-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UYMWqZHC3ov/BkKGQSscseW3FWYC/I+PTKSwrlieHm3ZUSHt6+mFEAWyBVyikf0v nd6N2Zj48X6qHeShT1r+1A== 0000882377-97-000297.txt : 19970924 0000882377-97-000297.hdr.sgml : 19970924 ACCESSION NUMBER: 0000882377-97-000297 CONFORMED SUBMISSION TYPE: F-4 PUBLIC DOCUMENT COUNT: 55 FILED AS OF DATE: 19970922 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS TRANSPORT PLC CENTRAL INDEX KEY: 0001046224 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111 FILM NUMBER: 97683772 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS IOM I-A LTD CENTRAL INDEX KEY: 0001046225 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111-01 FILM NUMBER: 97683773 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS IOM I-B LTD CENTRAL INDEX KEY: 0001046226 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111-02 FILM NUMBER: 97683774 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS IOM I-C LTD CENTRAL INDEX KEY: 0001046227 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111-03 FILM NUMBER: 97683775 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS IOM I-D LTD CENTRAL INDEX KEY: 0001046228 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111-04 FILM NUMBER: 97683776 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATOR GAS IOM I-E LTD CENTRAL INDEX KEY: 0001046229 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-36111-05 FILM NUMBER: 97683777 BUSINESS ADDRESS: STREET 1: 15-19 ATHOL ST CITY: DOUGLAS ISLE OF MAN BUSINESS PHONE: 2125086500 MAIL ADDRESS: STREET 1: 1519 ATHOL ST CITY: DOUGLAS ISLE OF MAN F-4 1 NAVIGATOR GAS TRANSPORT PLC AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1997 REGISTRATION NO.333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM F-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ NAVIGATOR GAS TRANSPORT PLC, NAVIGATOR GAS (IOM I-A) LIMITED, NAVIGATOR GAS (IOM I-B) LIMITED, NAVIGATOR GAS (IOM I-C) LIMITED, NAVIGATOR GAS (IOM I-D) LIMITED AND NAVIGATOR GAS (IOM I-E) LIMITED, (Exact Name of Registrant as Specified in its Charter)
ISLE OF MAN 8611 N/A ISLE OF MAN 8611 N/A ISLE OF MAN 8611 N/A ISLE OF MAN 8611 N/A ISLE OF MAN 8611 N/A ISLE OF MAN 8611 N/A (State or Other Jurisdiction of (Primary Standard Industrial Incorporation or Organization) Classification Code Number) (I.R.S. Employer Identification Nos.)
C/O 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB 011-44-1-62-4628575 (Address, including zip code, and telephone number, including area code, of principal executive offices of Navigator Gas Transport PLC CT CORPORATION SYSTEM 1623 BROADWAY NEW YORK, NEW YORK 10019 212-246-5070 (Name, address, including zip code, and telephone number, including area code, of agent for service of Navigator Gas Transport PLC ------------------ COPIES TO: LAURIS G. L. RALL CHARLES A. DIETZGEN JOSEPH AVANTARIO THACHER PROFFITT & WOOD CAMBRIDGE FUND MANAGEMENT LLC TWO WORLD TRADE CENTER 535 MADISON AVENUE NEW YORK, NEW YORK 10048 NEW YORK, NEW YORK 10022 212-912-7400 212-508-6500 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective ------------------ CALCULATION OF REGISTRATION FEE
==================================================================================================================================== Proposed maximum Proposed maximum Title of each class of Amount to offering price aggregate offering Amount of securities to be registered be registered per unit(1) price(1) Registration Fee - ------------------------------------------------------------------------------------------------------------------------------------ 10 1/2% First Priority Exchange Ship Mortgage Notes $217,000,000 100% $217,000,000 $65,757.58 - ------------------------------------------------------------------------------------------------------------------------------------ 12% Second Priority Exchange Ship Mortgage Notes $87,000,000 100% $87,000,000 $26,363.64 - ------------------------------------------------------------------------------------------------------------------------------------ Total $304,000,000 100% $304,000,000 $92,121.22 ====================================================================================================================================
================================================================================ CROSS REFERENCE SHEET FURNISHED PURSUANT TO RULE 404(a)
Items And Captions In Form F-4 Location in Prospectuses ------------------------------ ------------------------ 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus......................................... Forepart of Registration Statement and Outside Front Cover Page of Prospectus* 2. Inside Front and Outside Back Cover Pages of Prospectus....................................................... Inside Front Cover Page of Prospectus and Outside Back Cover Page of Prospectus* 3. Risk Factors, Ratio of Earnings to Fixed Charges, and Other Information............................. Prospectus Summary; Risk Factors 4. Terms of the Transaction ........................................ Prospectus Summary; Description of the Exchange Notes 5. Pro Forma Financial Information ................................. Capitalization, Management's Discussion and Analysis of Financial Condition and Results of Operations; Consolidated Balance Sheet. 6. Material Contacts with Company Being Acquired.................... * 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters........................................ Prospectus Summary; the Exchange Offer; Plan of Distribution 8. Interests of Named Experts and Counsel........................... * 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................... See page II 10 Information with Respect to S-3 Registrants...................... . * 11 Incorporation of Certain Information by . Reference........................................................ * 12 Information With Respect to S-2 or S-3 . Registrants...................................................... * 13 Incorporation of Certain Information by . Reference........................................................ * 14 Information With Respect to Registrants Other . than S-3 or S-2 Registrants (a) Description of Business................................. Prospectus Summary, Gas Carrier Industry, Business, Management's Discussion and Analysis of Financial Condition (b) Description of Property................................. Prospectus Summary, Business (c) Legal Proceedings....................................... * (d) Market Price of and Dividends on the Registrants' Common Equity and Related Stockholder Matters..................................... * (e) Financial Information................................... * (f) Selected Financial Data................................. Consolidated Balance Sheet (g) Supplementary Financial Information..................... Consolidated Balance Sheet (h) Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................. Management's Discussion and Analysis of Financial Condition and Results of Operations (i) Change in and Disagreements With Accountants on Accounting and Financial Disclosures................. * (j) Quantitative and Qualitative Disclosures About Market Desk............................................. * 15 Information With Respect to S-3 Companies........................ . * 16 Information With Respect to S-2 or S-3 . Companies........................................................ * 17 Information if Proxies, Consents or . Authorizations are to be Solicited............................... * 18 Information if Proxies, Consents or Authorizations Are Not to be Solicited, . or in an Exchange Offer.......................................... Summary of Prospectus; The Exchange Offer; Description of the Exchange Notes
- ------------------- * Answer negative or item inapplicable. PROSPECTUS _________, 1997 SUBJECT TO COMPLETION SEPTEMBER 22, 1997 OFFER FOR ALL OUTSTANDING 10 1/2% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2007 ($217,000,000 PRINCIPAL AMOUNT OUTSTANDING) IN EXCHANGE FOR 10 1/2% FIRST PRIORITY EXCHANGE SHIP MORTGAGE NOTES DUE 2007 and 12% SECOND PRIORITY SHIP MORTGAGE NOTES DUE 2007 ($87,000,000 PRINCIPAL AMOUNT OUTSTANDING) IN EXCHANGE FOR 12% SECOND PRIORITY EXCHANGE SHIP MORTGAGE NOTES DUE 2007 of Navigator Gas Transport PLC THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ____________, 1997, UNLESS EXTENDED. Navigator Gas Transport PLC, (the "Issuer" or "Navigator Gas Transport"), an Isle of Man company, hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal," which together with this Prospectus constitute the "Exchange Offer"), to exchange (i) up to $217,000,000 in aggregate principal amount of its registered 10 1/2% First Priority Exchange Ship Mortgage Notes Due 2007 (the "First Priority Exchange Notes"), for a like principal amount of its unregistered 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "Existing First Priority Notes"), of which an aggregate principal amount of $217,000,000 is outstanding, and (ii) up to $87,000,000 in aggregate principal amount of its registered 12% Second Priority Exchange Ship Mortgage Notes Due 2007 (the "Second Priority Exchange Notes" and, together with the First Priority Exchange Notes, the "Exchange Notes"), for a like principal amount of its unregistered 12% Second Priority Ship Mortgage Notes Due 2007 (the "Existing Second Priority Notes" and, together with the Existing First Priority Notes, the "Existing Notes"), of which an aggregate principal amount of $87,000,000 is outstanding. The form and terms of the First Priority Exchange Notes are identical to the form and terms of the Existing First Priority Notes, and the form and terms of the Second Priority Exchange Notes are identical to the form and terms of the Existing Second Priority Notes, except that (i) the offer of the Exchange Notes will be registered under the Securities Act of 1933, as amended (the "Securities Act"), and therefore the Exchange Notes will not be subject to certain transfer restrictions, and (ii) Holders of Exchange Notes will not be entitled to certain rights of Holders of Existing Notes under the Registration Rights Agreement relating to the Existing Notes. The Exchange Offer is being made in order to satisfy certain contractual undertakings of the Issuer. See "THE EXCHANGE OFFER" and "DESCRIPTION OF THE EXCHANGE NOTES." The Exchange Notes mature on June 30, 2007 (the "Maturity Date"). Interest on the Exchange Notes will be deemed to accrue from August 7, 1997 or from the date of the last periodic payment of interest on the Existing Notes, whichever is later, at a rate of 10 1/2% per annum (with respect to the First Priority Exchange Notes) and 12% (with respect to the Second Priority Exchange Notes). Interest on the Exchange Notes is payable on June 30 and December 31 of each year, commencing December 31, 1997 (each, a "Payment Date"), except that at the option of the Issuer, on any Interest Payment Date (as defined) following the delivery of the first Vessel, to the extent cash available for distribution to Holders of Second Priority Exchange Notes on such date is insufficient to pay all accrued and unpaid interest on the Second Priority Exchange Notes due on such date, the Issuer may pay such interest by issuing additional Second Priority Notes having an aggregate principal amount equal to the amount of such deficiency. The Issuer may not issue more than $20.9 million aggregate principal amount of such additional Second Priority Notes. The First Exchange Priority Notes are not redeemable at the option of the Issuer prior to June 30, 2002, except that (i) until June 30, 2000, the Issuer may redeem, at its option, in the aggregate up to 35% of the aggregate principal amount of each series of Notes, on a PRO RATA basis, at the redemption prices set forth herein with the proceeds of one or more Public Equity Offerings (as defined) if at least $100.0 million aggregate principal amount of the First Exchange Priority Notes and untendered First Priority Existing Notes and $45.0 million aggregate principal amount of the Second Priority Exchange Notes and untendered Second Priority Exchange Notes remain outstanding after any such redemption and (ii) the Issuer may redeem each series of Notes at any time if the Issuer or any Owner (as defined) becomes subject to withholding taxes on any amounts payable under the Notes or on any Guarantee (as defined) as a result of certain changes in law in respect of withholding taxes. On and after June 30, 2002, the First Priority Exchange Notes are redeemable at the option of the Issuer, in whole or in part, at the redemption prices set forth herein. Commencing on June 30, 2001, and semi-annually thereafter, the Issuer will be required, to the extent of any Available Cash (as defined) on each such date, to make an offer to each Holder (as defined) of First Priority Exchange Notes to purchase such Holder's First Priority Exchange Notes (or at such Holder's option, any part thereof) at a purchase price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. The Second Priority Exchange Notes are not redeemable at the option of the Issuer prior to June 30, 2002, except as set forth in clauses (i) and (ii) of the preceding paragraph. On and after June 30, 2002, the Second Priority Exchange Notes are redeemable at the option of the Issuer, in whole or in part, at the redemption prices set forth herein. Commencing on the first Interest Payment Date following the payment in full of the First Priority Exchange Notes and the untendered First Priority Existing Notes, if any, and semi-annually thereafter, the Issuer is required, to the extent of any Available Cash on such date, to make an offer to each Holder of Second Priority Exchange Notes to purchase such Holder's Second Priority Exchange Notes (or at such Holder's option, any part thereof) at a purchase price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. The Exchange Notes and the untendered Existing Notes (collectively, the "Notes"), if any, will be obligations of the Issuer, secured (subject to the priority of payment described herein) by the Collateral (as defined). The Notes will be guaranteed, jointly and severally (the "Guarantees"), by Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company and a wholly owned subsidiary of the Issuer (each, an "Owner" and, collectively, the "Owners" and, together with Navigator Holdings PLC and the Issuer, the "Company"). See "PROSPECTUS SUMMARY-- SECURITY." See "DESCRIPTION OF THE EXCHANGE NOTES--TRUST ACCOUNTS" and "--APPLICATION OF PROCEEDS." The Issuer will accept for exchange any and all Existing Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on ______________, 1997, unless extended (as so extended, the "Expiration Date"). Tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is subject to certain customary conditions. See "THE EXCHANGE OFFER." Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by a Holder who is not an "affiliate" of the Company (within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that the Holder is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes. However, the staff of the Commission has not considered the Exchange Offer in the context of a no-action letter addressed to the Company, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as it has in its prior interpretations. Persons who desire to exchange Existing Notes in the Exchange Offer must represent to the Company, among other things, that such conditions have been met. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a Prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal accompanying this Prospectus states that by so acknowledging and by delivering a Prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Existing Notes where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, starting on the Expiration Date and ending on the close of business on the first anniversary of the Expiration Date, it will make this Prospectus, as supplemented or amended, available to any broker-dealer for use in connection with any resale. See "PLAN OF DISTRIBUTION." ---------- SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN FACTORS THAT PROSPECTIVE INVESTORS IN EXCHANGE NOTES SHOULD CONSIDER. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- The date of this Prospectus is _____________, __, 1997 No public market has existed for the Exchange Notes before the Exchange Offer. The Company currently does not intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system, and no active public market for the Exchange Notes is currently anticipated. There will be no proceeds to the Issuer from this Exchange Offer. The Company will pay all expenses incident to the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Existing Notes being tendered for exchange pursuant to the Exchange Offer. The Existing Notes were sold by the Issuer, on August 7, 1997, in transactions not registered under the Securities Act in reliance upon the exemption provided in Section 4(2) of the Securities Act. The Existing Notes were subsequently placed with qualified institutional buyers (ii) in reliance upon Rule 144A under the Securities Act. Accordingly, the Existing Notes may not be reoffered, resold or otherwise transferred in the United States unless so registered or unless an applicable exemption from the registration requirements of the Securities Act is available. Any Existing Notes not tendered and accepted in the Exchange Offer will remain outstanding. To the extent that any Existing Notes are tendered and accepted in the Exchange Offer, a Holder's ability to sell untendered Existing Notes could be adversely affected. Following consummation of the Exchange Offer, the Holders of Existing Notes will continue to be subject to the existing restrictions upon transfer thereof and the Issuer generally will have no further obligations to such Holders to provide for the registration under the Securities Act of the Existing Notes held by them. See "THE EXCHANGE OFFER--CONSEQUENCES OF FAILURE TO EXCHANGE." The Exchange Notes issued pursuant to this Exchange Offer initially will be issued in the form of two global Exchange Notes (one representing the First Priority Exchange Notes and the second representing the Second Priority Exchange Notes), which will be deposited with, or on behalf of, The Depository Trust Company ("DTC") and registered in its name or in the name of Cede & Co., its nominee. Beneficial interests in the global Exchange Notes representing the Exchange Notes will be shown on, and transfers thereof will be effected through, records maintained by DTC and its participants. After the initial issuance of the global Exchange Notes, Exchange Notes in certificated form may be issued in exchange for the global Exchange Notes on the terms set forth in the Indenture. See "BOOK ENTRY, DELIVERY AND FORM." THE EXCHANGE OFFER DESCRIBED IN THIS PROSPECTUS (THE "PROSPECTUS") IS NOT DIRECTED TO, NOR WILL THE ISSUER ACCEPT ANY TENDER FOR EXCHANGE FROM, ANY PERSON IN ANY JURISDICTION IN WHICH PARTICIPATION IN SUCH EXCHANGE OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THE PROSPECTUS NOR ANY EXCHANGE MADE PURSUANT HERETO SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER OR THAT THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ---------- A copy of this document, together with certain other documents, has been delivered to the Registrar of Companies in the Isle of Man for registration as a prospectus in accordance with Section 38 of the Isle of Man Companies Act 1931. ---------- The principal executive office of the Issuer is located at c/o 15-19 Athol Street, Douglas, Isle of Man, 1M1 1LB, and the telephone number at that address is 011-44-1-62-4628575. ENFORCEABILITY OF CIVIL LIABILITIES The Issuer and each of the Owners is organized under the laws of the Isle of Man. A substantial portion of the assets of their respective assets is or may be located outside the United States. As a result, it may be difficult for investors to enforce outside the United States judgments against the Issuer or the Owners obtained in the United States in any actions, including actions predicated on the civil liability provisions of the federal securities laws of the United States. Certain directors of the Issuer and the Owners are residents of jurisdictions other than the United States, and all or a significant portion of the assets of such persons are or may be located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons or to enforce against them in United States courts judgments predicated upon the civil liability provisions of the federal securities laws of the United States. There is currently no treaty between the United States and the Isle of Man providing for reciprocal recognition and enforcement of judgments in civil and commercial matters, and therefore a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would not be automatically enforceable in the Isle of Man. Each of the Issuer and the Owners has irrevocably submitted to the non-exclusive jurisdiction of the federal and state courts in The City of New York for the purpose of any legal suit, action or proceeding against it in connection with the offering and sale of the Notes. The foregoing discussion is based on the advice of Cains, counsel to the Company, with respect to matters of Isle of Man law. AVAILABLE INFORMATION The Issuer and the Owners are not currently subject to the periodic reporting and other informational requirements of the Exchange Act. Each of the Issuer and the Owners has agreed that, whether or not it is required to do so by the rules and regulations of the Commission, for so long as any of the Notes remain outstanding, it will furnish to the Trustees (as defined) and the Holders of the Notes and file with the Commission, or cause to be so filed as part of the financial statements of the Company (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Issuer and the Owners were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, (iii) with respect to the annual information only, a report thereon by independent public accountants and (ii) all reports that would be required to be filed with the Commission on Form 8-K if the Issuer and the Owners were required to file such reports. Copies of the Indentures, the Registration Rights Agreement, the Security Documents and any other document referred to herein can be obtained without charge by any recipient of this Prospectus by contacting Navigator Gas Transport PLC c/o 15-19 Athol Street, Douglas, Isle of Man, 1M1 1LB. DEFINED TERMS All capitalized terms used in this Prospectus and not otherwise defined have the meanings assigned in "CERTAIN DEFINITIONS," beginning on page A-100 of this Prospectus. (iv) PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE RELATED NOTES, APPEARING ELSEWHERE IN THIS PROSPECTUS. SEE THE SECOND PARAGRAPH UNDER "RISK FACTORS." UNLESS OTHERWISE INDICATED, ALL CURRENCY AMOUNTS SET FORTH IN THIS PROSPECTUS ARE STATED IN UNITED STATES DOLLARS. REFERENCE IS MADE TO THE GLOSSARY OF CERTAIN TERMS IN APPENDIX A FOR DEFINITIONS OF CERTAIN TERMS USED IN THIS PROSPECTUS. THE COMPANY The Company was formed in 1997 for the purpose of building and operating a fleet of five state-of-the-art 22,000 cubic meter ("cbm") semi-refrigerated ethylene-capable gas carriers. The Vessels are designed to transport the entire range of petrochemical gases, including ethylene, propylene, vinyl chloride monomer ("VCM"), butadiene and crude C4, as well as liquified petroleum gases ("LPG"), such as ethane, propane and butane. There are no ethylene-capable semi-refrigerated gas carriers currently operating or under construction that will be larger than the Vessels. Each Vessel will have four separate gas cargo tanks, segregated pumping and piping systems and a separate deck tank, allowing each Vessel to carry up to three separate cargoes simultaneously. Upon their construction, the Vessels will be among the most versatile gas carriers in the world in terms of cargo options, ease and speed of loading and discharging cargoes and adaptability for route scheduling. The foregoing capabilities will permit the Company to minimize operating costs, reduce voyage times and maximize Vessel utilization. In addition, the Vessels' larger cargo capacities, compared to the existing ethylene-capable fleet, offer significant economies of scale, especially for long-haul transport. Navigator Gas Transport issued the Existing Notes, the proceeds of which have and will be loaned to the Owners to fund the construction of their Vessels, to pay certain expenses and to pay interest on the Notes during the scheduled construction period of the Vessels. The Vessels will be constructed by Jiangnan Shipyard ("Jiangnan") and China Shipbuilding Trading Company, Limited ("CST" and, together with Jiangnan, the "Builders") under the technical supervision of MARTIME-Gesellschaft fur maritime Dienstleistung mbH "Martime" or the "Technical Advisor"), an affiliate of Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH ("GEBAG"), in coordination with Germanischer Lloyd, an independent vessel classification society (the "Classification Society"). THE PETROCHEMICAL MARKET AND SEABORNE TRADE The Company believes that the gas freight market represents one of the most attractive sectors of the shipping industry in terms of its robust underlying demand growth dynamics and the outlook for limited expansion in freight capacity. The Vessels will address increasing customer demand for larger semi-refrigerated gas carriers designed for long-haul trade in petrochemical gases. The transportation of petrochemical gases is a rapidly-growing market with a few large participants. The Company intends to become a leading participant in this market to service the major producers, refiners, traders and end-users of petrochemical gases. The Company believes that the following factors create an attractive opportunity for the construction of the Vessels: DEMAND FOR GAS TRANSPORTATION. Demand for the seaborne transportation of ethylene and other petrochemical gases is driven by growth in gross domestic product and increased standards of living, particularly in net importing regions such as the Far East, the Mediterranean and the Indian subcontinent. Petrochemical gases are used in the production of a vast array of chemicals and finished products, including plastics and synthetic-based materials. New production technologies are allowing plastic and synthetic-based materials to displace metal, cotton, wood and other materials in an increasing number of end-products. From 1990 to 1996, global production of major petrochemical gases increased at a compound annual growth rate of 4.4%. Import growth in Asia of such major petrochemical gases, over this same period, increased at a compound annual growth rate of 9.4%. By-products of petroleum refining, ethylene and other petrochemical gases are primarily produced in major petroleum-processing regions such as the Middle East, North America, South America and northwestern Europe. The Company believes that large and growing net exports from these regions to meet the increasing global demand for petrochemical gases will continue to generate strong growth in seaborne trade. Cross-trading of petrochemical gases between and among producing and consuming regions to satisfy supply and demand imbalances will also contribute to growth in demand for deep sea transport. Cross-trading will be influenced by price imbalances among regions, mismatches in domestic production capabilities and consumption requirements, and planned and unplanned outages in production and manufacturing facilities. The Company believes that worldwide growth in consumption of end-products produced from petrochemicals will result in growth in cross-trading of petrochemical gases. Furthermore, because many gas carriers trade in both petrochemical gases and alternate cargoes such as LPG and ammonia, growth in the demand for seaborne transport of LPG and ammonia will tend to reduce the vessel capacity available to transport petrochemical gases and may positively affect freight rates for ethylene and other petrochemical gases. CONSTRUCTION OF MAJOR PETROCHEMICAL PRODUCTION AND TERMINAL FACILITIES. As a result of the expansion of existing facilities and the construction of major new petrochemical production facilities and associated large-scale terminals, the amount of petrochemical gases transported by sea has increased. New petrochemical production capacity of 46.8 million tonnes is expected to be on line by the beginning of the next decade, representing a 28.7% increase over global capacity at the end of 1996. Examples of such large-scale modern facilities include a 3.3 million tonne petrochemical plant, which includes a 1.4 million tonne ethylene plant, currently under construction in Taiwan; an 830,000 tonne ethylene plant planned to be built by a Mobil Corporation venture in Venezuela; and Exxon Chemical Company's planned 800,000 tonne ethylene and 400,000 tonne propylene facility in Singapore. These expanded and new facilities are typically incorporating large-scale storage terminals which include multiple tanks capable of handling many different petrochemical products. The Company believes that the Vessels' large capacity as well as their ability to carry a full range of petrochemical gas cargoes will make them attractive to major participants in the petrochemical industry. AN ATTRACTIVE MARKET FOR SEABORNE TRADE OF ETHYLENE. The Company believes that the market for seaborne transportation of ethylene, the key building block for plastics and a feedstock to other petrochemicals, is particularly attractive. World ethylene production capacity has doubled over the past 15 years to a total capacity of approximately 81 million tonnes in 1996, with production capacity increasing by 5.5% during 1996. This trend is expected to continue with additional production capacity of approximately 27 million tonnes expected by the beginning of the next decade. Due to its low temperature requirement (-104(degree)C), ethylene is the most demanding gas cargo to transport and is carried primarily by smaller, more specialized vessels. As a result, ethylene has typically commanded higher charter rates than other petrochemical gases. There are no ethylene-capable vessels which are currently operating or under construction that are over 12,500 cbm. In addition, the Vessels will be capable of carrying ethane, a feedstock for ethylene which also has a low -2- temperature requirement (-82(degree)C). The Company believes the market for the transportation of ethane will become a premium-rate market. BARRIERS TO ENTRY. Over the past several years, the gas carrier industry has experienced an increased emphasis on higher quality vessels and enhanced operating efficiencies as both customers and regulatory authorities have increasingly focused on safety issues and environmental protection. As the industry faces more stringent operating standards, including International Safety Management ("ISM") code certification, Chemical Distribution Industry ("CDI") certification and inspection certification by major customers, the Company believes that the existing fleet will find it increasingly difficult to compete without major capital investment for upgrades. Whereas in the oil carrier industry the entrance of new owners is commonplace, few vessel owners have the resources and the access to commercial and technical expertise necessary to build and operate an efficient-size fleet of petrochemical gas carriers and to attract major customers. In addition, few shipyards have the capabilities and experience required to build gas carriers, which incorporate sophisticated gas plant systems. Existing shipyard capacity is also currently constrained by the strong demand for less technically-demanding vessels such as oil tankers, drybulk vessels and container carriers. Given these entry barriers and the unique capabilities of the Vessels, the Company believes that it will have a competitive advantage over other industry participants. See "Business--The Vessels." STRONG SECONDHAND VESSEL VALUES. Producers, refiners, traders and end-users of petrochemical gases do not typically own or control their own vessels. Instead, vessels are owned by a limited number of experienced operators, each with a relatively large fleet. This market structure, combined with the complexity of building and operating vessels capable of carrying petrochemical gases, has resulted in these vessels maintaining strong secondhand values over time. For example, a 15,000 cbm semi-refrigerated gas carrier built in 1990 was sold in the secondary market in early 1997 at a price equal to 93% of its delivered cost, reflecting the high expected return and the high replacement cost of these vessels. BUSINESS STRATEGY The Company's business strategy is to take advantage of the strong demand for seaborne transportation of petrochemical gases and LPG resulting from the worldwide expansion in the production, use and trade of petroleum by-products. The Company's fleet is expected to supply transportation services to existing customers of certain entities that will become shareholders of Holdings (the "Shareholders") through the Equity Financing (as defined), including major oil, chemical and trading companies. The key elements of this strategy include: INTEGRATED CHARTERING STRATEGY. Charterers of gas carriers such as the Vessels rely on short and long-term contracts of affreightment and, to a lesser extent, time and spot charters, allowing them to respond quickly and efficiently to the changing trading patterns of the petrochemical gas market. The Company intends to take advantage of these market dynamics by building a portfolio of contracts of affreightment with major customers. Such contracts are expected to be from three to five years in length and would provide the Vessels with a high level of continuous employment. The Company also intends to use the spot market and, to a lesser extent, time charters of the Vessels to achieve maximum capacity utilization and minimize ballast trips and idle time. This strategy will be implemented by MarLink Schiffahrtskontor GmbH ("MarLink"), an affiliate of GEBAB, the commercial manager of the Vessels. MarLink is a leading commercial manager of vessels in the petrochemical gas market. -3- The Manager is currently negotiating two contracts of affreightment for the employment of the Vessels in the ethylene and propylene trades. One contract would guarantee a minimum of 10 voyages and a maximum of 20 voyages per annum for a full cargo of propylene from the Americas to the Mediterranean region. The second contract would ensure a minimum of 18 voyages and a maximum of 28 voyages per annum for a full cargo of ethylene from various loading ports to the Mediterranean region. Each contract would be for a five-year period with freight rates for each voyage to be based on then-prevailing market rates. If consummated, these contracts could provide a base-load of continuous employment for the Vessels during the terms thereof. However, there can be no assurance that these contracts will be consummated. MAXIMIZE ETHYLENE BUSINESS. Historically, ethylene has generally achieved an approximate 10-15% premium over charter rates for other petrochemical gas cargoes. As ethylene frequently trades along the same routes as other petrochemical gases, the Vessels' multiple tank configuration should enable the Company to maximize the proportion of its freight mix accounted for by ethylene, without sacrificing cargo capacity utilization or route efficiency. Based on historical trends, as well as the increasing size of production facilities, the Company also believes that the average size of ethylene freights will increase, thereby enhancing the competitiveness of the Vessels. BUILD VERSATILE VESSELS WITH MULTI-CARGO CAPABILITY. The Vessels will be among the most versatile petrochemical gas carriers in the world given their ability to carry the full range of petrochemical gases and transport up to three segregated cargoes simultaneously. The Company believes that these larger, multiple-tank vessels will provide a competitive advantage over other operators in the petrochemical gas freight market. In addition, the Vessels will offer improved operating efficiencies due to their higher speed and shorter loading and discharge times as compared to many less sophisticated vessels. The Company has chosen the Builders because of their previous experience in the building of gas carriers with Tractebel Gas Engineering GmbH ("TGE"), a leading engineering firm in the production of gas plants. See "Business--The Vessels" and "--The Builders and TGE." MAXIMIZE VESSEL UTILIZATION. The Company believes that its fleet size of five Vessels, each with four tanks and the ability to carry up to three fully segregated cargoes, will allow it to adopt triangular trade patterns which minimize ballast trips. In addition, the Vessels' ability to carry up to three cargoes simultaneously will give the Company the potential to service up to 15 charterers at any one time. The Company believes that the size of the Vessels will also be attractive to charterers with substantial long-haul transport requirements. The Company's fleet size and configuration should provide the operational flexibility necessary to meet the logistical demands of managing complex trading patterns. THE VESSELS The Vessels will be state-of-the-art gas carriers. The Company believes that the size and configuration of the Vessels, as well as the features incorporated therein, will make them more attractive to charterers than other vessels. As a result, the Company expects the Vessels to realize higher-than-average levels of utilization in the transport of high value petrochemical gas cargoes as compared to other gas carriers, significantly enhancing the earnings potential of each Vessel. The Vessels will be semi-refrigerated, combining refrigeration and pressurization to maintain their cargoes in a liquified state. This will allow the Vessels to load products at varying temperatures from different terminals. In addition to pre-cooled cargoes, the Vessels will have the -4- ability to load cargoes that cannot maintain their required liquid temperatures prior to loading, due to distances traveled by pipeline from production facilities to vessels, by accepting these cargoes under pressure and cooling them on board the Vessels during the voyage. The load time of these cargoes is thereby reduced since the cargoes do not need to be cooled prior to loading. Unlike semi-refrigerated vessels, fully-refrigerated vessels are only able to load cargoes in a cooled state, requiring those vessels to cool products prior to loading. This requirement slows product loading and limits the number of terminals which can be efficiently serviced by such vessels. The nitrogen generator and deck tank on the Vessels will allow them to prepare their tanks for the next cargo while en route to the next load port. This will result in time savings of as much as three days on some voyages, as tank preparation would otherwise have to be carried out in port. These features provide a significant benefit to charterers and terminal operators by improving their terminal utilization. The 22,000 cbm carrying capacity of the Vessels will also be beneficial to charterers and terminal operators by reducing the number of loading and discharging operations, the duration of such operations and the associated costs. The contractual delivery dates (each, a "Contractual Delivery Date") of the Vessels will be staggered as follows (assuming the absence of delays caused by changes in the rules or regulations of the Classification Society): Vessel 1--August 1, 1999 Vessel 2--November 1, 1999 Vessel 3--March 1, 2000 Vessel 4--June 1, 2000 Vessel 5--September 1, 2000 -5- The purchase price (the "Purchase Price") for each Vessel will be approximately $50.0 million. The following table sets forth the scheduled amounts and timing of the payments to the Builders under the Building Contract, except that the Builders have directed the Owners to make the payment due on September 1, 1997 directly to TGE.
DATE VESSEL 1 VESSEL 2 VESSEL 3 VESSEL 4 VESSEL 5 TOTAL(C) - ---- -------- -------- -------- -------- -------- -------- (IN MILLIONS) Issue Date...................... $6.6 $6.6 $6.6 $6.6 $6.6 $33.1 Sept. 1, 1997................... 2.4 2.4 2.4 2.4 2.4 12.2 Feb. 1, 1998.................... 6.8 -- -- -- -- 6.8 July 1, 1998.................... -- 6.8 -- -- -- 6.8 Nov. 1, 1998.................... 6.8 -- 6.8 -- -- 13.7 Feb. 1, 1999.................... -- -- -- 6.8 -- 6.8 Mar. 1, 1999.................... 4.6 -- -- -- -- 4.6 Apr. 1, 1999.................... -- 6.8 -- -- -- 6.8 June 1, 1999.................... -- -- -- -- 6.8 6.8 July 1, 1999.................... -- -- 6.8 -- -- 6.8 Aug. 1, 1999.................... 22.8(a) 4.6(b) -- -- -- 27.3 Oct. 1, 1999.................... -- -- -- 6.8 -- 6.8 Nov. 1, 1999.................... -- 22.8(a) 4.6(b) -- -- 27.3 Feb. 1, 2000.................... -- -- -- -- 6.8 6.8 Mar. 1, 2000.................... -- -- 22.8(a) 4.6(b) -- 27.3 June 1, 2000.................... -- -- -- 22.8(a) 4.6(b) 27.3 Sept. 1, 2000................... -- -- -- -- 22.8(a) 22.8 ----- ----- ----- ----- ----- ------ Total (c).............. $50.0 $50.0 $50.0 $50.0 $50.0 $250.1 ===== ===== ===== ===== ===== ======
- --------------- (a) Assuming delivery of the Vessel occurs on its Contractual Delivery Date. (b) This payment shall be payable to the Builders with respect to a Vessel only if and when the Collateral Agent has received evidence of delivery pursuant to the Building Contract with respect to each other Vessel having a Contractual Delivery Date prior to or on the Contractual Delivery Date of such Vessel. (c) May not total due to rounding. THE SHAREHOLDERS OF HOLDINGS The Shareholders include entities that, severally but not jointly, will provide all the critical services during the required construction period, and entities (other than TGE) which have been or will be responsible for the establishment of contract specifications and the future employment and ongoing operations of the Vessels. These entities include: o CAMBRIDGE GAS TRANSPORT CORPORATION ("CGTC"). CGTC is an affiliate of Cambridge Partners, L.L.C. ("Cambridge"). Cambridge, together with its affiliates (collectively, the "Cambridge Group"), is engaged in the business of providing investment and advisory services to major shipping, energy service and oil companies worldwide, as well as acquiring, owning, financing and managing vessels for its own account and offering these vessels for use by third party -6- charterers. Cambridge enjoys strong relationships with ship brokers located in London, Tokyo, Oslo and the United States, with major oil companies, with Far Eastern shipyards and with leading international maritime transportation companies. In addition, Cambridge has expertise in related areas such as vessel design and construction, commercial arrangements including contracts of affreightment and pooling arrangements, time and bareboat charters, as well as in financial management and operations. Currently, the Cambridge Group controls a fleet of vessels and tankers with an asset value in excess of $400 million, comprised of four existing suezmax tankers (150,000 deadweight tonnes ("dwt")) and two very large crude carriers (308,000 dwt) currently under construction. These vessels are currently under long-term charter commitments arranged with Chevron Transport Corporation. Cambridge is headquartered in New York. o GEBAB. GEBAB is a privately-owned German investment house specializing in ship finance, shipowning and other shipping services through its affiliates. GEBAB and the major German shipbuilder, Thyssen Nordseewerke GmbH ("Thyssen"), together own 70% of Martime, one of the leading German ship-management and shipowning companies. Martime will be responsible for the technical supervision of the construction of the Vessels, pre-delivery technical management and the ongoing technical management of the Vessels after delivery from the Builders. Martime's staff has over 20 years of experience in the ship-management business and currently operates nine container ships, three gas carriers and two chemical carriers. Martime will receive accreditation for ISO 9002 and ISM certification during 1997 providing independent confirmation of the strength of its technical management expertise. GEBAB, through its affiliate MarLink, will seek to negotiate, on behalf of the Owners, contracts of affreightments, spot charters and occasional time charters to provide a balanced mix of employment for the Vessels. GEBAB, together with a German shipowner, Hartmann Schiffarts GmbH ("Hartmann"), also owns a major stake in GasChem Services GmbH and Co., KG ("GasChem"). GasChem is a well-established commercial management company that currently manages for various owners a pool of 18 gas carriers ranging in size from 4,000 cbm to 8,000 cbm capacity, of which thirteen have ethylene capacity. See "Business--Marketing and Commercial Management--Commercial Management Agreement" and "Operations--Technical Management Agreement." o TGE. TGE is an indirect subsidiary of Tractebel S.A., a major Belgian public company engaged in the utility and engineering industries. TGE is a world leader in the engineering, design and construction of gas storage and transportation plants and equipment. In addition, it manufactures port facilities for the off-loading and receiving of liquified gases, gas liquification and handling systems, chemical and gas plants for installation on carriers, storage facilities for liquified gases and chemicals, gas bottling plants, gas terminals and metering stations, vaporization, transmission lines and compressor stations and package plants for recovery of products from associated gases. TGE is a leading provider of turnkey operations. TGE will design the complex gas plants to be utilized on the Vessels. TGE will also supervise the construction and erection of the Vessels' gas plants through its permanent office in Shanghai. Since 1980, TGE has been involved in the installation of gas plants for 36 gas carriers, 18 of which are ethylene-capable. -7- TGE will act as a subcontractor to Jiangnan under each Building Contract and as such will be responsible for supplying materials for construction of the gas plant and supervising its installation. TGE has acquired or is acquiring shares of capital stock of Holdings solely because of its role as a subcontractor. o ARCTIC GAS S.A. ("ARCTIC"). Arctic is part of the Cryofin Group ("Cryofin"). Cryofin is a shipbuilding group responsible for the original design and engineering specifications for the Vessels. Over the last 50 years, Cryofin has designed, built and partly operated more than 40 gas carriers of various types, including the first vessel designed to carry LPG. o XENON SHIPPING INC. ("XENON SHIPPING"). Xenon Shipping is an affiliate of Xenon Shipping AS ("Xenon"). Xenon is a leading Norwegian shipbroker, specializing in the petrochemical gas and LPG market. Xenon provides a full range of chartering, sale and purchase and related services to a worldwide clientele. Established in 1991, Xenon has extensive experience in the gas carrier industry. -8- THE EXCHANGE OFFER SUMMARY OF TERMS OF THE EXCHANGE OFFER The Exchange Offer.................. Up to $217,000,000 aggregate principal amount of 10 1/2% First Priority Exchange Ship Mortgage Notes Due 2007 (the "First Priority Exchange Notes") will be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Subject to such minimum denominations, $1,000 principal amount of First Priority Exchange Notes is offered in exchange for each $1,000 principal amount of First Priority Ship Mortgage Notes Due 2007 (the "Existing First Priority Notes"). As of the date hereof, Existing First Priority Notes representing $217,000,000 aggregate principal amount are outstanding. The form and terms of the First Priority Exchange Notes and the Existing First Priority Notes are identical, except that (i) the offer of the First Priority Exchange Notes will be registered under the Securities Act and therefore the First Priority Exchange Notes will not be subject to certain transfer restrictions and (ii) Holders of First Priority Exchange Notes will not be entitled to certain rights of Holders of the Existing Notes under the Registration Rights Agreement. Up to $87,000,000 aggregate principal amount of 12% Second Priority Exchange Ship Mortgage Notes Due 2019 (the "Second Priority Exchange Notes") will be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Subject to such minimum denominations, $1,000 principal amount of Second Priority Exchange Notes is offered in exchange for each $1,000 principal amount of Second Priority Ship Mortgage Notes Due 2007 (the "Existing Second Priority Notes"). As of the date hereof, Existing Second Priority Notes representing $87,000,000 aggregate principal amount are outstanding. The form and terms of the Second Priority Exchange Notes and the Existing Second Priority Notes are identical, except that (i) the offer of the Second Priority Exchange Notes will be registered under the Securities Act and therefore the Second Priority Exchange Notes will not be subject to certain transfer restrictions and (ii) Holders of Second Priority Exchange Notes will not be entitled to certain rights of Holders of the Existing Second Priority Notes under the Registration Rights Agreement. Based on interpretations by the Commission's staff set forth in no-action letters issued to third parties unrelated to the Company, the Company believes that the First Priority Exchange Notes and the Second Priority Exchange Notes (collectively, the "Exchange Notes") issued pursuant to the -9- Exchange Offer in exchange for the respective Existing First Priority Notes or Existing Second Priority Notes (collectively, the "Existing Notes") may be offered for resale, resold or otherwise transferred by any Holder (other than any such Holder or such other person (i) that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or (ii) that is a broker-dealer who acquired such Existing Notes directly from the Issuer (or any affiliate thereof)), without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that (i) the Exchange Notes are acquired in the ordinary course of business of the Holder and (ii) the Holder is not engaged in and does not intend to engage in a distribution of the Exchange Notes and has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes. The Commission, however, has not considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. See "THE EXCHANGE OFFER--PURPOSE AND EFFECT OF THE EXCHANGE OFFER." Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where those Existing Notes were acquired by the broker-dealer as a result of its market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of those Exchange Notes. See "PLAN OF DISTRIBUTION." Registration Rights Agreement........ The Existing Notes were sold by the Issuer on August 7, 1997 in a private placement. In connection with the sale of the Existing Notes, the Company entered into a Registration Rights Agreement for the benefit of the purchasers thereof (the "Registration Rights Agreement"), under which the Company agreed to use their respective reasonable best efforts to effect the Exchange Offer. See "THE EXCHANGE OFFER--PURPOSE AND EFFECT OF THE EXCHANGE OFFER" and "DESCRIPTION OF THE EXCHANGE NOTES--REGISTRATION RIGHTS." Pursuant to the Registration Rights Agreement, the Company is required to file a Registration Statement for a continuous offering pursuant to Rule 415 under the Securities Act in respect of the Existing Notes under certain circumstances, including if existing Commission interpretations are changed such that the Exchange Notes received by Holders in the Exchange Offer are not or would not be, upon receipt, transferable by each such Holder (other than an affiliate of the Company) without restriction under the Securities Act. This Prospectus is prepared in connection with the Company's compliance with such registration -10- requirement. See "THE EXCHANGE OFFER--PURPOSE AND EFFECT OF THE EXCHANGE OFFER" and "DESCRIPTION OF THE EXCHANGE NOTES--REGISTRATION RIGHTS." Expiration Date..................... The Exchange Offer will expire at 5:00 p.m., New York City time, on ___________, 1997 (or longer if required by applicable law). Any Existing Notes not accepted for exchange for any reason will be returned without expense to the tendering Holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Withdrawal.......................... The tender of Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Interest on the Exchange Notes...... Interest on each Exchange Note will be deemed to accrue from August 7, 1997 (the date of issuance of the Existing Notes) or from the date of the last periodic payment of interest on the Existing Notes, whichever is later. Conditions to the Exchange Offer.... The Exchange Offer is subject to certain customary conditions, certain of which may be waived by the Company. See "THE EXCHANGE OFFER--CONDITIONS." The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Existing Notes being tendered for exchange. Procedures for Tendering Existing Notes............................. Each Holder of Existing Notes who desires to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a copy thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver the Letter of Transmittal or the copy, together with the Existing Notes and any other required documentation, to the Exchange Agent at the address set forth herein. Persons holding Existing Notes through DTC and wishing to accept the Exchange Offer must do so pursuant to DTC's Automated Tender Offer Program ("ATOP"), by which each tendering participant will agree to be bound by the Letter of Transmittal. By executing or agreeing to be bound by the Letter of Transmittal, each Holder will represent to the Issuer that, among other things, (i) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the Holder of the Existing Notes, (ii) the Holder is not engaging in and does not intend to engage in a distribution of such Exchange Notes, (iii) the Holder has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes, (iv) the Holder is not -11- an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of the Company and (v) if such Holder is a broker-dealer, that it acquired the Existing Notes as a result of market making activities or other trading activities. Acceptance of Existing Notes and Delivery of Exchange Notes......... The Company will accept for exchange any and all Existing Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "THE EXCHANGE OFFER--TERMS OF THE EXCHANGE OFFER." Exchange Agent...................... United States Trust Company of New York is serving as Exchange Agent in connection with the Exchange Offer. U.S. Tax Considerations............. The exchange pursuant to the Exchange Offer will not be a taxable event for U.S. federal income tax purposes. See "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES." Effect of Not Tendering............. Existing Notes that are not tendered or that are not properly tendered will, following the completion of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof. Upon completion of the Exchange Offer, the Company generally will have no further obligation to provide for the registration under the Securities Act of such Existing Notes. SUMMARY OF TERMS OF THE EXCHANGE NOTES Securities Offered.................. $217,000,000 aggregate principal amount of 10 1/2% First Priority Exchange Ship Mortgage Notes Due 2007 (the "First Priority Exchange Notes"), and $87,000,000 aggregate principal amount of 12% Second Priority Exchange Ship Mortgage Notes (the "Second Priority Exchange Notes"). Issuer.............................. Navigator Gas Transport PLC, an Isle of Man public limited company. First Priority Trustee.............. United States Trust Company of New York. Second Priority Trustee............. The Chase Manhattan Bank Maturity Date....................... June 30, 2007. -12- Denominations....................... The Exchange Notes will be issued in minimum denominations of $100,000 and multiples of $1,000 in excess thereof. Interest Payment Dates.............. June 30 and December 31, commencing December 31, 1997. At the option of the Issuer, on any Interest Payment Date following the delivery of the first Vessel, to the extent cash available for distribution to Holders of Second Priority Exchange Notes on such date is insufficient to pay all accrued and unpaid interest on the Second Priority Exchange Notes due on such date, the Issuer may pay such interest by issuing additional Second Priority Exchange Notes having an aggregate principal amount equal to the amount of such deficiency. The Issuer may not issue more than $20.9 million aggregate principal amount of such additional Second Priority Exchange Notes. See "Description of the Exchange Notes--Terms of the Exchange Notes--Second Priority Exchange Notes." Mandatory Offer to Purchase Notes With Available Cash......... Commencing on June 30, 2001 and semi-annually thereafter so long as the First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, remain outstanding (each, an "Available Cash Payment Date"), the Issuer will be required, to the extent of Available Cash (as defined), to make an offer (each, an "Available Cash Offer") to each Holder of the First Priority Exchange Notes to purchase such Holder's First Priority Exchange Notes (or at such Holder's option, any part thereof) or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase; PROVIDED, HOWEVER, that the Issuer will not be required to make an Available Cash Offer if Available Cash is less than $1.0 million. Commencing on the first Available Cash Payment Date following the payment in full of the First Priority Exchange Notes and on each Available Cash Payment Date thereafter, the Issuer is required, to the extent of Available Cash, to make an Available Cash Offer to each Holder of the Second Priority Exchange Notes to purchase such Holder's Second Priority Exchange Notes (or at such Holder's option, any part thereof) at a purchase price equal to 102% of the principal amount thereof plus -13- accrued and unpaid interest to the date of purchase; provided, however, that the Issuer will not be required to make an Available Cash offer if Available Cash is less than $1.0 million. See "Description of the Exchange Notes--Mandatory Offers to Purchase Exchange Notes--Offer to Purchase with Available Cash." Mandatory Redemption Upon the Occurrence of Certain Events ...... In the event a Vessel is subject to a Total Loss, the Exchange Notes will be subject to mandatory redemption in part in an aggregate principal amount equal to the Allocated Principal Amount of the Notes for such Vessel at the redemption prices set forth herein. In addition, in the event an Owner elects to terminate a Building Contract because of a material breach thereof by the Builders, the Exchange Notes will be subject to mandatory redemption in part in an aggregate principal amount equal to the Allocated Principal Amount of the Notes for such Vessel, together with the Allocated Principal Amount of the Notes for all other Vessels that have not been accepted as of such date, at the redemption prices set forth herein. See "Description of the Exchange Notes--Redemptions--Mandatory Redemption Upon the Occurrence of Certain Events." Optional Redemption................. The Exchange Notes are not redeemable at the option of the Issuer prior to June 30, 2002, except that (i) until June 30, 2000, the Issuer may redeem, at its option, in the aggregate up to 35% of the original principal amount of each series of Notes, on a PRO RATA basis, at the redemption prices set forth herein with the net proceeds of one or more Public Equity Offerings if at least $100.0 million aggregate principal amount of the First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, and $45.0 million aggregate principal amount of the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, remain outstanding after each such redemption, and (ii) the Issuer may redeem the Exchange Notes and the untendered Existing Notes, if any, at the redemption price set forth herein at any time if the Issuer becomes subject to withholding taxes on any amounts payable under the Exchange Notes and the untendered Existing Notes, if any, or any Guarantee as a result of certain changes in law in respect of withholding taxes. On and after June 30, -14- 2002, the Exchange Notes may be redeemed at the option of the Issuer, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest to the date of redemption. Except as set forth in the previous sentence, the First Priority Indenture will prohibit the Issuer from redeeming at the option of the Issuer any Second Priority Exchange Notes while the First Priority Exchange Notes are outstanding. See "Description of the Exchange Notes--Redemption-- Optional Redemption" and "--Tax Redemption." Change of Control................... Upon a Change of Control, each Holder shall have the right to require the Issuer to purchase such Holder's Exchange Notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. See "Description of the Exchange Notes--Mandatory Offers to Purchase Exchange Notes--Offer to Purchase Upon Change of Control." Ranking............................. The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, and the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will be secured obligations of the Issuer. With respect to claims against the Collateral securing the Exchange Notes, the Holders of the Exchange Notes will have a claim thereto which is subordinate in right of payment to any claim held by the Letter of Credit Issuer with respect to any unreimbursed Draws under the Letter of Credit. The priority of payment of the principal of, premium (if any) and interest on the Exchange Notes is as described under "Description of the Exchange Notes--Priority of Payment--Revenue Account,"--"Priority of Payment-- Termination Account" and "--Application of Proceeds Following an Event of Default." Neither the Issuer nor the Owners are permitted by the Indentures to incur any additional Indebtedness, with certain limited exceptions. See "Description of the Exchange Notes--Ranking." Guarantees.......................... Payment of the principal of, premium, if any, and interest on the Exchange Notes and the untendered Existing Notes, if any, payment to the Letter of Credit Issuer of the Issuer's reimbursement obligations in respect thereof, the Issuer's obligations under the Security Agreements (as -15- defined) and performance of all other obligations contained in the Indentures and the Security Agreements is guaranteed on a joint and several basis by the Owners. See "Description of the Exchange Notes--Security." The Guarantees of the Owners are irrevocable and unconditional, but limited in amount to the extent required by laws relating to fraudulent transfer or similar laws. See "Description of the Exchange Notes--Guarantees." Security............................ As collateral for their respective obligations under the Exchange Notes and the untendered Existing Notes, if any, the Guarantees, the Security Agreements and the Letter of Credit Reimbursement Agreement, as the case may be, on the date the Existing Notes were issued (the "Original Closing Date") (i) Holdings has pledged to United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"), for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees (as defined), all the shares of capital stock of the Issuer, (ii) the Issuer has pledged to the Collateral Agent for the benefit of the Holders of the Exchange Notes and the untendered Existing Notes, if any, the Letter of Credit Issuer and the Trustees, all the shares of capital stock of the Owners and the promissory note (the "Intercompany Note") of the Owners in favor of the Issuer to evidence advances made by the Issuer to the Owners from time to time, and a security interest in all the Trust Accounts (as defined) and (iii) the Owners have granted to the Collateral Agent, for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees, a security interest in, among other things, (a) all Trust Accounts, including amounts held in the Capitalized Interest Account and the Pre-Funding Account, (b) the Building Contracts, (c) the Technical Supervision Agreement, (d) the Building Contract Guarantees, (e) the Performance Bonds, (f) the Technical Management Agreement, (g) the Commercial Management Agreement, (h) the Management Agreement, (i) certain other related collateral and (j) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing. See "Description of the Exchange Notes--Security." -16- On the Delivery Date of each Vessel, the Owner of such Vessel will grant to the Collateral Agent, for the benefit of the Holders of the Exchange Notes and the untendered Existing Notes, if any, the Letter of Credit Issuer and the Trustees, a security interest in (i) such Vessel, pursuant to the terms of the related Mortgage, (ii) amounts held in all other Trust Accounts established or funded after the Delivery Date of such Vessel, (iii) earnings and insurances in relation to such Vessel, (iv) any and all revenue earned from employment of such Vessel, to be held in the Revenue Account or in any other applicable Trust Account, (v) requisition proceeds and the Insurance Policies in relation to such Vessel, (vi) certain other related collateral and (vii) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing. See "Description of the Exchange Notes--Security." Letter of Credit.................... On the Original Closing Date, Credit Suisse First Boston, as funding bank and as administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (the "Letter of Credit Issuer") issued an irrevocable letter of credit (the "Letter of Credit") in the maximum amount of $50.0 million in favor of the Collateral Agent for the benefit of the Holders of the Exchange Notes and the untendered Existing Notes, if any. Prior to each Interest Payment Date, the Collateral Agent will determine if a Note Interest Shortfall (as defined) exists. To the extent a Note Interest Shortfalls exist, the Collateral Agent will make Interest Draws in an aggregate amount outstanding up to $45.5 million on the Letter of Credit in an amount (the "Draw Amount") equal to the lesser of (a) the Note Interest Shortfall (less any portion of such Note Interest Shortfall attributable to interest payable pursuant to a Registration Default) and (b) the Maximum Amount Available (as defined) under the Letter of Credit and will deposit such amount into the Letter of Credit Account (as defined). The Collateral Agent is required to make additional Interest Draws to (i) repay any outstanding Interest Draws and accrued interest thereon and (ii) pay any fees due under the Letter of Credit Reimbursement Agreement that have not been paid from funds available in the Revenue Account (as defined). Working Capital Draws may be made by the Issuer from time to time in an -17- aggregate amount outstanding up to $4.5 million to cover the working capital requirements of the Issuer and the Owners to the extent amounts available in the Revenue Account are insufficient to fund operating expenses. The proceeds of such Working Capital Draws shall be deposited in the Operating Account (as defined). In addition, the Collateral Agent will make Working Capital Draws in an amount equal to any additional interest paid or payable on the Allocated Principal Amount of the Notes for each Vessel pursuant to a Registration Default as provided under "Description of the Exchange Notes--Registered Exchange Offer; Registration Exchange," to the extent that amounts available in the Capitalized Interest Account on an Interest Payment Date prior to the acceptance of such Vessel are insufficient to pay such additional interest. The proceeds of a Working Capital Draw described in the previous sentence will be deposited in the Revenue Account. The Collateral Agent will be required to make additional Working Capital Draws to repay any outstanding Working Capital Draws and accrued interest thereon that have not been repaid from funds available in the Revenue Account. See "Description of the Letter Credit Reimbursement Agreement." -18- Building Contract Guarantees and Performance Bonds................. The obligation of the Builders to pay the Refund Amount (as defined) upon the termination of a Building Contract is severally and not jointly guaranteed by The Export-Import Bank of China ("EXIM") and by Generale de Banque S.A. ("Generale"). EXIM is owned by the government of the People's Republic of China and its long-term debt is rated A3 by Moody's Investor Service Inc. ("Moody's"). The long-term debt of Generale is rated A1 by Standard & Poor's Ratings Services, a division of The McGraw-Hill Company, Inc. ("S&P") and Aa3 by Moody's. See "Business--Building Contract Guarantees and Performance Bonds". Certain Covenants................... The Indentures (as defined) contain certain covenants that, among other things, limit the ability of the Issuer and the Owners to (i) incur any additional Indebtedness, (ii) pay dividends or make certain other Restricted Payments, (iii) restrict distributions from Owners, (iv) sell assets, (v) enter into transactions with affiliates, (vi) sell or issue capital stock of the Owners, (vii) incur liens other than permitted liens, (viii) enter into sale/leaseback transactions, (ix) enter into certain mergers and consolidations, (x) conduct certain business activities, (xi) impair the security interests in the Collateral and (xii) amend any of the Security Agreements. In addition, the Indentures limit the business activities of Holdings, including its ability to incur Indebtedness. See "Description of the Exchange Notes--Certain Covenants." -19- RISK FACTORS Prospective investors should carefully consider the risk factors described below, in addition to the other information set forth in this Prospectus, in connection with an investment in the Exchange Notes. All statements, other than statements of historical facts, included in this Prospectus that address activities, events or developments that a party expects, believes or anticipates will or may occur in the future, including such matters as future capital expenditures and investments in multi-client data (including the amount and nature thereof), backlog, repayment of debt, expansion and other development trends of the petroleum industry, business strategies, expansion and growth of operations and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by such party in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, including the risk factors discussed below, general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by such party, changes in laws or regulations and other factors, many of which are beyond the control of such party. Prospective investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. LIMITED PURPOSE NATURE OF THE ISSUER, THE OWNERS AND HOLDINGS; LACK OF OPERATING HISTORY OF OWNERS The Exchange Notes and the untendered Existing Notes, if any, represent obligations of the Issuer guaranteed by the Owners. The activity of the Issuer is limited to issuing the Notes, entering into the Letter of Credit Reimbursement Agreement, owning the Owners and lending the net proceeds of the Offerings and making other advances to the Owners. See "Description of the Exchange Notes--Certain Covenants." The Issuer has no source of payment for the Exchange Notes and the untendered Existing Notes, if any, other than payments it receives from the Owners under the Intercompany Notes and through dividends. The Issuer has no operating history or financial statements for any period prior to the Offerings. The Exchange Notes and the untendered Existing Notes, if any, are guaranteed by the Owners, which guarantees are secured by certain of the Collateral. See "Description of the Exchange Notes--Guarantees" and "--Security." The activity of the Owners is limited to guaranteeing the Exchange Notes and the untendered Existing Notes, if any, guaranteeing the Issuer's obligations under the Letter of Credit Reimbursement Agreement, owning, operating and maintaining the Vessels and fulfilling its obligations under the Indentures, the Security Agreements and the Letter of Credit Reimbursement Agreement. See "Description of the Exchange Notes--Certain Covenants." On and after the Delivery Date of a Vessel, the Owners' sources of funds will be earnings on the Vessels, earnings on Temporary Cash Investments (as defined) and the proceeds from any loss with respect to the Vessels. None of the Owners has any operating history or financial statements for any period prior to the Offerings. -20- The Exchange Notes and the untendered Existing Notes, if any, are not obligations of, and are not guaranteed by, any of the Shareholders. See "Description of the Exchange Notes--Guarantees" and "--Security." Holdings has no operating history or financial statements for any period prior to the Offerings. The activity of Holdings is limited to owning the Issuer and making the Holdings Pledge. RISKINESS OF REVENUES RELATING TO THE VESSELS Historically, the revenues generated by gas carriers have been cyclical, with attendant volatility in their profitability resulting from changes in supply and demand. The transportation rates received by the Company will be primarily dependent upon the supply of vessels capable of transporting cargoes such as those the Company intends to transport and the level of demand for the seaborne trade of such cargoes. These variables will be influenced by global and regional economic conditions, increases and decreases in the industrial production of and demand for the cargoes to be transported by such vessels and the products that are made therefrom, political changes and armed conflicts, developments in international trade, changes in seaborne and other transportation patterns and geopolitical events which interrupt production, trade routes or consumption. Because many of the factors influencing the supply of, demand and trade patterns for tonnage and cargo are unforeseeable and beyond the control of the Company, the Company cannot predict the nature, direction, timing or degree of changes in the revenues generated by the Vessels. In addition to transportation rates, the revenues generated by the Vessels will depend on the level of utilization of the Vessels and the mix of cargoes transported thereon. NON-PERFORMANCE BY BUILDERS AND PROVIDERS OF THE BUILDING CONTRACT GUARANTEES AND THE PERFORMANCE BONDS; UNCERTAINTY OF OUTCOME OF ARBITRATION Under each Building Contract, the Owner may rescind such Building Contract upon the occurrence of an event of default by the Builders, including the failure by the Builders to (i) make timely payment of liquidated damages to such Owner for delays in the delivery of the Vessel beyond 210 days after the Contractual Delivery Date, (ii) deliver the Vessel by March 31, 2001 or (iii) construct the Vessel in conformity with certain specifications. In addition, each Building Contract provides for the automatic termination of such Building Contract if, prior to the Delivery Date, (A)(i) a Vessel is seized by the Chinese government, (ii) the Builders fail to obtain the necessary licenses, permits and other authorizations from the Chinese government for the construction, delivery and export from China of such Vessel or (iii) a total loss occurs with respect to a Vessel and (B) the Builders do not elect to continue performing under such Building Contract. In addition, if any Building Contract is rescinded by the Owner or automatically terminated, each other Owner that has not accepted delivery of its Vessel will be deemed to have also rescinded its Building Contract through the cross-default provisions. See "Business--Building Contracts." In the event that an Owner rescinds a Building Contract pursuant to its terms or a Building Contract is automatically terminated, the Owner is entitled to receive the Refund Amount under such Building Contract from the Builders. If the Builders default on their obligations to pay the Owner the Refund Amount, the Building Contract Guarantor and the Performance Bond Guarantors (each, as defined) have severally and not jointly guaranteed the payment of amounts which in the aggregate will equal the Refund Amount payable by the Builders. The Refund Amount together with the amounts held in the Pre-Funding Account and the Capitalized Interest Account will be used to pay the Allocated Principal Amount of the Notes, subject to the mandatory redemption plus any accrued -21- and unpaid interest thereon, and certain fees and expenses incurred in connection with such redemption. To the extent the Builders fail to pay the Owners the Refund Amount and the Owners do not receive the amounts payable under the Building Contract Guarantee and the Performance Bonds, there will not be sufficient funds to redeem the Allocated Principal Amount of such Notes. See "Business--Building Contracts; Building Contract Guarantees and Performance Bonds." Should a dispute arise under a Building Contract, the related Owner and the Builders have agreed, pursuant to such Building Contract, to submit such dispute to arbitration by either the Classification Society or the London Maritime Arbitrators Association Inc. (each, an "Arbitrator"), as may be mutually agreed to by the parties involved. The applicable Arbitrator may in any particular dispute decide in favor of the Builders and as a result, delay or eliminate such Owner's right to receive the payment of (i) any liquidated damages, whether by an adjustment in the Purchase Price of the related Vessel or a cash payment, or (ii) the Refund Amount. In such an event, to the extent that such liquidated damages or the Refund Amount is necessary for the Issuer to make interest payments on, or to redeem, any series of Exchange Notes and the untendered Existing Notes, if any, as the case may be, the Issuer may not have sufficient funds to satisfy its obligations under one or both of the Indentures. See "Business--Building Contracts." VOLATILITY OF VESSEL VALUES; POTENTIAL INSUFFICIENCY OF COLLATERAL Upon the acceptance of the Vessels by the Owners under the Building Contracts, the Guarantees will be secured by a Mortgage on each Vessel granted to the Collateral Agent. There can be no assurance that the value of each Vessel will at any time equal or exceed the Allocated Principal Amount of the Notes for such Vessel. The fair market value of the Vessels can be expected to fluctuate, depending upon general economic and market conditions affecting the shipping industry, competition from other shipping companies, demand for various types and sizes of vessels, and other modes of transportation. There can be no assurance that the proceeds from the sale of any Vessel in connection with the Collateral Agent's exercise of remedies following an Event of Default would be sufficient to redeem the Allocated Principal Amount of the Notes for such Vessel or that any buyers would be available under the circumstances in which such sale would occur. The Company is not required under the Indentures to maintain any minimum value of any Vessel and there can be no assurance that the future value of a Vessel will not be considerably less than its acquisition cost or the Allocated Principal Amount of the Notes for such Vessel. If and to the extent that amounts are owing under the Letter of Credit Reimbursement Agreement, then the Letter of Credit Issuer shall have a claim to the proceeds of any sale of a Vessel prior to the claim of the Holders of the Exchange Notes and the untendered Existing Notes, if any. Furthermore, in certain circumstances the extent to which the Mortgages may be enforced and the extent to which the Mortgages will have priority over the claims of other creditors is limited. If the proceeds from a sale of the Vessels are not sufficient to satisfy payments due on the Exchange Notes and the untendered Existing Notes, if any, the Holders of the Exchange Notes and the untendered Existing Notes, if any (to the extent not repaid from the proceeds of the sale of the Vessels and other Collateral) will have only unsecured claims against the remaining assets, if any, of the Issuer and the Owners. See "The Mortgages." DEPENDENCE ON KEY PERSONNEL OF THE MANAGER AND GEBAB The Company believes that its operations are dependent to some degree upon the efforts of a small number of key management and operating personnel at Navigator Gas Management Limited (the "Manager") and at GEBAB and its affiliates, the loss of whom could adversely affect the Company. While the success of the Company depends in part upon the Manager and upon GEBAB -22- and its affiliates and their personnel, the Company believes that there are other qualified managers in the industry of seaborne transport of petrochemical gases and LPG. However, there can be no assurance that the Company will be able to engage such qualified managers or on what terms. See "Management." COMPETITION The number of participants in the seaborne trade of petrochemical gases is small and consists of a few large and experienced operators with greater financial resources than the Company. Since the Company will be a new participant in this field and has no operating history, it may not be able to participate successfully in the gas carrier industry. See "Gas Carrier Industry." TGE and its affiliates are not restricted from engineering, designing and constructing gas storage and transportation plants and equipment for competitors of the Company. RISKS IN INTERNATIONAL OPERATIONS The majority of the revenues from operation of the Vessels is expected to be derived from foreign operations and is subject, in varying degrees, to risks inherent in doing business abroad. Future hostilities or other political instability in the regions in which the Company conducts its operations could affect the Company's trade patterns and could adversely affect the Company's business and results of operations. See "Gas Carrier Industry--Demand for Gas Carriers" and "The Mortgages--Insurance." ENVIRONMENTAL AND OTHER REGULATIONS The Vessels and the operation of the Vessels must comply with extensive and changing environmental protection laws and regulations. Compliance with these laws and regulations may entail significant expenses, including expenses for ship modifications and changes in operating procedures. These laws and regulations could have a material adverse effect on the business and the operations of the Owners. In particular, the United States Comprehensive Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"), imposes strict liability on owners, operators, and demise charterers of vessels for releases of hazardous substances (other than oil) from their vessels. In addition, the United States Oil Pollution Act of 1990, as amended ("OPA 90"), provides for strict liability for owners, operators and demise charterers of any vessel for certain oil pollution incidents in the waters of the United States or adjoining shorelines or in the exclusive economic zone. OPA 90 applies to all vessels that trade in the United States or its territories or possessions or operate in United States waters, even if such vessels do not carry oil as cargo. Furthermore, certain states have enacted legislation that provides for liability under circumstances comparable to those governed by CERCLA and OPA 90, without the limitations on the amount of liability contained in the federal statutes. CERCLA and OPA 90 each require vessel owners and operators to furnish the United States Coast Guard (the "Coast Guard") evidence of financial responsibility sufficient to meet their potential liability. Insurance has been one of the principal methods used to satisfy such requirements. Although certain newly-formed insurance companies, which have been deemed acceptable guarantors by the Coast Guard, have furnished the guarantees pursuant to the terms outlined in the rule issued by the Coast Guard on March 7, 1996 relating to financial assurance (the "Final Rule"), most of the protection and indemnity organizations that traditionally provided insurance to ship owners and operators have refused to furnish evidence of insurance to owners and operators of vessels entering United States ports under the Final Rule. If an Owner intends to employ its Vessel -23- within the territorial waters of the United States, such Owner must furnish evidence of financial responsibility with respect to the Vessels to the Coast Guard as required by the Final Rule. If such Owner is unable to comply with the Final Rule, such Vessel will not be permitted to enter United States territorial waters. In addition, the International Maritime Organization (the "IMO"), an agency of the United Nations, recently adopted regulations designed to reduce oil pollution in international waters. In complying with the IMO regulations, the Owners and any charterer of the Vessels may be forced to incur additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Certain states in the United States and other countries have adopted or are considering adopting stricter technical and operational requirements for tankers. Additional laws and regulations may be adopted which would have a material adverse effect on the business and the operations of the Owners. RISK OF LOSS AND LIABILITY; INSURANCE The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters, environmental mishaps, cargo and property losses or damage and business interruptions caused by adverse weather and ocean conditions, mechanical failures, human error, political action in various countries, war, terrorism, piracy, labor strikes and other circumstances or events. The Vessels will be operated throughout the world in any lawful trade for which the Vessels are suitable, PROVIDED that, pursuant to the terms of the Mortgages, the Vessels may not be employed in any manner or for any purpose excepted by the insurance thereon. In the past, political conflicts have disrupted shipping in the surrounding regions. Vessels trading in such regions have also been subject to acts of terrorism and piracy. Any such event may result in increased costs or the loss of revenues or assets, including a Vessel. The Company intends to maintain insurance consistent with industry standards against these risks. However, there can be no assurance that all risks will be adequately insured against, that any particular claim will be paid out of such insurance or that the Company will be able to procure adequate insurance coverage at commercially reasonable rates in the future. More stringent environmental and other regulations may result in increased costs for, or the lack of availability of, insurance against risks of environmental damage, pollution, damages asserted against the Company or the loss of income resulting from a vessel being removed from operations. Moreover, even if insurance proceeds are paid to the Company to cover the financial losses incurred following the occurrence of one of these events, there can be no assurance that the Company's business reputation, and therefore its ability to obtain future charters, will not be materially adversely affected by such event. Such an impact on the Company's business reputation could have a material adverse effect on the Company's business and results of operations. See "Mortgages--Insurance." ENFORCEMENT OF MORTGAGES Each of the Vessels will be registered under the laws of the Republic of Liberia. The Mortgages will be recorded pursuant to the laws of the Republic of Liberia and the Isle of Man and will create preferred ship mortgage liens under the maritime law thereof. In addition, in order to perfect the Mortgages granted by the Owners, the Mortgages will also be filed in the Isle of Man. Historically, Liberian ship mortgages have been enforced in major commercial ports throughout the world. However, the priority that such mortgages will have against the claims of other lien creditors -24- in an enforcement proceeding is generally determined by, and will vary in accordance with, the laws of the country where a proceeding is brought. Generally, such a preferred ship mortgage lien will rank prior to all subsequent maritime liens other than certain other preferred maritime liens, including liens for damages arising out of tort (including claims for oil pollution), liens for crew's wages, liens for general average and salvage. Under Liberian law, a preferred ship mortgage lien will also rank after certain other maritime liens, including maritime liens for failure to pay tonnage taxes and annual fees. Under United States law, a foreign preferred ship mortgage lien will also rank after certain other maritime liens, including those for repairs, supplies, towage, use of drydock or marine railways or other necessaries, performed or supplied in the United States. Since each Vessel will trade throughout the world and since a mortgage generally will be enforceable against a Vessel only in the jurisdiction in which it is physically present, there can be no assurance that if enforcement proceedings are commenced against a Vessel, the Vessel will be located in a jurisdiction having the same mortgage enforcement procedures and lien priorities as, for example, Liberia or the United States. However, upon the occurrence of an event of default under a Mortgage, the Collateral Agent may be able to effect control over the related Vessel to direct it to a desirable jurisdiction for arrest of the Vessel pursuant to judicial foreclosure proceedings. See "Mortgages--Remedies." FRAUDULENT CONVEYANCE STATUTES The granting of the security interest in and to the Collateral could be subject to review under relevant fraudulent conveyance statutes and other applicable insolvency laws (the "Fraudulent Conveyance Laws") in a bankruptcy or other proceeding involving one or more of the Owners and Holdings. Due to the nature of the business of the Owners and Holdings and uncertainty as to where a bankruptcy, vessel foreclosure or other relevant proceeding might be commenced, it is not possible to predict where any such proceeding or attack might be brought or made or the law that the court might apply. Under the Fraudulent Conveyance Law of the Isle of Man (the jurisdiction in which each of the Owners and Holdings is incorporated), if a court were to find that, with respect to any Owner or Holdings, at the time the interests in the Collateral were granted (the "Transfer"), it (a) made such Transfer with actual intent to prefer or defraud any present or future creditor, (b) received less than a reasonably equivalent value or fair consideration for the Transfer or (c) intended to incur, or believed that it would incur, debts beyond its ability to pay as they matured (as the foregoing terms are defined in or interpreted under the relevant Fraudulent Conveyance Laws), such court could avoid the Transfer in whole or in part. To the extent that a Transfer by any Owner or Holdings exceeds the consideration received by it, the determination of whether the Transfer in question is a fraudulent conveyance depends on (1) whether the Transfer so exceeds the value and benefit received by such Owner or Holdings that, at least to the extent of such excess, the Owner or Holdings did not receive reasonably equivalent value or fair consideration for the Transfer; and, if so, then (2) whether following the valuation of the assets and liabilities of such Owner or Holdings, it is determined that such Owner or Holdings is or has been rendered insolvent. While there can be no assurance that a court, viewing the transaction in hindsight, would determine that a particular Owner or Holdings received fair value for its Transfer, or was not rendered insolvent by such Transfer, to the extent it exceeded the value of the consideration received by that Owner or Holdings, each Owner and Holdings believes that it will receive proper consideration for its respective Transfer and that no such Owner or Holdings will be rendered insolvent by the contemplated Transfers. No assurance, however, can be given that a court would concur with such belief. -25- RISKS RELATING TO ENFORCEMENT OF JUDGMENTS AGAINST HOLDINGS, THE ISSUER AND THE OWNERS Holdings, the Issuer and each of the Owners are incorporated in the Isle of Man. As a result, it may be difficult to obtain a judgment in the Isle of Man in an original action or to enforce in the Isle of Man judgments obtained in the United States courts and predicated upon United States securities laws. LIMITATION ON CHANGE OF CONTROL Pursuant to the Indentures, in the event of a Change of Control, the Issuer will be required to offer to purchase the Exchange Notes and the untendered Existing Notes, if any, in whole or in part, at a price equal to 101% of the principal amount thereof (determined on the date of purchase), as described under "Description of the Exchange Notes--Mandatory Offers to Purchase Exchange Notes--Offer to Purchase Upon Change of Control." As the Issuer has not provided for any credit support to fund a Change of Control Offer, there can be no assurance that sufficient funds will be available for the Issuer to fulfill its mandatory purchase obligation. ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES The Existing Notes are currently owned by a relatively small number of beneficial owners. The Existing Notes have not been registered under the Securities Act and will continue to be subject to restrictions on transferability to the extent that they are not exchanged for the Exchange Notes. The Exchange Notes will constitute a new issue of securities with no established trading market. Although the Exchange Notes will be permitted to be resold or otherwise transferred by Holders who have met the conditions of the Exchange Offer without compliance with the registration requirements under the Securities Act, Navigator Gas Transport and the Owners do not intend to list the Exchange Notes on any national securities exchange or to seek the admission thereof to trading on the Nasdaq National Market. Accordingly, no assurance can be given that an active public or other market will develop for the Exchange Notes or as to the existence of or liquidity of the trading market for the Exchange Notes. See "PLAN OF DISTRIBUTION." EXCHANGE OFFER PROCEDURE The issuance of the Exchange Notes pursuant to the Exchange Offer will be made only after a timely receipt by the Company or its agent of a properly completed and duly executed Letter of Transmittal, or an agreement to be bound thereby, and all other required documents. Therefore, Holders of Existing Notes desiring to tender such Existing Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to tenders of Existing Notes for exchange. Existing Notes that are not tendered or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to be subject to the existing restrictions on transfer thereof, and upon consummation of the Exchange Offer, the registration rights under the Registration Rights Agreement generally will terminate. In addition, any Holder of Existing Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge -26- that it will deliver a prospectus in connection with any resale of such Exchange Notes. To the extent that Existing Notes are tendered and accepted in the Exchange Offer, the liquidity of untendered and tendered but unaccepted Existing Notes could be adversely affected. See "THE EXCHANGE OFFER." THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Existing Notes were issued by the Issuer on August 7, 1997, to Credit Suisse First Boston Corporation and Cambridge Partners, L.L.C. (collectively, the "Initial Purchasers"). The Initial Purchasers subsequently placed the Existing Notes with qualified institutional buyers in reliance on Rule 144A under the Securities Act. As a condition to the purchase of the Existing Notes by the Initial Purchasers, the Company entered into the Registration Rights Agreement with the Initial Purchasers, which requires, among other things, that promptly following the sale of the Existing Notes to the Initial Purchasers, the Company would (i) file with the Commission a Registration Statement under the Securities Act with respect to a registered offer to exchange the Existing Notes for the Exchange Notes identical in all material respects to the Existing Notes, (ii) use its respective reasonable best efforts to cause such Registration Statement to become effective under the Securities Act and (iii) use its reasonable best efforts to cause the Exchange Offer to be consummated on the earliest practical date after such Registration Statement becomes effective. The Company has agreed to keep the Exchange Offer open for not less than 30 days. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Following the consummation of the Exchange Offer, Holders of the Existing Notes who did not tender their Existing Notes generally will not have any further registration rights under the Registration Rights Agreement, and such Existing Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Existing Notes could be adversely affected. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Issuer will accept for exchange any and all Existing Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Issuer, will issue up to $217,000,000 principal amount of First Priority Exchange Notes in exchange for a like principal amount of outstanding Existing First Priority Notes accepted in the Exchange Offer, and up to $87,000,000 principal amount of Second Priority Exchange Notes in exchange for a like principal amount of Existing Second Priority Notes pursuant to the Exchange Offer. Holders may tender all or a portion of their Existing Notes pursuant to the Exchange Offer. However, Existing Notes may be tendered only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. The form and terms of the Exchange Notes will be identical to the form and terms of the Existing Notes except that (i) the Exchange Notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof and (ii) the Holders of the Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement, which rights generally will terminate upon consummation of the Exchange Offer. The Exchange Notes will -27- evidence the same debt as the Existing Notes tendered in exchange therefor and will be entitled to the benefits of the Indenture. As of the date of this Prospectus, $217,000,000 aggregate principal amount of the Existing First Priority Notes and $87,000,000 aggregate principal amount of the Existing Second Priority Notes were outstanding and registered in the name of Cede & Co., as nominee for DTC. The Company has fixed the close of business on ________, 1997, as the record date for the Exchange Offer for purposes of determining the persons to whom this Prospectus, the Letter of Transmittal, the Notice of Guaranteed Delivery and the Isle of Man Information will be mailed initially. Holders of Existing Notes do not have any appraisal or dissenters' rights under the General Corporation Law of the Isle of Man or the Indenture in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder, including Rule 14e-1 thereunder. The Issuer shall be deemed to have accepted validly tendered Existing Notes when, as and if the Issuer has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering Holders for the purpose of receiving the Exchange Notes from the Issuer. If any tendered Existing Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, the certificates for any such unaccepted Existing Notes will be returned, without expense, to the tendering Holder thereof as promptly as practicable after the Expiration Date. Holders who tender Existing Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Notes pursuant to the Exchange Offer. The Company has agreed to pay all charges and expenses in connection with the Exchange Offer. See "--FEES AND EXPENSES" and "--TRANSFER TAXES." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ___________, 1997 (or longer if required by applicable law). If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered Holders, and, depending upon the significance of the amendment and the manner of disclosure to the registered Holders, the Company will extend the Exchange Offer for by the number of days equal to the period between the giving of such notice to the delivery of a prospectus supplement. Without limiting the manner in which the Company may choose to make public announcement of any delay, extension, amendment or termination of the Exchange Offer, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. -28- Holders of Existing Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. INTEREST ON THE EXCHANGE NOTES The Exchange Notes will be deemed to accrue interest from August 7, 1997 (the date of original issuance of the Existing Notes) or from the date of the last periodic payment of interest on such Existing Notes, whichever is later. Interest on the Exchange Notes will be payable semi-annually on each June 30 and December 31, commencing on December 31, 1997. PROCEDURES FOR TENDERING Only a Holder of Existing Notes may tender such Existing Notes in the Exchange Offer. To tender in the Exchange Offer, a Holder must either (i) complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed (if required by the Letter of Transmittal) and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Existing Notes and any other required documents, to the Exchange Agent or (ii) in the case of a book-entry transfer, confirm book-entry transfer of the Existing Notes into an equal principal amount of Exchange Notes into the Exchange Agent's account at DTC, in either case prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered effectively, the Existing Notes, Letter of Transmittal and other required documents must be received by the Exchange Agent at the address set forth below under "--EXCHANGE AGENT" or, if book-entry transfer is used, electronic instructions with regard to the Existing Notes, the Letter of Transmittal and all other required documents must be received by DTC, in each case prior to 5:00 p.m., New York City time, on the Expiration Date. A Holder of Existing Notes may also tender in the Exchange Offer by complying with the procedure set forth under "--GUARANTEED DELIVERY PROCEDURES." The Company understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Existing Notes at DTC for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in DTC's system may make book-entry delivery of the Existing Notes by causing DTC to transfer such Existing Notes into the Exchange Agent's account with respect to the Existing Notes in accordance with DTC's procedures for such transfer. DTC's Automated Tender Offer Program is the only method of processing exchange offers through DTC. To accept the Exchange Offer through ATOP, participants in DTC must send electronic instructions to DTC through DTC's communication system in place of sending a signed, hard copy Letter of Transmittal. DTC is obligated to communicate those electronic instructions to the Exchange Agent. To tender Existing Notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent must contain the character by which the participant acknowledges its receipt of, and agrees to be bound by, the Letter of Transmittal. By executing or electronically confirming the Letter of Transmittal, each Holder will make to the Company the representations set forth below in the second paragraph under "--RESALE OF EXCHANGE NOTES." -29- The tender by a Holder and the acceptance thereof by the Issuer will constitute agreement between such Holder and the Issuer in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF EXISTING NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO ANY OF THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Existing Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. Signatures on the Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Existing Notes tendered pursuant thereto are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered Holder of any Existing Notes listed therein, such Existing Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered Holder as such registered Holder's name appears on such Existing Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Existing Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. GUARANTEED DELIVERY PROCEDURES Holders not holding through DTC or Cede & Co. who wish to tender their Existing Notes and (i) whose Existing Notes are not immediately available, (ii) who cannot deliver their Existing Notes, the Letter of Transmittal or any other required documents to the Exchange Agent or (iii) who cannot complete the procedures for book-entry transfer, prior to the Expiration Date, may effect a tender if: -30- (a) the tender is made through an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number(s) of such Existing Notes and the principal amount of Existing Notes tendered, stating that the tender is being made thereby and guaranteeing that, within five New York Stock Exchange trading days after the Expiration Date or the execution of the Notice of Guaranteed Delivery, the Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing the Existing Notes (or a confirmation of book-entry transfer of such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered Existing Notes in proper form for transfer (or a confirmation of book-entry transfer of such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility) and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. WITHDRAWALS OF TENDERS Except as otherwise provided herein, tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Existing Notes in the Exchange Offer, a written or facsimile transmission notice of withdrawal (or a written or electronic ATOP transmission notice of withdrawal for DTC participants) must be received by the Exchange Agent at its address set forth herein (or received into the Exchange Agent's account at DTC) prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Existing Notes to be withdrawn (the "Depositor"), (ii) identify the Existing Notes to be withdrawn, (iii) be signed or confirmed by the Holder in the same manner as the original signature on or confirmation of the Letter of Transmittal by which such Existing Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Existing Notes register the transfer of such Existing Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Existing Notes are to be registered, if different from that of the Depositor. If Existing Notes have been delivered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must also specify the name and number of the account at DTC, and must otherwise comply with DTC's procedures. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Existing Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Existing Notes so withdrawn are validly retendered. Any Existing Notes which have been tendered but which are not accepted for exchange, will be returned to the Holder thereof without cost to such Holder as soon as -31- practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing Notes may be retendered by following one of the procedures described above under "--PROCEDURES FOR TENDERING" at any time prior to the Expiration Date. EXCHANGE AGENT United States Trust Company of New York has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance or for additional copies of this Prospectus, the Letter of Transmittal or the Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New York P.O. Box 844 Cooper Station New York, NY 10276-0844 BY HAND: United States Trust Company of New York 111 Broadway Lower Level Corporate Trust Window New York, NY 10006 BY OVERNIGHT MAIL OR COURIER: United States Trust Company of New York 770 Broadway 13th Floor New York, NY 10003 Attn: Corporate Trust Services BY FACSIMILE: United States Trust Company of New York (212) 420-6152; confirm by telephone (800) 548-6565 FEES AND EXPENSES The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone or in person by officers and regular employees of the Company and its affiliates. No additional compensation will be paid to any such officers and employees who engage in soliciting tenders. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers or others soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and -32- customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the Trustee, filing fees, blue sky fees and printing and distribution expenses. The estimated cash expenses to be incurred in connection with the Exchange Offer will be paid or reimbursed by the Company and are estimated in the aggregate to be in excess of $_______. TRANSFER TAXES The Company will pay all transfer taxes, if any, applicable to the exchange of the Existing Notes pursuant to the Exchange Offer. If, however, certificates representing the Exchange Notes or the Existing Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Existing Notes tendered, or if tendered Existing Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. ACCOUNTING TREATMENT The Exchange Notes will be recorded at the same carrying value as the Existing Notes, which is face value, as reflected in the accounting records of the Company on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized. RESALE OF EXCHANGE NOTES Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for the Existing Notes may be offered for resale, resold or otherwise transferred by any Holder of such Exchange Notes (other than any such Holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holder's business and such Holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. Any Holder who is an affiliate of the Company, who acquires the Exchange Notes outside the ordinary course of its business or who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Notes may not rely on the position of the staff of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988) and MORGAN STANLEY & CO. INCORPORATED (available June 5, 1991), or similar no-action letters, but rather must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. In addition, any such resale transaction should be covered by an effective Registration Statement containing the selling security holders information required by the -33- applicable provisions of Item 507 or 508, as appropriate, of Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, may be a statutory underwriter and must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "PLAN OF DISTRIBUTION." Each broker-dealer that receives Exchange Securities for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "PLAN OF DISTRIBUTION." By tendering in the Exchange Offer, each Holder will represent to the Company that, among other things, (i) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, (ii) the Holder has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes and (iii) the Holder acknowledges that if it participates in the Exchange Offer for the purpose of distributing the Exchange Notes (a) it must, in the absence of an exemption therefrom, comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes and cannot rely on the no-action letters referenced above and (b) failure to comply with such requirements in such instance could result in such Holder incurring liability under the Securities Act for which such Holder is not indemnified by the Company. Further, by tendering in the Exchange Offer, each Holder represents to the Company either that it is not an "affiliate" (as defined under Rule 405 of the Securities Act) of the Company or, if it may be deemed an "affiliate" of the Company that such Holder understands and acknowledges that the Exchange Notes may not be offered for resale, resold or otherwise transferred by that Holder without complying with the applicable registration and prospectus delivery requirements of the Securities Act. A Holder who is a broker-dealer must also acknowledge to the Company that it acquired the Existing Notes as a result of market-making activities or other trading activities. CONSEQUENCES OF FAILURE TO EXCHANGE As a result of the making of this Exchange Offer, the Company generally will have fulfilled its obligations under the Registration Rights Agreement, and Holders of Existing Notes who do not tender their Existing Notes generally will not have any further registration rights under the Registration Rights Agreement or otherwise. Accordingly, any Holder of Existing Notes that does not exchange such Existing Notes for Exchange Notes will continue to hold such Existing Notes and will be entitled to all the rights, and subject to all the limitations, applicable thereto under the Indenture, except to the extent such rights or limitations, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. Existing Notes that are not exchanged for Exchange Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Existing Notes may be resold only (i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to an effective Registration -34- Statement under the Securities Act, (iii) so long as the Existing Notes are eligible for resale pursuant to Rule 144A, to a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, (iv) outside the United States to a foreign person pursuant to the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder or (v) pursuant to another available exemption from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Because the Exchange Offer is for any and all Existing Notes, the number of Existing Notes tendered and exchanged in the Exchange Offer will reduce the principal amount of Existing Notes outstanding. As a result, the liquidity of any remaining Existing Notes may be substantially reduced. OTHER Participation in the Exchange Offer is voluntary, and Holders should carefully consider whether to accept. Thacher Proffitt & Wood, New York, New York, as counsel for the Company, has passed upon the legality of the Exchange Notes. None of the Company, the Owners or any of their respective representatives is making any representation to any offeree of the Exchange Notes offered hereby regarding the legality of an investment by such offeree or purchaser under appropriate legal investment or similar laws (which regulate the nature and extent of permitted investments in certain securities for certain institutional investors). Each Holder of the Existing Notes should consult with its own advisors as to legal, tax, business, financial and related aspects of participation in the Exchange Offer. The Company, may in the future seek to acquire untendered Existing Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company, has no present plans to acquire any Existing Notes that are not tendered in the Exchange Offer or to file a registration statement to permit resales of any untendered Existing Notes. USE OF PROCEEDS The Exchange Offer is intended to satisfy certain of the Company's obligations under the Registration Rights Agreement. The Company will not receive any cash proceeds from the issuance of the Exchange Notes offered hereby. In consideration for issuing the Exchange Notes as contemplated in this Prospectus, the Company will receive in exchange Existing Notes in like principal amount, the form and terms of which are substantially the same as the form and terms of the Exchange Notes, except as otherwise described herein. The Existing Notes surrendered in exchange for the Exchange Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes will not result in any increase in the indebtedness of the Company. -35- CAPITALIZATION The following table sets forth the unaudited consolidated capitalization of Holdings as of June 12, 1997, and as adjusted to give effect to the Offerings and the Equity Financing and the application of the estimated net proceeds therefrom. The information presented below should be read in conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" included elsewhere herein.
JUNE 12, 1997 ------------- ACTUAL AS ADJUSTED ------ ----------- (in thousands) Debt: 10 1/2% First Priority Ship Mortgage Notes Due 2007....................... $-- $217,000 12% Second Priority Ship Mortgage Notes Due 2007, net of discount of -- 79,263 $7,737.................................................................. -------- -------- Total debt............................................................ $-- $296,263 -------- -------- Shareholders' equity: Common Stock, par value $.01 per share (3,000,000 shares authorized; 2 $-- $20 shares issued and outstanding as of June 12, 1997 and 2,000,000 shares expected to be issued and outstanding as of the Issue Date)(a).......... Additional paid-in capital--Common Stock(a)................................. 10 30,940 Additional paid-in capital--Warrants........................................ -- 7,737 -------- -------- Total shareholders' equity............................................ 10 38,697 -------- -------- Total capitalization............................................... $10 $334,960 ======== ========
- ------ (a) See "Consolidated Balance Sheet." CONSOLIDATED BALANCE SHEET The following table sets forth the unaudited consolidated balance sheet of Holdings as of June 12, 1997, and as adjusted to give effect to the Offerings and the Equity Financing and the application of the net proceeds therefrom as if they had accrued on such date:
JUNE 12, 1997 ------------- ACTUAL AS ADJUSTED ------ ----------- (in thousands) Assets Current assets: Restricted cash(a)............................................................ $10 $272,666 Construction in progress: Vessels under construction.................................................... -- 33,079 Other capitalized costs(b).................................................... -- 13,950 ------ Total construction in progress........................................... -- 47,029 ------ Pre-paid marketing expenses(c)................................................... -- 2,000 Deferred financing costs(d)...................................................... -- 13,265 -------- -------- Total assets............................................................. $ 10 $334,960 ======== ======== Liabilities -36- Current liabilities: Interest payable and other liabilities........................................ $ -- $ -- -------- -------- Long-term liabilities and debt: Letter of Credit(e)........................................................... -- -- 101/2% First Priority Ship Mortgage Notes Due 2007......................... -- 217,000 12% Second Priority Ship Mortgage Notes Due 2007, net of discount of -- $7,737................................................................... 79,263 Total long-term debt..................................................... -- 296,263 -------- -------- Shareholders' Equity Common Stock, par value $.01 per share (3,000,000 shares authorized; 2 shares -- issued and outstanding as of June 12, 1997 and 2,000,000 shares expected to be issued and outstanding as of the Issue Date)(f)............................ 20 Additional paid-in capital--Common Stock(f)....................................... 10 30,940 Additional paid-in capital--Warrants(g)........................................... -- 7,737 -------- Total shareholders' equity............................................... 10 38,697 -------- -------- Total liabilities and shareholders' equity......................... $ 10 $334,960 -------- --------
- ------ (a) Restricted cash consists of $225.4 million to be deposited in the Pre-Funding Account and $47.3 million to be deposited in the Capitalized Interest Account, which together with interest earned thereon will be used to pay interest, Purchase Price installment payments, Letter of Credit fees and Manager's Fees and to purchase Vessel supplies during the pre-delivery period. (b) The following equity contributions to Holdings under the Equity Financing will be made in the form of services rendered:
(IN THOUSANDS) Vessel design.................................................................... $10,000 Technical supervision............................................................ 1,000 TGE Performance Bond............................................................. 650 -------- $11,650
The $10.0 million cost of Vessel design services rendered by Arctic will be capitalized to the cost of the Vessels on the Original Closing Date and carried on the accounts of Holdings as an equity contribution. The $1.0 million cost of technical supervision services rendered by GEBAB will be capitalized to the cost of the Vessels on the Original Closing Date and carried on the accounts of Holdings as an equity contribution. As future technical supervision services are performed, they will also be capitalized to the cost of the Vessels and carried on the accounts of Holdings as an equity contribution. The $650,000 cost to TGE of acquiring the TGE Performance Bond will be capitalized to the cost of the Vessels on the Issue Date and carried on the accounts of Holdings as an equity contribution. In addition, the $2.3 million structuring fee payable to CGTC by the Company on the Original Closing Date will be capitalized to the cost of the Vessels. See "PRINCIPAL SHAREHOLDERS--THE EQUITY FINANCING" and "CERTAIN TRANSACTIONS--SHAREHOLDERS." (c) Represents $2.0 million of pre-paid marketing services paid by Holdings on the Original Closing Date to certain shareholders for their services in developing charter contracts for the Vessels during the pre-delivery period. (d) Represents estimates of the Initial Purchasers' discounts and commissions, as well as estimates of legal, rating agency and other expenses associated with the Offerings together with initial Letter of Credit fees payable by the Issuer. Deferred financing costs are to be amortized on a straight line basis over the ten-year term of the Notes. (e) Represents the reimbursement obligation in respect of the Letter of Credit on the Original Closing Date. (f) Represents the following amounts:
(IN THOUSANDS) Equity contributions treated as capitalized costs (see note (b) above)........... $11,650 Cash contributions............................................................... 19,300 -37- -------- $30,950 ========
(g) Warrants are to be issued in connection with a unit offering which will be valued upon a determination of the terms of the Units Offering, and have not been valued in the table above or elsewhere in this Prospectus. -38- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Issuer was formed by Holdings as an Isle of Man public limited company for the purpose of establishing, owning and financing the Owners. Each Owner was formed as an Isle of Man private limited company for the purpose of building and operating one of the Vessels. As of the Original Closing Date, neither the Issuer nor any of the Owners had any operating history and each had nominal capitalization. Holdings has entered into the Building Contracts, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement. Holdings has assigned to each Owner the Building Contract for such Owner's Vessel and has assigned to the Manager the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement. In addition, each Owner has entered into the Management Agreement with the Manager. On or before the Original Closing Date, the Issuer (i) received the proceeds, net of the Initial Purchasers' discounts and commissions and financial advisory fees, from the Offerings and lent a portion of such net proceeds to the Owners on a joint and several basis pursuant to a promissory note, dated the Original Closing Date (the "Intercompany Note"), (ii) paid certain fees and expenses in connection with the Offerings, (iii) deposited $225.4 million into the Pre-Funding Account and $47.3 million into the Capitalized Interest Account and (iv) entered into the Letter of Credit Reimbursement Agreement. OPERATIONS The operations of the Issuer will be limited to (i) owning the Owners, (ii) receiving payments under the Intercompany Note, (iii) making payments of interest and principal on the Notes, and (iv) fulfilling its obligations under the Indentures, the Intercreditor Agreement, the Letter of Credit Reimbursement Agreement and the Registration Rights Agreement. Between the Original Closing Date and the Delivery Date of each Vessel, the operations of each Owner will consist solely of (i) entering into commercial arrangements in relation to the future operations of the Vessels, (ii) managing the construction of the Vessels, (iii) making payments of Management Fees, (iv) paying installments under the Building Contracts, (v) fulfilling its obligations under the Management Agreement and (vi) fulfilling its obligations under its Guarantee. On and after the Delivery Date of each Vessel, the operations of each Owner will consist solely of (i) operating, maintaining, insuring and using the Vessel and conducting activities related thereto, (ii) receiving payments under charters, contracts of affreightment and other contracts relating to the employment of its Vessel, (iii) receiving proceeds from the sale, if any, of its Vessel, (iv) making payments of interest and principal on the Intercompany Note and any other permitted indebtedness, (v) making payments of Management Fees, (vi) fulfilling its obligations under the Management Agreement and (vii) fulfilling its obligation under its Guarantee. -39- CAPITAL RESOURCES AND LIQUIDITY Through the Contractual Delivery Date of each Vessel, interest on the Allocated Principal Amount of the Notes for such Vessel that has not been accepted by the related Owner will be payable from amounts on deposit in the Capitalized Interest Account. To the extent the Delivery Date for a Vessel is delayed, either the Builders will pay liquidated damages which will be deposited into the Pre-Funding Account or the final installment due under such Building Contract will be decreased, or both. See "BUSINESS--BUILDING CONTRACTS." In either event, the amount available in the Pre-Funding Account will be sufficient to pay interest accrued on the Allocated Principal Amount of the Notes for such Vessel during the period of delay. After the Delivery Date of a Vessel, each Owner's sources of funds will be earnings on its Vessel, earnings on Temporary Cash Investments (as defined) and the proceeds from the sale, if any, of its Vessel. In addition, the Issuer has obtained a Letter of Credit in a total amount of $50.0 million of which $45.5 million is available as a liquidity support, available to fund payments of interest to the Noteholders under certain circumstances, and $4.5 million of which will be available as a working capital facility for certain amounts payable by the Owners. Under certain circumstances, interest on the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, may be paid through the issuances of additional Second Priority Exchange Notes. See "DESCRIPTION OF THE EXCHANGE NOTES--TERMS OF THE EXCHANGE NOTES--SECOND PRIORITY EXCHANGE NOTES." The Company does not have, nor does it expect to have in the future, any other source of capital for payment of its debt service obligations under the Notes. See "RISK FACTORS--LIMITED PURPOSE NATURE OF THE ISSUER, OWNERS AND HOLDINGS." RESULTS OF OPERATIONS The Company's results of operations will depend on the earnings from the Vessels and from Permitted Investments and its level of operating expenses. -40- GAS CARRIER INDUSTRY OVERVIEW Gas carriers transport three main types of liquified gases: (i) petrochemical gases such as ethylene, propylene, VCM, butadiene and crude C4, (ii) LPG products such as ethane, propane and butane and (iii) ammonia. Petrochemical gases, LPG and ammonia, under normal ambient temperatures, are found in a gaseous state. In order to reduce their volume and facilitate handling, these products are liquified for seaborne transportation in gas carriers. There are several types of gas carriers which use different techniques to liquify and transport cargoes, including (i) fully- pressurized vessels that rely solely upon high pressure to liquify gases, (ii) fully-refrigerated vessels that have the ability to maintain cargo in a liquified state by cooling gases to a temperature of -48(degree)C and (iii) semi-refrigerated vessels which employ a combination of refrigeration and pressurization techniques. Generally, LPG and ammonia gases are transported in fully-refrigerated vessels ranging in size from 20,000 to 80,000 cbm for long-haul, large volume transportation. Petrochemical gases are generally carried in semi-refrigerated or fully- pressurized vessels under 20,000 cbm. A limited number of semi-refrigerated vessels have the capability of carrying ethylene, which requires cooling temperatures to - -104(degree)C, and ethane, which requires cooling temperatures to -82(degree)C. To a lesser extent, these smaller vessels are also used to transport LPG and ammonia over short-haul routes. Charter rates and vessel values for gas carriers are influenced by the supply of and demand for seaborne gas cargo carrying capacity. The demand for gas carrier capacity is primarily determined by industrial and consumer demand for petrochemical gases and derivative products and the distance that such gases must be transported. Industrial and consumer demand for petrochemical gases and derivative products is, in turn, affected by general economic conditions, trends in personal consumption and manufacturing, exports and imports and the capacity of chemical plants, crackers and refineries worldwide. The supply of gas carrier capacity is a function of the size of the existing fleet, the number of newbuildings being delivered and the scrapping of older vessels. SUPPLY OF GAS CARRIERS EXISTING WORLD GAS CARRIER FLEET The following table sets forth the composition of the world gas carrier fleet which includes vessels which transport petrochemical gases, LPG and ammonia as of June 1997: -41- WORLD GAS CARRIER FLEET
EXISTING FLEET NEWBUILDS ON ORDER -------------- ------------------ % OF TOTAL % OLDER % OF AGGREGATE EXISTING AVERAGE AGE THAN 20 AGGREGATE TOTAL EXISTING SIZE IN CBM VESSELS CBM FLEET(A) IN YEARS YEARS(A) VESSELS CBM FLEET(A) ----------- ------- --- -------- -------- -------- ------- --- -------- 0-5,000 563 1,180,218 9.8% 15 24.0% 14 53,100 0.4% 5,001-10,000 100 671,429 5.6 13 15.0 14 85,800 0.7 10,001-25,000 81 1,284,645 10.7 15 31.0 17(b) 334,700(b) 2.8 25,001-50,000 28 942,127 7.8 13 27.0 4 140,000 1.2 50,001-60,000 23 1,265,913 10.5 17 29.0 -- -- -- over 60,000 87 6,676,636 55.5 13 12.0 2 157,000 1.3 ----- ------------ -------- ----- ------- ------ Total 882 12,020,968 100.0 51 770,600 6.4 ----- ------------ ------- ----- ------- ------
- ------ Source: ViaMar (a) Measured in cbm. (b) Includes the Vessels. 0--5,000 CBM. The smallest class of vessels is comprised primarily of fully-pressurized vessels which carry petrochemical gases and LPG. There are also some semi-refrigerated vessels in the 2,000--5,000 cbm range including several 4,000 cbm ethylene-capable carriers. The trading patterns of these vessels generally consist of short-haul "cross-trading" routes, which include hauls throughout the Far East, the Mediterranean, northwestern Europe and the Caribbean. 5,001--10,000 CBM. The vessels in this class are primarily semi-refrigerated vessels and carry petrochemical gases. There are also some fully- pressurized vessels in this class. The trading patterns of these vessels are mainly short cross-trades with some longer hauls. These vessels usually trade Transatlantic, between the Mediterranean and northern Europe, and between the Arabian Gulf and Southeast Asia/Far East. The majority of the existing ethylene carriers are in this size class. 10,001--25,000 CBM. In this class there are both semi-refrigerated and fully-refrigerated vessels. The majority of vessels under 20,000 cbm are semi-refrigerated while the majority of vessels over 20,000 cbm are fully-refrigerated. Petrochemical gases, including ethylene for ethylene-capable carriers, are the primary cargoes traded on semi-refrigerated vessels. The semi-refrigerated vessels under 12,500 cbm participate primarily in short-haul trading while the vessels over 12,500 cbm also operate in the long-haul markets. LPG and ammonia are the major products traded in the fully-refrigerated vessels, mostly on long-haul routes. 25,001--50,000 CBM. The vessels in this class are all modern fully-refrigerated vessels which carry LPG and ammonia on both long-haul and cross-trade routes, except for one non-ethylene-capable 30,000 cbm semi-refrigerated vessel. 50,001--60,000 CBM. The vessels in this class are all fully-refrigerated and transport LPG and ammonia. LPG trading routes include both long-haul trades between the Arabian Gulf and the Mediterranean and cross-trades in the North Sea and Europe. Ammonia trading routes are typically shorter cross-trades. -42- LARGER THAN 60,000 CBM. These vessels are fully-refrigerated and carry LPG on long-hauls worldwide. EXISTING WORLD ETHYLENE-CAPABLE FLEET The following table sets forth the current composition of the world fleet of ethylene-capable carriers, which is a sub-set of the world gas carrier fleet: WORLD ETHYLENE-CAPABLE FLEET
EXISTING FLEET NEWBUILDS ON ORDER -------------- ------------------ % OF TOTAL % OLDER % OF AGGREGATE EXISTING AVERAGE AGE THAN 20 AGGREGATE TOTAL EXISTING SIZE IN CBM VESSELS CBM FLEET(A) IN YEARS YEARS(A) VESSELS CBM FLEET(A) ----------- ------- --- -------- -------- -------- ------- --- -------- 0-5,000 40 126,722 24.5% 13.0 25.0% -- -- --% 5,001-10,000 33 236,722 45.8 12.8 9.0 -- -- -- 10,001-25,000 14 153,450 29.7 10.4 8.0 7(B) 135,000(B) 26.1 ------ ---------- -------- ------- ------------ ------- Total 87 516,894 100.0 7 135,000 26.1 ===== ========== ======= ====== ============ =======
- ------ Source: ViaMar (a) Measured in cbm. (b) Includes the Vessels. The seven newbuilds in the world ethylene-capable fleet include the Vessels as well as two vessels being built by Skibsaksjeselskapet Solvang, which at 12,500 cbm are each 56.8% of the capacity of one of the Vessels. Several factors in the gas carrier industry limit supply growth: (i) the importance of having a sufficient size fleet to engage in efficient triangular trading; (ii) the operational and technical expertise required to operate gas carriers; (iii) the limited number of shipyards which have the expertise required to build gas carriers, which incorporate sophisticated gas plant systems; and (iv) the strong demand for the construction of less technically-demanding vessels, such as oil tankers, drybulk carriers and container carriers, which currently limit shipyard availability. TRENDS IN PETROCHEMICAL GAS PRODUCTION AND SEABORNE TRADE World production and seaborne trade of petrochemical gases have shown a strong and stable growth trend over the past several years, and this trend is expected to continue. The following table sets forth historical and forecast production and seaborne trade data for the principal petrochemical gases and LPG, demonstrating both the rate and stability of global production growth and the stable percentage of production which is transported by sea. Although the LPG market is not the primary targeted market, the Company believes that the projected strong growth in seaborne LPG trading will absorb a significant portion of overall gas carrier capacity. -43- TOTAL WORLD PRODUCTION OF PETROCHEMICAL GASES AND LPG (TONNES IN THOUSANDS)
YEAR ETHYLENE PROPYLENE BUTADIENE VCM LPG TOTAL - ---- -------- --------- --------- --- --- ----- 1990...................................... 56,121 30,131 6,223 18,325 139,600 250,386 1991...................................... 57,631 31,097 5,962 18,269 144,000 256,959 1992...................................... 60,369 32,792 6,103 19,090 151,500 269,854 1993...................................... 61,836 33,208 5,999 19,549 154,700 275,294 1994...................................... 66,948 37,008 6,188 20,776 161,500 292,420 1995...................................... 70,474 39,468 6,662 21,157 167,200 304,961 1996...................................... 73,131 40,793 6,848 22,283 173,700 316,755 Compound Annual Growth Rate 1990-1996: 4.5% 5.2% 1.6% 3.3% 3.7% 4.0% 1997...................................... 77,942 43,396 7,210 23,548 179,400 331,496 1998...................................... 82,986 46,109 7,546 25,032 188,400 350,073 1999...................................... 86,161 48,225 7,812 26,162 195,700 364,085 2000...................................... 90,914 51,054 8,089 27,691 203,200 380,948 Forecast Compound Annual Growth Rate 1997-2000: 5.3% 5.6% 3.9% 5.6% 4.2% 4.7%
- ------ Source: CMAI (other than with respect to LPG) -44- SEABORNE TRADE OF PETROCHEMICAL GASES AND LPG (TONNES IN THOUSANDS)
TOTAL SEABORNE TRADE AS A % OF TOTAL YEAR ETHYLENE PROPYLENE BUTADIENE VCM LPG TOTAL PRODUCTION - ---- -------- --------- --------- --- --- ----- ---------- 1990....................................... 1,997 1,547 555 1,002 31,506 36,607 14.6% 1991....................................... 2,138 1,752 554 1,300 32,094 37,848 14.7 1992....................................... 1,998 1,831 662 1,285 34,474 40,250 14.9 1993....................................... 2,183 1,839 654 1,410 35,953 42,039 15.3 1994....................................... 2,683 1,859 666 1,465 38,008 44,681 15.3 1995....................................... 2,609 1,902 662 1,400 39,439 46,012 15.1 1996....................................... 2,483 1,820 628 1,072 42,140 48,143 15.2 Compound Annual 3.7% 2.8% 2.1% 1.1% 5.0% 4.7% Growth Rate 1990-1996: 1997....................................... 2,562 1,857 634 1,210 44,718 50,981 15.4 1998....................................... 2,663 1,995 606 1,246 48,272 54,782 15.6 1999....................................... 2,982 2,133 578 1,242 50,542 57,477 15.8 2000....................................... 2,855 2,271 550 1,238 51,191 58,105 15.3 Forecast Compound Annual Growth Rate 1997-2000: 3.7% 6.9% NM 0.8% 4.6% 4.5%
- ------ Source: ViaMar DEMAND FOR GAS CARRIERS The transportation of petrochemical gases is a rapidly-developing market fueled by industrial and consumer demand for products derived from petrochemical gases and the planned new construction and expansion of existing petrochemical production facilities worldwide. The petrochemical gases and LPG described below are used in many products, including plastics, synthetic-based products, chemicals and rubber, and as feedstocks. CARGOES AND TRADING PATTERNS The following is a brief description of the principal targeted cargoes and their trading patterns: ETHYLENE. Ethylene is derived from the cracking of petroleum feedstocks. It is the key building block in the production of a wide range of materials used in industrial and consumer items including plastics, polyester fibers and resins, large-volume thermoplastic resins, organic chemicals, kitchen equipment, anti-freeze and various products used in insulation and packing. Seventy percent of global ethylene production is used in the production of various plastics and automobile parts and the balance is used in the production of antifreeze, resins and fibers. Worldwide seaborne trade of ethylene rose at a compound annual growth rate of 3.7% from 2.0 million tonnes in 1990 to 2.5 million tonnes in 1996. Historically, the exporting regions of ethylene have been the Middle East, Europe and Latin America. The growth in imports of ethylene over this period was driven primarily by economic development in India, which resulted in an increase in ethylene imports from 0 tonnes -45- to 397,000 tonnes. European exports rose by 195,000 tonnes during this time period. In the next five years India, recently an importer of ethylene, is expected to become a producer of ethylene, along with Malaysia, Thailand and Singapore while the Mediterranean region and China are anticipated to increase their imports. By the beginning of the next decade, world ethylene capacity is expected to exceed 100.0 million tonnes, representing a 7.4% compound annual growth rate over the estimated 1996 capacity of 81.0 million tonnes. World ethylene demand is expected to grow at a similar rate during this period. PROPYLENE. Propylene is produced as a by-product in the making of ethylene and gasoline and is utilized in the production of consumer goods such as car components, carpets, plastic pipes and household articles for which there is typically strong demand in fast-growing economies. Polypropylene, a derivative of propylene, accounts for 52.0% of propylene usage and is used as a feedstock for plastics. Propylene is also used in the manufacture of acrylic fiber, styrofoam, pharmaceuticals, cumene and glue. Between 1990 and 1996, worldwide seaborne trade in propylene increased at a compound annual growth rate of 2.8% from 1.5 to 1.8 million tonnes. The Far East showed the most significant increase in imports during this time period, from 121,000 tonnes in 1990 to 355,000 tonnes in 1996, with exports serviced principally from the United States and Europe. In the future, Middle Eastern exports are expected to increase as new production facilities are introduced in the region. Imports of propylene, especially by the growing Far Eastern plastic industry, should ensure continued growth of the seaborne trade. VINYL CHLORIDE MONOMER (VCM). VCM is produced by the cracking of ethylene dichloride and requires the input of chloride and ethylene. VCM is primarily used in the manufacturing of PVC articles. Major end-user markets include residential construction and irrigation systems. The manufacture of PVC piping accounts for 35.0% of the VCM produced. The balance of VCM production is used in the manufacture of such items as window frames and wire and cable. The United States is the primary exporter of VCM and Southeast Asia and Latin America are the principal importers. VCM exports from the United States are expected to increase and the Far East is expected to become a larger importer. BUTADIENE. Butadiene is produced in the cracking of ethylene. Butadiene is primarily used in the making of plastic products for building construction and rubber for the automobile manufacturing industry. Rubber accounts for 80.0% of butadiene consumption. South Korea and Europe have traditionally been large exporters of butadiene, while the United States and the Far East have traditionally been the largest importers. Far Eastern exports of butadiene are expected to decrease as domestic demand grows. Worldwide seaborne trade of butadiene rose at a compound annual growth rate of 2.1% from 555,000 tonnes in 1990 to 628,000 tonnes in 1996. North America was the primary importer of butadiene accounting for 258,000 tonnes in 1996. Exports from Europe are expected to be maintained in the future, but are unlikely to increase significantly. Inter-Latin American butadiene trade is expected to increase. LIQUIFIED PETROLEUM GAS (LPG). LPG is produced as a by-product either from the production of natural gas or refining of crude oil. The primary uses of LPG are as fuel for transportation, residential and commercial heating, and as a feedstock for the production of petrochemicals. LPG is produced primarily in the North Sea, as a result of natural gas production, and the Middle East, as a refining by-product. Exports of LPG are expected to grow significantly over the next several -46- years. Japan is the world's single largest importer of LPG. Europe and the United States are expected to see increased imports of LPG. The seaborne trade of LPG was 42.1 million tonnes in 1996, which represents 5.0% compound annual growth from 1990. The North Pacific (including Japan) imported 18.7 million tonnes of LPG in 1996, while Europe and the Middle East were the largest exporters of LPG during the period, transporting 9.8 million tonnes in 1996. The Company views the transportation of ethane, a feedstock for petrochemical products that requires cooling to -82(degree)C for liquification, as an emerging opportunity for the Vessels. PLANNED NEW CONSTRUCTION AND EXPANSION OF PETROCHEMICAL PRODUCTION FACILITIES Petrochemical gases are used in the production of a vast array of chemicals and new production technologies are allowing plastic to displace metal, cotton, wood and other materials in an increasing number of end-user products. As a result, the use of petrochemical gases is expanding worldwide. The following table summarizes the expected new construction and expansion of petrochemical production facilities over the period from 1997 to 2001: NEW PETROCHEMICAL PRODUCTION CAPACITY(A) BY REGION FOR THE PERIOD 1997-2001 (TONNES IN THOUSANDS)
REGION ETHYLENE PROPYLENE VCM BUTADIENE - ------ -------- --------- --- --------- Western Europe........................................................ 1,850 200 230 -- Eastern Europe........................................................ 600 -- -- -- Latin America......................................................... 2,230 132 260 -- North America......................................................... 6,100 1,510 1,250 640 Middle East........................................................... 3,510 275 200 -- Asia/Pacific.......................................................... 15,747 8,400 3,270 415 --------- -------- ------- -------- Total Capacity Additions.............................................. 30,037 10,517 5,210 1,055 ========= ======= ======= ======= Existing Capacity..................................................... 81,000 47,845 25,465 8,581 Capacity Additions as % of Existing Capacity.......................... 37.1% 22.0% 20.5% 12.3%
- ----- Source: ViaMar (a) New production capacity is compiled from announced firm and planned projects, as well as projects in the study phase, and includes both the construction of new plants and the expansion of existing facilities. NEW PETROCHEMICAL PRODUCTION CAPACITY(A) FOR YEARS 1997-2001 (TONNES IN THOUSANDS)
YEAR ETHYLENE PROPYLENE VCM BUTADIENE - ---- -------- --------- --- --------- 1997........................................................ 5,087 1,770 1,300 -- 1998........................................................ 4,620 1,407 2,890 215 1999........................................................ 5,125 2,375 130 65 2000........................................................ 12,095 1,970 890 50 2001........................................................ 3,110 2,995 -- 725 --------- --------- --------- -------- Total Capacity Additions.................................... 30,037 10,517 5,210 1,055 ======== ======== ======== ======= Existing Capacity........................................... 81,000 47,845 25,465 8,581 Capacity Additions as % of Existing Capacity................ 37.1% 22.0% 20.5% 12.3%
- ------ Source: ViaMar (a) New production capacity is compiled from announced firm and planned projects, as well as projects in the study phase and includes both the construction of new plants and the expansion of existing facilities. -47- Since the seaborne trade of petrochemical gases began in the early 1980's, terminal storage facilities have grown steadily, providing access to larger, more efficient vessels with increased economies of scale. For example, the first generation of ethylene terminals had a storage capacity of 8,000-15,000 cbm. By the late 1980's the maximum storage capacity had reached 30,000 cbm. New production facilities are currently planned and under construction with storage capabilities of up to 60,000 cbm. The Company believes that this trend will support the transport of larger parcels of petrochemical gases resulting in greater demand for the Vessels. THE CHARTER MARKET THE CHARTERING PROCESS The chartering of vessels for a specified period of time or to carry a specific cargo is an integral part of the market for seaborne transportation of liquified gases. The charter market, consisting of a worldwide network of brokers specializing in the gas industry, is well established and efficient. The chartering process begins when a producer, user or trader of petrochemical gases identifies the need to transport a cargo or cargoes from one port to another. The charterer typically contacts a broker or group of brokers to determine the availability of suitable vessels to transport the specified cargo. The charterer then chooses from an array of available vessels and seeks to negotiate the most favorable economic terms for its transportation requirements. Typically, the agreed terms are based on standard industry charterparties prepared to streamline the negotiation and documentation processes. TYPES OF CHARTERS Charters may be arranged on a spot basis for the immediate hiring of a vessel, usually for a single voyage, or through longer term arrangements, such as contracts of affreightment and time or bareboat charters. Contracts of affreightment are agreements by vessel owners to transport a specified cargo on a specified route on a regular basis. Contracts of affreightment function as a long-term series of spot charters, except that the owner is not required to use a specific vessel to transport the cargo, but instead may use any vessel in its fleet. Contracts of affreightment benefit vessel owners by providing a guaranteed level of employment over a standard trading route. An owner with an efficient fleet configuration can schedule its vessels in a triangular trading pattern in order to minimize ballast trips and idle time, thereby achieving high capacity utilization and enhancing revenues. A time charter is a contract for the hire of a vessel for a certain period of time, with the vessel owner being responsible for providing the crew and paying operating costs, while the charterer is responsible for fuel and other voyage costs. As with a time charter, a bareboat charter is a contract to hire a vessel for a period of time with the exception that under a bareboat charter the charterer is responsible for operating the vessel and pays all associated operating costs of the vessel during the charter. -48- COMPARISON TO OTHER SHIPPING MARKETS Unlike other shipping markets, such as the crude oil tanker market, producers, users and traders of petrochemical gases generally do not own or charter on a long-term basis their own fleet of vessels to transport their cargoes. Instead, cargo owners rely on a small group of large vessel operators to provide all freight services. This market structure provides cargo owners with the flexibility to respond quickly and efficiently to changes in trading patterns, while providing vessel owners with limited competition from captive fleets. INDUSTRY PARTICIPANTS The number of participants involved in the seaborne trade of petrochemical gases is small and consists of few large and experienced operators. There are currently two significant participants in the ethylene carrier segment with vessels over 10,000 cbm. The largest owner is Sig. Bergesen ASA ("Bergesen"). Bergesen controls the Igloo Pool (a cooperative marketing venture among several owners) of 16 vessels ranging in size from 8,000 cbm to 12,000 cbm, most of which were built in the 1980's. Exmar NV has a small fleet of three 10,500 cbm ethylene-capable vessels. In the semi-refrigerated, non-ethylene carrier market, Handygas, controlled by Bergesen, and A.P. M0ller are the major participants. Handygas has a fleet of 10 semi-refrigerated vessels, the majority of which were built in the 1970's. The average size of these vessels is 12,000 cbm. M0ller's fleet of 12 semi-refrigerated vessels is newer and ranges in size from 15,000 cbm to 20,000 cbm. -49- BUSINESS GENERAL The Company was formed in 1997 for the purpose of building and operating a fleet of five state-of-the-art 22,000 cbm semi-refrigerated ethylene-capable gas carriers. The Vessels are designed to transport the entire range of petrochemical gases, including ethylene, propylene, VCM, butadiene and crude C4, as well as LPG, such as ethane, propane and butane. There are no ethylene-capable semi-refrigerated gas carriers currently operating or under construction that will be larger than the Vessels. Each Vessel will have four separate gas cargo tanks, segregated pumping and piping systems and a separate deck tank, allowing each Vessel to carry up to three separate cargoes simultaneously. Upon their construction, the Vessels will be among the most versatile gas carriers in the world in terms of cargo options, ease and speed of loading and discharging cargoes and adaptability for route scheduling. The foregoing capabilities will permit the Company to minimize operating costs, reduce voyage times and maximize vessel utilization. In addition, the Vessels' larger cargo capacities, compared to the existing ethylene-capable fleet, offer significant economies of scale, especially for long-haul transport. BUSINESS STRATEGY The Company's business strategy is to take advantage of the strong demand for seaborne transportation of petrochemical gases and LPG resulting from the worldwide expansion in the production, use and trade of petroleum by-products. The Company's fleet will supply transportation services to existing customers of certain of the Shareholders of Holdings including major oil, chemical and trading companies. The key elements of this strategy include: INTEGRATED CHARTERING STRATEGY. Charterers of gas carriers rely on short and long-term contracts of affreightment and, to a lesser extent, time and spot charters, allowing them to respond quickly and efficiently to the changing trading patterns of the petrochemical gas market. The Company intends to take advantage of these market dynamics by building a portfolio of contracts of affreightment with major customers. Such contracts are expected to be from three to five years in length and would provide the Vessels with a high level of continuous employment. The Company also intends to use the spot market and, to a lesser extent, time charters of the Vessels to achieve maximum capacity utilization and minimize ballast trips and idle time. This strategy will be implemented by MarLink, the commercial manager of the Vessels. MarLink is a leading commercial manager of vessels in the petrochemical gas market. The Manager is currently negotiating contracts of affreightment for the employment of the Vessels in the ethylene and propylene trades. One contract would guarantee a minimum of 10 voyages and a maximum of 20 voyages per annum for a full cargo of propylene from the Americas to the Mediterranean region. The second contract would ensure a minimum of 18 voyages and a maximum of 28 voyages per annum for a full cargo of ethylene from various loading ports to the Mediterranean region. Each contract would be for a five-year period with freight rates for each voyage to be based on market rates. If consummated, these contracts could provide a base-load of -50- continuous employment for the Vessels during the terms thereof. However, there can be no assurance that these contracts will be entered into. MAXIMIZE ETHYLENE BUSINESS. Historically, ethylene has generally achieved an approximate 10-15% premium over charter rates for other petrochemical gas cargoes. As ethylene frequently trades along the same routes as other petrochemical gases, the Vessels' multiple tank configuration should enable the Company to maximize the proportion of its freight mix accounted for by ethylene, without sacrificing cargo capacity utilization or route efficiency. Based on historical trends, as well as the increasing size of production facilities, the Company also believes that the average size of ethylene freights will increase, thereby enhancing the competitiveness of the Vessels. BUILD VERSATILE VESSELS WITH MULTI-CARGO CAPABILITY. The Vessels will be among the most versatile petrochemical gas carriers in the world given their ability to carry the full range of petrochemical gases and transport up to three segregated cargoes simultaneously. The Company believes that these larger, multiple-tank vessels will provide a competitive advantage over other operators in the petrochemical gas freight market. In addition, the Vessels will offer improved operating efficiencies due to their higher speed and shorter loading and discharge times as compared to many less sophisticated vessels. The Company has chosen the Builders because of their previous experience in the building of gas carriers with TGE, a leading engineering firm in the production of gas plants. See "BUSINESS -- THE VESSELS" and "--THE BUILDERS AND TGE." MAXIMIZE VESSEL UTILIZATION. The Company believes that its fleet size of five Vessels, each with four tanks and the ability to carry up to three fully segregated cargoes, will allow it to adopt triangular trade patterns which minimize ballast trips. In addition, the Vessels' ability to carry up to three cargoes simultaneously will give the Company the potential to service up to 15 charterers at any one time. The Company believes that the size of the Vessels will also be attractive to charterers with substantial long-haul transport requirements. The Company's fleet size and configuration will provide the operational flexibility necessary to meet the logistical demands of managing complex trading patterns. THE VESSELS The Vessels will be state-of-the-art gas carriers. The Company believes that the size and configuration of the Vessels, as well as the features incorporated therein, will make them more attractive to charterers than other vessels. As a result, the Company expects the Vessels to realize higher-than-average levels of utilization in the transport of high value petrochemical gas cargoes as compared to other gas carriers, significantly enhancing the earnings potential of each Vessel. The Vessels will be semi-refrigerated, combining refrigeration and pressurization to maintain their cargoes in a liquified state. This will allow the Vessels to load products at varying temperatures from different terminals. In addition to pre-cooled cargoes, the Vessels will have the ability to load cargoes that cannot maintain their required liquid temperatures prior to loading, due to distances traveled by pipeline from production facilities to vessels, by accepting these cargoes under pressure and cooling them onboard the Vessels during the voyage. The load time of these cargoes is thereby reduced since the cargoes do not need to be cooled prior to loading. Unlike semi-refrigerated vessels, fully-refrigerated vessels are only able to load cargoes in a cooled state, requiring those vessels to -51- cool products prior to loading. This requirement slows product loading and limits the number of terminals which can be efficiently serviced by such vessels. The nitrogen generator and deck tank on each of the Vessels will allow it to prepare its tanks for the next cargo while en route to the next load port. This will result in time savings of as much as three days on some voyages, as tank preparation would otherwise have to be carried out in port. These features provide a significant benefit to charterers and terminal operators by improving their terminal utilization. The 22,000 cbm carrying capacity of the Vessels will also be beneficial to charterers and terminal operators by reducing the number of loading and discharging operations, the duration of such operations and the associated costs. The Vessels will sail under the Liberian flag, with a certification from the Classification Society. The crew for each Vessel will be trained in accordance with the highest standards. Each crew will consist of 6 to 7 officers and 12 to 13 seamen. Upon delivery, each Vessel, including its machinery, equipment and outfitting, is required to be classed with the Classification Society and shall be distinguished in the record by the symbol of +100 A5 E "Liquified Gas Carrier Type 2G" +MC E, AUT INERT. In order for a Vessel to be accepted by the Owner, it is required to comply with the laws, rules, regulations, recommendations and requirements as set out in the specifications attached to the related Building Contract (the "Specifications"). VESSEL OWNER, REGISTRATION AND CONTRACTUAL DELIVERY DATE
HULL CONTRACTUAL NUMBER OWNER REGISTRATION DELIVERY DATE ------ ----- ------------ ------------- Vessel 1........... 2245 Navigator Gas (IOM I-A) Limited Liberia August 1, 1999 Vessel 2........... 2246 Navigator Gas (IOM I-B) Limited Liberia November 1, 1999 Vessel 3........... 2247 Navigator Gas (IOM I-C) Limited Liberia March 1, 2000 Vessel 4........... 2248 Navigator Gas (IOM I-D) Limited Liberia June 1, 2000 Vessel 5........... 2249 Navigator Gas (IOM I-E) Limited Liberia September 1, 2000
VESSEL TECHNICAL INFORMATION (ALL VESSELS) Length (meters)....................................... 171.5 Breadth (meters)...................................... 24.2 Maximum Draft (meters)................................ 10.9 Maximum Deadweight (tonnes)........................... 22,800 Speed (knots)......................................... 16.5 Cargo Tank Volume (cbm)............................... 22,000 Range (nautical miles)................................ 15,000 -52- CONSTRUCTION PERIOD The Manager, as agent of CGTC, has agreed to oversee the construction of the Vessels. TECHNICAL SUPERVISION AGREEMENT The Owners have engaged GEBAB to supervise the construction of the Vessels during the pre-delivery period. GEBAB, the Manager on behalf of the Owners and the Builders are parties to an Agreement on Contract for Technical Matters (the "Technical Supervision Agreement"), dated as of February 28, 1997, pursuant to which each Owner has appointed GEBAB to act as such Owner's technical representative with respect to technical matters related to the construction of its Vessel. GEBAB intends to assign by novation its responsibilities under the Technical Supervision Agreement to its affiliate, Martime. GEBAB, in coordination with the Classification Society, will monitor the construction of each Vessel. Pursuant to the Technical Supervision Agreement, Martime will, among other things, examine all hull and engineering plans submitted by the Builders to ensure that they comply with the terms of the Building Contracts, monitor the construction of the Vessels to ensure compliance with the terms of the Building Contracts and the requirements of the Classification Society, render monthly progress reports, advise the Owners of any modifications or improvements which may enhance the Vessels or reduce operating costs and oversee any work performed in drydock prior to the delivery of each Vessel. THE BUILDERS AND TGE Located in Shanghai, Jiangnan was founded in 1865 and is a modern, fully-equipped shipyard that is among the largest shipyards under the supervision and control of China State Shipbuilding Corporation, which also controls CSTC, its trading and export subsidiary. Jiangnan designs, builds, repairs and converts many kinds of vessels including gas carriers. It also designs, manufactures and erects various specialized machinery and electrical equipment, non-standardized equipment, pressure vessels, port machinery and steel structures in accordance with the regulations and requirements of the world's major classification societies and shipping and building safety treaties. China's first generation of submarines and the first self-designed 10,000 dwt ocean-going ship were built by Jiangnan in the 1950's and 1960's, respectively. A fleet of oceanographic and scientific survey vessels was built in the 1970's to support the launching of a rocket and man-made satellite in China. Since 1980 many vessels built by Jiangnan have entered the international market, including various types of merchant ship cargo vessels and LPG vessels built for companies located in Germany, the United States, Italy, Norway, Singapore, Hong Kong and other countries. Some of Jiangnan's recent export clients include Mitsubishi Corporation, Neptune Orient Lines Ltd., World Wide Shipping Agency Ltd., Lasco Shipping Co., Canada Steamship Lines and B. Skaugen Shipping AS. Jiangnan has previous experience with TGE and is currently completing the construction of two 16,500 cbm LPG/ammonia gas carriers for Bernard Schulte GmbH, a large German shipowner. Jiangnan has also built the following types of vessels and major components: 4,200 cbm -53- semi-refrigerated ethylene carriers; 3,000 cbm fully-pressurized LPG carrier; floating production storage units; 68,500 dwt panamax oil tankers; 65,000/70,000/73,000 dwt panamax bulk carriers; 50,000 dwt open-hatch bulk carriers; 28,000/34,000 dwt lakes-fitted bulk carriers; 20,000 dwt bulk carriers; 4,000 roll-on/roll-off car carriers and UT714 anchor handling-tug-supply vessels. Jiangnan is also currently constructing other sophisticated types of vessels including a 70,800 dwt self-unloader, a 1,021 TEU fast-speed feeder and a 13,700 dwt chemical carrier. TGE is an indirect subsidiary of Tractebel, S.A., a major Belgian public company engaged in the utility and engineering industries. TGE is a world leader in the engineering, design and construction of gas storage and transportation plants and equipment. In addition, it manufactures port facilities for the off-loading and receiving of liquified gases, gas liquification and handling systems, chemical and gas plants for installation on carriers, storage facilities for liquified gases and chemicals, gas bottling plants, gas terminals and metering stations, vaporization, transmission lines and compressor stations and package plants for recovery of products from associated gases. TGE is a leading provider of turnkey operations. TGE will design the complex gas plants utilized on the Vessels. TGE will also supervise the construction and erection of the Vessels' gas plants through its permanent office in Shanghai. Since 1980, TGE has been involved in the installation of gas plants for 36 gas carriers, 18 of which are ethylene-capable. TGE will act as a subcontractor to Jiangnan under each Building Contract and as such will be responsible for supplying materials for construction of the gas plant and supervising its installation. Jiangnan and TGE have worked together on the construction of the following gas carriers and components: JIANGNAN SHIPYARD AND TGE JOINT GAS CARRIER/COMPONENT BUILDING EXPERIENCE CAPACITY VESSEL TYPE Year Ethylene- (CBM) DELIVERED CAPABLE ----- --------- ------- 3,000 Fully-Pressurized 1990 No 4,200 Semi-Refrigerated 1992 Yes 4,200 Semi-Refrigerated 1993 Yes 3,750 Gas Tank(a) 1995 No 4,200 Gas Tank(a) 1996 No 4,200 Gas Tank(a) 1996 No 16,500 Semi-Refrigerated 1997(b) No 16,500 Semi-Refrigerated 1998(b) No - -------------------- (a) Tanks built by Jiangnan and delivered to Shanghai Edward Shipbuilding, China for installation in vessel construction at Shanghai Edward shipyard. (b) Scheduled delivery date. BUILDING CONTRACTS SPECIFICATIONS -54- Each Vessel will be constructed pursuant to the terms and specifications of the Building Contracts. See "--THE VESSELS." CONTRACTUAL DELIVERY DATE The Contractual Delivery Dates of the Vessels will be staggered as follows: Vessel 1 -- August 1, 1999 Vessel 2 -- November 1, 1999 Vessel 3 -- March 1, 2000 Vessel 4 -- June 1, 2000 Vessel 5 -- September 1, 2000 PROVIDED, that if a change in the rules or regulations of the Classification Society causes a period of delay of up to 12 days in the delivery of a Vessel, the Contractual Delivery Date will be extended by such period. PURCHASE PRICE The Purchase Price for each Vessel will be approximately $50.0 million. The following table sets forth the scheduled amounts and timing of the payments to the Builders under the Building Contracts, except that the Builders have directed the Owners to make the payment due on September 1, 1997 directly to TGE and such payment has been made.
DATE VESSEL 1 VESSEL 2 VESSEL 3 VESSEL 4 VESSEL 5 TOTAL(C) - ---- -------- -------- -------- -------- -------- -------- (in millions) Issue Date............................ $6.6 $6.6 $6.6 $6.6 $6.6 $33.1 Sept. 1, 1997......................... 2.4 2.4 2.4 2.4 2.4 12.2 Feb. 1, 1998.......................... 6.8 -- -- -- -- 6.8 July 1, 1998......................... -- 6.8 -- -- -- 6.8 Nov. 1, 1998.......................... 6.8 -- 6.8 -- -- 13.7 Feb. 1, 1999......................... -- -- -- 6.8 -- 6.8 Mar. 1, 1999.......................... 4.6 -- -- -- -- 4.6 Apr. 1, 1999.......................... -- 6.8 -- -- -- 6.8 June 1, 1999.......................... -- -- -- -- 6.8 6.8 July 1, 1999.......................... -- -- 6.8 -- -- 6.8 Aug. 1, 1999.......................... 22.8(a) 4.6(b) -- -- -- 27.3 Oct. 1, 1999.......................... -- -- -- 6.8 -- 6.8 Nov. 1, 1999.......................... -- 22.8(a) 4.6(b) -- -- 27.3 Feb. 1, 2000.......................... -- -- -- -- 6.8 6.8 Mar. 1, 2000.......................... -- -- 22.8(a) 4.6(b) -- 27.3 June 1, 2000.......................... -- -- -- 22.8(a) 4.6(b) 27.3 Sept. 1, 2000......................... -- -- -- -- 22.8(A) 22.8 ----- ----- ----- ----- ----- ------ Total(c)........................ $50.0 $50.0 $50.0 $50.0 $50.0 $250.1 ===== ===== ===== ===== ===== ======
- ------ (a) Assuming delivery of the Vessel occurs on its Contractual Delivery Date. (b) This payment shall be payable to the Builders with respect to a Vessel only if and when Collateral Agent has received evidence of delivery pursuant to the Building Contract with respect to each other Vessel having a Contractual Delivery Date prior to the Contractual Delivery Date of such Vessel. (c) May not total due to rounding. -55- Each Building Contract provides for upward and downward adjustments to the Purchase Price of a Vessel, which adjustments are made through increases or decreases in the final installment of the Purchase Price. The Purchase Price of a Vessel may be increased by $13,000 per day for each day that such Vessel is delivered earlier than its Contractual Delivery Date. In addition, in the event of certain delays in the delivery of such Vessel or the failure of such Vessel to comply with certain specifications, the Builders are required to pay liquidated damages to its Owner. Under each Building Contract, the Builders may postpone the delivery of a Vessel to a certain number of days beyond its Contractual Delivery Date without incurring liability for liquidated damages (the "Permissible Delay Period"). The Permissible Delay Period for each of the Vessels is as follows: (i) 60 days for Vessel 1, (ii) 45 days for Vessel 2 and (iii) 30 days for each of Vessels 3, 4 and 5. The aggregate Permissible Delay Period for all five Vessels, however, is limited to 150 days. Therefore, for example, if the Builders utilize the full Permissible Delay Period for each of Vessels 1, 2 and 3, then an aggregate Permissible Delay Period of 15 days is available for the remaining Vessels before the Builders are required to pay liquidated damages to the respective Owner of Vessels 4 or 5, or both. During the period of delay following the Permissible Delay Period up to and including 210 days beyond the Contractual Delivery Date of a Vessel (the "First Delay Period"), the Builders must pay liquidated damages to the related Owner in the form of a reduction in the final installment of the Purchase Price of such Vessel in an amount equal to $11,000 per day for the first 90 days of delay beyond the Extended Delivery Date and $14,500 per day for each day of delay thereafter. The Builders have the option to extend the Delivery Date of a Vessel beyond the First Delay Period until March 31, 2001 (the "Second Delay Period") by paying liquidated damages monthly in advance at a rate of $18,000 per day for the first six-month period, $20,000 per day for the second six-month period and $22,000 per day thereafter up to and including March 31, 2001, which liquidated damages are expected to be sufficient to pay the interest on the Allocated Principal Amount of the Notes for such Vessel. In the event the Builders fail to make timely payment of such liquidated damages, the Owner may (i) waive its right to such payment and elect instead to receive a further reduction in the final installment of the Purchase Price (in addition to any such reduction during the First Delay Period) equal to the amount of the liquidated damages waived or (ii) rescind the related Building Contract and demand payment of the Refund Amount. An Owner's waiver of the advance payment of liquidated damages for any given month will not constitute a waiver by the Owner of its right to demand the payment at any later date of such liquidated damages or to demand the advance payment of monthly liquidated damages for any subsequent months of delay. The Purchase Price of a Vessel may also be reduced, as a result of liquidated damages payable by the Builders, because of the Builders' failure to construct such Vessel in compliance with specifications relating to guaranteed speed, fuel consumption, deadweight and cargo tank capacity. RESCISSION AND TERMINATION OF THE BUILDING CONTRACTS An Owner may rescind a Building Contract upon the occurrence of certain events of default by the Builders, which arise from the non-delivery of a Vessel or the failure of a Vessel to meet minimum requirements relating to speed, fuel consumption, deadweight and cargo tank capacity. The -56- events of default relating to non-delivery of a Vessel are (i) the failure by the Builders to make payments of liquidated damages monthly in advance during the Second Delay Period and the Owner does not waive its right to receive the payment of such liquidated damages and (ii) the failure to deliver the Vessel by March 31, 2001. The Owner may also rescind a Building Contract if any of the following deficiencies exists with respect to a Vessel: (i) its speed is one knot or more below the guaranteed speed of 16.5 knots; (ii) its fuel consumption is 8.0% or greater than the guaranteed fuel consumption set forth in the Specifications; (iii) its deadweight is more than 800 tonnes below the guaranteed deadweight of 22,800 tonnes; and (iv) its cargo tank capacity is more than 400 cbm below the guaranteed cargo tank capacity of 22,000 cbm. In addition, a Building Contract will be automatically terminated if, prior to the Delivery Date, (A)(i) a Vessel is seized by the Chinese government, (ii) the Builders fail to obtain the necessary licenses, permits and other authorizations from the Chinese government for the construction, delivery and export from China of such Vessel or (iii) a total loss occurs with respect to a Vessel and (B) the Builders do not elect to continue performing under such Building Contract. Under the cross-default provisions of the Building Contracts, in the event a Building Contract is rescinded by an Owner or automatically terminated, the other Owners that have not accepted delivery of their Vessel will be deemed to have also rescinded their respective Building Contracts. MANDATORY REDEMPTION OF THE NOTES AND THE REFUND AMOUNT In the event a Building Contract is rescinded or automatically terminated, the Issuer is required, under the terms of the Indentures, to redeem the Allocated Principal Amount of the Notes for the relevant Vessel and the Builders must, under such Building Contract, pay the Owner a scheduled amount (the "Refund Amount"). The Refund Amount together with the amounts held in the Pre-Funding Account and the Capitalized Interest Account with respect to such Building Contract are expected to be sufficient to pay the Rescission Amount calculated as of the date on which the Notes are scheduled for redemption. The Refund Amount is due and payable upon the delivery by an Owner to the Builders of its notice of rescission of a Building Contract or upon the automatic termination of the Building Contract, as the case may be. If the Builders delay the payment of the Refund Amount, interest (the "Refund Interest") will accrue on the Refund Amount at a rate of 10% per annum for each day of delay from and including the date on which the Owner's notice of rescission is delivered or on which the Building Contract is automatically terminated, as the case may be, until but not including the date on which Builder makes payment in full of the Refund Amount plus any Refund Interest. GAS TRIALS Prior to the Delivery Date, the Vessel's gas plant will be mechanically completed by the Builders and a running test of the equipment of the gas plant and a function test of its system utilizing either inert gas or dry air shall be made by the Builders. The tests will be repeated until the results are deemed by the Classification Society to be in conformity with the Building Contract and the Specifications. -57- After the Delivery Date, the Owner shall, at its own cost and expense, carry out an additional gas trial in accordance with the trial program furnished by TGE. The gas trial is required to be made no later than 45 days after the Delivery Date subject to certain exceptions and shall be certified by the Classification Society. If the gas plant is not in conformity with the Building Contract and the Specifications, the Builders must remedy any such non-conformity to the satisfaction of the Owner, the Classification Society and any other relevant authority. If such non-conformity delays the use of a Vessel, the Owner's only contractual remedy is to receive payment of liquidated damages of up to $200,000 from the Builders, which payment is not supported by either the related Building Contract Guarantee or the Performance Bonds. WARRANTY OF QUALITY The Builders, for a period of 12 months following the Delivery Date of a Vessel, guarantee the Vessel, its hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the Builders and/or their sub-contractors under the Building Contract including material and equipment (excluding any parts for the Vessel which have been supplied by or on behalf of the Owner) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. BUILDING CONTRACT GUARANTEES AND PERFORMANCE BONDS The Export-Import Bank of China (the "Building Contract Guarantor" or "EXIM") has delivered an Irrevocable Letter of Guarantee with respect to each Vessel (collectively, the "Building Contract Guarantees") and an Irrevocable Performance Bond relating to all five Vessels (the "Builders Performance Bond"), each on behalf of the Builders, and Generale de Banque S.A. ("Generale" and, together with EXIM, the "Performance Bond Guarantors") has delivered an Irrevocable Performance Bond (the "TGE Performance Bond" and, together with the Builders Performance Bond, the "Performance Bonds"), on behalf of TGE, relating to all five Vessels. The Building Contract Guarantees and the Performance Bonds severally and in the aggregate unconditionally guarantee payment to the Owners of the Refund Amount and any Refund Interest. Each Building Contract Guarantee guarantees the payment to the relevant Owner of the portion of the Refund Amount relating to all installment payments that have been made on or prior to the date on which such Building Contract is rescinded by such Owner or automatically terminated. The Builders Performance Bond covers an aggregate amount of up to $32.5 million for all five Vessels and the TGE Performance Bond covers an aggregate amount of up to $16.2 million for all five Vessels. The availability of the TGE Performance Bond, however, is conditioned upon the payment by EXIM to the Owners of the maximum amount of $32.5 million guaranteed under the Builders Performance Bond. Pursuant to the terms and conditions of the Intercreditor Agreement, the Collateral Agent shall draw under the Performance Bonds an amount equal to the Rescission Amount (as defined) (calculated as of the date on which the Exchange Notes and the untendered Existing Notes, if any, are scheduled for redemption) less the sum of (i) the amounts held in the Pre-Funding Account and in the Capitalized Interest Account and (ii) the amount payable under the applicable Building Contract Guarantee or Guarantees, as the case may be. -58- Each of the Building Contract Guarantees and the Performance Bonds became effective upon the payment of the first installment of the Purchase Price under the Building Contracts, which payment was made on the Original Closing Date with the net proceeds of the Offerings. Each Building Contract Guarantee will expire with respect to the related Building Contract upon the earliest of (i) the receipt by the Owner of the amount guaranteed thereunder, (ii) the confirmation to the Building Contract Guarantor of acceptance of the related Vessel and (iii) May 1, 2001. Each of the Performance Bonds will expire upon the earliest of (i) the receipt by any of the Owners of any payment thereunder, (ii) the confirmation to the applicable Performance Bond Guarantor of the acceptance of all remaining Vessels and (iii) May 1, 2001. EXIM is owned by the government of the People's Republic of China and its long-term debt is rated A3 by Moody's Investor Service Inc. ("Moody's"). The long-term debt of Generale is rated A1 by Standard & Poor's Ratings Services, a division of The McGraw-Hill Company, Inc. ("S&P") and Aa3 by Moody's. MARKETING AND COMMERCIAL MANAGEMENT MARKETING STRATEGY The marketing strategy of the Owners is to build a portfolio of contracts of affreightment for petrochemical gas cargoes in order to maximize the revenue potential of the Vessels. The Owners intend to concentrate on transporting primarily petrochemical gases, particularly ethylene, and secondarily LPG. The Owners do not intend to transport ammonia cargoes but may pursue such employment as dictated by the overall market for gas transport. On or prior to the Original Closing Date, the Issuer, Holdings and each of the Owners have engaged the Manager to manage their daily commercial and technical operations pursuant to a management agreement (the "Management Agreement"), including providing administrative services, causing the compliance of the Owner's covenants in the Indentures and monitoring GEBAB's performance under the Technical Supervision Agreement, Technical Management Agreement and the Commercial Management Agreement. The Manager, through the expertise of its principal employees, is implementing and will implement the Owners' marketing strategy. The Manager believes that contracts of affreightment will offer the advantages of longer-term employment and the exploitation of the triangular trading capabilities of the Vessels. Triangular trading in this context refers to the ability of the Vessels to trade multiple cargoes on a trade route in which cargoes are discharged and new cargoes are loaded in a single geographic region. Such triangular trading can be distinguishable from the "A to B" trade characteristic of crude transport in which the vessel carries a cargo from the loading port to the discharge port and returns ballast to the loading port. The Manager may supplement the employment of the Vessels with spot charters and timecharters as opportunities arise in the market. The Manager does not intend to pursue bareboat charters with respect to the Vessels. The Manager is currently negotiating two contracts of affreightment for the employment of the Vessels in the ethylene and propylene trade. One contract would guarantee a minimum of 10 voyages and a maximum of 20 voyages per annum for a full cargo of propylene from the Americas to the Mediterranean Region. The second contract would ensure a minimum of 18 voyages and a -59- maximum of 28 voyages per annum for a full cargo of ethylene from various loading ports to the Mediterranean Region. Each contract would be for a five-year period with freight rates for each voyage to be based on market rates. The Management of the Company believes that if consummated, these contracts could provide a base-load of continuous employment for the Vessels during the terms thereof. However, there can be no assurance that these contracts will be entered into. The Manager is implementing and will implement a marketing strategy on behalf of the Owners through the marketing efforts of its principal employees and through the Commercial Management Agreement with GEBAB. The Owners intend to supplement the marketing efforts of the Manager and GEBAB by maintaining a non-exclusive brokerage relationship with Xenon. The Company has preliminarily identified Chevron Products Company, Pequiven, Norsk Hydro, Enichem, PMI, Dow Chemicals, Mitsui USA, and Sunkyong America, Inc., among others, as potential customers in the petrochemical market. It has identified Exxon Chemical Company, Shell Chemicals, Texaco Chemical Company, Statoil, Yukong, Dow Chemicals and Mitsubishi International Corporation, among others, as potential customers in the LPG market. There is currently no contractual arrangement between the Company and any of these customers for the transportation of cargoes by the Vessels, and there can be no assurance that any of these potential customers will employ the Vessels upon their acceptance by the Owners under each Building Contract. COMMERCIAL MANAGEMENT AGREEMENT The Manager on behalf of the Owners is party to a Master Commercial Marketing and Services Agreement (the "Commercial Management Agreement"), dated as of February 28, 1997, with GEBAB whereunder GEBAB has agreed to commercially manage the Vessels. Upon the completion and delivery to the Owners of each Vessel, GEBAB will solicit cargo to be transported by such Vessels. GEBAB's responsibilities include the marketing of each Vessel, the preparation and negotiation of all contracts of affreightment or other types of charters for each Vessel, operation of all agreements entered into, including invoicing and accounting for and handling of employment-related expenses, calculation of demurrage and laytime expenses and the coordination of all claims with each Owner's P&I Clubs. GEBAB, through its affiliate MarLink, will arrange for all income earned with respect to each Vessel to be paid directly into a lock-box account (the Revenue Account) to be held by the Collateral Agent. Pursuant to the Commercial Management Agreement, a management fee of 2.0% of net revenues from operations received in a given Calendar Quarter (as defined) is payable quarterly by the Manager from the Operating Account (as defined) on the 16th day following the end of each calendar quarter which shall end on the last day of March, June, September and December (each, a "Calendar Quarter"). GEBAB, through its affiliate MarLink, will deliver a quarterly statement (a "Quarterly Statement") reflecting the net operating revenues of the Vessels received in the Revenue Account, all actual employment related expenses incurred duly supported by the relevant documents and vouchers, resulting net time charter earnings during the elapsed period, days employed as well as idle days and reasons therefor. Each Quarterly Statement shall be due within 15 days after the end of each Calendar Quarter. Each month, the Owners will be provided with an -60- estimate of employment-related expenses. Actual expenses will be paid to the Collateral Agent upon the presentation of invoices therefor to the Manager from amounts held in the Operating Account. The term of the Commercial Management Agreement with respect to each Vessel shall be a period of three years commencing on the delivery to the related Owner of such Vessel, and the Commercial Management Agreement will continue after the end of the three-year term indefinitely until terminated by GEBAB or any Owner pursuant to the Commercial Management Agreement. The obligations of GEBAB under the Commercial Management Agreement will be assigned to MarLink by novation. As a condition to such novation, GEBAB shall deliver a guarantee. OPERATIONS The Manager intends to implement the Owners' operating strategy by administering a technical management agreement between GEBAB and the Owners. GEBAB intends to assign its responsibilities under the technical management agreement to its affiliate Martime. TECHNICAL MANAGEMENT AGREEMENT GEBAB and the Manager on behalf of the Owners are parties to the Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement (the "Technical Management Agreement"), dated as of February 28, 1997, whereunder Holdings, as predecessor to the Owners, appointed GEBAB to act as technical manager of the Vessels. Pursuant to the Technical Management Agreement, GEBAB, through its affiliate Martime, will provide for and supervise the crew for each Vessel, supervise and maintain the technical management of each Vessel, arrange for all insurances for each Vessel, provide accounting services for each Vessel, arrange for the supply of provisions for each Vessel, including bunker fuel, and provide for the operation of each Vessel. GEBAB, through its affiliate Martime, will present an annual budget three months before the end of each calendar year. The projected budget for 1999, the first year a Vessel is expected to be delivered and become operational, is $190,000 per month, which amount is expected to be sufficient to cover crew cost and basic operating expenses (includes insurance cover, deck equipment, cargo plant, engine up-keep, luboils and chemicals, and provision for dry docking). Following the agreement on the operating budget for the Vessels, on the first Business Day of each month in such budgeted year, GEBAB, through its affiliate Martime, shall prepare and present to the Manager its estimate of the working capital requirement for each Vessel and shall request the Manager to disburse the funds required to run the Vessel against invoices presented by it. In addition, GEBAB, through its affiliate Martime, will present invoices representing occasional or extraordinary items of expense such as emergency repair costs, additional insurance premiums, bunkers or provisions. Pursuant to the Technical Management Agreement, a management fee of 2.0% of net operating revenues for the first six years of operation and 2.5% thereafter will be payable by the Manager from the Operating Account quarterly in advance on the first day of the calendar quarter based on a pre-approved budget (the "Budgeted Management Fee") submitted by GEBAB, through its affiliate Martime. The Budgeted Management Fee shall be adjusted quarterly in arrears for each Calendar Quarter and the difference between the actual management fee earned for a Calendar Quarter and the aggregate Budgeted Management Fee paid for such Calendar Quarter shall be -61- reflected in the Budgeted Management Fee payable on the next day immediately following the end of any Calendar Quarter. The term of the Technical Management Agreement with respect to each Vessel shall be for a period of three years commencing on the delivery to each Owner of such Vessel, and the Technical Management Agreement will continue after the end of the three-year term indefinitely until termination by either GEBAB or any Owner pursuant to 90 days' written notice. The obligations of GEBAB under the Technical Management Agreement will be assigned to Martime by novation. As a condition to such novation, GEBAB shall deliver a guarantee. INSPECTION CHEMICAL DISTRIBUTION INSTITUTE CDI was founded by the major participants in the liquid and gas transportation market and is controlled by the oil majors, including Exxon Chemical Company, Chevron Products Company, British Petroleum (BP) Chemicals, Shell Chemicals and Mobil Chemical Company. CDI has set common vessel inspection criteria for the safe transportation of hazardous cargo at sea, according to the standards of all individual member companies. CDI has also implemented standardized vessel inspections to replace the need for each particular member to inspect and rate each vessel on a regular basis. These inspections are generally more thorough and extensive than the inspections carried out by the individual members. CDI is fully-implemented in Europe and the Americas and is in the process of being implemented in Asia. The Company intends to fully meet all CDI code requirements and receive certification. INTERNATIONAL SAFETY MANAGEMENT ISM publishes a code (the "ISM Code") which sets forth standards applicable for internationally acceptable procedures in safe contemporary ship management. The ISM Code has been endorsed by the IMO and plays an important role in international ship management. Entities that do not obtain certification under the ISM Code have increasing difficulties in marketing their services. The certification under the ISM Code are carried out by classification societies acting as auditors and must be complied with by 1999. The provisions of ISO 9002 are not mandatory. The Company intends to fully meet all ISM Code requirements and receive certification. ENVIRONMENTAL REGULATIONS The business and operations of the Company and any charterer of the Vessels are materially affected by governmental regulation in the form of international conventions and national, state, and local laws and regulations in force in the jurisdictions in which the Vessels operate, as well as in the country or countries of registration. Because such conventions, laws and regulations are often revised, and have become increasingly stringent, the Company cannot predict the ultimate costs of compliance with such revised conventions, laws and regulations or the impact thereof on the resale price or useful life of the Vessels. -62- COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980 ("CERCLA") CERCLA was enacted to respond to environmental contamination caused by the release of hazardous substances from facilities and vessels. CERCLA provides that an owner, operator or demise charterer of a vessel, from which there is a release or threatened release of certain defined hazardous substances, not including crude oil or its fractions, is liable for the following: (i) removal costs or remedial action taken by the United States or a local government; (ii) other necessary costs of response incurred by any other person consistent with the National Contingency Plan (the primary guidance document for CERCLA response actions); (iii) damages for injury to, destruction of, or loss of natural resources, including the cost of assessing such injury, destruction, or loss; and (iv) the costs of any health assessment or studies permitted under CERCLA. Since the Vessels may carry substances as cargo which are hazardous substances under CERCLA, a discharge or threat of discharge of such cargo could result in CERCLA liability and have a materially adverse effect on the Owners and the operation of the Vessels. Total liability under CERCLA for each release from a vessel is limited to the greater of $300 per gross tonne or $5,000,000 for vessels that carry hazardous substances as cargoes. However, these limits will not apply if: (i) the release or threat of release of a hazardous substance was the result of willful misconduct or willful negligence within the privity or knowledge of an owner or operator, or the primary cause or the release was a violation of applicable safety, construction or operating standards or regulations; or (ii) the owner or operator fails or refuses to provide all reasonable cooperation and assistance requested by a responsible public official in connection with response activities. In addition, a responsible party under CERCLA could face punitive damages equal to three times the government's cost of response and remediation if the responsible party fails, without sufficient cause, to undertake a removal or remediation action ordered by the government. CERCLA requires that owners and operators of vessels establish and maintain with the Coast Guard evidence of insurance or of qualification as a self-insurer or other evidence of financial responsibility sufficient to meet their potential strict liability limit under CERCLA. The Coast Guard adopted the Final Rule, which requires evidence of financial responsibility equal to the aggregate of the CERCLA strict liability limit and the OPA 90 liability limit demonstrated by insurance, surety bond, self-insurance or guarantee. Without such certificates, vessels are prohibited from trading to United States ports or in United States waters. The Owners have agreed to furnish evidence of financial responsibility with respect to the Vessels to the Coast Guard as required by the Final Rule. Certain newly-formed insurance companies, which have been deemed acceptable guarantors by the Coast Guard, have furnished the guarantees pursuant to the Final Rule. The Final Rule may also be satisfied by evidence of a surety bond or guarantee. However, the financial credit of some owners and operators may make the furnishing of surety bonds or guarantees economically infeasible. Additionally, vessel owners and operators may give evidence of self-insurance to satisfy the Coast Guard's regulations. Under these provisions, the shipowner or operator must have net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that each exceed the applicable amount of financial responsibility. If the Owners of the Vessels fail to comply with the Final Rule, it would have a material adverse effect on the Owners and holders of the Securities. -63- OIL POLLUTION ACT OF 1990 OPA 90 imposes liability on responsible parties, as defined by OPA 90, for clean-up expenses and damages caused by oil spills. Such responsible parties could include owners, operators and demise charterers of vessels. OPA 90 applies to all vessels that trade in the United States or its territories or possessions or operate in United States waters, even if such vessels do not carry oil as cargo, as is the case with the Vessels. Liability imposed under OPA 90 is joint and several for all spill containment expenses, clean-up costs, and other damages arising from actual and threatened oil spills from their vessels. Such a spill could include the discharge of bunkers from the Vessels. Subject to statutory qualifications, a sole fault third party may be also be a responsible party under OPA 90. For example, a Vessel could cause another vessel to suffer a discharge of oil. Other damages recoverable under OPA 90 include: (i) natural resource damages and the costs of assessment thereof; (ii) real and personal property damage; (iii) net loss of taxes, royalties, rent, fees, and other lost government revenues; (iv) lost profits or impairment of earning capacity due to property or natural resource damage; (v) net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and (vi) loss of subsistence use of natural resources. A responsible party's limit of liability under OPA 90 is the greater of $1,200 per gross tonne of the discharging vessel or $10 million per vessel (subject to possible adjustment for inflation); however, this limit would not apply if the incident were proximately caused by violation of applicable United States federal safety, construction or operating regulations or by the responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report an incident which the responsible party knows or has reason to know of, or to provide all reasonable cooperation and assistance requested by a responsible official in connection with oil removal activities. OPA 90 does not by its terms impose liability on lenders or the holders of mortgages on vessels; however, there is no specific exclusion for such entities under OPA 90. In addition, if the Collateral Agent or any holder of the Notes participates so substantially in the overall management of the Vessels so as to be considered their "operator" or exercises remedies and becomes an "owner" or "operator" or "demise charterer" of a Vessel following a Mortgage Event of Default, such persons or entities may be subject to liability under OPA 90. A catastrophic spill could exceed the liability limits of any insurance coverage available, in which event there could be a material adverse effect on the owner and the operator of the vessel involved in the spill. OPA 90, like CERCLA, requires owners and operators of all vessels, whether or not such vessels carry oil as cargo, to establish and maintain with the Coast Guard evidence of insurance or of qualification as a self-insurer or other evidence of financial responsibility sufficient to meet their potential strict liability limit under OPA 90. Owners or operators of tankers operating in United States waters must file vessel response plans with the Coast Guard, and their tankers must operate in compliance with their Coast Guard approved plans. Such response plans must, among other things (i) identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a "worst case" discharge; (ii) describe crew training and drills; (iii) identify a qualified individual with full authority to implement removal actions; and (iv) describe mitigation and response actions. The Owners will ensure that the Vessels have response plans approved by the Coast Guard. -64- OPA 90 specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and many states have enacted legislation providing for unlimited liability for oil spills. In some cases, states which have enacted such legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. Additionally, under OPA 90 the liability of responsible parties, United States or foreign, with regard to oil pollution damage in the United States is not preempted by any international convention. OPA 90 expressly provides that individual states are entitled to enforce their own pollution liability laws, even if inconsistent with or imposing greater liability than OPA 90. There is no uniform scheme among the states. Some states have OPA 90-like schemes for limiting liability to various amounts, other states rely on fault-based remedies under common law, while still other states impose strict and unlimited liability on an owner or operator. In addition, some states also have established their own requirements for financial responsibility. Compliance with and violation of such state regulations, and the liabilities imposed thereunder, may have a material adverse effect on the business and the operations of the Owners and any charterer of the Vessels. INTERNATIONAL MARITIME ORGANIZATION The IMO, an agency organized in 1958 by the United Nations in which over 100 national governments are members, provides international regulations and practices affecting shipping and international trade and encourages the adoption of standards of safety and navigation. During the last 35 years, the IMO has initiated over 700 resolutions and 30 major conventions and protocols. All IMO agreements must be ratified by the individual government constituents. In May 1996, the IMO adopted a draft International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (the "HNS Convention"). The HNS Convention is open for signature until October 1, 1997. It is unknown at this time which countries, if any, will become signatories to the HNS Convention. The HNS Convention establishes a uniform international legal regime to ensure prompt and adequate compensation to victims of spills and release of hazardous and noxious substances ("HNS") from vessels. HNS are defined broadly by reference to various IMO codes and lists and include approximately 6,000 bulk and packaged substances. Damages recoverable under the HNS Convention include personal injury and death, property damage outside the ship, environmental damage, and preventive measures. The HNS Convention excludes damage for oil that is covered by the CLC, as defined below. There are two tiers of liability under the HNS Convention. Tier one is strict shipowner liability that must be guaranteed by compulsory insurance or some other financial guarantee. Limits of liability under the first tier are based on tonnage: for (i) vessels less than 2,000 gross tonnes, the limit of liability is 10 million Special Drawing Rights ("SDRs"). An SDR is defined by the International Monetary Fund on the basis of a basket of currencies. The exchange rate in effect on June 30, 1997 for the dollar equivalent of the SDR was approximately 1.39; (ii) vessels greater than 2,000 gross tonnes but less than 50,000 gross tonnes have an additional limit of 1,500 SDRs per tonne above 2,000; and (iii) vessels with a gross tonnage in excess of 50,000 will have a limit of an additional 360 SDRs per tonne up to a maximum of 100 million SDRs (E.G., at $1.39 per SDR, a 100,000 gross tonne vessel would have -65- a limit of liability under the HNS Convention of approximately $139,000,000). The second tier of liability under the HNS Convention is an international fund (the "HNS Fund"), which will pay compensation for damages that exceed the vessel owner's liability limit or if the vessel owner is not liable or is otherwise unable to meet its first tier liability obligations. Total liability under the first and second tiers is limited to 250 million SDRs. A vessel owner loses its right to limit liability under the HNS Convention if it is proved that the damage resulted from the personal act or omission of the owner, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. The HNS Fund will be composed of several accounts. There will be a separate account for (i) liquified natural gas ("LNG"); (ii) LPG; and (iii) oil. These industries will contribute to the HNS Fund by receivers and importers of HNS in a contracting state (with the exception of the LNG account). In the case of LNG industry, the cargo titleholder will pay contributions to the LNG account immediately prior to discharge in a contracting state. Collections and payments from contributors will be managed by the HNS Fund, and contributors will be invoiced annually. The amount of the levy will be determined primarily by the claims submitted to the HNS Fund the preceding year and the volume of HNS the contributor imported. Initial contributions will also be required to capitalize the HNS Fund and cover administrative costs. In addition to the special HNS Fund accounts, there will be a general account to provide compensation for damage from any HNS not falling within the HNS separate accounts. Outside the United States, many countries have ratified and follow the liability scheme adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969 ("CLC"), as amended by the 1992 Protocol, which entered into force May 30, 1996. Under the CLC, an oil tanker's registered owner is strictly liable for pollution damage caused on the territorial waters of a contracting state by a discharge of oil, subject to certain defenses and limits. The current limit for a ship not exceeding 5,000 gross tonnes is 3.0 million SDRs and, for each additional tonne on a larger vessel, an additional 420 SDRs, up to a maximum of 59.7 million SDRs (E.G., at $1.39 per SDR, the maximum liability is approximately $83 million). Vessels trading to contracting states must establish evidence of insurance covering the limit of liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to the CLC. On March 6, 1992, the IMO adopted regulations which set forth new and upgraded requirements for pollution prevention for tankers. These regulations went into effect on July 6, 1995. Each Vessel will be required to comply with such IMO regulations. The IMO continues to review and introduce new regulations on a regular basis. It is impossible to predict what additional regulations, if any, may be passed by the IMO, whether those regulations will be adopted by member countries and what effect, if any, such regulations might have on the operation of the Vessels. THE COMPANY AND THE MANAGER Holdings is an Isle of Man public limited company which beneficially owns 100% of the Issuer. The Issuer is an Isle of Man public limited company that has been recently organized solely for the purpose of issuing the Notes, lending the net proceeds thereof to the Owners and entering into -66- and performing its obligations under the Letter of Credit Reimbursement Agreement. The Issuer owns 100% of each Owner. Each of the Owners has been recently organized as an Isle of Man private limited company. The Manager, an affiliate of CGTC through common ownership, is an Isle of Man private limited company, 50% of which is owned by Cambridge Holdings, L.L.C. MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS THE MANAGER The following table sets forth the name, age and principal position with the Manager of each of its executive officers and directors: NAME AGE POSITION WITH THE MANAGER Bjorn Q. Aaserod............. 40 Director and Chairman Richard M. Klapow............ 39 Director and Chief Financial Officer John F. DeSantis............. 58 Director Rolf Hansen.................. 57 Director Kenneth L. Columbia.......... 39 Vice President, Operations and Secretary All directors and executive officers of the Manager were appointed in July 1997. Each director will serve until he resigns or is removed by a resolution of the Shareholders. Officers are appointed by the Board of Directors and will serve until they resign or are removed by the Board of Directors. BJORN Q. AASEROD has broad experience in the shipping, finance and industrial sectors. Mr. Aaserod joined Cambridge in 1995. Prior to that he acted as a consultant to major investment banking firms. Among his other positions, he has been chairman and chief executive officer of publicly-quoted MG Industries and has held several directorships in other public corporations. Mr. Aaserod has close relationships with the major oil companies, first-class shippers and Far Eastern shipyards. RICHARD M. KLAPOW has extensive experience in the shipping and investment banking industries. Mr. Klapow joined Cambridge after serving as vice president of finance for Overseas Shipholding Group, Inc., a major international owner and operator of oil tankers and dry bulk vessels. Mr. Klapow's investment banking experience includes positions with Citibank, N.A. and Salomon Brothers Inc. Mr. Klapow has been associated with Cambridge since January 1996. From September 1990 to September 1995 he held senior positions with Overseas Shipholding Group, Inc. JOHN F. DESANTIS has broad experience in the shipping industry. Mr. DeSantis is currently the Chief Executive Officer and Chairman of the Board of Directors of McQuilling Brokerage Partners, Inc., a leading international ship brokerage firm based in New York and is the Chairman of the Board of Directors of the "Worldscale Association" (NYC), whose freight scale is universally used in the tanker industry. Mr. DeSantis has been a broker with McQuilling Brokerage Partners, Inc. -67- for over twenty years. Mr. DeSantis is also a former President of the Association of Ship Brokers and Agents (USA), Inc. ROLF HANSEN has extensive experience in the gas industry. Mr. Hansen has been the Terminal Manager of the Antwerp Gas Terminal since 1983 and has been the Panel Chairman of the Society International Gas Tanker and Terminal Operators since 1988. KENNETH L. COLUMBIA has a background as a tanker broker trading gases, petrochemicals, and other products, and as a vessel operations specialist with tankers, gas carriers and dry cargo vessels. Mr. Columbia has 20 years experience in transportation-related positions and extensive administrative and managerial experience in shipping. Mr. Columbia's prior positions include working at Xenon Shipping AS; JLM Industries, Inc.; Nederkoorn (USA) Inc.; and Colonial Marine Inc. GEBAB The following table sets forth the name, age and principal position with GEBAB of each of its executive officers and directors: NAME AGE POSITION WITH THE COMPANY - ---- --- ------------------------- Stefan-Mathias Pahl......................... 38 Director D. Jeffrey Phillips......................... 44 Director STEFAN-MATHIAS PAHL has worked with various shipping companies. In 1986, Mr. Pahl joined the shipbroker, Interfrete Afretamentos Ltda., in Brazil as managing director and shareholder. In 1990, Mr. Pahl joined Tankreederei Ahrenkiel GmbH, Hamburg as managing director in charge of all tanker activities. At Ahrenkiel, Mr. Pahl arranged a pool of 15 gas carriers ranging from approximately 4,000 to 8,000 cbm that was managed by GasChem. GEBAB is a major shareholder of GasChem. D. JEFFREY PHILLIPS has twenty-one years of marine management experience in Europe, Canada, the United States and Asia. He spent two years as managing director of Ahrenkiel Shipping (HK) Ltd., responsible for the technical and commercial management and newbuilding of 18 vessels. Between 1969 and 1981, Mr. Phillips worked for various companies including Turnbull Scott Shipping Company, Ltd., United States Lines, London, Furness Withy Chartering Limited, London, and Van Ommeren B.V., London. From 1981 to 1990 Mr. Phillips worked as general manager for Canadian Pacific Ships. In 1990 he became vice president at Turecamo Maritime. HOLDINGS Holdings has no and will have no employees involved in the management of the Vessels. The following table sets forth the name, age and principal position with Holdings of each of its executive officers and directors: NAME AGE POSITION WITH HOLDINGS - ---- --- ---------------------- Richard M. Klapow............... 39 Director and President David M. Moore.................. 36 Director, Vice President and Treasurer -68- Edward Cain..................... 29 Director Joseph Avantario................ 31 Director and Assistant Secretary Andrew Baker.................... 38 Secretary The directors and executive officers of Holdings were appointed in May and July 1997. Officers are appointed by the Board of Directors and will serve until they resign or are removed by the Board of Directors. THE ISSUER The Issuer has no and will have no employees involved in the management of the Vessels. The following table sets forth the name, age and principal position with the Issuer of each of its executive officers and directors: NAME AGE POSITION WITH THE ISSUER - ---- --- ------------------------ Richard M. Klapow............... 39 Director and President David M. Moore.................. 36 Director, Vice President and Treasurer Edward Cain..................... 29 Director Joseph Avantario................ 31 Director and Assistant Secretary Andrew Baker.................... 38 Secretary All directors and executive officers of the Issuer were appointed in July 1997. Officers are appointed by the Board of Directors and will serve until they resign or are removed by the Board of Directors. THE OWNERS No Owner has or will have any employees involved in the management of the Vessels. The following table sets forth the name, age and principal position with each Owner of each of its executive officers and directors: NAME AGE POSITION WITH THE OWNERS - ---- --- ------------------------ Richard M. Klapow............... 39 Director and President David M. Moore.................. 36 Director, Vice President and Treasurer Edward Cain..................... 29 Director Joseph Avantario................ 31 Director and Assistant Secretary Andrew Baker.................... 38 Secretary All directors and executive officers of the Owners were appointed in July 1997. Officers are appointed by the Board of Directors and will serve until they resign or are removed by the Board of Directors. JOSEPH AVANTARIO is a comptroller with Cambridge Holdings, L.L.C., New York. He has been comptroller with Cambridge Partners, L.L.C. since April of 1995. From May 1992 to April 1995 he was with Credit Suisse First Boston, first as a staff auditor and then as a trader of municipal reinvestment. -69- DAVID M. MOORE is a member of Cambridge Holdings, L.L.C., New York. He has been associated with Cambridge Partners, L.L.C. since 1995. Prior to that he was an investment banker with Credit Suisse First Boston since 1991. ANDREW BAKER is an English solicitor with Cains, Isle of Man, who are legal advisers to Holdings, the Issuer and the Owners and as such are entitled to charge for professional advice and services. He has been a solicitor with Cains since March 1994. Prior to that he was a partner with the law firm Pennington's since 1987. EDWARD CAIN is an English and Hong Kong solicitor with Cains, Isle of Man, who are legal advisors to Holdings, the Issuer and the Owners and as such are entitled to charge for professional advice and services. He has been a solicitor with Cains since December 1996. Prior to that he was a solicitor with the law firm Simmons & Simmons since 1992. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY The executive officers and directors of the Company have not entered into any arrangement to receive compensation for services rendered in their respective capacities. -70- PRINCIPAL SHAREHOLDERS All issued and outstanding capital stock of the Issuer is beneficially owned by Holdings. The following table sets forth information as of the date hereof, concerning the beneficial ownership of Holdings Common Stock by (i) the only persons known by Holdings' management to own beneficially more than 5% of the outstanding shares of Holdings Common Stock, (ii) each of Holdings' directors and executive officers, and (iii) all directors and executive officers of Holdings as a group. The Shareholders will obtain equity interests in Holdings through the Equity Financing, which will be consummated concurrently with the closing of the Offerings.
Percent of Number of COMMON NAME OF BENEFICIAL OWNER SHARES STOCK(A) - ------------------------ ------ -------- Cambridge Gas Transport Corporation............................................. 1,200,000 60.0% GEBAB........................................................................... 200,000 10.0 Arctic Gas S.A.................................................................. 200,000 10.0 Tractebel Gas Engineering GmbH.................................................. 200,000 10.0 Xenon Shipping Inc. ............................................................ 200,000 10.0 All executive officers and directors as a group (5 persons)..................... -- --
- ------ (a) As used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Exchange Act as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to the security through any contract, arrangement, understanding, relationship, or otherwise, including a right to acquire such power(s) during the next 60 days. Unless otherwise noted, beneficial ownership consists of sole ownership, voting and investment power with respect to all Holdings Common Stock (being ordinary shares) shown as beneficially owned by them. THE EQUITY FINANCING On the Original Closing Date, the following occurred: (a) CGTC was issued 1,000,000 shares of Holdings Common Stock in exchange for acting as arranger for the Company and 200,000 shares of Holdings Common Stock in exchange for management services to be performed by the Manager as agent of CGTC prior to the Delivery Date of each Vessel pursuant to the Management Agreement. The services to be performed by the Manager as agent of CGTC were treated by Holdings as an equity contribution with a cost basis of $3.0 million, and will be recognized for financial reporting purposes as such future services are provided. On June 12, 1997, CGTC made a cash contribution to Holdings of $10,000. (b) Arctic was issued 200,000 shares of Holdings Common Stock in exchange for Vessel design services contributed. The design services of Arctic was accounted for by Holdings as an equity contribution with a cost basis of $10.0 million. (c) GEBAB was issued 200,000 shares of Holdings Common Stock in exchange for services contributed during the pre-delivery period pursuant to the Technical Supervision Agreement -71- and for services contributed during the first six years of operation under the Technical Management Agreement. The supervision services to be performed by GEBAB was accounted for by Holdings as an equity contribution with a cost basis of $4.0 million. For financial reporting purposes, $1.0 million of this amount was recognized on the Original Closing Date reflecting services provided prior to such date, and the remaining $3.0 million was recognized as future services are provided during the pre-delivery period. The technical management services was contributed in the form of reduced compensation for those services during the first six years of operation of the Vessels as set forth under the Technical Management Agreement. (d) Xenon Shipping was issued 200,000 shares of Holdings Common Stock in exchange for a cash contribution in the amount of $9.3 million, which represents an amount equal to the brokerage commission owed by the Builders to Xenon Shipping. See "CERTAIN TRANSACTIONS--SHAREHOLDERS." (e) TGE was issued 200,000 shares of Holdings Common Stock in exchange for a cash contribution in the amount of $10.0 million and the payment by TGE to acquire the TGE Performance Bond. The cost to TGE of acquiring the TGE Performance Bond was accounted for by Holdings as an equity contribution with a cost basis of $650,000. On the Original Closing Date, TGE delivered $10.0 million in cash for deposit by the Collateral Agent into the Pre-Funding Account and directed Generale to deliver the TGE Performance Bond to the Collateral Agent, as assignee of the Owners. The value assigned to the components of the Equity Financing may not accurately reflect the true value thereof for the purpose of valuing Holdings. The Designated Owners (as defined) have agreed not to dispose of their respective stock in Holdings if any Notes are outstanding; PROVIDED that such Designated Owners may sell a portion of their respective stock, if after such sale, the stock held by such Designated Owners, either directly or indirectly, represents more than 50% of the total voting power of the Voting Stock (as defined) of Holdings and more than 50% of the equity interests in Holdings. STOCKHOLDERS AGREEMENT Holdings and its stockholders of record are parties to a Stockholders Agreement, dated as of August 1, 1997, which contains various restrictions on the transfer of stock owned by the stockholders. CGTC has a right of first refusal to purchase any shares which one or more of the other stockholders propose to sell. The agreement provides that certain stockholders continue to hold a specified minimum number of shares for a certain period of time. Except to an affiliate of TGE, TGE has agreed not to dispose of its stock in Holdings prior to the expiration of the warranty period of the last Vessel to be delivered. The stockholders have the right, in the event CGTC sells all or any portion of its stock, to require CGTC to purchase an amount of stock from each such other stockholder which is equal to that fraction (expressed as a percentage, the numerator of which is the number of shares owned by such other stockholder and the denominator of which is the aggregate number of shares owned by all shareholders) of the shares of stock owned by such other stockholder, times the number of shares of stock sold by CGTC. The agreement contains provisions which -72- prevent the Designated Owners from reducing their aggregate interest in Holdings to less than a majority interest. -73- CERTAIN TRANSACTIONS THE MANAGER Each of the Owners has entered into the Management Agreement whereby the Manager will manage each Owner's commercial and technical operations, including providing administrative services, causing the compliance of the Owners' covenants in the Indentures and monitoring GEBAB's performance under the Technical Supervision Agreement, Technical Management Agreement and Commercial Management Agreement. The Manager will receive a fee of $30,000 per annum for each Vessel prior to the Delivery Date for such Vessel and $120,000 per Vessel per annum from and after the Delivery Date for such Vessel. Prior to the Delivery Date for the first Vessel, the Manager will be responsible for the payment of the fees and expenses of the Trustees and the Collateral Agent. See "BUSINESS--MARKETING AND COMMERCIAL MANAGEMENT." In addition, the Manager, as agent of CGTC, will oversee during the pre-delivery period all aspects of the Vessels' construction on behalf of the Owners. The cost of these services, which will be $4.0 million, will be contributed to Holdings as and when performed. GEBAB On or before the Original Closing Date, Holdings assigned to the Manager, acting on behalf of each Owner, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement. Pursuant to the Technical Supervision Agreement, GEBAB (through Martime) will supervise the construction of the Vessels. See "BUSINESS--CONSTRUCTION PERIOD--TECHNICAL SUPERVISION AGREEMENT." Under the Technical Management Agreement, GEBAB (through Martime) will provide and supervise the crew for each Vessel, supervise and maintain the technical management of each Vessel, arrange for all insurances for each Vessel, provide accounting services for each Vessel, arrange for the supply of provisions for each Vessel, including bunker fuel and provide for the operation of each Vessel. See "BUSINESS--MARKETING AND COMMERCIAL MANAGEMENT--COMMERCIAL MANAGEMENT AGREEMENT" and "--OPERATIONS--TECHNICAL MANAGEMENT AGREEMENT." Pursuant to the Commercial Management Agreement, GEBAB (through MarLink) will advertise and promote each Vessel, engage each Vessel in the preparation and negotiation of all contracts of affreightment and/or charters for each vessel, administer all agreements, calculating demurrage and laytime expenses and coordinating claims with the P&I clubs. See "BUSINESS--MARKETING AND COMMERCIAL MANAGEMENT AGREEMENT--COMMERCIAL MANAGEMENT AGREEMENT." SHAREHOLDERS On the Original Closing Date, (i) GEBAB received $1.0 million to market the Vessels during the construction period thereof, (ii) Xenon Shipping received $1.0 million to market the Vessels during the construction period thereof and (iii) Xenon Shipping received a brokerage commission from the Builders in the amount of $9.3 million; and on September 1, 1997, TGE received the second installment of the Purchase Price in the amount of $2.4 million per Vessel payable under the Building Contracts. -74- UK LEASE As a component of a UK Lease (as defined), the Owners (or lessees under full payout leases) may enter into either hire purchase agreements (each, an "HPA") or conditional sale contracts (each, a "CSC") with UK Lessors (as defined) under which such UK Lessors will initially pay an amount equal to substantially all of the Purchase Price for each of the related Vessels and which grants such UK Lessors a right of possession in respect of such Vessels. Each HPA or CSC will provide that the related Owner will (unless the related UK Lessor fails to exercise its option in the case of an HPA or otherwise elects in the case of CSC) pass title to the related Vessel to the related UK Lessor after the passage of an agreed upon period of time after the delivery of such Vessel or following any early termination of the related Bareboat Lease (as defined) at which time the nominal remainder of the Purchase Price for such Vessel will be paid. Other than as described above, a UK Lessor will have no right to acquire title to the related Vessel. Each UK Lessor will be required to acknowledge the rights of the Collateral Agent to the related Vessel and any income and proceeds therefrom as provided in the related Mortgage and in the Intercreditor Agreement or otherwise agree to respect such rights (pursuant to an inter-creditor or co-ordination agreement). The Owners and the Collateral Agent will acknowledge to the related UK Lessors that they will (i) not vary provisions of the related Mortgages relating to certain rights as to the disposition of insurance proceeds and (ii) give such UK Lessors notice of any defaults under such Mortgages and the right to cure such defaults, PROVIDED that such rights of cure will not be available if the related Owners are subject to bankruptcy or insolvency proceedings and will be available for only a single period of 90 days. As a further component of a UK Lease, each UK Lessor will in turn lease the related Vessel back to the related Owner under a separate, full payout bareboat lease (each, a "Bareboat Lease") for such Vessel. It is anticipated that each Owner will pay to a subsidiary of another major UK Bank (each, a "Defeasance Bank") a sum of money, and that such Defeasance Bank will, in consideration of such payment, assume, up to certain limits of liability, the payment obligations of such Owner under the related Bareboat Lease. To the extent such payment obligations under a Bareboat Lease are assumed by such Defeasance Bank, the related Owner will be released from those obligations; PROVIDED, HOWEVER, that each Owner will remain liable under its Bareboat Lease for payment obligations in excess of the obligations thus defeased. It is anticipated that the Vessels will be chartered by the Owners to a shipping company or a subsidiary of Holdings pursuant to either bareboat or time charters. It is a requirement of the UK tax legislation that while the Vessels are leased by UK Lessors such leasing arrangements must continue for a period of 10 years and each lessee must be a company which (i) is liable for UK corporate tax in respect of its profits from the related Vessel and (ii) uses such Vessel for the purposes of that company's non-leasing trade or charters such Vessel in such manner as to satisfy the UK legislation relating to the availability of depreciation allowances for the UK Lessors. As a precondition to any Owner entering into a UK Lease, any nationally recognized statistical rating agency then rating the Notes (the "Rating Agencies"), must confirm to the Trustees in writing that entering into such UK Lease will not result in a ratings decline with respect to the Notes. -75- DESCRIPTION OF THE EXCHANGE NOTES GENERAL The First Priority Exchange Notes will be issued, and the Existing First Priority Notes were issued, pursuant to an Indenture, dated as of August 1, 1997 (the "First Priority Indenture"), among the Issuer, the Owners and United States Trust Company of New York, as First Priority Trustee. The Second Priority Exchange Notes will be issued, and the Existing Second Priority Notes were issued, pursuant to an Indenture, dated as of August 1, 1997 (the "Second Priority"), among the Issuer, the Owners and The Chase Manhattan Bank, as Second Priority Trustee. The First Priority Indenture and the Second Priority Indenture are collectively referred to herein as the "Indentures," and the First Priority Trustee and the Second Priority Trustee are collectively referred to herein as the "Trustees." The Issuer, the Owners, Holdings, the Trustees, the Letter of Credit Issuer and United States Trust Company of New York, as Collateral Agent, are all parties to a Collateral Agency and Intercreditor Agreement, dated as of August 1, 1997 (the "Intercreditor Agreement"). Copies of the Indentures, the Intercreditor Agreement and the other Security Agreements (as defined) will be available as set forth herein under "Available Information." The following summary of certain provisions of the Notes, the Indentures and the Security Agreements does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all provisions of the Notes, the Indentures and the Security Agreements, including the definitions of certain terms used therein and those terms made a part thereof by the Trust Indenture Act of 1939, as amended. EXCHANGE The Exchange Notes have been registered under the Securities Act and, accordingly, will not be subject to certain restrictions on transfer applicable to the Existing Notes. Except (i) as provided in the previous sentence and (ii) that the Existing Notes are entitled to the benefit of the Registration Rights Agreement, the First Priority Exchange Notes have terms and conditions identical in all material respects to those of the Existing First Priority Notes, and the Second Priority Exchange Notes have terms and conditions identical in all material respects to those of the Existing Second Priority Notes. Accordingly, unless specifically stated to the contrary, the following description of the Exchange Notes applies equally to the Existing Notes and the Exchange Notes, and the First Priority Exchange Notes and the Existing First Priority Notes will be treated as one series for purposes of the First Priority Indenture, and the Second Priority Exchange Notes and the Existing Second Priority Notes will be treated as one series for purposes of the Second Priority Indenture. The statements under this section relating to the Existing Notes, the Exchange Notes and the Indentures are summaries of the material terms, but do not purport to be a complete description, of the Indentures, the Existing Notes or the Exchange Notes. TERMS OF THE EXCHANGE NOTES Interest on the Exchange Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Interest on overdue principal, and (to the extent permitted by law) on overdue installments of interest will accrue at 1% per annum in excess of the stated rate for each series of Notes. The Exchange Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Exchange Notes -76- may be presented for registration of transfer and exchange at the offices of the applicable Registrar (as defined). Initially, the applicable Trustee will act as paying agent and registrar with respect to the Exchange Notes of a series. FIRST PRIORITY EXCHANGE NOTES The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, will be secured obligations of the Issuer, limited to an aggregate principal amount of $217.0 million and will mature on June 30, 2007. The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, are guaranteed jointly and severally by the Owners. See "--GUARANTEES." The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, and the Guarantees will be secured by the Collateral and will have the benefit of the Letter of Credit. The Issuer's reimbursement obligation in respect of the Letter of Credit and the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will also be secured by the Collateral. The Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will also have the benefit of the Letter of Credit under certain circumstances. See "--SECURITY." The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, will bear interest at a rate of 10 1/2% per annum from the Original Closing Date until the principal thereof is paid or made available for payment. Such interest will be payable semi-annually on June 30 and December 31 of each year, commencing December 31, 1997, to the person in whose name the relevant First Priority Exchange Note or the untendered Existing First Priority Note, if any, is registered at the close of business on the preceding June 15 or December 15, as the case may be. SECOND PRIORITY EXCHANGE NOTES The Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will be secured obligations of the Issuer, limited to an aggregate principal amount of $87.0 million (plus up to $20.9 million of additional Second Priority Notes that may be issued in lieu of paying cash interest as described below) and will mature on June 30, 2007. The Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, are guaranteed jointly and severally by the Owners. See "--GUARANTEES." The Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, and the Guarantees will be secured by the Collateral and, under certain circumstances, the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will have the benefit of the Letter of Credit. See "--SECURITY." The Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will bear interest at a rate of 12% per annum from the Original Closing Date until the principal thereof is paid or made available for payment. Such interest will be payable in cash semi-annually on June 30 and December 31 of each year, commencing December 31, 1997, to the person in whose name the relevant Second Priority Exchange Note or the untendered Existing Second Priority Notes, if any, is registered at the close of business on the preceding June 15 or December 15, as the case may be; PROVIDED, HOWEVER, that at the election of the Issuer, on any Interest Payment Date following the delivery of the first Vessel if cash available for distribution in the Revenue Account (as defined) to the Holders on such date is insufficient to pay all accrued and unpaid interest on the Second -77- Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, such interest may be paid through the issuance to the Holders of the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, by the Issuer of additional Second Priority Exchange Notes having an aggregate principal amount equal to the deficiency in such available cash; PROVIDED FURTHER, HOWEVER, that the Issuer may not issue more than $20.9 million in aggregate principal amount of such additional Second Priority Exchange Notes. REDEMPTIONS OPTIONAL REDEMPTION Except as set forth below, the Exchange Notes are not redeemable at the option of the Issuer prior to June 30, 2002. On and after such date, the First Priority Exchange Notes and the Second Priority Exchange Notes may be redeemed at the option of the Issuer, in whole or in part, at any time or from time to time, upon not less than 30 days' nor more than 60 days' prior notice mailed by first-class mail to each Holder's registered address, at the redemption prices set forth in the table below (expressed as a percentage of the principal amount thereof), plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date):
IF REDEEMED DURING THE 12-MONTH PERIOD REDEMPTION PRICE COMMENCING ON JUNE 30 OF THE YEARS SET FORTH FIRST PRIORITY EXCHANGE SECOND PRIORITY BELOW: NOTES EXCHANGE NOTES - ------ ----- -------------- 2002................................................................. 105.75% 106.00% 2003................................................................. 103.50 104.00 2004................................................................. 101.75 102.00 2005 and thereafter.................................................. 100.00 100.00
In addition, at any time and from time to time prior to June 30, 2000, the Issuer may redeem in the aggregate up to 35% of the original principal amount of each series of Notes, on a PRO RATA basis, with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Issuer) following which there exists a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% (in the case of the First Priority Exchange Notes) and 112% (in the case of the Second Priority Exchange Notes), plus in each case accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, and $45 million aggregate principal amount of Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, must remain outstanding after each such redemption. Other than as set forth in the previous paragraph, the First Priority Indenture will prohibit the Issuer from redeeming at the option of the Issuer any Second Priority Notes while the First Priority Notes are outstanding. -78- MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Exchange Notes of each series will be subject to mandatory redemption in part, on a PRO RATA basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Notes for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss (as defined), the Exchange Notes of each series will be subject to mandatory redemption in part, on a PRO RATA basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Notes for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds (as defined) with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. SELECTION AND NOTICE Unless otherwise expressly stated, if the Exchange Notes are to be redeemed in part, the selection of the Exchange Notes to be redeemed will be made by the applicable Trustee on a PRO RATA basis, by lot or by such other method as such Trustee in its sole discretion shall deem to be fair and appropriate; PROVIDED that, in all cases the Exchange Notes may be redeemed in multiples of $1,000 only, and subject always to the provisions described above. Any notice of redemption will specify (i) the Exchange Notes subject to redemption; (ii) whether the Exchange Notes are to be redeemed in whole or in part, and the aggregate principal amount of the Exchange Notes to be redeemed; and (iii) the date of such redemption. Once an Exchange Note or portion thereof has been redeemed, interest will cease to accrue thereon as of the redemption date. ADDITIONAL AMOUNTS All payments of, or in respect of, principal of and any premium and interest on the Exchange Notes, and all payments pursuant to the Guarantees, shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (or interest on any taxes, duties, assessments or other governmental charges of whatever nature) imposed or levied by or on behalf of, or within, the Isle of Man (or the jurisdiction of incorporation of any successor of the Issuer or any of the Owners) or any political subdivision or taxing authority thereof or therein ("Taxes"), unless such Taxes are required by the Isle of Man or the jurisdiction of incorporation of any successor to the Issuer or any of the Owners (each a -79- "Successor Jurisdiction"), as the case may be, or any such authority to be withheld or deducted. In that event, the Issuer, the relevant Owners or any successor, as the case may be, will pay such additional amounts of, or in respect of, principal and any premium and interest or with respect to payments pursuant to the Guarantees ("Additional Amounts") as may be necessary so that the net amount received by each Holder (including Additional Amounts) after such withholding or deduction will not be less than the amounts that the Holder would have received if such Taxes had not been withheld or deducted, except that no Additional Amounts shall be so payable for or on account of: (1) Taxes that would not have been imposed but for (a) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership or corporation) and the Isle of Man or any Successor Jurisdiction (including any territory or political subdivision of the foregoing), as the case may be, including such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a national, domiciliary or resident of or treated as a resident thereof or being or having been present or engaged in a trade or business therein or having or having had a permanent establishment therein; (b) the presentation of such Exchange Note for payment in the Isle of Man or any Successor Jurisdiction, as the case may be, or any of their respective territories or political subdivisions, unless such Exchange Note could not have been presented for payment elsewhere; or (c) the presentation of such Exchange Note more than 30 days after the date on which the payment in respect of such Exchange Note became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Exchange Note for payment on any day within such period of 30 days; (2) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; (3) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure of the Holder or beneficial owner of an Exchange Note to comply with a request of the Issuer or any of the Owners, as the case may be, addressed to the Holder (a) to provide reasonable information concerning the nationality, residence or identity of the Holder or such beneficial owner or (b) to make any reasonable declaration or other similar claim or satisfy any reasonable information or reporting requirement, which, in the case of (a) or (b), is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or governmental charge; or (4) any combination of items (1), (2) and (3); -80- nor shall Additional Amounts be paid with respect to any payment of the principal of or any premium or interest on any such Exchange Note, or payment pursuant to the Guarantees, to any Holder (including a fiduciary or partnership) to the extent that the beneficial owner would not have been entitled to such Additional Amounts had it been the Holder of the Exchange Note. The Issuer or the relevant Owners, as the case may be, will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Issuer or the relevant Owners, as the case may be, will furnish to Holders of Exchange Notes that are outstanding on the date of the withholding or deduction for or on account of Taxes, within 30 days after the date of the payment of any Taxes due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Issuer or the relevant Owners, as the case may be. Whenever there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Exchange Note, any payment pursuant to the Guarantees or the net proceeds received from the Issuer or the Owners on the sale or exchange of any Exchange Note, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in the Indentures to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the Indentures. The Issuer or the relevant Owners, as the case may be, will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery, enforcement or registration of the Exchange Notes or the Guarantees or any other document or instrument in relation thereto, or the receipt of any payments with respect to the Exchange Notes or Guarantees, excluding such taxes, charges or similar levies imposed by any jurisdiction outside of the Isle of Man, any Successor Jurisdiction or any jurisdiction in which a paying agent is located (except those resulting from or required to be paid in connection with, the enforcement of the Exchange Notes or the Guarantees or any other such document or instrument following the occurrence of any Event of Default with respect to the Exchange Notes), and has agreed to indemnify the Holders for any such taxes paid by such Holders. TAX REDEMPTION If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Exchange Notes, which change or amendment becomes effective on or after the Original Closing Date or which change in official administration, application or interpretation shall not have been available to the public prior to the Original Closing Date and is notified to the Issuer or the relevant Owners, as the case may be, on or after the Original Closing Date, it is determined by the Issuer or the relevant Owners, as the case may be, that the Issuer or the relevant Owners, as the case may be, would be required to pay, or that the Issuer or the relevant Owners, as the case may be, would be substantially likely to be required to pay, any Additional Amounts (as defined in "Additional Amounts" above) pursuant to the Indentures or the terms of any Exchange Note in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees -81- on such Interest Payment Date), and that such obligation cannot be avoided by the Issuer or the relevant Owners taking reasonable measures available to it, the Issuer may, at its option, redeem all (but not less than all) the Exchange Notes in respect of which such Additional Amounts would be so payable at any time, upon not less than 30 nor more than 60 days' written notice as provided in the Indentures, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date); PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Issuer or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Exchange Notes or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. GUARANTEES Payment of the principal of, and premium, if any, and interest on the Exchange Notes, payment to the Letter of Credit Issuer of the Issuer's obligations under the Letter of Credit Reimbursement Agreement, and the Issuer's obligations for payment of all sums of money payable under the Security Agreements and performance of all other obligations contained in the Indentures and the Security Agreements (collectively, the "Obligations") is guaranteed (each, a "Guarantee," and, collectively, the "Guarantees"), jointly and severally, on a secured basis by each of the Owners. Each Guarantee is irrevocable and unconditional but limited to an amount not to exceed the maximum amount that can be guaranteed by the applicable Owner without rendering such Guarantee voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. If a Guarantee were to be rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable Owner, and, depending on the amount of such indebtedness, an Owner's liability on its Guarantee could be reduced to zero. See "RISK FACTORS--RANKING OF THE EXCHANGE NOTES AND GUARANTEES" and "--FRAUDULENT CONVEYANCE STATUTES." SECURITY Pursuant to the Intercreditor Agreement, the Collateral Agent is holding and will hold the Collateral (defined below) in trust for the benefit of the Holders of the Exchange Notes, as well as for the benefit of the Letter of Credit Issuer and the Trustees. In addition, pursuant to the Intercreditor Agreement, the Collateral Agent has or will establish the Trust Accounts for the deposit and application of funds, as described below under "--TRUST ACCOUNTS" and "--PRIORITIES OF PAYMENT." On the Original Closing Date, (a) to secure the Issuer's obligations under the Indentures, the Security Agreements, the Letter of Credit Reimbursement Agreement and in respect of the Notes, Holdings pledged to the Collateral Agent, for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees, all the Capital Stock of the Issuer (the "Holdings Pledge") and the Issuer pledged to the Collateral Agent, for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees, all the Capital Stock of the Owners and the Intercompany -82- Note, and granted a security interest in all of its rights, titles and interests in the Trust Accounts and all cash, securities, instruments or other property credited thereto or deposited therein, and (b) to secure its obligations under its Guarantee and under the Security Agreements, each Owner granted to the Collateral Agent, for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees, a security interest in all its right, title and interest in the following assets and documents: (i) the Building Contract for the applicable Vessel; (ii) the Technical Supervision Agreement; (iii) the Building Contract Guarantee for such Vessel and the Performance Bonds; (iv) the Technical Management Agreement; (v) the Commercial Management Agreement; (vi) the Trust Accounts and all cash, securities, instruments or other property credited thereto or deposited therein; (vii) all monies and securities, including Temporary Cash Investments, paid to or deposited with, or required to be paid to or deposited with, the Collateral Agent by or for the account of the Issuer or such Owner, or otherwise pursuant to the terms of any Security Agreement; (viii) the Management Agreement; (ix) all rights of such Owner to receive payments of any kind, to execute any election or option or to give or receive any notice, consent, waiver or approval under or in respect of any of the foregoing documents or instruments; (x) any and all assets of such Owner whether now owned or hereafter acquired; and (xi) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing. The foregoing collateral pledged by Holdings, the Issuer and the Owners is herein collectively referred to as the "Original Closing Date Collateral." On the Delivery Date of each Vessel, the related Owner will grant to the Collateral Agent, for the benefit of the Holders of the Exchange Notes, the Letters of Credit Issuer and the Trustees, a security interest in all of such Owner's right, title and interest in the following assets and documents acquired by such Owner after the Original Closing Date (the "Delivery Date Collateral" and, together with the Original Closing Date Collateral, the "Collateral"): (i) such Vessel in accordance with the terms and conditions of the related Mortgage; (ii) all earnings and insurances in respect of such Vessel; (iii) all the charterhire, tolls, rents, issues, profits, products, revenues and other income (including insurance and warranty proceeds) from the property subject to, or required to be subject to, the Lien under the Mortgage, and all the estate, right, title and interest of such Owner in and to the same and every part of said property; (iv) all requisition proceeds and Insurance Proceeds with respect to such Vessel or any part thereof (to the extent of the Collateral Agent's interest therein as mortgagee of such Vessel pursuant to the related Mortgage); and (v) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing. The Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees will have an equal and ratable interest in the Collateral, subject to the priority of payment described below under "--APPLICATION OF PROCEEDS FOLLOWING AN EVENT OF DEFAULT." If Insurance Proceeds are payable in respect of a Total Loss of any Vessel, the Trustees will instruct the Collateral Agent to release the Lien on such Vessel and the related Collateral and the related Owner from all of its obligations under its Guarantee upon receipt by the Collateral Agent of the Total Loss Payment with respect to such Vessel. In connection with the termination by an Owner of the related Building Contract because of a material breach thereof by the Builder and the termination of the Building Contracts for each other Vessel that has not been accepted by its Owner as of the date of such termination, the Trustees will instruct the Collateral Agent to release the Liens on such Building Contracts and the related Collateral and the related Owners from their obligations under their Guarantees upon receipt by the Collateral Agent of the Rescission Amounts for such Vessels. -83- INTEREST DRAWS ON THE LETTER OF CREDIT On the Original Closing Date, the Letter of Credit was issued by the Letter of Credit Issuer in favor of the Collateral Agent for the benefit of the Holders of the Exchange Notes and the Trustees. The Collateral Agent is not and will not be eligible by the terms of the Letter of Credit to make an Interest Draw (as defined below) thereunder until after the Delivery Date of the first Vessel. Three Business Days prior to each Interest Payment Date thereafter, the Collateral Agent shall determine if a Note Interest Shortfall exists. If a Note Interest Shortfall exists, no later than the day which is two Business Days prior to such Interest Payment Date, the Collateral Agent shall make a draw (each, an "Interest Draw") on the Letter of Credit in a Draw Amount (as defined) equal to the lesser of (a) the Note Interest Shortfall (less any portion of such Note Interest Shortfall attributable to interest payable pursuant to a Registration Default) and (b) the Maximum Amount Available under the Letter of Credit. No later than the Business Day prior to such Interest Payment Date, the Letter of Credit Issuer shall remit such Draw Amount to the Collateral Agent and the Collateral Agent shall deposit such amount into the Letter of Credit Account. Under the terms of the Letter of Credit Reimbursement Agreement and the Intercreditor Agreement, the Collateral Agent is not and will not be permitted to make an Interest Draw to pay interest on the Second Priority Exchange Notes until and unless the Issuer shall have, prior to or on the date of such Interest Draw, issued additional Second Priority Exchange Notes in an aggregate principal amount of $20.9 million to cover previous or concurrent shortfalls in cash available in the Revenue Account to pay interest on the Second Priority Exchange Notes. On the first Business Day of each calendar month, (i) subject to the prior distribution of any required (a) Monthly Operating Deposit and (b) Manager's Fee (if such date shall also be a Management Fee Payment Date (as defined)), cash available for distribution in the Revenue Account on such date will be applied to the payment of unpaid fees in respect of the Letter of Credit and all accrued and unpaid interest on all outstanding Draws under the Letter of Credit and to the repayment, to the extent of funds remaining therein, of all Working Capital Draws outstanding on such date and then all Interest Draws outstanding; and (ii) if such date shall also be an Interest Payment Date after the Delivery Date of the first Vessel, the repayment of all Draws outstanding on such date shall be subject to the prior distribution of any required fees and expenses payable to the Trustees and the Collateral Agent in respect of the Indentures and the Intercreditor Agreement. See "--PRIORITIES OF PAYMENT--REVENUE ACCOUNT." RANKING The First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, and the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, will be secured obligations of the Issuer. With respect to claims against the Collateral securing the Exchange Notes, the Holders of the Exchange Notes will have a claim thereto which is subordinate in right of payment to any claim held by the Letter of Credit Issuer with respect to any unreimbursed Draws under the Letter of Credit. The priority of payment of the principal of, premium (if any) and interest on the Exchange Notes is as described under "Description of the Exchange Notes--Priority of Payment--Revenue Account,"-- "Priority of Payment-- Termination Account" and "-- Application of Proceeds Following an Event of Default." Neither the Issuer nor -84- the Owners are permitted by the Indentures to incur any additional Indebtedness, with certain limited exceptions. See "Description of the Exchange Notes--Ranking." MANDATORY OFFERS TO PURCHASE EXCHANGE NOTES OFFER TO PURCHASE WITH AVAILABLE CASH. Commencing on June 30, 2001 and semi-annually thereafter so long as the First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, remain outstanding (each, an "Available Cash Payment Date"), the Issuer will be required, to the extent of Available Cash (as defined), to make an offer (each, an "Available Cash Offer") to each Holder of the First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, to purchase such Holder's First Priority Exchange Notes and the untendered Existing First Priority Notes, if any,(or at such Holder's option, any part thereof) or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase; PROVIDED, HOWEVER, that the Issuer will not be required to make an Available Cash Offer if Available Cash is less than $1.0 million. Commencing on the first Available Cash Payment Date on or after the date the First Priority Exchange Notes and the untendered Existing First Priority Notes, if any, are repaid in full and on each Available Cash Payment Date thereafter, the Issuer will be required, to the extent of Available Cash, to make an Available Cash Offer to each Holder of the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, to repurchase such Holder's Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, (or at such Holder's option, any part thereof) at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase; PROVIDED, HOWEVER, that the Issuer will not be required to make an Available Cash Offer if Available Cash is less than $1.0 million. Pursuant to the terms of the Intercreditor Agreement, the Issuer will have the ability from time to time to withdraw, to the extent of Available Cash, cash from the Revenue Account in connection with purchases by the Issuer of Exchange Notes in open market transactions. To the extent the Issuer in fact purchases Exchange Notes in open market transactions, the amount of Available Cash, if any, in the Revenue Account on subsequent Available Cash Payment Dates will be reduced. OFFER TO PURCHASE UPON CHANGE OF CONTROL. Upon the occurrence of a Change of Control (as defined), the Issuer will be required to make an offer (a "Change of Control Offer"), to each Holder of the First Priority Exchange Notes and to each Holder of the Second Priority Exchange Notes, to purchase such Holder's Exchange Notes (subject to the limitation described below under "--SOURCE OF FUNDS TO PURCHASE NOTES"), at a price equal to 101% of the outstanding principal amount of such Exchange Notes, plus accrued and unpaid interest to the date of purchase (the "Change of Control Payment"); PROVIDED, HOWEVER, that the Issuer will not be required to make a Change of Control Offer following a Change of Control if a third party makes an offer which, if it had been made by the Issuer, would constitute a Change of Control Offer; PROVIDED FURTHER, that the Issuer shall purchase any and all First Priority Exchange Notes validly tendered pursuant to a Change of Control Offer prior to purchasing any Second Priority Exchange Notes validly tendered pursuant to such Change of Control Offer. -85- A "CHANGE OF CONTROL" is defined to mean the occurrence of any of the following events: (i) prior to the first public offering of common stock of Holdings, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Issuer, whether as a result of issuance of securities of Holdings or the Issuer, any merger, consolidation, liquidation or dissolution of Holdings or the Issuer, any direct or indirect transfer of securities by Holdings or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent corporation); (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in clause (i) above, except that for purposes of this clause (ii) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Issuer; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Issuer than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors (for the purposes of this clause (ii), such other person shall be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other person is the beneficial owner (as defined in this clause (ii)), directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent corporation and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent corporation); (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of Holdings or the Issuer (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of Holdings or the Issuer, respectively, was approved by a vote of 662/3% of the directors of Holdings or the Issuer, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors of Holdings or the Issuer, respectively, then in office; (iv) either CGTC or GEBAB ceases to be a shareholder of Holdings; or -86- (v) prior to the expiration of the warranty period of the last Vessel, TGE (including its Affiliates) disposes of any of its shares in Holdings other than to an Affiliate of TGE. PROCEDURE FOR PURCHASE OF NOTES. On the next succeeding Business Day after the Available Cash Determination Date with respect to an Available Cash Offer and within 30 days after the occurrence of a Change of Control, the Issuer will be required to provide, by mail (first class, prepaid) written notice to the Trustees and each Holder stating that: (i) Available Cash is expected to be available on the next succeeding Available Cash Payment Date or a Change of Control has occurred, as applicable; (ii) an Available Cash Offer is being made and Exchange Notes of the applicable series having an aggregate principal amount equal to Available Cash divided by 1.02 (the "Maximum Principal Amount") will be accepted for payment (provided that no Second Priority Exchange Note or untendered Existing Secured Priority Note, if any, will be accepted for payment unless and until all First Priority Exchange Notes and untendered Existing First Priority Notes, if any, have been repaid in full) or a Change of Control Offer is being made and all Exchange Notes validly tendered will be accepted for payment, as applicable; (iii) the purchase price and date of purchase (which shall be the Available Cash Payment Date, in the case of an Available Cash Offer, or which shall be a Business Day not less than 30 days nor more than 60 days from the date on which such Change of Control notice is mailed in the case of a Change of Control Offer); (iv) any Exchange Note not tendered will continue to accrue interest pursuant to its terms; (v) any Exchange Note accepted for payment pursuant to the Available Cash Offer or the Change of Control Offer, as applicable, shall cease to accrue interest on and after the purchase payment date therefor (in the case of a Change of Control Offer, the "Change of Control Payment Date" and, together with the Available Cash Payment Date, the "Purchase Payment Date"), unless the Issuer defaults on such payment; (vi) Holders of Exchange Notes electing to have any Exchange Note or portion thereof purchased pursuant to an Available Cash Offer or Change of Control Offer will be required, prior to the close of business on the Business Day immediately preceding the applicable Purchase Payment Date, to surrender such Exchange Note to the applicable Trustee at the address specified in the notice, together with a completed form entitled "Option of the Holder to Elect Purchase" on the reverse side of such Note; (vii) Holders of Exchange Notes will be entitled to withdraw their election if the applicable Trustee receives, not later than the close of business on the third Business Day immediately preceding the applicable Purchase Payment Date, a telegraph, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Exchange Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have such Exchange Notes purchased; and (viii) Holders whose Exchange Notes are being purchased in part will receive new Exchange Notes of the same series and in principal amount equal to the unpurchased portion of the Exchange Notes surrendered; PROVIDED, HOWEVER, that each Exchange Note purchased and each new Exchange Note issued shall be in a principal amount of $1,000 or integral multiples thereof. On the applicable Purchase Payment Date, the Issuer will be required to: (i) accept for payment all Exchange Notes or portions thereof tendered pursuant to the Available Cash Offer (provided that no Second Priority Exchange Note will be accepted for payment unless and until all First Priority Exchange Notes and untendered Existing First Priority Notes, if any, have been repaid in full) or Change of Control Offer (provided that the Issuer shall purchase any and all First Priority Exchange Notes and untendered Existing First Priority Notes, if any, validly tendered pursuant to a Change of Control Offer prior to purchasing any Second Priority Exchange Notes and untendered -87- Existing Second Priority Notes, if any, validly tendered pursuant to such Change of Control Offer), as applicable; (ii) deposit with the applicable Trustee funds sufficient to pay the purchase price of all Exchange Notes of the applicable series or portions thereof so accepted; and (iii) deliver or cause to be delivered to the applicable Trustee, all Exchange Notes or portions thereof so accepted together with an officers' certificate specifying the Exchange Notes or portions thereof accepted for payment. The applicable Trustee shall promptly mail, to the Holders of Exchange Notes so accepted, payment in an amount equal to the purchase price, and the applicable Trustee shall promptly authenticate and mail to such Holders a new Exchange Note of such series equal in principal amount to any unpurchased portion of the Exchange Notes of such series surrendered; PROVIDED, HOWEVER, that each Exchange Note purchased and each new Exchange Note issued shall be in a principal amount of $1,000 or integral multiples thereof; PROVIDED FURTHER, HOWEVER, that with respect to an Available Cash Offer, if the aggregate amount of Exchange Notes of a series tendered exceeds the Maximum Principal Amount, then the applicable Trustee shall select Exchange Notes of such series to be purchased ratably from each Holder that tendered Exchange Notes of such series such that the ratio of the principal amount of the Exchange Notes of such series to be purchased from each Holder that tendered Exchange Notes of such series to the aggregate principal amount of Exchange Notes of such series tendered by such Holder shall, as nearly as practicable and subject to rounding, equal the ratio of the Maximum Principal Amount to the aggregate principal amount of the Exchange Notes of such series tendered with respect to such Available Cash Offer. The Issuer will notify the Holders of the results of an Available Cash Offer or Change of Control Offer on or as soon as practicable after the applicable Purchase Payment Date. The Issuer will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable to an Available Cash Offer or a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the covenant described hereunder by virtue thereof. SOURCE OF FUNDS TO PURCHASE NOTES. In the event of an Available Cash Offer, the payment for the tendered Exchange Notes shall be taken from amounts held as Available Cash in the Revenue Account. In the event of a Change of Control Offer, the Change of Control Payment shall be taken from the Revenue Account to the extent of funds available therein. As discussed under "RISK FACTORS--LIMITATION ON CHANGE OF CONTROL," there can be no assurance that, on the Change of Control Payment Date, amounts in the Revenue Account will be sufficient to pay for all the Exchange Notes tendered pursuant to the Change of Control Offer. REGISTRATION RIGHTS In connection with the issuance of the Existing Notes, the Company entered into a Registration Rights Agreement with the Initial Purchasers pursuant to which the Company agreed, for the benefit of the Holders of the Existing Notes, at the Company's expense, to use its reasonable best efforts to cause the Registration Statement of which this Prospectus forms a part to be declared effective under the Securities Act. -88- Promptly after the Registration Statement of which this Prospectus forms a part is declared effective, the Company has agreed to commence the Exchange Offer and to keep the Exchange Offer open not less than 30 days (or longer if required by applicable law). In the event that any changes in law or applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer or in certain other circumstances, the Company has agreed, at the Manager's expense, to (i) as promptly as practicable, and in any event on or prior to 30 days after such filing obligation arises, file or cause to be filed with the Commission the Shelf Registration Statement covering resales of the Existing Notes, (ii) use reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act and (iii) use reasonable best efforts to keep effective the Shelf Registration Statement for up to two years after its effective date (or such shorter period that will terminate when all the Existing Notes covered thereby have been sold pursuant thereto or in certain other circumstances). The Company has agreed to use reasonable best efforts in the event of the filing of a Shelf Registration Statement, to provide to each Holder of the Existing Notes covered by the Shelf Registration Statement copies of the prospectus that is a part of the Shelf Registration Statement, notify each such Holder when the Shelf Registration Statement for the Existing Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Existing Notes. A Holder of Existing Notes that sells such Existing Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to the purchaser, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such Holder (including certain indemnification obligations). In addition, each Holder of the Existing Notes will be required to deliver certain information to be used in connection with the Shelf Registration Statement in order to have its Existing Notes included thereunder. If the Exchange Offer is not consummated by February 3, 1998, Additional Interest will accrue on the Existing Notes from such date to the date the Exchange Offer is consummated, at a rate of 0.50% of the principal amount thereof per annum, which Additional Interest is payable semiannually in arrears on each Payment Date. Interest on the First Priority Exchange Notes will accrue at a rate of 11% and interest on the Second Priority Exchange Notes will accrue at a rate of 12 1/2% per annum to reflect the 0.50% of additional Additional Interest until the earlier of consummation of the Exchange Offer or such time as the Exchange Notes may be freely resold pursuant to Rule 144(k). Additional charter hire payments are or will be payable under the Charters in an aggregate amount, in each case, equal to such Additional Interest. Upon consummation of the Exchange Offer, the Company generally will have satisfied its obligations under the Registration Rights Agreement with respect to registration of the Existing Notes and generally will have no further obligation to register the Existing Notes. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. TRUST ACCOUNTS -89- Pursuant to the Intercreditor Agreement, the Collateral Agent has established and is maintaining the Pre-Funding Account, Capitalized Interest Account, Revenue Account, Letter of Credit Account, Operating Account, Casualty Account, Termination Account and Collateral Account (collectively, the "Trust Accounts") each of which was established in the name of the Collateral Agent for the benefit of the Holders of the Exchange Notes, the Letter of Credit Issuer and the Trustees. The Manager has and will have the right to withdraw amounts held in the Operating Account. See "--OPERATING ACCOUNT." PRE-FUNDING ACCOUNT. The Issuer has deposited or will deposit, as applicable, into an account (the "Pre-Funding Account"): (i) on the Original Closing Date, (A) an amount sufficient to pay the Purchase Price of each Vessel; and (B) an amount sufficient to pay (1) all fees allocable to each Vessel and due and payable prior to the Delivery Date of such Vessel, including the Manager's Fees and those payable to the Letter of Credit Issuer and (2) all amounts in respect of the cost of Vessels' supplies and (ii) from time to time income earned on Temporary Cash Investments from amounts on deposit in the Pre-Funding Account. In connection with the foregoing deposits, the Issuer has delivered on the Original Closing Date to the Trustees and the Collateral Agent a verification report of a nationally recognized firm of independent accountants to the effect that funds deposited pursuant to clause (i)(A) above will provide cash at such times and in such amounts as will be sufficient to pay, when due, each installment payment for the Purchase Price of each Vessel. Notwithstanding the delivery of the aforementioned report, there can be no assurance that the funds deposited pursuant to clause (i)(A) above, will provide cash at such times and in such amounts as will be sufficient to pay, when due, each installment payment for the Purchase Price of each Vessel. The Collateral Agent has made or will make, as applicable payments from the Pre-Funding Account as follows: (i) on each Vessel Purchase Installment Date (as defined) for each Vessel, an amount equal to the installment then due with respect to such Vessel to be remitted to the Builders as an installment payment of the Purchase Price of such Vessel, PROVIDED that each of the Trustees and the Collateral Agent has received written notice of such Vessel Purchase Installment Date at least three Business Days prior to such date, and PROVIDED FURTHER, that no material default exists under the related Building Contract; (ii) at any time and from time to time, PROVIDED that the Collateral Agent and the Trustees have received a written request for such payment at least three Business Days prior to such date of withdrawal, an amount equal to that portion of any fee allocable to a Vessel and then due and payable prior to the Delivery Date of such Vessel pursuant to the terms of the Management Agreement or the Letter of Credit Reimbursement Agreement, to be remitted to the Manager or the Letter of Credit Issuer, as the case may be; PROVIDED, HOWEVER, that amounts withdrawn from the Pre-Funding Account to make payments as described in this clause (ii) shall not in the aggregate exceed the sum of all amounts deposited into the Pre-Funding Account pursuant to clause (i)(B)(1) of the preceding paragraph; (iii) on the Delivery Date for each Vessel, PROVIDED that the conditions precedent set forth in the Indentures and the Intercreditor Agreement have been satisfied, an amount equal to (A) the final installment of the Purchase Price for such Vessel, to be remitted to the Builders, plus (B) fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel, to be remitted to the Manager; (iv) on each Interest Payment Date occurring after the Contractual Delivery Date of a Vessel and before the Delivery Date of such Vessel, an amount equal to the interest accrued on the Allocated Principal Amount of the Notes for such Vessel to be deposited in the Revenue Account; (v) if an Owner elects to terminate the Building Contract for its Vessel due -90- to a material breach of such Building Contract by the Builders, an amount equal to the remaining funds in the Pre-Funding Account to be deposited into the Termination Account for application in redemption of such portion of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, or the Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, as the case may be, as described above under "--REDEMPTION--MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS;" (vi) on the Delivery Date of the last Vessel, the amounts remaining in the Pre-Funding Account after the payment of the final installment of the Purchase Price to the Builders and the remittance of the fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel to the Manager, to be deposited into the Revenue Account; and (vii) any and all investment income earned from Temporary Cash Investments held therein, for deposit in the Capitalized Interest Account. CAPITALIZED INTEREST ACCOUNT. On the Original Closing Date, the Collateral Agent, pursuant to the Intercreditor Agreement, deposited into an account (the "Capitalized Interest Account") an amount which, together with the investment income estimated to be earned thereon from Temporary Cash Investments as well as any investment income from Temporary Cash Investments deposited therein from the Pre-Funding Account, will be sufficient to pay interest (excluding additional interest payable on such Exchange Notes pursuant to a Registration Default) on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of the related Vessel. In connection with the foregoing deposit, the Issuer delivered on the Original Closing Date to the Trustees and the Collateral Agent a verification report of a nationally recognized firm of independent accountants to the effect that the payments scheduled to be received, without reinvestment, on the Temporary Cash Investments made with funds deposited in the Capitalized Interest Account pursuant to this paragraph, together with amounts deposited in the Capitalized Interest Account from the Pre-Funding Account as set forth above and together with any cash, without reinvestment, deposited pursuant to this paragraph, that was not invested on the Original Closing Date, will provide cash at such times and in such amounts as will be sufficient to pay, when due, interest on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of such Vessel (excluding additional interest payable on such Exchange Notes pursuant to a Registration Default). Notwithstanding the delivery of the aforementioned report, there can be no assurance that the funds deposited pursuant to this paragraph will provide cash at such times and in such amounts as will be sufficient to pay, when due, interest on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of such Vessel. On each Interest Payment Date prior to the Contractual Delivery Date of a Vessel, the Collateral Agent will withdraw from the Capitalized Interest Account in respect of each such Vessel an amount equal to the interest accrued on the Allocated Principal Amount of the Notes for such Vessel and shall deposit such amount into the Revenue Account. In addition, if an Owner elects to terminate the Building Contract for its Vessel due to a material breach of such Building Contract by the Builders, then the remaining funds in the Capitalized Interest Account shall be withdrawn from the Capitalized Interest Account and deposited into the Termination Account for application in redemption of such portion of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, or the Second Priority Exchange Notes and untendered Existing Second -91- Priority Notes, if any, as the case may be, as described above under "--REDEMPTIONS--MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS." REVENUE ACCOUNT. The following amounts will be deposited into an account (the "Revenue Account"): (i) on a daily basis, any and all revenue (including charterhire) received by the Owners or the Manager in connection with the employment of the Vessels; (ii) on the first Business Day of each month following the Delivery Date of the first Vessel, income earned during the preceding calendar month on Temporary Cash Investments from amounts on deposit in the Revenue Account; (iii) Interest Draws; (iv) Working Capital Draws in an amount equal to additional interest being paid or payable on the Allocated Principal Amount of the Notes for each Vessel pursuant to a Registration Default to the extent the balance remaining in the Capitalized Interest Account on an Interest Payment Date prior to the acceptance of such Vessel is insufficient to pay such additional interest; and (v) on the Delivery Date of the last Vessel, any amounts remaining in the Pre-Funding Account after the payment of the final installment of the Purchase Price to the Builders and the remittance of the fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel to the Manager. Deposits will also be made into the Revenue Account from time to time (i) from certain withdrawals of funds from the Pre-Funding Account, the Capitalized Interest Account and the Casualty Account, as described herein; and (ii) from amounts held in the Termination Account to the extent Insurance Proceeds exceed the related Total Loss Payment. The Collateral Agent will disburse funds on deposit in the Revenue Account from time to time as described below under "--PRIORITIES OF PAYMENTS--REVENUE ACCOUNT." LETTER OF CREDIT ACCOUNT. No later than the Business Day prior to each Interest Payment Date with respect to which the Collateral Agent has made an Interest Draw under the Letter of Credit, the Collateral Agent will, pursuant to the Intercreditor Agreement, deposit the Draw Amount into an account (the "Letter of Credit Account"). On each Interest Payment Date after the Delivery Date of the first Vessel as described under "--PRIORITIES OF PAYMENT--LETTER OF CREDIT ACCOUNT," the Collateral Agent will be required to withdraw from the Letter of Credit Account such Draw Amount and shall deposit such amount into the Revenue Account. OPERATING ACCOUNT. On the first Business Day of each calendar month, commencing after the Delivery Date of the first Vessel, the Collateral Agent will, from amounts withdrawn from the Revenue Account as described under "--PRIORITIES OF PAYMENT--REVENUE ACCOUNT," deposit into an account (the "Operating Account") an amount (the "Monthly Operating Deposit") by which the Budgeted Monthly Operating Balance then in effect exceeds the balance of funds in the Operating Account as of the opening of business on such first Business Day, as certified by the Manager to the Trustees and the Collateral Agent as of such first Business Day. In addition, on and after any Business Day commencing 90 days prior to the Delivery Date of the first Vessel, as reasonably expected by the Issuer and evidenced by an Officer's Certificate, upon receipt by the Collateral Agent of a written request from the Manager that a Working Capital Draw be made under the Letter of Credit to the extent the funds in the Operating Account are insufficient to meet actual operating expenses (including the Manager's Fees and the fees of GEBAB under the Technical Supervision Agreement and the Commercial Management Agreement) for which the Manager has received an invoice, the Collateral Agent will make a Working Capital Draw in the amount requested by the -92- Manager (but not to exceed the maximum amount then available under the Letter of Credit for Working Capital Draws) and deposit the Draw Amount into the Operating Account. CASUALTY ACCOUNT. The Collateral Agent will deposit into an account (the "Casualty Account") (i) any cash proceeds (other than amounts representing the Refund Amount or the proceeds of the Performance Bonds or any Building Contract Guarantee) from the exercise of remedies against a Builder in respect of any Vessel; and (ii) any Insurance Proceeds (other than with respect to a Total Loss) payable to the Collateral Agent as assignee of the Owners and the Manager, pursuant to the terms of the Insurance Policies, as described herein under "THE MORTGAGES--INSURANCE." In accordance with the terms of the Intercreditor Agreement, the Collateral Agent will apply amounts deposited into the Casualty Account to pay for the repair or salvage of any of the Vessels, if, in each case, the following conditions have been met: (i) if no Event of Default has occurred or is continuing, the Manager has certified to the Trustees and the Collateral Agent that such repairs are necessary or desirable for the use, operation and maintenance of such Vessel; and (ii) if an Event of Default has occurred and is continuing, the Collateral Agent, in its sole discretion, has determined to apply such amounts to pay for the repair or salvage of such Vessel. If repair of such Vessel is deemed not to be desirable by the Manager or the Collateral Agent, pursuant to either clause (i) or (ii) above, such amounts will be held (x) in the Casualty Account if no Event of Default has occurred or is continuing, and (y) in the Collateral Account if an Event of Default has occurred and is continuing. The Collateral Agent may withdraw funds from the Casualty Account on any Interest Payment Date, to cover any deficiency which may arise if funds available in the Revenue Account are insufficient to pay amounts required to be paid from the Revenue Account on such Interest Payment Date as described under "--PRIORITIES OF PAYMENTS--REVENUE ACCOUNT," but only to the extent that funds on deposit in the Casualty Account are not designated for payment of the repair or salvage of the related Vessel giving rise to the deposit of such funds. TERMINATION ACCOUNT. In the event of a Total Loss of a Vessel or in the event of a termination by an Owner of its Building Contract, the Collateral Agent will deposit into an account (the "Termination Account") any Insurance Proceeds or the Refund Amounts with respect to the related Vessel and any other Vessel that has not been accepted as of such date of termination, if any, and any amounts collected in respect of the related Building Contract Guarantees and Performance Bonds, as the case may be. See "--REDEMPTIONS--MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS." The Refund Amounts and any amounts collected in respect of the related Building Contract Guarantees and the Performance Bonds, together with the amounts withdrawn from the Pre- Funding Account and the Capitalized Interest Account shall be withdrawn from the Termination Account to be applied first, to the Letter of Credit Issuer in an aggregate amount equal to the sum of (i) any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement, (ii) all Working Capital Draws made with respect to such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and (iii) the Allocated Portion of Interest Draws for such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and then, for the redemption of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, or the Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, -93- as the case may be, as required by the terms of the Indentures. The Insurance Proceeds in the event of a Total Loss will be withdrawn from the Termination Account and disbursed by the Collateral Agent, in the following order of priority: FIRST: to the Letter of Credit Issuer, the Trustees and the Collateral Agent, an amount equal to any accrued and unpaid Letter of Credit Fees and Trustee and Collateral Agent fees and all reasonable expenses and charges incurred by or on behalf of the Letter of Credit Issuer, the Trustees and the Collateral Agent in connection with the ascertainment or protection of their respective rights and the pursuance of their respective remedies under the Indentures, the Letter of Credit Reimbursement Agreement or any of the Security Agreements (including the reasonable fees and expenses of counsel); SECOND: to the Letter of Credit Issuer, an amount equal to all Working Capital Draws made with respect to such Vessel which remain unreimbursed, together with interest thereon payable pursuant to the Letter of Credit Reimbursement Agreement; THIRD: to the Letter of Credit Issuer, an amount equal to the Allocated Portion of Interest Draws for a Vessel which remain unreimbursed, together with interest thereon payable pursuant to the Letter of Credit Reimbursement Agreement; FOURTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Exchange Notes and untendered Existing First Priority Exchange Notes, if any, an amount equal to any accrued and unpaid interest in respect of the First Priority Exchange Notes and untendered Existing First Priority Exchange Notes, if any, then outstanding; FIFTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Exchange Notes and untendered Existing Second Priority Exchange Notes, if any, an amount equal to any accrued and unpaid interest in respect of the Second Priority Exchange Notes and untendered Existing Second Priority Exchange Notes, if any, then outstanding; SIXTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Exchange Notes and untendered Existing First Priority Exchange Notes, if any, an amount equal to the outstanding principal of the First Priority Exchange Notes and untendered Existing First Priority Exchange Notes, if any; SEVENTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Exchange Notes and untendered Existing Second Priority Exchange Notes, if any, an amount equal to the outstanding principal of the Second Priority Exchange Notes and untendered Existing Second Priority Exchange Notes, if any; and EIGHTH: to the Revenue Account, any remaining amounts. COLLATERAL ACCOUNT. The Collateral Agent will deposit into an account (the "Collateral Account"): (i) the cash proceeds of any sale of, or other realization upon, all or any part of the Collateral upon exercise by the Collateral Agent of any rights and remedies under the Intercreditor Agreement and the Indentures, as described below under "--DEFAULTS;" (ii) any other amounts -94- received by the Collateral Agent upon the occurrence and continuation of an Event of Default, if such amounts are not otherwise applied as indicated below under "--PRIORITIES OF PAYMENT--REVENUE ACCOUNT;" (iii) any other amounts received by the Collateral Agent pursuant to any of the Security Agreements for which the Intercreditor Agreement does not specify a Trust Account into which such amount is to be deposited; and (iv) upon the occurrence and continuance of an Event of Default, at the instruction of the Trustees and the Letter of Credit Issuer, funds from any other Trust Account. Funds on deposit in the Collateral Account will be distributed in accordance with "--APPLICATION OF PROCEEDS FOLLOWING AN EVENT OF DEFAULT" below. PRIORITIES OF PAYMENT The Collateral Agent will disburse amounts from the Revenue Account, the Letter of Credit Account and the Operating Account in the manner, and in the order of priority, described below. REVENUE ACCOUNT. On the first Business Day of each calendar month, the Collateral Agent will withdraw funds from the Revenue Account and apply such funds in the following order of priority: (i) first, for deposit into the Operating Account, an amount equal to the Monthly Operating Deposit (as certified by the Manager); (ii) second, to the Letter of Credit Issuer, an amount, as certified to the Collateral Agent by the Letter of Credit Issuer, equal to all accrued and unpaid interest on all outstanding Draws under the Letter of Credit, to such date and, after the Delivery Date of the last Vessel, the sum of all accrued and unpaid fees payable in respect of the Letter of Credit to such date; (iii) third, to the Letter of Credit Issuer, an amount as certified to the Collateral Agent by the Letter of Credit Issuer, equal to the aggregate amount of Working Capital Draws outstanding on such date; and (iv) fourth, to the Letter of Credit Issuer, an amount, as certified to the Collateral Agent by the Letter of Credit Issuer, equal to the aggregate amount of Interest Draws outstanding on such date; PROVIDED, HOWEVER, that, in the event that the first Business Day of any calendar month is a Management Fee Payment Date, the application of funds pursuant to subparagraphs (ii), (iii) and (iv) above shall be subordinate to the payment of the Manager's Fee as set forth in the following paragraph; PROVIDED FURTHER, that in the event that the first Business Day of any calendar month is an Interest Payment Date, the application of funds pursuant to subparagraphs (iii) and (iv) above shall also be subordinate to the payments set forth in subparagraph (A) below. On each the first Business Day of each calendar quarter (each a "Management Fee Payment Date") after the Delivery Date of the first Vessel, upon its receipt from the Manager of a written statement describing the amounts then due and payable, the Collateral Agent will withdraw from the Revenue Account, to the extent of funds available therein, an amount equal to the aggregate -95- Manager's Fee then payable pursuant to the Management Agreement, the Commercial Management Agreement and the Technical Management Agreement, and shall remit such amount to the Manager. Subject to the priorities set forth in the preceding two paragraphs, on each Interest Payment Date the Collateral Agent shall withdraw funds from the Revenue Account, to the extent of funds available therein, and apply such funds in the following order of priority: (A) prior to the Delivery Date of the last Vessel, to the Letter of Credit Issuer, the sum of all accrued and unpaid fees payable in respect of the Letter of Credit to such date; (B) after the Delivery Date of the first Vessel, to the Trustees and the Collateral Agent, on a PRO RATA basis in accordance with amounts owed, an amount, as certified by the respective Trustee or the Collateral Agent, equal to the accrued and unpaid fees and expenses payable in respect of the Indentures and the Intercreditor Agreement; (C) to the First Priority Trustee for the benefit of the Holders of First Priority Exchange Notes and untendered Existing First Priority Notes, if any, an amount, as certified to the Collateral Agent by the First Priority Trustee, equal to all accrued and unpaid interest to such Interest Payment Date on the First Priority Exchange Notes and untendered Existing First Priority Notes, if any; and (D) to the Second Priority Trustee for the benefit of the Holders of Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, an amount, as certified to the Collateral Agent by the Second Priority Trustee, equal to the accrued and unpaid interest to such Interest Payment Date on the Second Priority Notes and untendered Existing Second Priority Notes, if any. Any amounts that remain in the Revenue Account on an Interest Payment Date after application in accordance with the foregoing priorities will be treated as Available Cash. From time to time after the Delivery Date of the first Vessel, in the event of an extraordinary expense incurred in order to maintain and operate a Vessel in accordance with the related Mortgage, as certified by the Manager to the Trustees and the Collateral Agent, which expense is immediately due and payable, the Collateral Agent will be required to withdraw (each, an "Extraordinary Remittance") from amounts on deposit in the Revenue Account an amount sufficient to meet such extraordinary expense and deposit such amount into the Operating Account. LETTER OF CREDIT ACCOUNT. On each Interest Payment Date after the Delivery Date for the first Vessel, any amounts on deposit in the Letter of Credit Account will be withdrawn by the Collateral Agent and transferred into the Revenue Account and applied on such Interest Payment Date solely to amounts payable as described in clauses (B) and (C) of the third paragraph under "--Revenue Account;" PROVIDED, HOWEVER, that such amounts shall not be applied to pay amounts owed as described in such clause (C) unless the Issuer shall have, prior to or on such Interest Payment Date, issued additional Second Priority Notes in an aggregate principal amount of $20.9 million as described under "--TERMS OF THE EXCHANGE NOTES--SECOND PRIORITY EXCHANGE NOTES." -96- OPERATING ACCOUNT. The Manager shall have the right to withdraw amounts on deposit in the Operating Account, from time to time, to pay the operating expenses of (i) Vessels as to which the Delivery Date has occurred and (ii) to the extent of Working Capital Draws deposited therein, Vessels the Delivery Date of which is reasonably expected by the Issuer, as evidenced to the Collateral Agent by an Officer's Certificate, to occur within 90 days of the date of such withdrawal date. On the fifteenth day of each January, April, July and October, the Manager shall provide to the Trustees and the Collateral Agent a reasonably detailed statement setting forth, on an aggregate and per Vessel basis, how the amounts withdrawn from the Operating Account were applied during the previous calendar quarter. APPLICATION OF PROCEEDS FOLLOWING AN EVENT OF DEFAULT Upon the occurrence of (i) an Event of Default under either of the Indentures or (ii) an Event of Default under the Letter of Credit Reimbursement Agreement, the related Trustee or the Letter of Credit Issuer, as the case may be, may, subject to the terms and provisions of the Intercreditor Agreement, declare all amounts owing under the applicable Indenture or the Letter of Credit Reimbursement Agreement, as the case may be, to be immediately due and payable and, subject to the terms of the Intercreditor Agreement, direct the Collateral Agent to take action to enforce the remedies contained in the applicable Indenture or the Letter of Credit Reimbursement Agreement, as the case may be. Pursuant to the Intercreditor Agreement, all amounts on deposit in the Trust Accounts which may be distributed in the event of an Event of Default, will be distributed on a distribution date selected by the Collateral Agent or at the request of the Letter of Credit Issuer or the Holders (in the aggregate) of a majority of the then outstanding Exchange Notes of both series, in the following order of priority, to the extent of funds available therein: FIRST: to the Letter of Credit Issuer, the Trustees and the Collateral Agent, an amount equal to any accrued and unpaid Trustee and Collateral Agent fees and all reasonable expenses and charges incurred by or on behalf of the Letter of Credit Issuer, the Trustees and the Collateral Agent in connection with the ascertainment or protection of their respective rights and the pursuance of their respective remedies under the Indentures, the Letter of Credit Reimbursement Agreement or any of the Security Agreements (including the reasonable fees and expenses of counsel); SECOND: to the Letter of Credit Issuer, an amount equal to any amounts owing pursuant to the Letter of Credit Reimbursement Agreement with respect to Working Capital Draws; THIRD: to the Letter of Credit Issuer, an amount equal to any amounts pursuant to the Letter of Credit Reimbursement Agreement with respect to Interest Draws; FOURTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, an amount equal to any accrued and unpaid interest in respect of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, then outstanding; -97- FIFTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, an amount equal to any accrued and unpaid interest in respect of the Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, then outstanding; SIXTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, an amount equal to the outstanding principal of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any; SEVENTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Exchange Notes and the untendered Existing Second Priority Notes, if any, an amount equal to the outstanding principal of the Second Exchange Priority Notes and untendered Existing First Priority Notes, if any; and EIGHTH: to the Issuer, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, the excess, if any. CERTAIN COVENANTS LIMITATION ON INDEBTEDNESS. The Issuer shall not Incur, directly or indirectly, any Indebtedness, except that the Issuer may Incur any or all of the following Indebtedness: (1) the Existing First Priority Notes, the First Priority Exchange Notes, the Existing Second Priority Notes and the Second Priority Exchange Notes; and (2) Indebtedness incurred under the Letter of Credit Reimbursement Agreement and under the Security Agreements. LIMITATION ON INDEBTEDNESS OF OWNERS. (a) The Issuer shall not permit any Owner to Incur, directly or indirectly, any Indebtedness except that an Owner may Incur the following Indebtedness: (1) Guarantees of the Existing First Priority Notes, the First Priority Exchange Notes, the Existing Second Priority Notes and the Second Priority Exchange Notes, the Issuer's obligations under the Letter of Credit Reimbursement Agreement and any Indebtedness Incurred under the Security Agreements; (2) the Intercompany Note; and (3) Attributable Debt in respect of a UK Lease; PROVIDED, HOWEVER, that prior to such Incurrence, the Issuer shall have delivered to the Trustees written confirmation from the Rating Agencies that the entry into such UK Lease will not result in a downgrading (or possible downgrading) of the Notes. LIMITATION ON RESTRICTED PAYMENTS. (a) The Issuer shall not, and shall not permit any Owner, directly or indirectly, to make a Restricted Payment. -98- (b) The provisions of the foregoing paragraph (a) shall not prohibit, with respect to the First Priority Indenture, the redemption of Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, pursuant to the provisions described under "--REDEMPTIONS--MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS," or "--TAX REDEMPTION" or the purchase of Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, pursuant to the provisions described under "--MANDATORY OFFERS TO PURCHASE NOTES," in each case only to the extent that the corresponding provisions in the First Priority Indenture have been complied with prior to or on the date of such redemption or purchase. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM OWNERS. The Issuer shall not, and shall not permit any Owner to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Owner to (a) pay dividends or make any other distributions on its Capital Stock to the Issuer or another Owner or pay any Indebtedness owed to the Issuer, (b) make any loans or advances to the Issuer or (c) transfer any of its property or assets to the Issuer, except any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Original Closing Date. LIMITATION ON ASSET SALES. The Issuer shall not, and shall not permit any Owner to, sell, assign, convey, transfer or otherwise dispose of a Vessel or any other portion of the Collateral, except pursuant to the Security Agreements or a UK Lease and except sales of Incidental Assets. LIMITATION ON AFFILIATE TRANSACTIONS. (a) Except for payments under the Building Contracts which the Builders pay to TGE or which the Builders have directed be paid directly to TGE, the Issuer shall not, and shall not permit any Owner to, enter into or permit to exist any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with any Affiliate of the Issuer (an "Affiliate Transaction") unless the terms thereof (1) are no less favorable to the Issuer or such Owner than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction involves an amount in excess of $1.0 million, (i) are set forth in writing; and (ii) have been approved by a majority of the members of the Board of Directors having no personal stake in such Affiliate Transaction and (3) if such Affiliate Transaction involves an amount in excess of $5.0 million, have been determined by a reasonably appropriate independent qualified appraiser given the size and nature of the transaction to be fair, from a financial standpoint, to the Issuer and the Owners. (b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any Restricted Payment permitted to be paid pursuant to the covenant described under "--LIMITATION ON RESTRICTED PAYMENTS;" (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options, stock ownership and other employee benefit plans approved by the Board of Directors; (iii) the grant of stock options or similar rights to employees and directors of Holdings or the Issuer pursuant to plans approved by the Board of Directors; (iv) fees paid to directors who are not employees of the Issuer or the Owners; (v) any Affiliate Transaction between the Issuer and an Owner or between Owners; (vi) the performance by the Issuer and the Owners of their obligations under the Management Agreement and, in the case of the Owners, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement, in each case in the form in effect on the -99- Issue Date; and (vii) the payments made to the Shareholders on the Original Closing Date as described in this Offering Circular under "Certain Transactions." LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF OWNERS. The Issuer shall not sell or otherwise dispose of any Capital Stock of an Owner, and shall not permit any such Owner directly, or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock except (i) to the Issuer or another Owner or (ii) directors' qualifying shares. LIMITATION ON LIENS. The Issuer shall not, and shall not permit any Owner to, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties (including Capital Stock of an Owner), whether owned at the Original Closing Date or thereafter acquired, other than Permitted Liens. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Issuer shall not, and shall not permit any Owner to, enter into any Sale/Leaseback Transaction, except for a UK Lease. MERGER AND CONSOLIDATION. The Issuer shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all its assets to, any Person, except in connection with the imposition of Additional Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Issuer") shall be a Person organized and existing under (a) the laws of the United States of America, any State thereof or the District of Columbia, (b) the laws of the Republic of Liberia, (c) the laws of the Isle of Man or (d) any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Issuer (if not the Issuer) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the applicable Trustee, in form satisfactory to such Trustee, all the obligations of the Issuer under the Exchange Notes and the applicable Indenture; (ii) the Successor Issuer (if not the Issuer) shall expressly assume all the obligations of the Issuer under the Security Agreements and the Letter of Credit Reimbursement Agreement; (iii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Issuer or any Subsidiary as a result of such transaction as having been Incurred by such Successor Issuer or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iv) immediately after giving effect to such transaction, the Successor Issuer shall have a Consolidated Net Worth in an amount that is not less than the Consolidated Net Worth of the Issuer immediately prior to such transaction; (v) the Issuer shall have delivered to the applicable Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the applicable Indenture and (vi) an opinion of counsel in the jurisdiction where the Successor Issuer is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Exchange Notes by the Successor Issuer to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes on income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Exchange Notes, who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect of the acquisition, ownership or disposition of the Exchange Notes including the receipt of interest, principal or premiums thereon, provided that such Holder does not -100- use or hold, and is not deemed to use or hold the Exchange Notes in carrying on a business in the Applicable Jurisdiction. The Successor Issuer shall be the successor to the Issuer and shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indentures, but the predecessor Issuer in the case of a conveyance, transfer or lease shall not be released from the obligation to pay the principal of and interest on the Exchange Notes. The Issuer shall not permit any Owner to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all its assets to any Person, except in connection with the imposition of Additional Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Owner") shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under (a) the laws of the United States of America, or any State thereof or the District of Columbia, (b) the laws of the Republic of Liberia, (c) the Isle of Man or (d) any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Owner (if not the Owner) shall expressly assume, by a Guarantee Agreement, all the obligations of such Owner, if any, under its Guarantee; (ii) the Successor Owner (if not the Owner) shall expressly assume, by the Guarantee Agreement, all the obligations of such Owner, if any, under its Guarantee of the Issuer's obligations under the Security Agreements and the Letter of Credit Reimbursement Agreement; (iii) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the Successor Owner as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; (iv) the Issuer delivers to the applicable Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guarantee Agreement, if any, complies with the applicable Indenture; and (v) an opinion of counsel in the jurisdiction where the Successor Owner is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Guarantee by the Successor Owner to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes or income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Securities who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect to the acquisition, ownership or disposition of the Securities, including the receipt of interest, principal or premiums thereon, PROVIDED that such Holder does not use or hold, and is not deemed to use or hold the Securities in carrying on a business in the Applicable Jurisdiction. LIMITATION ON BUSINESS ACTIVITIES. The Issuer shall not conduct any trade or business other than holding Investments in the Owners. The Issuer shall not permit any Owner to conduct any trade or business other than the ownership and operation of its respective Vessel and holding Investments in the Issuer or one or more other Owners. IMPAIRMENT OF SECURITY INTEREST. The Issuer shall not, and shall not permit any Owner to, take or knowingly or negligently omit to take, any action which action or omission might or would have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Trustees and the Holders of the Exchange Notes, and the Issuer shall not, and shall not permit -101- any Owner to, grant to any Person other than the Collateral Agent, for the benefit of the Trustees, the Letter of Credit Issuer and the Holders of the Exchange Notes, any interest whatsoever in any of the Collateral. AMENDMENTS TO SECURITY AGREEMENTS. The Issuer shall not, and shall not permit any Owner to, amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Agreements in any way that would be adverse to the Holders of the Exchange Notes. SEC REPORTS. Whether or not required by the rules and regulations of the Commission, Holdings shall furnish to the Noteholders (i) all annual and quarterly financial information that would be required to be contained in a filing with the Commission on Forms 20-F and 10-Q if Holdings were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual financial information, a report thereon by Holdings' certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if Holdings were required to file such reports; PROVIDED, HOWEVER, that (x) such quarterly financial information shall be furnished within 60 days following the end of each such fiscal quarter of Holdings (provided that the initial quarterly information shall be furnished within 75 days following the end of the most recently completed fiscal quarter ending prior to the Original Closing Date) and (y) such annual financial information shall be furnished within 120 days following the end of the fiscal year of Holdings. In addition, whether or not required by the rules and regulations of the Commission, Holdings will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such filing). In addition, Holdings shall furnish to the Noteholders and to prospective investors, upon the requests of such Noteholders, any information required to be delivered pursuant to Rule 144A (d) (4) under the Securities Act so long as the Exchange Notes are not freely transferable under the Securities Act. LIMITATION ON ACTIVITIES OF HOLDINGS. (a) Holdings shall not Incur, directly or indirectly, any Indebtedness other than the Holdings Pledge. (b) Holdings shall at all times be the holder of record of, and shall be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of, 100% of the outstanding Capital Stock of the Issuer. (c) Holdings shall not engage in any trade or business or hold any assets or make any Investments (other than, in each case, the ownership of the Capital Stock of the Issuer). (d) Holdings shall not, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties, other than the Holdings Pledge. (e) Holdings shall not consolidate with or merge with or into any Person. DEFAULTS -102- An Event of Default is defined in the Indentures as (i) a default in the payment of interest on the Notes when due, continued for 30 days; (ii) a default in the payment of principal of any Note when due at its Stated Maturity, upon optional or mandatory redemption, required purchase, declaration or otherwise; (iii) the failure by the Issuer to comply with its obligations under "--CERTAIN COVENANTS--MERGER AND CONSOLIDATION" above; (iv) the failure by the Issuer to comply for 30 days after notice with any of its obligations in the covenants described above under "--CHANGE OF CONTROL" (other than a failure to purchase Exchange Notes), "--LIMITATION ON INDEBTEDNESS," "--LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF OWNERS," "--LIMITATION ON RESTRICTED PAYMENTS," "--LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM OWNERS," "--LIMITATION ON ASSET SALES," "--LIMITATION ON AFFILIATE TRANSACTIONS," "--LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF OWNERS," "--LIMITATION ON LIENS," "--LIMITATION ON SALE/LEASEBACK TRANSACTIONS," "--LIMITATION ON BUSINESS ACTIVITIES," "--IMPAIRMENT OF SECURITY INTEREST," "--AMENDMENT TO SECURITY AGREEMENTS" or "--SEC REPORTS" or the failure by Holdings to comply for 10 Business Days after notice with any of its obligations in the covenant described above under "--CERTAIN COVENANTS--LIMITATION ON ACTIVITIES OF HOLDINGS;" (v) the failure by the Issuer to comply with its other agreements contained in the Indentures or in the Security Agreements, or the occurrence of an event of default under a Mortgage, and such failure or event of default continues for 60 days after notice; (vi) Indebtedness of Holdings, the Issuer or any Owner is not paid within any applicable grace period after final maturity or is accelerated by the Holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million (the "cross acceleration provision"); (vii) certain events of bankruptcy, insolvency or reorganization of Holdings, the Issuer or an Owner (the "bankruptcy provisions"); (viii) any judgment or decree for the payment of money in excess of $5.0 million is entered against Holdings, the Issuer or an Owner, remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed within 10 days after notice (the "judgment default provision"); (ix) a Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Guarantee) or an Owner denies or disaffirms its obligations under its Guarantee (the "guarantee default provision"); (x) the security interest under the Indentures or the Security Agreements shall, at any time, cease to be in full force and effect for any reason (other than by operation of the provisions of the applicable Indenture and the Security Agreements) other than the satisfaction in full of all obligations under the applicable Indenture and discharge of the applicable Indenture, or any security interest created thereunder or in the Security Agreements shall be declared invalid or unenforceable or the Issuer, Holdings or any Owner shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable (the "security default provision"); or (xi) the Designated Owners cease to own (and vote at their discretion) Voting Stock of Holdings representing at least a majority of the Voting Stock of Holdings and cease to own Capital Stock of Holdings entitling them to at least a majority of the equity interests in Holdings. However, a default under clauses (iv), (v) and (viii) will not constitute an Event of Default under an Indenture with respect to a series of Exchange Notes, until the applicable Trustee or the Holders of 25% in principal amount of the outstanding Exchange Notes of such series notify the Issuer of the default and the Issuer does not cure such default within the time specified after receipt of such notice. If an Event of Default occurs with respect to a series of Exchange Notes and is continuing, the applicable Trustee or the Holders of at least 25% in principal amount of the outstanding Exchange Notes of such series may declare the principal of and accrued but unpaid interest on all the Exchange Notes, of such series to be due and payable. Upon such a declaration, such principal -103- and interest shall be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer occurs and is continuing, the principal of and interest on all the Exchange Notes will IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustees or any Holders of the Exchange Notes. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Exchange Notes of a series may rescind any such acceleration with respect to the Exchange Notes of such series and its consequences. Subject to the provisions of the Indentures relating to the duties of the Trustees, in case an Event of Default occurs with respect to a series of Notes and is continuing, the applicable Trustee will be under no obligation to exercise any of the rights or powers under the applicable Indenture at the request or direction of any of the Holders of the Exchange Notes of such series unless such Holders have offered to such Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder of an Exchange Note, of a series may pursue any remedy with respect to the applicable Indenture or the Exchange Notes of such series unless (i) such Holder has previously given the applicable Trustee notice that an Event of Default is continuing; (ii) Holders of at least 25% in principal amount of the outstanding Exchange Notes of such series have requested such Trustee to pursue the remedy; (iii) such Holders have offered such Trustee reasonable security or indemnity against any loss, liability or expense; (iv) such Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and (v) the Holders of a majority in principal amount of the outstanding Exchange Notes of such series have not given such Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes of a series are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the applicable Trustee or of exercising any trust or power conferred on the applicable Trustee. Such Trustee, however, may refuse to follow any direction that conflicts with law or the applicable Indenture or that such Trustee determines is unduly prejudicial to the rights of any other Holder of an Exchange Note of such series or that would involve such Trustee in personal liability. Each Indenture provides that if a Default occurs and is continuing and is known to the Trustee, such Trustee must mail to each Holder of the Exchange Notes of the applicable series notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of or interest on an Exchange Note of a series, the applicable Trustee may withhold notice if and so long as a committee of its trust officers determines that withholding notice is not opposed to the interest of the Holders of the Exchange Notes of such series. In addition, the Issuer is required to deliver to each Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Issuer also is required to deliver to each Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults, their status and what action the Issuer is taking or proposes to take in respect thereof. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS A director, officer or employee, as such, of the Issuer or Holdings shall not have any liability for any obligations of the Issuer or Holdings, as the case may be, under the Indentures, the Security Agreements or the Intercreditor Agreement. In addition, a director, officer, employee or stockholder, as such, of the Owners shall not have any liability for any obligations of the Owners under the -104- Guarantees or for any claim based on, in respect of or by reason of such obligations or their creation. AMENDMENTS AND WAIVERS Subject to certain exceptions, each Indenture may be amended with the consent of the Holders of a majority in principal amount of the Exchange Notes of the applicable series then outstanding (including consents obtained in connection with a tender offer or exchange for the Exchange Notes of such series) and any past Default or Event of Default or compliance with any provisions may also be waived with the consent of the Holders of a majority in principal amount of the Exchange Notes of such series then outstanding. However, without the consent of each Holder of an outstanding Exchange Note of a series affected thereby, no amendment may, among other things, (i) reduce the amount of Exchange Notes of such series whose Holders must consent to an amendment; (ii) reduce the rate of or extend the time for payment of interest on any Exchange Note of such series; (iii) reduce the principal of or extend the Stated Maturity of any Exchange Note of such series; (iv) reduce the premium payable upon the redemption of any Note of such series or change the time at which any Exchange Note of such series may be redeemed as described under "--REDEMPTIONS" above; (v) make any Exchange Note of such series payable in money other than that stated in the Exchange Note of such series; (vi) impair the right of any Holder of the Exchange Notes of such series to receive payment of principal of and interest on such Holder's Exchange Notes or untendered Existing Notes, if any, of such series on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Exchange Notes of such series; (vii) make any change in the amendment provisions which require each Holder's consent or in the waiver provisions; (viii) make any change in any Guarantee or Security Agreements that would adversely affect the Holders of such series or terminate the Lien of the Indenture or any Security Agreement on any property at any time subject thereto or deprive the Holder of the security afforded by the Lien of such Indenture or the Security Agreements; or (ix) make any change in the covenants described under "--CERTAIN COVENANTS" that would adversely affect the Holders of such series. Without the consent of any Holder of the Exchange Notes of a series, the Issuer and related Trustee may amend the applicable Indenture or any Security Agreement to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation of the obligations of the Issuer under such Indenture, to provide for uncertificated Exchange Notes of such series in addition to or in place of certificated Exchange Notes of such series (PROVIDED that such uncertificated Exchange Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that such uncertificated Exchange Notes are described in Section 163(f)(2)(B) of the Code), to add guarantees with respect to the Exchange Notes of such series, to secure the Exchange Notes of such series, to add to the covenants of the Issuer for the benefit of the Holders of the Exchange Notes or untendered Existing Notes, if any, of such series or to surrender any right or power conferred upon the Issuer, to make any change that does not adversely affect the rights of any Holder of the Exchange Notes of such series or to comply with any requirement of the SEC in connection with the qualification of the applicable Indenture under the Trust Indenture Act. The consent of the Holders of the Exchange Notes of a series is not necessary under the applicable Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. -105- After an amendment under an Indenture becomes effective, the Issuer is required to mail to Holders of the Exchange Notes of the applicable series a notice briefly describing such amendment. However, the failure to give such notice to all Holders of the Exchange Notes of such series, or any defect therein, will not impair or affect the validity of the amendment. TRANSFER The Exchange Notes will be issued in registered form and will be transferable (subject to applicable federal and state securities laws) only upon the surrender of the Exchange Notes being transferred for registration of transfer. The Issuer may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection with certain transfers and exchanges. DEFEASANCE The Issuer at any time may terminate all its obligations under the Exchange Notes of a series and the applicable Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Exchange Notes of such series, to replace mutilated, destroyed, lost or stolen Exchange Notes of such series and to maintain a registrar and paying agent in respect of the Exchange Notes of such series. The Issuer at any time may terminate its obligations under the Exchange Notes of a series and the applicable Indenture under "--MANDATORY OFFERS TO PURCHASE EXCHANGE NOTES--OFFER TO PURCHASE UPON CHANGE OF CONTROL" and under the covenants described under "--CERTAIN COVENANTS" (other than the covenant described under "--MERGER AND CONSOLIDATION"), the operation of the cross acceleration provision, the bankruptcy provisions with respect to Owners, the judgment default provision, the guarantee default provision and the security default provision described under "--Defaults" above and the limitations contained in clause (iv) of the first paragraph under, and in the third paragraph under, "--CERTAIN COVENANTS--MERGER AND CONSOLIDATION" above ("COVENANT DEFEASANCE"). The Issuer may exercise its legal defeasance option with respect to a series of Exchange Notes notwithstanding its prior exercise of its covenant defeasance option with respect to such series. If the Issuer exercises its legal defeasance option with respect to a series of Exchange Notes, payment of the Exchange Notes of such series may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option with respect to a series of Exchange Notes, payment of the Exchange Notes of such series may not be accelerated because of an Event of Default specified in clause (iv), (vi), (vii) (with respect only to Owners), (viii), (ix), (x) or (xi) under "--DEFAULTS" above or because of the failure of the Issuer to comply with clause (iv) of the first paragraph, or with the third paragraph, under "--CERTAIN COVENANTS--MERGER AND CONSOLIDATION" above. If the Issuer exercises its legal defeasance option or its covenant defeasance option with respect to a series of Exchange Notes, each Owner will be released from all its obligations with respect to its Guarantee and the Security Agreements with respect to such series, as applicable. In order to exercise either defeasance option with respect to a series of Exchange Notes, the Issuer must irrevocably deposit in trust (the "Defeasance Trust") with the applicable Trustee money -106- or U.S. Government Obligations for the payment of principal and interest on the Exchange Notes of such series to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the applicable Trustee of an Opinion of Counsel to the effect that Holders of the Exchange Notes of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law). Notwithstanding the foregoing, the exercise of either defeasance option by the Issuer may not be enforceable if such defeasance improves the position of Noteholders of either series of Exchange Notes as against any other creditor of the Issuer, whether actual, contingent or otherwise. Furthermore, the Issuer may not exercise its legal defeasance or covenant defeasance options unless the Rating Agencies confirm to the applicable Trustee in writing that such exercise will not result in a ratings decline with respect to either series of Exchange Notes. CONCERNING THE TRUSTEES United States Trust Company of New York is the Trustee under the First Priority Indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the First Priority Exchange Notes and untendered Existing First Priority Notes, if any. The Chase Manhattan Bank is the Trustee under the Second Priority Indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any. United States Trust Company of New York is the Collateral Agent under the Intercreditor Agreement. The Holders of a majority in principal amount of the outstanding Exchange Notes of a series have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the applicable Trustee, subject to certain exceptions. Each Indenture provides that if an Event of Default occurs (and is not cured) thereunder, the applicable Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, such Trustee is under no obligation to exercise any of its rights or powers under such Indenture at the request of any Holder of Exchange Notes of the applicable series, unless such Holder shall have offered to such Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of such Indenture. Prior to the Delivery Date of the first Vessel, the Manager is responsible for the payment of the fees and expenses of the Trustees and the Collateral Agent. Thereafter, the fees and expenses of the Trustees and the Collateral Agent shall be payable from amounts held in the Revenue Account. See "--PRIORITIES OF PAYMENTS--REVENUE ACCOUNT." -107- GOVERNING LAW Each of the Indentures and the Intercreditor Agreement provides that the Indentures, the Intercreditor Agreement, the Exchange Notes and each of the Security Agreements, other than the Mortgages and the Issue of One Debenture, are governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. The Building Contract Guarantees and the Performance Bonds are governed by the laws of England. ENFORCEABILITY OF JUDGMENTS Since most of the operating assets of Holdings and its Subsidiaries are located outside the United States, any judgment obtained in the United States against Holdings or a Subsidiary, including judgments with respect to the payment of principal of and interest on the Exchange Notes, may not be collectible within the United States. See "ENFORCEMENT OF CIVIL LIABILITIES." CONSENT TO JURISDICTION AND SERVICE Each Indenture provides that Holdings, the Issuer and each Guarantor will appoint Cambridge Partners, L.L.C., 535 Madison Avenue, New York, New York 10022 as its agent for actions brought under Federal or state securities laws brought in any Federal or state court located in the Borough of Manhattan in The City of New York and will submit to such jurisdiction. See "ENFORCEMENT OF CIVIL LIABILITIES." CERTAIN DEFINITIONS "AFFILIATE" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under "--CERTAIN COVENANTS--LIMITATION ON RESTRICTED PAYMENTS" and "--CERTAIN COVENANTS--LIMITATION ON AFFILIATE TRANSACTIONS" only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Issuer or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "ALLOCATED PORTION OF INTEREST DRAW" means, with respect to an Interest Draw and a Vessel that has been accepted by the related Owner under the related Building Contract, an amount equal to the product of (a) the amount of such Interest Draw and (b) a fraction the numerator of which is one and the denominator of which is the number of Vessels that have been accepted by the related Owners as of the date of such Interest Draw. -108- "ALLOCATED PORTION OF INTEREST DRAWS FOR A VESSEL" means, as of any date of determination and with respect to a Vessel, an amount equal to the aggregate principal amount of all Allocated Portion of Interest Draws for such Vessel as of such date of determination. "ALLOCATED PRINCIPAL AMOUNT" means at any time, when used with reference to the Exchange Notes and untendered Existing Notes and any Vessel, the following amounts: The quotient of (a) the difference between (i) the sum of the initial principal amount of the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, and the initial principal amount of the Second Priority Exchange Notes and untendered Existing Second Priority Notes, if any, and (ii) all amounts applied to the payment of principal thereof as of such time and (b) the difference between (i) five and (ii) the sum of (A) the number of Vessels that have been rejected as of such time by the Owners pursuant to the terms of the Building Contracts and (B) the number of Vessels released as of such time by the Collateral Agent from the Lien of the related Mortgage. "ASSIGNMENT OF EARNINGS AND ISSUANCES" means, for each Vessel, the Assignment of Earnings and Insurances, dated on or before the Delivery Date for such Vessel, between the related Owner and the Collateral Agent. "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the First Priority Exchange Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "AVAILABLE CASH" means, as of any Available Cash Determination Date, an amount equal to the excess, if any, of (a) the amounts available in the Revenue Account after giving effect to the payments made therefrom on the related Interest Payment Date over (b) the Manager's Fee for the Vessels payable on the Management Fee Payment Date next succeeding such Interest Payment Date. "AVAILABLE CASH DETERMINATION DATE" means, with respect to an Available Cash Payment Date, the close of business on the first Business Day of the month immediately preceding such Available Cash Payment Date. "BOARD OF DIRECTORS" means the Board of Directors of Holdings (or, if Holdings no longer controls the Issuer, the Issuer) or any committee thereof duly authorized to act on behalf of such Board. "BUDGETED MONTHLY OPERATING BALANCE" means as of any date of determination the product of (i) $500,000 and (ii) the number of Vessels as to which the Delivery Date has occurred. "BUILDERS" means Jiangnan Shipyard and China Shipbuilding Trading Company, Limited. "BUILDING CONTRACT" means any of the shipbuilding contracts for the Vessels between the Builders and Holdings, each dated as of February 4, 1997, as amended and restated as of June 26, 1997 and as further amended as of August 1, 1997, and assigned by Holdings to the Owners on or before the Original Closing Date. -109- "BUILDING CONTRACT GUARANTEE" means, with respect to each Building Contract, the guarantee on behalf of the Builders, issued or to be issued by The Export-Import Bank of China. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York, or in the city of the corporate trust office of the Collateral Agent, are authorized by law to close. "CAPITAL LEASE OBLIGATIONS" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "CAPITAL STOCK" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "CGTC" means Cambridge Gas Transport Corporation, a Cayman Islands corporation, and its successors. "CHARTERS" is defined to mean each charter party and contract of affreightment between an Owner, or the Manager on behalf of an Owner, and any third party with respect to a Vessel, and as the same may be amended from time to time. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMERCIAL MANAGEMENT AGREEMENT" means the Master Commercial Marketing and Services Agreement between Holdings and GEBAB dated as of February 28, 1997, assigned by Holdings to the Manager on behalf of the Owners on or before the Original Closing Date. "COMPULSORY ACQUISITION" means requisition for title or other compulsory acquisition of any Vessel (otherwise than by requisition for hire), capture, seizure, condemnation, destruction, detention or confiscation of such Vessel by any Governmental Authority or by persons acting or purporting to act on behalf of any Governmental Authority. "CONSOLIDATED NET WORTH" means, with respect to any Person, the total of the amounts shown on the balance sheet of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of such Person ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of such Person plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. -110- "CONTRACTUAL DELIVERY DATE" means, with respect to a Vessel, the date specified in the related Building Contract for the delivery of such Vessel. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DELIVERY DATE" means, with respect to a Vessel, the date such Vessel is accepted by the related Owner pursuant to the terms of the related Building Contract. "DESIGNATED OWNERS" means CGTC, GEBAB, Xenon Shipping, Inc., a Norwegian corporation, and any Person actually controlled (as defined in the definition of "Affiliate") by any of the foregoing. "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable or subject to required purchase at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the Stated Maturity of the Exchange Notes. "DRAW AMOUNT" means the amount drawn under an Interest Draw or a Working Capital Draw, as the case may be. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE NOTES" means the First Priority Exchange Notes and the Second Priority Exchange Notes. "EXISTING FIRST PRIORITY NOTES" means First Priority Notes which are not First Priority Exchange Notes. "EXISTING NOTES" means the Existing First Priority Notes and the Existing Second Priority Notes. "EXISTING SECOND PRIORITY NOTES" means Second Priority Notes which are not Second Priority Exchange Notes. "FIRST PRIORITY EXCHANGE NOTES" means the notes of the Issuer exchanged hereunder for Existing First Priority Notes pursuant to the Registered Exchange Offer in connection with which this Prospectus is prepared, or in a private exchange. "FIRST PRIORITY NOTE INTEREST AMOUNT" means, as of any Interest Payment Date, the amount of interest, determined by the First Priority Trustee, that is accrued and unpaid on the Allocated Principal Amount of the First Priority Notes as of such Interest Payment Date in respect of each -111- Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED that the First Priority Note Interest Amount on the Allocated Principal Amount of First Priority Notes in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "FIRST PRIORITY NOTE INTEREST SHORTFALL" means, with respect to each Interest Payment Date, the excess of (i) the First Priority Note Interest Amount in respect of such Interest Payment Date over (ii) the amount available in the Revenue Account (after giving effect to the distributions described in (i) and (ii) under "--Priorities of Payments--Revenue Account" to be made on such Interest Payment Date) as of the opening of business on the third Business Day prior to such Interest Payment Date. "FIRST PRIORITY NOTES" means the Existing First Priority Notes and the First Priority Exchange Notes. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Original Closing Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Sections 13 or 15(d) of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GEBAB" means Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH, a German corporation. "GOVERNMENTAL APPROVAL" means any authorization, consent, approval, license, franchise, lease, ruling, permit, tariff, rate, certification, exemption, filing or registration by or with any Governmental Authority relating to the ownership of the Collateral or to the execution, delivery or performance of the Indentures or any Security Agreement. "GOVERNMENTAL AUTHORITY" means the United States federal or any foreign government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any other governmental entity with authority over an Owner or the operation of a Vessel. "GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "guarantee" shall not include endorsements for collection or deposit -112- in the ordinary course of business. The term "guarantee" used as a verb has a corresponding meaning. "GUARANTEE AGREEMENT" means a supplemental indenture, in a form satisfactory to the applicable Trustee, pursuant to which a successor Owner becomes subject to the applicable terms and conditions of the applicable Indenture. "HOLDER" OR "NOTEHOLDER" means the Person in whose name a Note is registered on the Registrar's books. "INCIDENTAL ASSET" means any equipment, outfit, furniture, furnishings, appliances, spare or replacement parts or stores owned by the Issuer or an Owner that has become obsolete or unfit for use or no longer useful, necessary or profitable in the conduct of the business of the Issuer or such Owner, as the case may be. In no event shall the term "Incidental Asset" include a Vessel. "INCUR" means issue, assume, guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness. "INDEBTEDNESS" means, with respect to any Person on any date of determination (without duplication): (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable (other than a written commitment made on or prior to the Original Closing Date); (ii) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit); -113- (v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, the liquidation preference with respect to, any Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "INITIAL LETTER OF CREDIT AMOUNT FOR INTEREST DRAWS" means $45.5 million. "INSURANCE POLICIES" means with respect to a Vessel, those policies of insurance required to be maintained pursuant to the terms of the related Mortgage. "INSURANCE PROCEEDS" means the proceeds of the Insurance Policies. "INTERCOMPANY NOTE" means the revolving credit promissory note, dated the Original Closing Date, from the Owners evidencing the loans made by the Issuer to the Owners on the Original Closing Date as well as any amounts loaned from time to time by the Issuer to the Owners for working capital requirements of the Owners. "INTEREST" with respect to a Note, means the interest thereon plus any Additional Amount with respect to such Note. "INTEREST PAYMENT DATE" means any date on which interest is payable on the First Priority Exchange Notes or the Second Priority Exchange Notes. "INVESTMENT" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. The payments of the Purchase Price shall not be deemed to be an Investment. -114- "ISSUE OF ONE DEBENTURE" means, with respect to each Owner, the issue of one debenture, dated as of the Original Closing Date, between each Owner and the Collateral Agent wherein such Owner grants to the Collateral Agent a security interest in and to all of such Owner's now owned and hereafter acquired property. "LETTER OF CREDIT" means the letter of credit issued pursuant to the Letter of Credit Reimbursement Agreement. "LETTER OF CREDIT ISSUER" means Credit Suisse First Boston acting through its London branch, as funding bank and as administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement. "LETTER OF CREDIT REIMBURSEMENT AGREEMENT" means the Letter of Credit Reimbursement Agreement and Guaranty dated as of the Original Closing Date among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and each of the Owners. "LIEN" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "MANAGEMENT AGREEMENT" means the management agreement to be entered into among Navigator Gas Management Limited, the Issuer, Holdings and each of the Owners. "MANAGER" means the company that manages the Vessels, which initially shall be Navigator Gas Management Limited. "MANAGER'S FEE" means, with respect to each Vessel, (a) prior to the Delivery Date thereof, an amount equal to $30,000 per annum, and (b) from and after the Delivery Date thereof, an amount equal to $120,000 per annum. "MAXIMUM AMOUNT AVAILABLE UNDER THE LETTER OF CREDIT" means, as of each date of determination, (1) the Initial Letter of Credit Amount for Interest Draws less (2) all Interest Draws made on the Letter of Credit to such date of determination plus (3) all amounts reimbursed to the Letter of Credit Issuer in repayment of Interest Draws, other than in respect of interest on outstanding Interest Draws, to such date of determination. "MOODY'S" means Moody's Investor Service, Inc. and its successors. "MORTGAGE" means the mortgage granted to the Collateral Agent by each Owner on its related Vessel to secure the obligations of such Owner under its Guarantee and the Letter of Credit Reimbursement Agreement. "NOTE INTEREST SHORTFALL" means, with respect to each Interest Payment Date, the sum of (a) the First Priority Note Interest Shortfall and (b) the Second Priority Note Interest Shortfall. "NOTES" means the Existing Notes and the Exchange Notes. -115- "OFFERINGS" means the offerings of the Existing First Priority Notes and the Existing Second Priority Notes. "ORIGINAL CLOSING DATE" means August 7, 1997. "OWNERS" means: Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company, and their respective successors. "PERFORMANCE BOND" means, with respect to the Building Contracts, the performance bonds issued by The Export Import Bank of China, on behalf of the Builders, and Generale de Banque, on behalf of TGE. "PERMITTED HOLDER" means CGTC, Xenon and GEBAB and their Related Parties. "PERMITTED INVESTMENT" means an Investment by the Issuer or any Owner in (i) the Issuer or an Owner; (ii) Temporary Cash Investments; (iii) receivables owing to the Issuer or any Owner if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Issuer or any such Owner deems reasonable under the circumstances; (iv) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; and (v) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or any Owner or in satisfaction of judgments. "PERMITTED LIENS" means, with respect to any Person, the following: (a) Liens securing obligations under the Indentures, the Existing Notes, the Letter of Credit Reimbursement Agreement and the Security Agreements; (b) other Liens existing or securing Indebtedness existing (or for which a written commitment has been made on or prior to the Original Closing Date) on the Original Closing Date; (c) Liens granted after the Original Closing Date in favor of the Holders; and in the case of an Owner, the following additional Liens: (d) Liens for crews' wages and pledges or deposits by such Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business; (e) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (f) Liens for property taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate proceedings; (g) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that such letters of credit do not constitute Indebtedness; (h) minor survey exceptions, -116- minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (i) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; PROVIDED, HOWEVER, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; PROVIDED FURTHER, HOWEVER, that the Liens may not extend to any other property owned by such Person or any of its Subsidiaries; (j) any Lien which arises in favor of an unpaid seller in respect of goods, plant or equipment sold and delivered to such Person in the ordinary course of business until payment of the purchase price for such goods or plant or equipment or any other goods, plant or equipment previously sold and delivered by that seller (except to the extent that such Lien secures Indebtedness or arises otherwise than due to deferment of payment of purchase price); (k) any Lien or pledge created or subsisting in the ordinary course of business over documents of title, insurance policies or sale contracts in relation to commercial goods to secure the purchase price thereof; (l) charters, leases or subleases granted to others in the ordinary course of business that are subject to the relevant Mortgage and that do not materially interfere with the ordinary course of business of the Issuer and the Owners, taken as a whole; (m) (A) Liens in favor of the Issuer or any Owner, (B) Liens arising from the rendering of a final judgment or order against the Issuer or any Owner that does not give rise to an Event of Default and (C) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and products and proceeds thereof; (n) Liens in favor of customers and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods; and (o) Liens for salvage. For purposes of this definition, the term "Indebtedness" shall be deemed to include interest on such Indebtedness. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock or any other class of such Person. "PRINCIPAL" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "PUBLIC EQUITY OFFERING" means an underwritten primary public offering of common stock of Holdings pursuant to an effective registration statement under the Securities Act. "PUBLIC MARKET" means any time after (x) a Public Equity Offering has been consummated and (y) at least 15% of the total issued and outstanding common stock (being ordinary shares) of -117- Holdings has been distributed by means of an effective registration statement under the Securities Act or is eligible for distribution pursuant to Rule 144(k) under the Securities Act. "PURCHASE PRICE" means, with respect to a Vessel, the amount specified under the related Building Contract as the total purchase price to be paid to the Builders for such Vessel. "RATING AGENCIES" means S&P, DCR and Moody's, or if S&P, DCR or Moody's or all of them shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuer (as certified by a resolution of the Board of Directors) which shall be substituted for S&P, DCR or Moody's or all of them, as the case may be. "REFUND AMOUNT" means, with respect to a Vessel and the related Building Contract, the amount payable by the Builders in the event such Building Contract is rescinded by the related Owner because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel) or is otherwise terminated. "REGISTRAR" means, initially, The United States Trust Company of New York with respect to the First Priority Exchange Notes and untendered Existing First Priority Notes, if any, and The Chase Manhattan Bank with respect to the Second Priority Exchange Notes and untendered Existing First Priority Notes, if any. "REGISTRATION JURISDICTION" means the Republic of Liberia or such other jurisdiction under whose laws a Vessel is permitted to be registered under the terms and subject to the conditions of the Indentures and the related Mortgage. "RELATED BUSINESS" means any business related, ancillary or complementary to the businesses of the Issuer and the Owners on the Original Closing Date. "RELATED PARTY" with respect to a Permitted Holder means (A) any controlling stockholder, 80% (or more) owned subsidiary, or spouse or immediate family member (in the case of an individual) of the foregoing or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such other persons referred to in the immediately preceding clause (A). "RESCISSION AMOUNT" means, as of any date of determination and with respect to a Vessel and the termination of its related Building Contract, the sum of (a) the Allocated Principal Amount of the Notes for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the required redemption of the Notes as a result of such termination, (c) any and all Manager's Fees owing to the Manager in respect of such Vessel, (d) an amount equal to the amounts of all Working Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto and (e) any cost incurred by the Collateral Agent in connection with the related redemption. -118- "RESTRICTED PAYMENT" with respect to any Person means (i) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock, (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Issuer held by any Person or of any Capital Stock of an Owner held by any Affiliate of the Issuer (other than an Owner), including the exercise of any option to exchange any Capital Stock, (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) the making of any Investment in any Person (other than a Permitted Investment). "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Company, Inc. and its successors. "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now owned or hereafter acquired whereby the Issuer or an Owner transfers such property to a Person and the Issuer or an Owner leases it from such Person. "SEC" means the Securities and Exchange Commission. "SECOND PRIORITY EXCHANGE NOTES" means the Exchange Notes of the Issuer exchanged hereunder for Existing Second Priority Notes pursuant to the Registered Exchange Offer in connection with which this Prospectus is filed, or in a private exchange, or otherwise issued after the Original Closing Date. "SECOND PRIORITY NOTE INTEREST AMOUNT" means, as of any Interest Payment Date, the amount of interest, determined by the Second Priority Trustee, that is accrued and unpaid on the Allocated Principal Amount of the Second Priority Notes as of such Interest Payment Date in respect of each Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED, HOWEVER, that the Second Priority Note Interest Amount on the Allocated Principal Amount of Second Priority Notes in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "SECOND PRIORITY NOTE INTEREST SHORTFALL" means, with respect to each Interest Payment Date, the excess of (i) the Second Priority Note Interest Amount in respect of such Interest Payment Date over (ii) the amount available in the Revenue Account (after giving effect to distribution of amounts pursuant to clauses (i)--(iii) described under "--PRIORITY OF PAYMENTS --REVENUE ACCOUNT" on such Interest Payment Date as of the opening of business on the third Business Day prior to such Interest Payment Date; PROVIDED, HOWEVER, that the Second Priority Note Interest Shortfall will be deemed to be zero unless and until the Issuer shall have issued after the Original Closing Date $20.9 million in aggregate principal amount of additional Second Priority Exchange Notes in lieu of paying accrued and unpaid interest on the Second Priority Notes in cash. -119- "SECOND PRIORITY NOTES" means the Existing Second Priority Notes and the Second Priority Exchange Notes. "SECURITY AGREEMENTS" means the Intercreditor Agreement, the Mortgages, the Assignments of Earnings and Insurances, each Original Closing of One Debenture and any other similar instruments or documents entered into or delivered in connection with any of the foregoing, as such agreements, instruments or documents may from time to time be amended in accordance with their respective terms and the terms of the Indentures and the Letter of Credit Reimbursement Agreement. "SUBORDINATED OBLIGATION" with respect to a series of Notes means any Indebtedness of the Issuer (whether outstanding on the Original Closing or thereafter Incurred) which is subordinate or junior in right of payment to the Notes of such series pursuant to a written agreement to that effect; PROVIDED, HOWEVER, that the Second Priority Notes shall constitute Subordinated Obligations under the First Priority Indenture. "SUBSIDIARY" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "TECHNICAL MANAGEMENT AGREEMENT" means the Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement between GEBAB and Holdings, on behalf of the Owners, dated as of February 28, 1997, assigned by Holdings to the Manager on behalf of the Owners on or before the Original Closing Date. "TECHNICAL SUPERVISION AGREEMENT" means the Agreement on Contract for Technical Matters among GEBAB, Holdings, on behalf of the Owners, and the Builders dated as of February 28, 1997, assigned by Holdings to the Manager on behalf of the Owners on or before the Original Closing Date. "TEMPORARY CASH INVESTMENTS" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof; (ii) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust issuer which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust issuer has capital, surplus and undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor; (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above; (iv) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an -120- Affiliate of the Issuer) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's "A-1" (or higher) according to S&P or "D-1" (or higher) according to DCR; (v) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P, Moody's or DCR and (vi) guaranteed investment contracts, investment agreements or similar agreements initially rated "A" by S&P or Moody's that are treated as Indebtedness for United States federal income tax purposes. For purposes of determining whether a Temporary Cash Investment matures on or before the next succeeding Interest Payment Date, each payment received under a Temporary Cash Investment described in clause (vi) above will be considered to be the maturity of such Temporary Cash Investment. A guaranteed investment contract, investment agreement or similar agreement that constitutes a senior unsecured long-term debt obligation of a Person shall be deemed to have the same rating as such Person's other senior unsecured long-term debt obligations, if any, that are rated by a Rating Agency. "TGE" means Tractebel Gas Engineering GmbH, and its successors and assigns. "TOTAL LOSS" means, with respect to a Vessel that has been accepted by an Owner pursuant to the related Building Contract, either (a) the actual or constructive or compromised or arranged total loss of the Vessel, (b) the Compulsory Acquisition of the Vessel or (c) a requisition by a Governmental Authority for hire of the Vessel for a period in excess of 180 days. Any actual loss of the Vessel shall be deemed to have occurred at 1200 hours Greenwich Mean Time ("GMT") on the actual date on which the Vessel was lost or in the event of the date of the loss being unknown then the actual total loss shall be deemed to have occurred at 1200 hours GMT on the day next following the day on which the Vessel was last heard from. A constructive total loss shall be deemed to have occurred at 1200 hours GMT on the earliest of: (1) the date that notice of abandonment of the Vessel is given to the insurers, provided a claim for total loss is admitted by the insurers, (2) if the insurers do not admit such a claim, at the date and time GMT at which a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred, or (3) the date that a report is rendered by one or more experts in marine surveying and vessel valuation concluding that salvage, repair and associated costs in restoring the Vessel to the condition specified in each Mortgage exceed the Vessel's fair market value in sound condition. "TOTAL LOSS PAYMENT" means, as of any date of determination and with respect to a Total Loss of a Vessel, the sum of (a) the Allocated Principal Amount of the Notes for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the required redemption of the Notes as a result of such Total Loss, (c) any and all premiums payable with respect to such redemption, (d) any and all Manager's Fees owing to the Manager in respect of such Vessel, (e) an amount equal to the amounts of all Working Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto and (f) an amount equal to the Allocated Portion of all Interest Draws for such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto. "UK LEASE" means an arrangement pursuant to which (i) an Owner enters into either a hire purchase agreement or a conditional sale contract with a UK Lessor providing for such UK Lessor -121- to pay a purchase price for the related Vessel and granting such UK Lessor a right of possession in respect of such Vessel, (ii) such UK Lessor charters such Vessel to such Owner under a bareboat charter for a term ending after the maturity date of the Notes and (iii) such Owner's monetary obligations with respect to such charter are effectively satisfied by depositing such purchase price in a defeasance trust; PROVIDED, HOWEVER, that the creation of any such UK Lease shall not result in the lowering of any ratings then in effect with respect to the Notes. "UK LESSOR" means a leasing subsidiary of a United Kingdom clearing bank. "VESSEL" means a vessel built pursuant to a Building Contract. "VESSEL PURCHASE INSTALLMENT DATE" means, with respect to a Building Contract, each date on which an installment of the Purchase Price is payable by the related Owner pursuant to the terms of such Building Contract. "VOTING STOCK" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. DESCRIPTION OF THE UNITS AND THE WARRANTS Pursuant to the Offerings, the Second Priority Notes have been issued in units ("Units"). Each Unit consists of one Second Priority Note in a principal amount of $1,000 and 7.66 Warrants, each Warrant entitling the holder thereof to purchase one share of Holdings Common Stock at an exercise price of $.01 per share, subject to adjustment. The Second Priority Notes and the Warrants will not trade separately until the earlier to occur of (i) the commencement of the Exchange Offer or the effectiveness of a shelf registration statement with respect to the Second Priority Notes and (ii) such date as the Initial Purchasers may in their discretion deem appropriate. See "DESCRIPTION OF THE NOTES--REGISTERED EXCHANGE OFFER; REGISTRATION RIGHTS." See "DESCRIPTION OF THE EXCHANGE NOTES" and "DESCRIPTION OF WARRANTS" for further information concerning the Second Priority Notes and the Warrants, respectively. In addition, see "DESCRIPTION OF CAPITAL STOCK" for additional information relating to the Holdings Common Stock issuable upon exercise of the Warrants. The Warrants were issued under the Warrant Agreement dated as of August 7, 1997, between Holdings and United States Trust Company of New York, as warrant agent (the "Warrant Agent"). Each Warrant, when exercised, will entitle the holder thereof to receive one share of Holdings Common Stock. The exercise price of $.01 per share with respect to all the shares of Holdings Common Stock purchasable under the Warrants was paid by each initial purchaser from the Initial Purchaser thereof as part of the purchase price of the Units. Thereafter, no additional amounts shall be required to be paid upon exercise of the Warrants. The Warrants will entitle the holders thereof to purchase in the aggregate 25% of Holdings Common Stock on a fully diluted basis as of the date of issuance of the Warrants. The number of shares of Holdings Common Stock is subject to adjustment in certain cases referred to below. Unless exercised, the Warrants will automatically expire on June 30, 2007. -122- DESCRIPTION OF CAPITAL STOCK HOLDINGS As of the date hereof, there are 2,000,000 shares of Holdings Common Stock outstanding and registered in the names of five shareholders in the Register of Members of Holdings. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by, the Certificate of Incorporation and the Memorandum and Articles of Association of Holdings, copies of which may be obtained from Holdings or the Initial Purchasers upon request, and by provisions of applicable law. HOLDINGS COMMON STOCK As of the date hereof, Holdings will be authorized to issue up to 3,000,000 shares of Holdings Common Stock. In relation to all matters submitted to a vote of stockholders, every holder of Holdings Common Stock who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorized representative, not being himself a stockholder, shall, on a show of hands, have one vote and, on a poll, every holder of Holdings Common Stock entitled to vote shall have one vote for every share held. Accordingly, the holders of Holdings Common Stock may from time to time in general meeting increase or reduce the number of directors and may, by special resolution, remove any director or by ordinary resolution appoint any person to be a director. Holders of Holdings Common Stock may by ordinary resolution declare dividends, but no dividend may exceed the amount recommended by the directors out of funds legally available for the purpose. On a winding-up of Holdings, a liquidator may divide among the holders of Holdings Common Stock rateably the net assets of Holdings available after the payment of all debts and other liabilities in accordance with applicable law and may, with the sanction of an extraordinary resolution of the stockholders and any other sanction required by applicable law, divide among the holders of Holdings Common Stock rateably in specie the whole or any part of the assets of Holdings and may, for that purpose, value any assets and determine how the division shall be carried out as between them. There is included in the Articles of Association of Holdings a provision, subject to Section 151 of the Companies Acts 1931 of the Isle of Man, indemnifying every director or other officer of Holdings out of the assets of Holdings against losses or liabilities which such director or officer may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto and confirming that no such director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by Holdings in the execution of the duties of his office or in relation thereto. BOOK-ENTRY REGISTRATION The Existing Notes sold to Qualified Institutional Buyers were, and the Exchange Notes will be, originally issued in fully registered book-entry form, and each of the Existing Notes and the Exchange Notes will be represented by a global note (each a "Global Note") registered in the name of Cede & Co. ("Cede") as the nominee of the Depository Trust Company ("DTC"). All references to actions by holders shall, in respect of the applicable Global Note, refer to actions -123- taken by DTC upon instruction from DTC Participants (as defined below), and all references herein to distributions, notices, reports and statements to holders shall refer, as the case may be, to distributions, notices, reports and statements to DTC or Cede, as the registered holder of the Exchange Notes or to DTC Participants for distribution to Beneficial Owners in accordance with DTC procedures. DTC has advised the Company that DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC accepts securities for deposit from its participating organizations ("Participants") and facilitates the clearance and settlement of securities transactions between Participants in such securities through electronic book-entry changes in accounts of Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks and trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). The Company expects that pursuant to procedures established by the DTC, (i) upon deposit of the applicable Global Note, DTC will credit the accounts of Participants designated by the Exchange Agent with portions of the principal amount of the applicable Global Note and (ii) ownership of the Exchange Notes evidenced by the applicable Global Note will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of DTC's Participants), DTC's Participants and DTC's Indirect Participants. Consequently, the ability to transfer Existing Notes or Exchange Notes evidenced by the applicable Global Note will be limited to such extent. So long as Cede is the registered owner of any Exchange Notes, Cede will be considered the sole holder under the Indentures of any Exchange Notes evidenced by the applicable Global Note. Beneficial owners of Exchange Notes evidenced by the applicable Global Note will not be considered the owners or holders thereof under the Indentures for any purpose, including with respect to the giving of any directions, instructions or approvals to the Indenture Trustees thereunder. Neither the Company nor the Indenture Trustee will have any responsibility or liability for any aspect of the records of the DTC or for maintaining, supervising or reviewing any records of the DTC relating to the Exchange Notes. Payments in respect of the principal of, premium, if any, and interest, on any Exchange Notes registered in the name of Cede on the applicable record date will be payable by the Indenture Trustees to or at the direction of Cede in its capacity as the registered holder under the Indentures. Under the terms of the Indentures, the Issuer, and the Indenture Trustee may treat the persons in whose names Exchange Notes including the applicable Global Note, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither the Issuer or the Indenture Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of Exchange Notes. The Company believes, however, that it is currently the policy of the DTC to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant security as shown on the records of the DTC. Payments by DTC's Participants and DTC's Indirect Participants to the beneficial owners of -124- Exchange Notes will be governed by standing instructions and customary practice and will be the responsibility of DTC's Participants or DTC's Indirect Participants. Subject to certain conditions, any beneficial owner of the applicable Global Note may obtain, through the Direct Participant through which such beneficial owner directly or indirectly holds beneficial interest, a certificated Exchange Note or Exchange Notes, in exchange for all or part of such beneficial interest. In addition, the Exchange Notes will be issued in fully registered, certificated form to beneficial owners, or their nominees, rather than to DTC or its nominee, if DTC advises the Indenture Trustees in writing that it is no longer willing or able or qualified to discharge properly its responsibilities as depository with respect to the Exchange Notes and the Issuer, is unable to locate a qualified successor or if the Issuer elects to terminate the book-entry system through DTC. In such event, the Indenture Trustees will notify all beneficial owners through DTC Participants of the availability of such certificated Exchange Notes. Upon surrender by DTC of the registered global certificates representing the Exchange Notes and receipt of instructions for re-registration, the Indenture Trustees will re-issue the Exchange Notes in certificated form to beneficial owners or their nominees. Such certificated Exchange Notes will be transferable and exchangeable at the office of the Indenture Trustees upon compliance with the requirements set forth in the Indentures. -125- DESCRIPTION OF LETTER OF CREDIT REIMBURSEMENT AGREEMENT The Letter of Credit was issued pursuant to a Letter of Credit Reimbursement Agreement and Guaranty dated as of the Original Closing Date among the Letter of Credit Issuer, the participating banks from time to time party thereto (together with the Letter of Credit Issuer, the "Letter of Credit Banks"), the Issuer, Holdings and the Owners (the "Letter of Credit Reimbursement Agreement"). The Letter of Credit Reimbursement Agreement shall provide that Interest Draws and Working Capital Draws shall be repaid by the Issuer, together with interest accrued thereon, on the first Business Day of each calendar month to the extent of amounts available in the Revenue Account as described under "DESCRIPTION OF THE EXCHANGE NOTES--PRIORITIES OF PAYMENT - --REVENUE ACCOUNT." The Issuer has agreed to instruct the Collateral Agent to make (i) additional Interest Draws to repay any portion of any Interest Draw and accrued interest thereon that remains unpaid 35 days from the date of such Interest Draw and (ii) additional Working Capital Draws to repay any portion of any Working Capital Draw and accrued interest thereon that remains unpaid 35 days from the date of such Working Capital Draw. The Issuer further agreed to instruct the Collateral Agent to make additional Interest Draws to the extent funds are not available in the Revenue Account on the first Business Day of each calendar month to pay any fees due under the Letter of Credit Reimbursement Agreement. Any outstanding principal amount of Draws not repaid from amounts in the Revenue Account shall be payable from proceeds of Collateral. Unreimbursed amounts drawn under the Letter of Credit bear interest at the Letter of Credit Issuer's cost of funds from time to time plus 1.25% per annum. The Issuer is required to pay to the Letter of Credit Issuer (a) a fronting fee equal to 0.25% per annum on the aggregate outstanding face amount of the Letter of Credit, (b) a participation fee equal to 1.00% per annum on the aggregate outstanding face amount of the Letter of Credit and (c) an underwriting fee prior to the issuance of the Letter of Credit equal to 1.25% of the maximum face amount of the Letter of Credit. The reimbursement obligations of the Issuer under the Letter of Credit Reimbursement Agreement are guaranteed by each of the Owners and are secured by the Collateral. To the extent such obligations are not repaid from the Revenue Account or from additional Draws, proceeds of Collateral will be applied to repayment of the reimbursement obligations prior to the repayment of obligations in respect of the Notes. The Letter of Credit Reimbursement Agreement contains representations and warranties similar to those contained in the Purchase Agreement, and incorporates by reference, for the benefit of the Letter of Credit Issuer, each of the covenants contained in the Indentures. The following events, among others, constitute events of default under the Letter of Credit Reimbursement Agreement unless waived by the required Letter of Credit Banks: (i) the Issuer shall fail to pay the Letter of Credit Issuer when due any amounts drawn under the Letter of Credit, any interest thereon or any fees due under the Letter of Credit Reimbursement Agreement, (ii) the Issuer, Holdings or any of the Owners shall fail to observe or perform any other covenant, agreement or restriction contained or incorporated by reference in the Letter of Credit Reimbursement Agreement, and, in certain cases, applicable grace periods have expired, (iii) any representation, warranty, certification or statement made by the Issuer, Holdings or any of the Owners in the Letter of Credit Reimbursement Agreement or in any certificate, financial statement or other document delivered pursuant thereto shall prove to have been incorrect in any material respect when made and (iv) certain events of bankruptcy or insolvency of the Issuer, Holdings or any of the Owners. Upon the occurrence of an event of default under the Letter of Credit Reimbursement Agreement, the Letter of Credit Issuer shall have the right to notify the Collateral Agent that the Letter of Credit will be terminated within five days, which -126- notice would enable the Trustees to accelerate the maturity of the Notes and to instruct the Collateral Agent to make an Interest Draw on the Letter of Credit. The Letter of Credit Reimbursement Agreement provides that amounts available under the Letter of Credit shall be reduced on a PRO RATA basis upon the occurrence of a redemption of the Notes as described under "DESCRIPTION OF THE EXCHANGE NOTES--OPTIONAL REDEMPTION" and "--MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS." -127- THE MORTGAGES GENERAL Contemporaneously with the delivery of a Vessel, the Owner of such Vessel will grant to the Collateral Agent a Mortgage on such Vessel to secure the payment of all sums of money (whether for principal, premium, if any, interest, fees, expenses or otherwise) from time to time payable by such Owner under its Guarantee, the payment of the principal of (and premium, if any) and interest on the Notes, the payment of all other sums payable by the Issuer under the Indentures and the payment of all other sums payable under the Security Agreements and the Letter of Credit Reimbursement Agreement. On the Delivery Date of a Vessel, the related Mortgage will be executed by the related Owner and the Collateral Agent and will be recorded in accordance with the provisions of Liberian and Isle of Man law. The maximum liability of each Owner under its Mortgage is limited to the same extent as such Owner's maximum liability under its Owner Guarantee. See "DESCRIPTION OF THE EXCHANGE NOTES--GUARANTEES." CERTAIN REPRESENTATIONS AND WARRANTIES Each Mortgage contains, among other things, the following representations and warranties: OWNERSHIP OF VESSEL. Each Owner will represent and warrant that it is the sole and lawful owner of the whole of its Vessel, free from all liens, security interests, mortgages, charges or encumbrances (other than the related Mortgage and Permitted Liens); PRIORITY OF LIEN. Each Owner will represent and warrant that it is constituting in favor of the Collateral Agent a first preferred ship mortgage on its Vessel to secure the punctual payment of each of the amounts due under its Guarantee and the performance and observance of and compliance with all the covenants, terms, conditions and provisions of its Guarantee, the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements and the transactions contemplated thereby; LITIGATION. Each Owner will represent and warrant that no actions or legal proceedings exist or are threatened against such Owner which will materially adversely affect the condition, financial or otherwise, of its Vessel or will enjoin or restrain the transactions contemplated hereby; and CUSTOMARY REPRESENTATIONS AND WARRANTIES. Each Owner will make additional customary representations and warranties regarding such Owner and its Vessel. CERTAIN COVENANTS Each Mortgage contains, among other things, the following covenants: OPERATION OF VESSEL. No Owner will cause or permit its Vessel to be operated in any manner contrary to law, will engage in unlawful trade, violate any applicable law or carry any cargo that would expose the Vessel to penalty, confiscation, forfeiture, capture or condemnation or do, suffer or permit to be done anything which can or may injuriously affect the registration or enrollment of -128- its Vessel under the laws and regulations of the Republic of Liberia, or any jurisdiction of registration which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by such Owner, and will at all times keep its Vessel duly documented thereunder. LIMITATION ON EMPLOYMENT OF VESSELS IN WAR ZONES. Each Owner will be required to ensure that, in the event of hostilities in any part of the world, its Vessel is not employed in carrying any goods which are declared contraband, nor allowed in any zone in respect of which the war risks insurers have withdrawn coverage for such Vessel, nor allowed to trade in any zone which is declared a war zone by the war risks insurers, unless such Owner has made arrangements with such insurers for the payment of additional premiums required to maintain the relevant insurances in force. LIMITATION ON ACTIVITIES OUTSIDE INSURANCE POLICIES. Each Owner will be required to ensure that its Vessel is not employed in any manner or for any purpose excepted from any of the Insurance Policies, or for the purpose of carriage of goods of any description excepted from the Insurance Policies and shall not do or permit to be done anything which could reasonably be expected to invalidate any Insurance Policies. MAINTENANCE OF INSURANCE. Each Owner will be required to maintain insurance with respect to its Vessel, as described below under "--Insurance," and will assign the Insurance Policies to the Collateral Agent to be held for the benefit of the Holders, the Trustees and the Letter of Credit Issuer. LIMITATION ON LIENS. Except for the lien of the Mortgage and certain other Permitted Liens, no Owner will have any right, power or authority to create, incur or permit to be placed or imposed or continued any lien, encumbrance or charge on its Vessel for longer than 30 days after the same becomes due and payable and will pay or cause to be discharged or make adequate provision for the satisfaction or discharge of all claims or demands, or will cause its Vessel to be released or discharged from any lien, encumbrance or charge therefor. MAINTENANCE OF VESSEL. Each Owner will at all times and without cost or expense to the Collateral Agent maintain and preserve, or cause to be maintained and preserved, its Vessel in good running order and repair, so that such Vessel shall be, in so far as due diligence can make her so, tight, staunch, strong and well and sufficiently tackled, apparelled, furnished, equipped and in every respect seaworthy and in at least as good operating condition as when originally delivered by the Builders, ordinary wear and tear excepted; and will keep the Vessel, or cause her to be kept in such condition, as will entitle her to the highest classification of the Classification Society, and annually will furnish the Collateral Agent a certificate by the Classification Society that such classification is maintained. TRANSFER OF FLAG OR SALE OF VESSEL. No Owner will transfer or change the flag or port or documentation of its Vessel, except to the United States or any jurisdiction when at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Owners, as permitted by the terms of the Indentures. Except as permitted by the terms of the Indentures, no Owner will sell, mortgage, demise, charter or transfer its Vessel. -129- INSURANCE Each Owner, at its own expense, will be required to insure its Vessel against all risks, whether marine or war, and all risks of navigation, operation and maintenance. In addition, each Owner will be required to keep its Vessel insured against all protection and indemnity risks in the name of the Owner. The protection and indemnity insurance shall include cover against liabilities to persons who have suffered any loss, damage or injury whatsoever in connection with anything done or not done by the Vessel and/or the related Owner in connection with the Vessel or the employment or use thereof (including in connection with any oil or other substance emanating from the Vessel or any other vessel with which the Vessel may be involved in collision) and against liability under OPA 90. Pursuant to each Mortgage, each Owner will also obtain loss of hire hull and machinery insurance, loss of hire war risks insurance, drug seizure insurance and confiscation, expropriation, nationalization and detainment insurance in a form which is substantially equivalent to the coverage carried by other responsible and experienced companies engaged in the operation of vessels similar to its Vessel and with insurance companies, underwriters, funds, mutual insurance associations or clubs of recognized standing. No insurance will provide for a deductible amount in excess of $1,000,000 per occurrence. Under each such insurance policy, each Owner will cause the Collateral Agent to be named an additional insured and will cause the insurers under such policies to waive any liability of the Collateral Agent for premiums or calls payable under such policies. For purposes of insurance against total loss, each Vessel is to be insured for an amount not less than the greater of (a) its fair value and (b) the Total Loss Payment with respect to such Vessel. Unless the Collateral Agent shall have otherwise directed, any loss involving damage to a Vessel which is not in excess of $1,000,000 may be deposited into the Operating Account. No policy is to be cancellable or subject to lapse without at least 7 Business Days prior notice to the Trustees and the Collateral Agent. In the event of an actual, constructive or compromised total loss of its Vessel, any adjustment or compromise of such loss by the Owner will be at the highest amount reasonably obtainable, and all insurance or other payments for such loss will be applied as set forth above under "DESCRIPTION OF THE EXCHANGE NOTES -- REDEMPTIONS -- MANDATORY REDEMPTION UPON THE OCCURRENCE OF CERTAIN EVENTS." Unless the Collateral Agent shall have given its prior consent, each insurance policy shall include a provision stating that no breach of warranty or condition or want of due diligence on the part of the Owner or any agent of the Owner shall defeat recovery of any claim by the Collateral Agent; PROVIDED, HOWEVER, in the event such provision conflicts with the available reinsurance arrangements of the issuers of such policy, such provision shall not be included in the related insurance policy. Each Owner will be required to ensure, inter alia, that 7 Business Days prior written notice be given to the Trustees and to the Collateral Agent prior to the cancellation or modification of any insurance. INSURANCE PROCEEDS The proceeds of any insurances or entries referred to in the Mortgage will be applied as follows: until the occurrence of an Event of Default: -130- (i) any claim under any such insurance will be deposited in the Casualty Account and will be applied by the Collateral Agent pursuant to the terms of the Intercreditor Agreement; and (ii) any claim in respect of protection and indemnity insurance shall be paid directly to the person, firm or company to which the liability covered by such insurance was incurred, or to the applicable Owner in reimbursement of moneys expended by it in satisfaction of such liability. Upon the occurrence of an Event of Default, except as provided above, any claim under any such insurance and entry (other than in respect of actual, constructive, arranged or compromised total loss) will be deposited in the Termination Account, and will be applied by the Collateral Agent pursuant to the terms of the Intercreditor Agreement. No Owner will alter so as to in any way restrict the cover of any insurances or entries referred to in its Mortgage, except to the extent expressly permitted by the Collateral Agent. EVENTS OF DEFAULT UNDER THE MORTGAGE The following constitute Events of Default under the Mortgages: (i) an Event of Default under the Indentures or the Letter of Credit Reimbursement Agreement; (ii) default by the applicable Owner in the payment of any sums payable under its Mortgage to the Collateral Agent (other than payments due under the Indentures) continuing for two Business Days after the receipt of notice of such failure to pay; (iii) default by the applicable Owner in any material respect in the performance, or breach in any material respect of any covenant of its Owner under its Mortgage or if any representation or warranty of such Owner made in such Mortgage or in any certificate or other writing delivered pursuant thereto or in connection therewith with respect to or affecting the related Vessel proves to have been inaccurate in any material respect as of the time when the same shall have been made, and, if such breach or default or inaccuracy is curable, continuance of such default or breach or inaccuracy for a period of 10 days after receipt of written notice thereof from the Collateral Agent or any Trustee or the Letter of Credit Issuer; (iv) entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the applicable Owner in any involuntary case under any applicable federal or state bankruptcy, insolvency, or other similar law now or hereafter in effect, or appointment of a receiver, liquidator, assignee, custodian, trustee, or sequestrator (or other similar official) for such Owner or for any substantial part of its property, or the ordering, winding up or liquidation of its respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; (v) commencement by the applicable Owner of a voluntary case under any applicable federal or state bankruptcy, insolvency, or other similar law now or hereafter in effect in any jurisdiction, or the consent by such Owner to the appointment of or taking possession by a receiver, liquidator, -131- assignee, custodian, trustee or sequestrator (or other similar official) of such Owner or any substantial part of its property, or the making by such Owner of any general assignment for the benefit of creditors, or the failure by such Owner generally to pay its debts as they become due, or the taking of action by the Owner in furtherance of any such action; (vi) any Vessel is deemed a Total Loss and the Insurance Proceeds thereof have not been received by the Collateral Agent within 90 days after the date on which such Vessel was deemed a Total Loss; or (vii) a Lien other than a Permitted Lien is placed on any Vessel. REMEDIES In the event that any one or more Events of Default has occurred and is continuing, then, in each and every such case the Collateral Agent, will have the right to: (i) in the event the related Trustee or the Letter of Credit Issuer has declared immediately due and payable all amounts owing under the Notes and the Letter of Credit Reimbursement Agreement (in which case all of the same shall be immediately due), bring suit at law, in equity or in admiralty, as it may be advised, to recover judgment for such amounts and collect the same out of any and all property of the applicable Owner whether covered by the related Mortgage or otherwise; (ii) exercise all of the rights and remedies in foreclosure and otherwise given to mortgagees by provisions of applicable law; (iii) take and enter into possession of the applicable Vessel, at any time, wherever the same may be, without court decision or other legal process and without being responsible for loss or damage and the Collateral Agent may, without being responsible for loss or damage, hold, lay-up, lease, charter, operate or otherwise use such Vessel for such time and upon such terms as it may deem to be for its best advantage, and demand, collect and retain all hire, freights, earnings, issues, revenues, income, profits, return premiums, salvage awards or recoveries, recoveries in general average, and all other sums due or to become due in respect of such Vessel or in respect of any insurance thereon from any person whomsoever, accounting only for the net profits, if any, arising from such use of such Vessel and charging upon all receipts from use of the Vessel or from the sale thereof by court proceedings or by private sale all costs, expenses, charges, damages or losses by reason of such use, and if at any time the Collateral Agent avails itself of the right given to it to take the Vessel: (i) the Collateral Agent will have the right to dock the Vessel for a reasonable time at any dock, pier or other premises of the Owner without charge, or to dock her at any other place at the cost and expense of the Owner; and (ii) the Collateral Agent will have the right to require the Owner to deliver, and the Owner will on demand, at its own cost and expense, deliver to the Collateral Agent the Vessel as demanded; and (iii) the Owner will irrevocably instruct the master of the Vessel so long as the Mortgage is outstanding to deliver the Vessel to the Collateral Agent as demanded; and (iv) sell the applicable Vessel or any share therein with or without the benefit of any charterparty or other engagement by public auction or private contract without legal process at any -132- place in the world and upon such terms as the Collateral Agent in its absolute discretion may determine with power to postpone any such sale and without being answerable for any loss occasioned by such sale or resulting from the postponement thereof and at any such public auction the Collateral Agent may become the purchaser and shall have the right to set off the purchase price against the Notes. Any sale of such Vessel or any shares therein made by the Collateral Agent in pursuance of the applicable Mortgage will operate to divest all title, right and interest of any nature whatsoever of the applicable Owner therein and thereto and shall bar such Owner, its successors and assigns, and all persons claiming by, through or under them. Upon any such sale, the purchaser will not be bound to see or inquire whether the Collateral Agent's power of sale has risen in the manner provided by such Mortgage and the sale will be within the power of the Collateral Agent and the receipt of the Collateral Agent of the purchase money will effectively discharge the purchaser, who will not be concerned with the manner of application of the proceeds of sale or be in any way answerable or otherwise liable therefor. Each of the Vessels will be registered under the laws of the Republic of Liberia. The Mortgages on the Vessels will be preferred mortgage liens under Liberian maritime law. Liberian law provides that such mortgages may be enforced by the mortgagee in a proceeding substantially identical to a suit in rem in admiralty in a proceeding against a vessel covered by such mortgage. The priority with respect to sale proceeds that such a mortgage would have vis-a-vis the claims of other lien creditors in an enforcement proceeding is generally determined by, and will vary in accordance with, the law of the country where the proceeding is brought. Liberian maritime law provides that a "preferred mortgage lien" is prior to all claims, other than the following: (i) liens against the vessel arising prior in time to the recording of the preferred mortgage; (ii) liens for damages arising out of tort; (iii) liens for unpaid vessel tonnage taxes and annual fees and penalties payable under the Liberian Maritime Regulations; (iv) liens for crew wages; (v) liens for general average; (vi) liens for salvage; and (vii) liens for expenses and fees allowed and costs imposed by courts of competent jurisdiction. Liberian ship mortgages may be enforced against a vessel that is physically present in the United States, but the claim under the mortgage would rank below certain preferred maritime liens as defined under the laws of the United States, including those for supplies and necessaries provided in the United States. Since the Vessels will be trading throughout the world, there can be no assurance that, if enforcement proceedings are commenced against a Vessel, such Vessel will be -133- located in a jurisdiction having the same procedures and lien priorities as Liberia or the United States. Other jurisdictions may provide no legal remedy at all for the enforcement of the Mortgages, or may provide a remedy that is dependent on court proceedings so expensive and time consuming as to be impractical. Furthermore, certain jurisdictions, unlike Liberia or the United States, may not permit a Vessel to be sold prior to entry of a judgment, entailing a long waiting time that could result in increased custodial costs, deterioration in the condition of the Vessel and substantial reduction in her value. Since the Notes are also secured by a pledge by the Issuer of all the stock of the Owners, enforcement of this pledge, including foreclosure, may provide in effect an alternative method to transfer control over a Vessel and mitigate against a substantial reduction in her value. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES THE EXCHANGE OFFER The following disclosure summarizes the material federal income tax consequences under the Internal Revenue Code of 1986 (the "Code") expected to result to Holders whose Existing Notes are exchanged for Exchange Notes in the Exchange Offer. This discussion has been prepared with the advice of Thacher Proffitt & Wood, counsel to the Company, and is based upon the provisions of the Code, the Treasury regulations thereunder, and published rulings and court decisions in effect as of the date hereof, all of which authorities are subject to change or differing interpretations, which could apply retroactively. The disclosure below does not purport to deal with federal income tax consequences applicable to all categories of investors and is directed solely to holders that hold the Notes as capital assets within the meaning of Section 1221 of the Code, and acquire such Notes for investment and not as a dealer or for resale. This disclosure is not intended to address every aspect of the federal income tax laws that may be relevant to holders in light of their particular investment circumstances or to certain types of holders subject to special treatment under the federal income tax laws such as banks, insurance Companies, holders that will hold the Notes as a position in a "straddle" for tax purposes or as a part of a "synthetic security" or "conversion transaction" or other integrated investment comprised of the Notes and one or more other investments, holders who own or will own directly, indirectly or by attribution including stock attribution resulting from ownership of the Warrants) 10.0% or more (by voting power) of Holdings Common Stock or holders that have a functional currency other than the U.S. dollar. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the "IRS") with respect to any of the federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. Holders and preparers of tax returns should be aware that under applicable Treasury regulations a provider of advice on specific issues of law is not considered an income tax return preparer unless the advice is (i) given with respect to events that have occurred at the time the advice is rendered and is not given with respect to the consequences of contemplated actions, and (ii) directly relevant to the determination of an entry on a tax return. Accordingly, holders should consult their own tax advisors and tax return preparers regarding the preparation of any item on a tax return. -134- All investors also should consult their own tax advisors in determining the federal, state, local, foreign and any other tax consequences to them of an investment in the Notes and the purchase, ownership and disposition thereof. The exchange of Existing Notes for Exchange Notes will be treated as a "non-event" for federal income tax purposes because the Exchange Notes will not be considered to differ materially in kind or extent from the Existing Notes. As a result, no material federal income tax consequences will result to Holders exchanging Existing Notes for Exchange Notes. UNITS, NOTES AND WARRANTS The following disclosure summarizes the material federal income tax consequences under the Internal Revenue Code of 1986 (the "Code") of the purchase, ownership and disposition of the Notes, Units, Warrants and Holdings Common Stock obtained upon exercise of the Warrants offered on the Original Closing Date to initial purchasers of Notes or Units that, except as noted below, are United States persons (as defined below). This disclosure has been prepared with the advice of Thacher Proffitt & Wood, counsel to the Company, and is based upon the provisions of the Code, the Treasury regulations thereunder, and published rulings and court decisions in effect as of the date hereof, all of which authorities are subject to change or differing interpretations, which could apply retroactively. The disclosure below does not purport to deal with federal income tax consequences applicable to all categories of investors and is directed solely to holders that hold the Notes, Units, Warrants or shares of Holdings Common Stock as capital assets within the meaning of Section 1221 of the Code, and acquire such Notes, Units, Warrants or shares of Holdings Common Stock for investment and not as a dealer or for resale. This disclosure is not intended to address every aspect of the federal income tax laws that may be relevant to holders in light of their particular investment circumstances or to certain types of holders subject to special treatment under the federal income tax laws such as banks, insurance companies, holders that will hold the Notes, Units, Warrants or shares of Holdings Common Stock as a position in a "straddle" for tax purposes or as a part of a "synthetic security" or "conversion transaction" or other integrated investment comprised of the Notes and one or more other investments, holders who own or will own directly, indirectly or by attribution (including stock attribution resulting from ownership of the Warrants) 10.0% or more (by voting power) of Holdings Common Stock or holders that have a functional currency other than the U.S. dollar. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the "IRS") with respect to any of the federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. Holders and preparers of tax returns should be aware that under applicable Treasury regulations a provider of advice on specific issues of law is not considered an income tax return preparer unless the advice is (i) given with respect to events that have occurred at the time the advice is rendered and is not given with respect to the consequences of contemplated actions, and (ii) directly relevant to the determination of an entry on a tax return. Accordingly, holders should consult their own tax advisors and tax return preparers regarding the preparation of any item on a tax return, even where the anticipated tax treatment has been discussed herein. All investors also should consult their own tax advisors in determining the federal, state, local, foreign and any other tax consequences to them of an investment in the Notes, Units, Warrants or shares of Holdings Common Stock and the purchase, ownership and disposition thereof. -135- Upon the issuance of the Existing Notes, Thacher Proffitt & Wood, counsel to the Issuer, delivered its opinion generally to the effect that, based upon the application of existing law, and assuming compliance with all provisions of the Indentures and other relevant documents, and the facts set forth in the Confidential Offering Circular, dated July 31, 1997 related to the Existing Notes and Warrants, the First Priority Notes will, and the Second Priority Notes should, be characterized as indebtedness of the Issuer for federal income tax purposes. Holders of Notes should recognize, however, that there is some uncertainty regarding the appropriate characterization of instruments such as the Notes. It is possible that the IRS might contend that the First Priority Notes and/or the Second Priority Notes should be treated not as debt of the Issuer but as equity interests in the Issuer. Any such recharacterization might result in material adverse consequences to United States persons holding such Notes, including those described below under "--HOLDINGS COMMON STOCK." The balance of this discussion assumes that the Notes are treated as indebtedness for federal income tax purposes. UNITS Because the original purchasers of the Second Priority Notes also will acquire Warrants, each Second Priority Note likely will be treated for federal income tax purposes as having been issued as part of an "investment unit" consisting of the Second Priority Note and associated Warrant. The issue price of an investment unit consisting of the Second Priority Note and associated Warrant will be the first price at which a substantial amount of Units are sold to the public for money (excluding sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The issue price of an investment unit is allocated between its component parts based on their relative fair market values. The Issuer and Holdings have allocated the issue price of a Unit between the Second Priority Note and the associated Warrant in accordance with the Issuer's determination of their relative fair market values on the Original Closing Date. The Issuer will use that allocation to determine the issue price of the Second Priority Notes and the holder's tax basis in the Warrants. Although the Issuer's allocation is not binding on the IRS, a holder of a Unit must use the Issuer's allocation unless the holder discloses on its federal income tax return for the year in which the Unit was acquired that it plans to use an allocation that is inconsistent with the Issuer's allocation. UNITED STATES PERSONS The following discussion is limited to the United States federal income tax consequences relevant to a holder of Notes, Units, Warrants and Holdings Common Stock that is a United States person. For those purposes, a "United States person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in, or under the laws of, the United States or any political subdivision thereof (except, in the case of a partnership, to the extent provided in regulations), an estate whose income is subject to United States federal income tax regardless of its source, or a trust other than a foreign trust within the meaning of Section 7701(a)(31) of the Code. Holders who are not United States persons should consult their own tax advisors regarding the tax consequences of purchasing, owning or disposing of a Note, Unit, Warrant or share of Holdings Common Stock. NOTES -136- ORIGINAL ISSUE DISCOUNT The Existing Notes were issued with "original issue discount" for federal income tax purposes. A Holder of a Note generally is required to include original issue discount in gross income as it accrues, regardless of the holder's method of accounting for federal income tax purposes. Accordingly, each holder will be required to include amounts in gross income without regard to when the cash to which such income is attributable is received. Because the Issuer is required, to the extent of Available Cash, to offer to purchase Notes on each Available Cash Payment Date at a price equal to 102% of a Note's principal amount, although the matter is not free from doubt, Treasury regulations regarding contingent payment debt instruments likely will apply to the Notes. It is not altogether clear how the contingent payment rules apply to a debt instrument the payments on which may be received at the option of a holder. The Issuer will assume for purposes of those rules that an option that increases a holder's yield (such as the Available Cash Offer) will be deemed exercised, and that a non-exercise of such option will result in adjustments as described below. In general, under the contingent payment rules, the Issuer is required to construct a projected payment schedule for the Notes. A holder generally will recognize all interest income with respect to a Note on a constant yield basis based on that projected payment schedule (but would not recognize ordinary income upon receipt of cash payments denominated as interest), subject to certain adjustments if actual contingent payments differ from those projected. Such interest is treated as "original issue discount." The projected payment schedule includes each noncontingent payment and a projection of the amount and timing of each contingent payment on the Notes as of the Original Closing Date, assuming exercise of options by a holder that increase such holder's yield (such as the Available Cash Offer). The projected payment schedule must produce the "comparable yield," which is the yield at which the Issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the Notes. The amount of interest that accrues in each accrual period is the product of the "comparable yield" (adjusted for the length of the accrual period) and the Note's "adjusted issue price" at the beginning of each accrual period. The adjusted issue price of a Note is equal to its issue price, increased by interest previously accrued on the Note (determined without adjustments), and decreased by the amount of any noncontingent payments and the projected amount of any contingent payments previously made on the Note. The issue price of a First Priority Note is the first price at which a substantial amount of such Notes was sold to the public for money (excluding sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The issue price of a Second Priority Note is equal to that portion of the issue price of the Unit allocable to the Second Priority Note as described above. Except for adjustments made for differences between actual and projected payments, the amount of interest included in income by a holder of a Note is the sum of the "daily portions" of interest income with respect to the Note for each day during the taxable year (or portion thereof) on which such holder held such Note. The "daily portions" of interest income are determined by allocating to each day in an accrual period the ratable portion of the interest that accrues in that accrual period. If the total actual payments exceed the total projected payment in a tax year (a "net -137- positive adjustment"), a holder generally will be required to treat such excess as additional interest includible in gross income for such tax year. If the total actual payments are less than the total projected payments in a tax year (a "net negative adjustment"), a holder will be required to reduce the amount of interest income that it would otherwise account for by the amount of such difference. If the net negative adjustment exceeds the amount of interest income that the holder would otherwise account for, such excess will be treated as an ordinary loss to the extent that the holder's total interest inclusions with respect to the Note exceed the total net negative adjustments treated as ordinary loss on the Note in prior taxable years. Any remaining excess will be a "negative adjustment carryforward" and treated as a negative adjustment in the succeeding tax year. If a Note is sold, retired or otherwise disposed of in a taxable transaction, any negative adjustment carryforward from the prior year will reduce the holder's amount realized on the sale, retirement or disposition. Thus, because the yield to maturity of the Notes will be determined for federal income tax purposes by assuming that the projected payments will be made on specific dates, a holder of Notes may be required to include amounts in income prior to the receipt of cash payments attributable to such income. The Issuer will provide to holders the projected payment schedule for the Notes. The payment amounts, timing thereof, and yield set forth on the projected payment schedule are for federal income tax purposes only and are not assurances by the Issuer with respect to any aspect of the Notes. A holder generally will be bound by the projected payment schedule. The IRS, however, will not respect the projected payment schedule if it determines such schedule to be unreasonable. Holders are strongly urged to consult their tax advisors with respect to the application of the contingent payment rules described above to the Notes. SALE, RETIREMENT OR OTHER TAXABLE DISPOSITION In general, a holder of a Note will recognize gain or loss upon the sale, retirement or other taxable disposition of such Note in an amount equal to the difference between (a) the amount of cash and the fair market value of other property received in exchange therefor and (b) the holder's adjusted tax basis in such Note. A holder's tax basis in a Note generally will be equal to the price paid for such Note, increased by the amount of interest previously accrued on the Note (determined without adjustments), and decreased by the amount of any noncontingent payments and the projected amount of any contingent payments previously made on the Note. If a Note is sold or otherwise disposed of when there are remaining contingent payments due under the projected payment schedule, then any gain recognized upon such sale or other disposition will be ordinary interest income, while any loss recognized will be ordinary loss to the extent that the holder's total interest inclusions on a Note exceed the total net negative adjustments on the Note that the holder took into account as ordinary loss under the rules described above, and any additional loss will generally be a capital loss. If, however, a Note is sold or otherwise disposed of after there are no remaining contingent payments due on the Notes under the projected payment schedule, the resulting gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the Note had been held for more than one year. Any such capital gain realized by an individual, -138- estate or trust will qualify for the 20% maximum tax (10% in the case of such a taxpayer in the 15% ordinary income tax bracket) on capital gains if the Note sold or otherwise disposed of was held for at least 18 months, and for the 28% maximum tax on capital gains if such Note was held for more than one year and less than 18 months. Holders should be aware that the resale of a Note may be affected by the market discount rules of the Code under which a subsequent purchaser of a Note acquiring such Note at a market discount generally would be required to include as ordinary income a portion of the gain realized upon the disposition or retirement of such Note, to the extent of the market discount that has accrued while the debt instrument was held by such holder. FOREIGN TAX CREDIT CONSIDERATIONS--EFFECT OF ISLE OF MAN WITHHOLDING TAXES For purposes of the U.S. foreign tax credit limitations, original issue discount with respect to the Notes will be foreign source income. In addition, in the event that cash interest payments on the Notes become subject to Isle of Man withholding taxes and the Issuer accordingly is required to pay Additional Amounts, a holder of a Note will be treated as actually receiving any amount withheld by the Issuer from a cash interest payment with respect to a Note and then as having paid over such amount to the Isle of Man taxing authorities. As a result, the amount includible in the income of a holder for U.S. federal income tax purposes may be greater than the amount actually received by such holder from the Issuer with respect to such payment. Subject to certain limitations, a holder of a Note generally will be entitled to a credit against its U.S. federal income tax liability, or deduction in computing its U.S. federal taxable income, in respect of Isle of Man income taxes withheld by the Issuer. A holder of Notes should consult his own tax advisor as to the consequences of Isle of Man withholding taxes and the availability of a foreign tax credit or deduction. WARRANTS The exercise of a Warrant will not result in a taxable event to the holder of the Warrant. Upon such exercise, the holder's adjusted tax basis in the Holdings Common Stock obtained will be equal to the sum of such holder's adjusted tax basis in the Warrant (described above) and the exercise price of the Warrant; the holder's holding period with respect to such Holdings Common Stock will commence on the day after the date of exercise. If a Warrant expires without being exercised, the holder will recognize a loss in an amount equal to its tax basis in the Warrant. Such loss will be a capital loss if the Holdings Common Stock to which the Warrants relate would have been a capital asset in the hands of the Warrant holder, and such capital loss will be a long-term capital loss if the Warrant was held for more than one year at the time of the lapse. Upon the sale or other taxable disposition of a Warrant, a holder will recognize gain or loss for federal income tax purposes in an amount equal to the difference between (a) the amount of cash and the fair market value of property received therefor and (b) the holder's adjusted tax basis in the Warrant. A holder's initial tax basis in a Warrant will be that portion of the issue price of the Units allocable to the Warrant, as described above, and subject to adjustment in the events described above. Such gain or loss will be capital gain or loss if the Holdings Common Stock to which the -139- Warrants relate would be a capital asset in the hands of the Warrant holder. Any such capital gain or loss will be long-term capital gain or loss if the Warrant was held for more than one year at the time of the sale or exchange and otherwise will be a short-term capital gain or loss. Any such capital gain realized by an individual, estate or trust will qualify for the 20% maximum tax (10% in the case of such a taxpayer in the 15% ordinary income tax bracket) on capital gains if the Warrant sold or otherwise disposed of was held for at least 18 months, and for the 28% maximum tax on capital gains if such Warrant was held for more than one year and less than 18 months. It is possible that the Warrants may be deemed to have been exercised for tax purposes on the date on which they first become exercisable or possibly on the date issued, regardless of whether they are actually exercised on the date on which they are first exercisable. As a result, it is possible that the holding period of a share of Holdings Common Stock may be deemed to have begun on the date on which the Warrants first become exercisable or possibly on the date issued. Under current provisions of the Code relating to holders of stock in a "passive foreign investment company," holders of options to acquire such stock are considered to own such stock for purposes of certain of those provisions. Accordingly, the consequences described in "Passive Foreign Income Company Status" below generally apply to the holder of a Warrant upon receipt of such Warrant, except to the extent described below. Adjustments to the number of shares of Holdings Common Stock purchasable upon exercise of the Warrants, or the failure to make adjustments, may in certain circumstances result in the receipt of taxable constructive dividends by the holder resulting in ordinary income to the extent of Holdings' current and accumulated earnings and profits (as determined for U.S. federal income tax purposes). In such event the holder's tax basis in the Warrants would be increased by an amount equal to the constructive dividend. HOLDINGS COMMON STOCK DISTRIBUTIONS Distributions of cash or property with respect to the Holdings Common Stock will constitute ordinary dividend income to the extent of Holdings' current and accumulated earnings and profits (as determined for U.S. federal income tax purposes) and will be treated as foreign source dividend income. Any distributions in excess of such earnings and profits will constitute a nontaxable return of capital and reduce the holder's tax basis in such Holdings Common Stock. To the extent such distributions exceed a holder's tax basis in Holdings Common Stock, such excess will constitute capital gain. The dividend will not be eligible for the dividends received deduction allowed to United States corporations. Special rules apply for purposes of determining the foreign tax credit available to a United States corporation which controls 10% or more of the voting shares of Holdings. SALE OR OTHER TAXABLE DISPOSITION A holder will, upon the sale, redemption or other taxable disposition of Holdings Common Stock, recognize gain or loss for federal income tax purposes in an amount equal to the difference between (a) the amount of cash and the fair market value of property received therefor and (b) the -140- holder's tax basis in the Holdings Common Stock. Except as described below under "Passive Foreign Investment Company Status," such gain or loss will be capital gain or loss if the Holdings Common Stock were a capital asset in the hands of the holder. Any such capital gain realized by an individual, estate or trust will qualify for the 20% maximum tax (10% in the case of such a taxpayer in the 15% ordinary income tax bracket) on capital gains if the Holdings Common Stock sold or otherwise disposed of was held for at least 18 months, and for the 28% maximum tax on capital gains if such share of Holdings Common Stock was held for more than one year and less than 18 months and will be long-term if the Holdings Common Stock were held for more than one year. Any such gain generally will not be treated as foreign source income. If a holder receives any foreign currency on the sale or other taxable disposition of Holdings Common Stock, the holder may recognize ordinary gain or loss as a result of currency fluctuations between the date of the sale and the date the sale proceeds are converted into U.S. dollars. PASSIVE FOREIGN INVESTMENT COMPANY STATUS Because Holdings will receive (or be deemed to receive) rental income and other passive income, Holdings may be a passive foreign investment company ("PFIC") for federal income tax purposes. Holdings will be a PFIC if either 75% or more of its gross income in a tax year is passive income or the average percentage of its assets (by value) which produce or are held for the production of passive income is at least 50%. A determination as to PFIC status is made annually (although an initial determination that Holdings is a PFIC generally will apply for subsequent years (whether or not Holdings meets the PFIC test in those years)) with respect to a holder owning Holdings stock who does not make the qualified electing fund ("QEF") election with respect to the first year it holds or is deemed to hold Holdings stock and for which Holdings is determined to be a PFIC. Whether Holdings is a PFIC in any year and the tax consequences relating to PFIC status will depend on the composition of the income and assets of Holdings, which may vary each year. Holdings will monitor its status and will, promptly following the end of any taxable year for which it determines it was a PFIC, notify holders of such status and comply with the reporting and other requirements necessary for holders to make a QEF election (described below). If Holdings is a PFIC, the direct and certain indirect holders holding Holdings Common Stock must either (i) make a QEF election and report currently their pro rata share of Holdings' ordinary earnings and net capital gain even if they do not receive distributions from Holdings, or (ii) upon disposition of Holdings Common Stock or Warrants or receipt of an "excess distribution" (as defined in the Code), be subject to tax generally as if the gain or distribution were ordinary income earned ratably over the period in which the Holdings Common Stock or Warrant was held (including payment of an interest charge on the deferred tax), and face other adverse tax consequences. While it is unclear, holders of Warrants should be aware that it is likely that the QEF election will be unavailable to Warrant holders. If Holdings determines that it is a PFIC at any time and so notifies holders, it is strongly urged that each holder of Holdings Common Stock or Warrants make a QEF election in accordance -141- with the procedure described in the following paragraph. Any such notification from Holdings also would include a detailed explanation as to how to make a QEF election. If such election is made, the holder would be required to include in income the holder's pro rata share of Holdings' ordinary earnings and net capital gain during the PFIC year. As stated above, it is not entirely clear if a QEF election is available to holders of Warrants. If the IRS successfully claims that a holder of Warrants could not make a QEF election, or if a holder of Holdings Common Stock or Warrants fails to make a QEF election after receiving a notification from Holdings that it is or was a PFIC, the holder will face severe adverse tax consequences described under (ii) of the preceding paragraph. The QEF election is made on a shareholder-by-shareholder basis. Each holder should consult with its own tax adviser to decide whether to make the QEF election. This election is made by attaching the shareholder election statement, the PFIC annual information statement and Form 8621 to such holder's timely filed United States federal income tax return with a copy of the shareholder election statement being sent to the Internal Revenue Service Center, P.O. Box 21088, Philadelphia, Pennsylvania 19114. If Holdings is (or under the circumstances described above, was) a PFIC, copies of the Form 8621 must also be filed every year, both with such tax return and with the IRS Center in Philadelphia, whether or not the QEF election is made. Holdings will supply the PFIC annual information statement to any holder of Holdings Common Stock or Warrant or former holder of Holdings Common Stock or Warrant who requests it and to all shareholders of record who are holders at any time in any PFIC year. LIQUIDATED DAMAGES The Issuer intends to take the position that the additional payments described above under "Description of the Exchange Notes--Registered Exchange Offer; Registration Rights" will be taxable to a holder as ordinary income in accordance with such Holder's method of accounting for tax purposes. The IRS, however, may take a different position, which could affect the timing of both a Holder's income and the timing of the Issuer's deduction with respect to such additional payments. NON-U.S. PERSONS The following discussion is limited to the United States federal income tax consequences relevant to a holder of a Unit, Note, Warrant or share of Holdings Common Stock that is not a United States person (a "non-U.S. person"). NOTES In general, payments of principal, premium (if any) and interest (including original issue discount) on the Notes will not be subject to federal income tax, including withholding tax, if paid to a non-U.S. person, unless, in the case of interest (including original issue discount) the non-U.S. person is (i) a corporation that is an insurance company carrying on a U.S. trade or business to which the interest (including original issue discount) is attributable within the meaning of the Code, or (ii) the individual or corporation has an office or other fixed place of business in the United States to which the interest is attributable, and the interest either is derived in the active conduct of a banking, financing or similar business within the United States or is received by a corporation, the -142- principal business of which is trading in stock or securities for its own account. Even if (i) or (ii) of the preceding sentence applies to a non-U.S. person, the exchange of Existing Notes for Exchange Notes pursuant to the Registered Exchange Offer will not constitute a taxable exchange. See "--EXCHANGE OFFER" above. Gain realized on the sale or retirement of Notes by a non-U.S. person will not be subject to federal income tax, including withholding tax, unless (i) the gain is effectively connected with the conduct of a trade or business within the United States or (ii) in the case of an individual, the holder has been present in the United States for 183 days or more during the taxable year of the sale or retirement and certain other conditions are satisfied. WARRANTS AND HOLDINGS COMMON STOCK Distributions by Holdings to a non-U.S. person of a Warrant or share of Holdings Common Stock would be subject to withholding of federal income tax only if 25% or more of the gross income of Holdings (from all sources of the three-year period ending with the taxable year preceding the declaration of the dividend (the "Testing Period")) was effectively connected with the conduct of a trade or business in the United States by Holdings. Holdings does not anticipate that 25% or more of its gross income will be effectively connected with the conduct of a trade or business in the United States by Holdings, and accordingly, Holdings anticipates that dividends paid to non-U.S. persons will not be subject to withholding of federal income tax. Gain realized on the sale or other disposition of Warrants or Holdings Common Stock by a non-U.S. person will not be subject to federal income tax, including withholding tax, unless (i) the gain is effectively connected with the conduct of a trade or business within the United States or (ii) in the case of an individual, the holder has been present in the United States for 183 days or more during the taxable year of the sale or retirement and certain other conditions are satisfied. STATE, LOCAL, FOREIGN AND OTHER TAXES Investors should consult their own tax advisors regarding whether the purchase of the Exchange Notes, Units, Warrants or shares of Holdings Common Stock, either alone or in conjunction with an investor's other activities, may subject an investor to any state or local taxes, or to taxes imposed by any taxing jurisdiction outside the United States, based on an assertion that the investor is either "doing business" in, or deriving income from a source located in, any state, local or foreign jurisdiction, including any such assertion arising from the presence, use, trading or operation of any of the Vessels in such jurisdiction or any activities in such jurisdiction of an Owner or any other person. Additionally, potential investors should consider the state, local, foreign and other tax consequences of purchasing, owning or disposing of an Exchange Note, Unit, Warrant or share of Holdings Common Stock. State, local and foreign tax law may differ substantially from the corresponding federal tax law, and the foregoing discussion does not purport to describe any aspect of the tax laws of any state or other jurisdiction. Accordingly, potential investors should consult their own tax advisors with regard to such matters. INFORMATION REPORTING AND BACKUP WITHHOLDING -143- The Issuer will provide annual information statements to holders of the Exchange Notes and information returns to the IRS regarding the amount of original issue discount that accrued on the Exchange Notes during the past year. A holder of an Exchange Note or share of Holdings Common Stock may be subject to backup withholding at the rate of 31.0% with respect to original issue discount and proceeds from the sale, exchange, redemption or retirement of the Exchange Note or share of Holdings Common Stock unless such holder (i) is a corporation or falls within certain other exempt categories and, when required, demonstrates such fact, or (ii) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Any amount paid as backup withholding would be creditable against such holder's United States federal income tax liability. A holder who does not provide a correct taxpayer identification number may be subject to penalties imposed by the Code. UNITED STATES TAXATION OF THE COMPANY U.S. TAXATION OF OPERATING INCOME. Unless exempt from U.S. taxation under the rules discussed below, a non-U.S. corporation is subject to U.S. federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, or from the performance of services directly related to such use ("Shipping Income"), to the extent that such Shipping Income is derived from sources within the United States. For these purposes, 50% of Shipping Income that is attributable to transportation that begins or ends (but that does not both begin and end) in the United States constitutes income from sources within the United States ("50% U.S.-source Shipping Income"). The tax on non-exempt 50% U.S.-source Shipping Income is 4% of the amount of such income not reduced by any deductions. A foreign corporation, such as the Company, which does not maintain an office or other fixed place of business within the United States is not subject to United States taxation with respect to Shipping Income that is not considered to be from sources within the United States (such as income attributable to transportation that begins and ends outside of the United States and 50% of the Shipping Income that is attributable to transportation that begins or ends (but that does not both begin and end) in the United States). The Vessels will be operated in various parts of the world and, in part, may be involved in transportation of cargoes that begins or ends (but that does not both begin and end) in U.S. ports. EXEMPTION OF OPERATING INCOME FROM U.S. TAXATION. Pursuant to Section 883 of the Code, the Company will be exempt from U.S. taxation of its 50% U.S.-source Shipping Income, if both (i) the Company is organized in a foreign country that grants an equivalent exemption to corporations organized in the United States (the "Equivalent Exemption Requirement"), and (ii) either (A) more than 50% of the value of the Company's shares is owned, directly or indirectly, by individuals who are "residents" of such country or of another foreign country that grants an equivalent exemption to corporations organized in the United States (the "50% Ownership Test") or (B) stock of the Company is "primarily and regularly traded on an established securities market" in such country, in -144- another country that grants an "equivalent exemption" to U.S. corporations, or in the United States (the "Publicly-Traded Test"). The Isle of Man, the country in which the Company is incorporated, grants an "equivalent exemption" to U.S. corporations. Therefore, the Company will be exempt from U.S. federal income taxation with respect to its 50% U.S.-source Shipping Income if either the 50% Ownership Test or the Publicly-Traded Test is met. As of the Original Closing Date, the Company met the 50% Ownership Test. However, no assurance can be given that the Company will qualify for the exemption in any future year. U.S. TAXATION OF GAIN ON SALE OF VESSELS. Regardless of whether the Company qualifies for exemption under Section 883 of the Code, the Company will not be subject to United States taxation with respect to gain realized on sale of a Vessel, provided that the sale is considered to occur outside of the United States under United States tax principles. In general, a sale of a Vessel will be considered to occur outside of the United States for this purpose if title to the Vessel, and risk of loss with respect to the Vessel, pass to the buyer outside of the United States. It is expected that any sale of a Vessel will be considered to occur outside of the United States. FIXED PLACE OF BUSINESS WITHIN THE UNITED STATES. In the event that the Company were considered to maintain an office or other fixed place of business within the United States, the Company could become subject to the net-basis U.S. federal corporate income tax, which currently is imposed at rates of up to 35% on taxable income, and to the 30% "branch profits tax" regime of Section 884 of the Code with respect to any U.S.-source Shipping Income and gain not in excess of the "depreciation adjustments," as defined in Section 865 of the Code, on the sale of a Vessel that has produced such "effectively connected" income. As noted above, the Company does not expect to have an office or other fixed place of business within the United States. ERISA CONSIDERATIONS Sections 404 and 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the Code impose restrictions on the activities of employee benefit plans (as defined in Section 3(3) of ERISA) and certain other retirement plans and arrangements described in Section 4975(e)(l) of the Code, including individual retirement accounts, individual retirement annuities and Keogh plans and insurance company separate accounts and bank collective investment funds, in which such plans, accounts, annuities or arrangements are invested (each a "Plan"). Section 404 of ERISA imposes general fiduciary requirements on the fiduciaries of Plans to which it applies, including requirements of investment prudence and diversification in managing such a Plan's assets. In addition, Section 406 of ERISA prohibits Plans to which it applies from engaging in transactions described in Section 406 of ERISA, and Section 4975 of the Code imposes excise taxes with respect to transactions described in Section 4975(c)(l) of the Code. The transactions described in Section 406 of ERISA and Section 4975(c)(l) of the Code are transactions which involve the assets of a Plan and to which a person related to the Plan is a party. Statutory and administrative exemptions from such restrictions and taxes are available in certain cases. -145- The purchase of Securities by a Plan may be deemed to constitute a sales transaction between the Plan and the seller of Securities, as well as an extension of credit by the Plan to the Issuer or the Owners. Either of such transactions could constitute a prohibited transaction if Holdings, the Issuer or any of the Owners is a "party in interest" with respect to the Plan for purposes of Section 406 of ERISA or a "disqualified person" with respect to the Plan under Section 4975 of the Code. In such a case, the Plan should not purchase or hold the Securities unless there is in effect a statutory or administrative prohibited transaction exemption making Section 406 of ERISA and Section 4975 of the Code inapplicable to such purchase and holding. Additional ERISA considerations may apply if the Securities cause the holders thereof to be deemed to have an equity interest in Holdings, the Issuer or the Owners for purposes of ERISA. In that event, a Plan's investment in the Securities may cause the assets of Holdings, the Issuer or the Owners to be deemed to be assets of the Plan for purposes of Sections 404 and 406 of ERISA and Section 4975 of the Code. In such event, ERISA's fiduciary standards might apply to actions involving Holdings, the Issuer's or the Owners' assets, and any transactions involving Holdings, the Issuer or the Owners, or their respective assets could be deemed to be transactions to which the restrictions of Section 406 or ERISA and the taxes imposed under Section 4975 of the Code might apply. Under Section 2510.3-101 of regulations issued by the United States Department of Labor (the "Regulations"), when a Plan to which the Regulations apply acquires an equity interest in an entity, the Plan's assets include the investment in the entity and, with certain exceptions, an undivided interest in each asset of the entity in which the investment is made. Exceptions contained in the Regulations provide that a Plan's assets will not include an undivided interest in each asset of an entity in which it makes an equity investment if: (1) the entity is an operating company; (2) the equity investment made by the Plan is either a "publicly-offered security" as defined in the Regulations or a security issued by an investment company registered under the Investment Company Act of 1940, as amended; or (3) Benefit Plan Investors do not own 25% or more in value of any class of equity securities issued by the entity. For this purpose, "Benefit Plan Investors" include Plans, as well as any "employee benefit plan" as defined in Section 3(3) of ERISA which is not subject to Title I of ERISA, such as governmental plans (as defined in Section 3(32) of ERISA) and church plans (as defined in Section 3(33) of ERISA) which have not made an election under Section 410(d) of the Code, and any entity whose underlying assets include Plan assets by reason of a Plan's investment in the entity. If the purchase of the Securities results in holders thereof having an equity interest in Holdings, the Issuer or the Owners for purposes of ERISA, there is no assurance that any of the exceptions set forth in the Regulations will apply to the purchase of the Securities offered hereby. Under the terms of the Regulations, if any person were deemed to hold Plan assets by reason of a Plan's investment in the Securities, such Plan assets may include an undivided interest in the Vessels and other property of such person. In such an event, the Owners, the Trustees, the Collateral Agent, the Manager, GEBAB, other persons providing services with respect to the Vessels and other property of the Owners, may be subject to the fiduciary responsibility provisions of Title I of ERISA. The prohibited transaction provisions of Section 4975 of the Code and Section 406 of ERISA would apply with respect to transactions involving Holdings, the Issuer or the Owners or the Vessels and a related party to a Plan unless such transactions are subject to a statutory or administrative exemption. Additionally, if Holdings, the Issuer, the Owners or the Collateral Agent were deemed to hold Plan assets, each holder of a Security may be subject to the fiduciary responsibility provisions -146- of Title I of ERISA with respect to its right to consent or withhold consent to amendments to any of the Indentures or the Warrant Agreement and with respect to its right to vote on actions to be taken or not taken if an Event of Default occurs. As of the date hereof, the Company believes that each of the Owners will qualify as an operating company within the meaning of the Regulations. However, Plans considering the purchase of the Securities should consult with their own independent legal counsel concerning the status of the Owners under the Regulations and any ERISA considerations relevant thereto. In addition, certain affiliates of Holdings, the Issuer, the Owners, the Manager, GEBAB, the Collateral Agent and the Trustees may be considered to be parties in interest or fiduciaries with respect to many Plans. An investment by such a Plan in Securities may be a prohibited transaction under ERISA and the Code unless such investment is subject to a statutory or administrative exemption. As a result, each prospective initial holder of the Securities, each prospective transferee acquiring any of the Securities and each prospective owner (or transferee thereof) of a beneficial interest in any of the Securities (each a "Prospective Owner") is or will be deemed to have represented and warranted to Holdings, the Owners, the Issuer, the Trustees, the Collateral Agent, the Manager and GEBAB that either (1) the Prospective Owner is not a Plan and the Prospective Owner is not directly or indirectly acquiring the relevant Securities on behalf of, as investment manager of, as named fiduciary of, as trustee of, or with assets of a Plan, (2) to the extent such purchase is made by or on behalf of a bank collective investment fund maintained by the purchaser in which no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total assets in such collective investment fund, and the other applicable conditions of Prohibited Transaction Class Exemption 91-38 issued by the Department of Labor are satisfied, (3) to the extent such purchase is made by or on behalf of an insurance company pooled separate account maintained by the purchaser in which, at any time while the Securities are outstanding, no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total of all assets in such pooled separate account, and the other applicable conditions of Prohibited Transaction Class Exemption 90-1 issued by the Department of Labor are satisfied, (4) to the extent such purchase is made on behalf of a plan by (A) an investment adviser registered under the Investment Advisers Act of 1940, as amended (the "1940 Act"), that had as of the last day of its most recent fiscal year total assets under its management and control in excess of $50.0 million and had stockholders' or partners' equity in excess of $750,000, as shown in its most recent balance sheet prepared in accordance with GAAP, or (B) a bank as defined in Section 202(a)(2) of the 1940 Act, with equity capital in excess of $1.0 million as of the last day of its most recent fiscal year, or (C) an insurance company which is qualified under the laws of more than one state to manage, acquire or dispose of any assets of a pension or welfare plan, which insurance company has as of the last day of its most recent fiscal year, net worth in excess of $1.0 million and which is subject to supervision and examination by a state authority having supervision over insurance companies and, in any case, such investment adviser, bank or insurance company is otherwise a qualified professional asset manager, as such term is used in Prohibited Transaction Class Exemption 84-14 issued by the Department of Labor, and the assets of such plan when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof) or employee organization and managed by such investment adviser, bank or insurance company, do not represent more than 20% of the total client assets -147- managed by such investment adviser, bank or insurance company at the time of the transaction, and the other applicable conditions of such exemption are otherwise satisfied, (5) to the extent such plan is a governmental plan (as defined in Section 3 of ERISA) which is not subject to the provisions of Title I of ERISA or Section 401 of the Code, (6) to the extent such purchase is made by or on behalf of an insurance company using the assets of its general account, the reserves and liabilities for the general account contracts held by or on behalf of any plan, together with any other plans maintained to the same employer (or its affiliate) or employee organization, do not exceed 10% of the total reserves and liabilities of the insurance company general account (exclusive of separate account liabilities), plus surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed with the state of domicile of the insurer, in accordance with Prohibited Transaction Class Exemption 95-60, and the other applicable conditions of such exemption are otherwise satisfied, (7) to the extent such purchase is made by an in-house asset manager within the meaning of Part IV(a) of Prohibited Transaction Class Exemption 96-23, such manager has made or properly authorized the decision for such plan to purchase Securities, under circumstances such that Prohibited Transaction Class Exemption 96-23 is applicable to the purchase and holding of such Securities or (8) the proposed acquisition or transfer will qualify for a statutory or administrative prohibited transaction exemption under ERISA and the Code or will not give rise to a transaction described in Section 406 of ERISA or Section 4975(c)(l) of the Code for which a statutory or administrative exemption is unavailable. Any Plan fiduciary that proposes to cause a Plan to purchase Securities should consider whether such purchase would be appropriate under the general fiduciary standards of prudence and diversification, taking into account the overall investment policy of the Plan and its existing portfolio and should consult with its counsel with respect to the potential applicability of ERISA and the Code. PROSPECTIVE PLAN INVESTORS SHOULD CONSULT WITH THEIR LEGAL AND OTHER ADVISORS CONCERNING THE IMPACT OF ERISA AND THE CODE (AND, PARTICULARLY IN THE CASE OF NON-ERISA PLANS AND ARRANGEMENTS, ANY ADDITIONAL STATE LAW CONSIDERATIONS), AND THE POTENTIAL CONSEQUENCES IN THEIR SPECIFIC CIRCUMSTANCES OF AN INVESTMENT IN THE SECURITIES, PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES. CERTAIN ISLE OF MAN TAX CONSEQUENCES The Issuer is prohibited from making, and accordingly shall not make, any offer or invitation to any resident of the Isle of Man to subscribe for Exchange Notes. Holdings is prohibited from making, and accordingly shall not make, any offer or invitation to any resident of the Isle of Man to subscribe for Warrants. By acquiring and holding any Exchange Notes or Warrants, the holder will be deemed to warrant as a continuing warranty that the holder is not resident for taxation purposes in the Isle of Man unless the holder is acting as a trustee or nominee for a person not resident for taxation purposes, in the Isle of Man or is a Manx exempt or international company, and accordingly the entry of a Manx address on the Register of Members of the Issuer or Holdings, as the case may be, will -148- not be permitted unless evidence is produced to the Registrar that the holder is a trustee or nominee for a person not resident for taxation purposes in the Isle of Man or is a Manx exempt or international company. Special Isle of Man counsel has advised the Issuer that no withholding taxes will be imposed on payments of principal, interest or premium (if any) thereon with respect to the Exchange Notes and that the Holders will not be subject to any income taxes imposed by the Isle of Man solely as a result of owning the Exchange Notes. Investors should consult their own tax advisors regarding whether the purchase of the Exchange Notes in conjunction with an investor's other activities in the Isle of Man, may subject an investor to any taxes imposed by the Isle of Man. To the extent the Isle of Man in the future does impose a withholding tax with respect to payments of principal, interest or premium (if any) on the Exchange Notes, the Issuer will make the required withholding and is required to gross-up or indemnify Holders for amounts withheld. Pursuant to the Indentures, in the event the Isle of Man does impose a withholding tax with respect to such payments, the Issuer is obligated to take any lawful action to the extent necessary to prevent or avoid the imposition of any withholding taxes, including changing its jurisdiction of incorporation or residence; PROVIDED, HOWEVER, that the Issuer will not be required to take, or fail to take, any action (x) if in the opinion of counsel such act or failure to act would violate applicable law or (y) if in the reasonable opinion of the Issuer the actions necessary to avoid or prevent imposition of such taxes would be unduly burdensome. For purposes of clause (y) of the immediately preceding sentence, a requirement to change the jurisdiction of the Issuer's incorporation or residence will not be treated as unduly burdensome unless changing the Issuer's jurisdiction of incorporation or residence to such other jurisdiction or location would subject the Issuer to charges in such other jurisdiction, including but not limited to taxes imposed on or measured by its income, receipts, property, assets, capital, sales or value-added. Furthermore, special Isle of Man counsel has advised Holdings that the Holders of the Warrants will not be subject to any income or withholding taxes imposed by the Isle of Man solely as a result of owning the Warrants, exercising the Warrants to purchase Holdings Common Stock or owning Holdings Common Stock. Investors should consult their own tax advisors regarding whether the same, in conjunction with an investor's other activities in the Isle of Man, may subject an investor to any taxes imposed by the Isle of Man. PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Notes where such Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 199 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. -149- The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to a Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incidental to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilites, including liabilities under the Securities Act. NOTICE TO CANADIAN RESIDENTS RESALE RESTRICTIONS The distribution of the Securities in Canada is being made only on a private placement basis exempt from the requirement that Navigator Gas Transport and Holdings prepare and file a prospectus with the securities regulatory authorities in each province where trades of Securities are effected. Accordingly, any resale of the Securities in Canada must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with available statutory exemptions or pursuant to a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the Securities. REPRESENTATIONS OF PURCHASERS Each purchaser of Securities in Canada who receives a purchase confirmation will be deemed to represent to Navigator Gas Transport, Holdings and the dealer from whom such purchase confirmation is received that (i) such purchaser is entitled under applicable provincial securities laws to purchase such Securities without the benefit of a prospectus qualified under such securities laws, (ii) where required by law, that such purchaser is purchasing as principal and not as agent and (iii) such purchaser has reviewed the text below under "TRANSFER RESTRICTIONS." -150- RIGHTS OF ACTION (ONTARIO PURCHASERS) The Securities being offered are those of a foreign issuer and Ontario purchasers will not receive the contractual right of action prescribed by Section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result, Ontario purchasers must rely on other remedies that may be available, including common law rights of action for damages or rescission or rights of action under the civil liability provisions of the U.S. federal securities laws. ENFORCEMENT OF LEGAL RIGHTS All of the directors and officers of Navigator Gas Transport, Holdings and the Owners as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon Navigator Gas Transport, Holdings, the Owners or such persons. All or a substantial portion of the assets of Navigator Gas Transport, Holdings, the Owners and such persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against Navigator Gas Transport, Holdings, the Owners or such persons in Canada or to enforce a judgment obtained in Canadian courts against Navigator Gas Transport, Holdings, the Owners or such persons outside of Canada. NOTICE TO BRITISH COLUMBIA RESIDENTS A purchaser of Securities to whom the SECURITIES ACT (British Columbia) applies is advised that such purchaser is required to file with the British Columbia Securities Commission a report within ten days of the sale of any Securities acquired by such purchaser pursuant to the Offerings. Such report must be in the form attached to British Columbia Securities Commission Blanket Order BOR #95/17, a copy of which may be obtained from Navigator Gas Transport. Only one such report must be filed in respect of Securities acquired on the same date and under the same prospectus exemption. TAXATION AND ELIGIBILITY FOR INVESTMENT Canadian purchasers of Securities should consult their own legal and tax advisors with respect to the tax consequences of an investment in the Securities in their particular circumstance and with respect to the eligibility of the Securities for investment by the purchaser under the relevant Canadian legislation. -151- RATING Moody's has rated the First Priority Existing Notes B1 and the Second Priority Existing Notes B3, Standard & Poor's has rated the First Priority Existing Notes B and the Second Priority Existing Notes B and Duff & Phelps has rated the First Priority Existing Notes BB- and the Second Priority Existing Notes B. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. The ratings of the Rating Agencies assigned to the Notes address the likelihood of the receipt by Holders of the Existing Notes of all distributions to which such Holders are entitled. The ratings assigned to the Notes do not represent any assessment of the likelihood that principal prepayments might differ from those originally anticipated or address the possibility that Holders might suffer a lower than anticipated yield. In the event that the rating initially assigned to any of the Notes is subsequently lowered for any reason, no person or entity is obligated to provide any additional support or credit enhancement with respect to such Note. The ratings do not address the possibility that Holders of the Existing Notes may suffer a lower than anticipated yield. The Issuer has not requested a rating on the Notes by any rating agencies other than the Rating Agencies. However, there can be no assurance as to whether any other rating agency will rate the Notes, or, if it does, what rating would be assigned by any such other rating agency. A rating on the Notes by another rating agency, if assigned at all, may be lower than the ratings assigned to the Note by the Rating Agencies. LEGAL MATTERS Certain legal matters with respect to the Securities offered hereby will be passed upon for the Company and the Manager by Thacher Proffitt & Wood, New York, New York and Cains, Douglas, Isle of Man. GLOSSARY OF SHIPPING TERMS The following shipping terms are used in this Prospectus: "BALLAST" means the time during which a vessel is not employed while en route to load a cargo. "BAREBOAT CHARTER" means a contract to hire a vessel for a period of time under which the charterer is responsible for operating the vessel, providing and paying the captain and crew and paying all associated operating costs of the vessel during the charter. Also known as a "demise charter." "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act, as amended. "CHARTER" means the hire of a ship for a specified period of time or to carry a cargo for a fixed fee from a loading port to a discharging port. "CHARTERPARTY" means a contract for a charter. -152- "CLASSIFICATION SOCIETY" means a private organization which has as its purpose the supervision of vessels during their construction and afterward, in respect to their seaworthiness and upkeep, and the placing of vessels in "classes" according to the classification society's rules for each type of vessel. "CONFISCATION, EXPROPRIATION, NATIONALIZATION AND DETAINMENT INSURANCE" provides insurance for the occurrence of such event due to the carrying of contraband items on a vessel. "CONTRACT OF AFFREIGHTMENT" means a contract for a series of voyages involving bulk cargoes. "DEADWEIGHT TONNE" ("dwt") is a unit of a vessel's capacity for cargo, fuel oil, stores and crew, measured in tonnes. A vessel's dwt or total deadweight is the maximum weight the vessel can carry when fully loaded. "DRUG SEIZURE INSURANCE" provides cover for the seizure of a vessel by a national authority. "FREIGHT" means the compensation for carriage of cargo. "GENERAL AVERAGE" is related to the deliberate sacrifice of property to save the whole venture. "HULL AND MACHINERY INSURANCE" provides cover against total loss of a vessel, particular average (including partial loss and collision damage), general average and collision liability. "IMO" means International Maritime Organization, a United Nations agency that issues, INTER ALIA, international trade standards for shipping. "LAY-UP" means mooring a ship at a protected anchorage, shutting down substantially all of its operating systems and taking measures to protect against corrosion and other deterioration. "LOSS OF HIRE HULL AND MACHINERY INSURANCE" provides cover for the loss of earnings on a vessel after an accident under the hull and machinery policy. This is a daily indemnity based on the earnings of a vessel. "LOSS OF HIRE WAR RISKS INSURANCE" provides cover for the loss of earnings on a vessel after a insurable incident under the war risks policy. This is a daily indemnity based on the earnings of a vessel. "NEWBUILDING" means a new vessel under construction. "OPA 90" means the United States Oil Pollution Act of 1990, as amended. "P&I CLUBS" means protection and indemnity clubs, whereby shipowners jointly pay to receive coverage for third party liability. "PARTICULAR AVERAGE" means a fortuitous partial loss to the property insured which is not a general average loss. -153- "PROTECTION AND INDEMNITY INSURANCE" and "FREIGHT DEMURRAGE AND DEFENSE INSURANCE" provide cover for loss of life, personal injury, damage to vessels and property of third parties and indemnity for legal and contractual liability as carriers of cargo. These forms of insurance are generally provided to shipowners by P&I Clubs. P&I Clubs are mutual non-profit associations. As mutual insurers, P&I Club members are both assured and the providers of the capital necessary to support their P&I Club's underwriting. "SPECIAL SURVEY" means the inspection of a vessel by a classification society surveyor which takes place at a minimum every four years and at a maximum every five years. "SPOT MARKET" means the market for immediate chartering of a vessel. "TIME CHARTER" means the hire of a ship for a specified period of time. The owner provides the ship with crew, stores and provisions, ready in all aspects to load cargo and proceed on a voyage. The charterer pays for bunkering and all voyage related expenses including canal tolls and port charges. "TONNE" means a metric tonne of 1,000 kilograms. "VOYAGE CHARTER" means a contract of carriage in which the charterer pays for the use of a ship's cargo capacity for one, or sometimes more than one, voyage. Under this type of charter, the shipowner pays all the operating costs of the ship (including bunkers, canal and port changes, pilotage, towage and ship's agency) while payment for cargo handling charges is subject to agreement between the parties. Freight is generally paid per unit of cargo, such as a tonne, based on an agreed quantity, or as a lump sum irrespective of the quantity loaded. "WAR RISKS POLICY" provides cover against the blocking and trapping of a vessel, confiscation and damage resulting from hostilities, mines, strikes, riots and civil commotions. However, a vessel subject to this form of insurance cannot trade in a high risk area without the specific agreement of the insurer and the payment of additional premiums. Pursuant to this insurance, a total loss will be declared to have occurred after six months of arrest by a government, civil war, sabotage, acts of terrorists and mines. Shipping terms supplied by the Dictionary of Shipping Serials and other sources. -154- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. ------- TABLE OF CONTENTS PAGE ENFORCEABILITY OF CIVIL LIABILITIES.......................................iii AVAILABLE INFORMATION.....................................................iii DEFINED TERMS.............................................................iii PROSPECTUS SUMMARY..........................................................1 RISK FACTORS...............................................................18 THE EXCHANGE OFFER.........................................................25 USE OF PROCEEDS............................................................34 CAPITALIZATION.............................................................35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................................................35 CONSOLIDATED BALANCE SHEET.................................................35 GAS CARRIER INDUSTRY.......................................................40 BUSINESS...................................................................47 MANAGEMENT.................................................................63 PRINCIPAL SHAREHOLDERS.....................................................67 TRANSACTIONS...............................................................69 DESCRIPTION OF THE EXCHANGE NOTES..........................................71 DESCRIPTION OF THE UNITS..................................................113 DESCRIPTION OF THE WARRANTS...............................................113 THE MORTGAGES.............................................................124 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.........................................................129 ERISA CONSIDERATIONS......................................................139 CERTAIN ISLE OF MAN TAX CONSEQUENCES.....................................142 PLAN OF DISTRIBUTION......................................................142 NOTICE TO CANADIAN RESIDENTS..............................................143 LEGAL MATTERS.............................................................145 GLOSSARY OF SHIPPING TERMS................................................145 - -------------------------------------------------------------------------------- COVER CHART $304,000,000 NAVIGATOR GAS TRANSPORT PLC $217,000,000 10 1/2% First Priority Exchange Ship Mortgage Notes Due 2007 and $87,000,000 12% Second Priority Exchange Ship Mortgage Notes Due 2007 PROSPECTUS - -------------------------------------------------------------------------------- -155- PART II ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS NAVIGATOR GAS TRANSPORT PLC ("NAVIGATOR GAS TRANSPORT"), NAVIGATOR GAS (IOM I-A) LIMITED, NAVIGATOR GAS (IOM I-B) LIMITED, NAVIGATOR GAS (IOM I-C) LIMITED, NAVIGATOR GAS (IOM I-D) LIMITED AND NAVIGATOR GAS (IOM I-E) LIMITED (EACH, AN "OWNER" AND TOGETHER WITH NAVIGATOR GAS TRANSPORT, THE "COMPANIES") Each of the Companies is a corporation incorporated under the laws of the Isle of Man. Section 151 of the Isle of Man Companies Act 1931 provides that any provision (whether contained in the articles of association of the corporation or elsewhere) exempting any director, officer or auditor (collectively, "Officer") or indemnifying him or her against any liability which would attach to him or her in relation to any negligence, default, breach of duty or breach of trust is void. However, Section 151 also provides that an Isle of Man corporation may indemnify any Officer against any liability incurred by him or her in defending any proceedings, whether civil or criminal, in which judgment is given in his or her favor or in which he or she is acquitted or in connection with any application under Section 337 of the Isle of Man Companies Act 1931 in which relief is granted by a court. Section 337 provides that, if in any proceedings for negligence, default, breach of duty or breach of trust against any Officer it appears to the court hearing the case that the person is or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that he or she has acted honestly and reasonably and that, having regard to all the circumstances of the case, including those connected with his appointment, he or she ought fairly be excused, that court may relieve him or her either wholly or partly his or her liability on such terms as the court thinks fit. Additionally, under Section 337, where any Officer has reason to believe that any claim will or might be made against him or her, he or she may apply to court for relief as if an action had already been brought against him. An Isle of Man corporation has the power to purchase and maintain insurance on behalf of an Officer against any liability alleged against him or her for negligence, default, breach of duty or breach of trust. Article 126 of the Articles of Association of each of the Companies provides for indemnification of directors and officers as follows: Every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Companies Act [1931]), which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect insofar as its provisions are not avoided by the said section. The effectiveness of such article is subject to the provisions of Section 151 of the Isle of Man Companies Act 1931 as discussed above. 1 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS * 3.1 - Memorandum and Articles of Association of Navigator Gas Transport PLC. 3.2 - Memorandum and Articles of Association of Navigator Gas (IOM I-A) Limited. * 3.3 - Memorandum and Articles of Association of Navigator Gas (IOM I-B) Limited. * 3.4 - Memorandum and Articles of Association of Navigator Gas (IOM I-C) Limited. * 3.5 - Memorandum and Articles of Association of Navigator Gas (IOM I-D) Limited. * 3.6 - Memorandum and Articles of Association of Navigator Gas (IOM I-E) Limited. 4.1 - Indenture, dated as of August 1, 1997, among Navigator Gas Transport, Navigator Holdings PLC ("Holdings"), the Owners and United States Trust Company of New York (the "First Priority Trustee"), in respect of the 10 1/2% First Priority Ship Mortgage Notes due 2007. 4.2 - Indenture, dated as of August 1, 1997, among Navigator Gas Transport, Holdings, the Owners and The Chase Manhattan Bank of New York (the "Second Priority Trustee"), in respect of the 12% Second Priority Ship Mortgage Notes due 2007. 4.3 - Issue of One Debenture, dated as of August 1, 1997, between Navigator Gas (IOM I-A) Limited and the Collateral Agent, United States Trust Company of New York. * 4.4 - Issue of One Debenture, dated as of August 1, 1997, between Navigator Gas (IOM I-B) Limited and the Collateral Agent. * 4.5 - Issue of One Debenture, dated as of August 1, 1997, between Navigator Gas (IOM I-C) Limited and the Collateral Agent. * 4.6 - Issue of One Debenture, dated as of August 1, 1997, between Navigator Gas (IOM I-D) Limited and the Collateral Agent. * 4.7 - Issue of One Debenture, dated as of August 1, 1997, between Navigator Gas (IOM I-E) Limited and the Collateral Agent. 4.8 - Form of First Priority Exchange Note. 4.9 - Form of Second Priority Exchange Note. 4.10 - Intercreditor Agreement, dated as of August 1, 1997 between the First Priority Trustee, the Second Priority Trustee, Navigator Gas Transport, the Owners and Holdings. 4.11 - Letter of Credit Reimbursement Agreement, dated as of August 7, 1997 among Navigator Gas Transport, Holdings, the Owners, Credit Swisse First Boston and certain banks named therein. 4.12 - Intercompany Note dated as of August 7, 1997, made by the Owners to Navigation Gas Transport. 4.13 - Letter of Credit dated as of August 7, 1997, issued by Credit Suisse First Boston in favor of the Collateral Agent. 4.14 - Triparty Agreement dated as of August 1, 1997 among Holdings, China Shipbuilding Trading Company, Limited Jiagnan Shipyard and Tractebel. 5.1 - Opinion of Thacher Proffitt & Wood, counsel to the Issuer and the Owners, as to the validity of the Exchange Notes. 8.1 - Opinion of Thacher Proffitt & Wood, counsel to the Owners, as to Certain United States Income Tax Consequences (contained in Exhibit 5.1). 8.2 - Opinion of Cains, special counsel to the Owners, as to Certain Isle of Man Tax Consequences. 2 10.1 - Amended and Restated Shipbuilding Contract, dated as of June 26, 1997, between Navigator Holdings PLC and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.2 - Amended and Restated Shipbuilding Contract, dated as of June 26, 1997, between Navigator Holdings PLC and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.3 - Amended and Restated Shipbuilding Contract, dated as of June 26, 1997, among Navigator Holdings PLC and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.4 - Amended and Restated Shipbuilding Contract, dated as of June 26, 1997, among Navigator Holdings PLC and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.5 - Amended and Restated Shipbuilding Contract, dated as of June 26, 1997, among Navigator Holdings PLC and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. 10.6 - Amendment No. 1 to Amended and Restated Shipbuilding Contract, dated as of August 1, 1997, among Navigator Gas (IOM I-A) Limited and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.7 - Amendment No. 1 Amended and Restated Shipbuilding Contract, dated as of August 1, 1997, among Navigator Gas (IOM-I-B) Limited and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.8 - Amendment No. 1 to Amended and Restated Shipbuilding Contract, dated as of August 1, 1997, among Navigator Gas (IOM I-C) Limited and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.9 - Amendment No. 1 to Amended and Restated Shipbuilding Contract, dated as of August 1, 1997, among Navigator Gas (IOM-I-D) Limited and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. * 10.10 - Amendment No. 1 to Amended and Restated Shipbuilding Contract, dated as of August 1, 1997, among Navigator Gas (IOM-I-E) Limited and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard. 10.11 - Management Agreement, dated as of August 1, 1997, between Navigator Gas Management Limited, the Owners, Navigator Gas Transport and Holdings. 10.12 - Technical Supervision Agreement dated February 28, 1997 between Holdings on behalf of each Owner and GEBAB. 10.13 - Agreement on Contract for Technical Matters dated February 28, 1997 between Holdings on behalf of each Owner and GEBAB. 10.14 - Master Marketing and Services Agreement dated as of February 28, 1997 between Holdings on behalf of each Owner and GEBAB. 10.15 - Purchase Agreement, dated July 31, 1997, among Credit Suisse First Boston Corporation, Cambridge Partners, L.L.C. and Navigator Gas Transport. 10.16 - Registration Rights Agreement, dated as of July 31, 1997 among Credit Suisse First Boston Corporation, Cambridge Partners, L.L.C. and Navigator Gas Transport. 10.17 - Assignment and Assumption Agreement dated as of July 31, 1997 between Holdings and Navigator Gas (IOM I-A) Limited. * 10.18 - Assignment and Assumption Agreement dated as of July 31, 1997 between Holdings and Navigator Gas (IOM I-B) Limited. * 10.19 - Assignment and Assumption Agreement dated as of July 31, 1997 between Holdings and Navigator Gas (IOM I-C) Limited. * 10.20 - Assignment and Assumption Agreement dated as of July 31, 1997 between Holdings and 3 Navigator Gas (IOM I-D) Limited. * 10.21 - Assignment and Assumption Agreement dated as of July 31, 1997 between Holdings and Navigator Gas (IOM I-E) Limited. 10.22 - Global First Priority Note dated August 7, 1997 in the amount of $75,000,000. 10.23 - Global First Priority Note dated August 7, 1997 in the amount of $75,000,000. 10.24 - Global First Priority Note dated August 7, 1997 in the amount of $67,000,000. 10.25 - Global Second Priority Note in the amount of $87,000,000. + 23.1 - Consent of Coopers & Lybrand L.L.P. (New York). + 23.2 - Consent of Coopers & Lybrand LLP (Isle of Man). 23.3 - Consent of Thacher Proffitt & Wood (contained in Exhibit 5.1). 23.4 - Consent of Cains. 25.1 - Statement of eligibility of First Priority Trustee on Form T-1. 25.2 - Statement of eligibility of Second Priority Trustee on Form T-1. 99.1 - Letter of Transmittal (with regard to the First Priority Notes). 99.2 - Letter of Transmittal (with regard to the Second Priority Notes). 99.3 - Notice of Guaranteed Delivery with regard to the First Priority Notes. 99.4 - Notice of Guaranteed Delivery with regard to the Second Priority Notes.
- -------------------- * Substantially identical to corresponding document of Navigator Gas (IOM I-A) Limited, except as to the parties thereto. - -------------------- + To be provided by amendment. 4 ITEM 22. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form F-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (i) to include any prospectus required by Section 10(a)(3) of Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new 5 registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: if the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Rule 3-19 of this chapter at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, PROVIDED, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes that every prospectus: that prior to any public or reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145 (c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. Each of Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an undersigned registrant, hereby undertakes: (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. 6 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS TRANSPORT PLC By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 7 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS (IOM I-A) LIMITED By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 8 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS (IOM I-B) LIMITED By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 9 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS (IOM I-C) LIMITED By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 10 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS (IOM I-D) LIMITED By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 11 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on September 22, 1997 NAVIGATOR GAS (IOM I-E) LIMITED By: /s/ Richard M. Klapow --------------------------------- Richard M. Klapow President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities indicated on September 22, 1997 Name Title /s/ Richard M. Klapow Director and President --------------------- Richard M. Klapow /s/ David M. Moore Director, Vice President & Treasurer --------------------- David M. Moore /s/ Edward Cain Director --------------------- Edward Cain /s/ Joseph Avantario Director and Assistant Secretary --------------------- Joseph Avantario /s/ Andrew Baker Secretary --------------------- Andrew Baker 12 EX-3.1 2 MEMORANDUM OF ASSOC. - NAVIGATOR GAS TRANSPORT PLC 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS TRANSPORT PLC 1. The name of the Company is:- NAVIGATOR GAS TRANSPORT PLC 2. The Company is a public company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of US$1.00 each. 2 We, the subscribers to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite our respective names; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Names and addresses Signatures Number of of Subscribers Shares taken - -------------------------------------------------------------------------------- EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man ONE JOHN MICHAEL KILLIP 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 3 Witness to the above signatures TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PUBLIC COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS TRANSPORT PLC PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 4 2. The Company is a "Public Company" within the meaning of the Act, and accordingly invitation may be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 5 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued 7 shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. 8 (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 9 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the 10 share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its 11 disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 12 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some 13 person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and 14 (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that 15 minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the 16 requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 17 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 18 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; 19 and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 20 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 21 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - 22 Plc I/We, , of , being a member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Plc I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: 23 Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; 24 and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 25 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 26 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. 27 DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 28 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis 29 or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - 30 (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 31 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be 32 entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as 33 if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 101.A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102.The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed 34 to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and 35 (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate 36 if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share 37 as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - 38 (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. 39 NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 40 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 41 - -------------------------------------------------------------------------------- Names and Addresses Signatures of Subscribers - -------------------------------------------------------------------------------- EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man JOHN MICHAEL KILLIP 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 42 Witness to the above signatures TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-3.2 3 MEMORANDUM OF ASSOC. -- (1OM 1-A) 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-A) LIMITED 1. The name of the Company is:- NAVIGATOR GAS (1OM 1-A) LIMITED 2. The Company is a private company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of $1.00 each. 2 3 I, the subscriber to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite my name; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Name and address Signature Number of of Subscriber Shares taken - -------------------------------------------------------------------------------- EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 4 Witness to the above signature TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PRIVATE COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-A) LIMITED PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 5 2. The Company is a "Private Company" within the meaning of the Act, and accordingly no invitation shall be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 6 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. 7 (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 8 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 9 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 10 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. 11 CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 12 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum 13 from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they 14 shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder 15 of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The 16 transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 17 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general 18 meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member 19 or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the 20 adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 21 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each 22 executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which 23 the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of , being a member/members of the above- named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. 24 signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 25 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of 26 a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as 27 a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 28 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the 29 proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. 30 DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. 31 DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or 32 from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director 33 who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 34 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 35 101. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102. The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. 36 SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. 37 DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets 38 and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as 39 conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital 40 redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 41 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division 42 shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 43 - -------------------------------------------------------------------------------- Name and Address Signature of Subscriber - -------------------------------------------------------------------------------- EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 Witness to the above signature 44 TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-3.3 4 MEMORANDUM OF ASSOC. -- (1OM 1-B) 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-B) LIMITED 1. The name of the Company is:- NAVIGATOR GAS (1OM 1-B) LIMITED 2. The Company is a private company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of $1.00 each. 2 3 I, the subscriber to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite my name; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Name and address Signature Number of of Subscriber Shares taken - -------------------------------------------------------------------------------- EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 4 Witness to the above signature TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PRIVATE COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-B) LIMITED PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 5 2. The Company is a "Private Company" within the meaning of the Act, and accordingly no invitation shall be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 6 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. 7 (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 8 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 9 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 10 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. 11 CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 12 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum 13 from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they 14 shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder 15 of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The 16 transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 17 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general 18 meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member 19 or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the 20 adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 21 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each 22 executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which 23 the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of , being a member/members of the above- named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. 24 signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 25 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of 26 a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as 27 a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 28 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the 29 proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. 30 DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. 31 DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or 32 from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director 33 who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 34 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 35 101. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102. The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. 36 SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. 37 DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets 38 and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as 39 conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital 40 redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 41 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division 42 shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 43 - -------------------------------------------------------------------------------- Name and Address Signature of Subscriber - -------------------------------------------------------------------------------- EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 Witness to the above signature 44 TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-3.4 5 MEMORANDUM OF ASSOC. -- (1OM 1-C) 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-C) LIMITED 1. The name of the Company is:- NAVIGATOR GAS (1OM 1-C) LIMITED 2. The Company is a private company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of $1.00 each. 2 3 I, the subscriber to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite my name; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Name and address Signature Number of of Subscriber Shares taken - -------------------------------------------------------------------------------- EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 4 Witness to the above signature TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PRIVATE COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-C) LIMITED PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 5 2. The Company is a "Private Company" within the meaning of the Act, and accordingly no invitation shall be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 6 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. 7 (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 8 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 9 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 10 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. 11 CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 12 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum 13 from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they 14 shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder 15 of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The 16 transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 17 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general 18 meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member 19 or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the 20 adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 21 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each 22 executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which 23 the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of , being a member/members of the above- named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. 24 signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 25 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of 26 a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as 27 a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 28 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the 29 proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. 30 DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. 31 DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or 32 from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director 33 who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 34 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 35 101. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102. The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. 36 SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. 37 DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets 38 and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as 39 conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital 40 redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 41 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division 42 shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 43 - -------------------------------------------------------------------------------- Name and Address Signature of Subscriber - -------------------------------------------------------------------------------- EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 Witness to the above signature 44 TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-3.5 6 MEMORANDUM OF ASSOC. -- (1OM 1-D) 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-D) LIMITED 1. The name of the Company is:- NAVIGATOR GAS (1OM 1-D) LIMITED 2. The Company is a private company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of $1.00 each. 2 3 I, the subscriber to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite my name; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Name and address Signature Number of of Subscriber Shares taken EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 4 Witness to the above signature TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PRIVATE COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-D) LIMITED PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 5 2. The Company is a "Private Company" within the meaning of the Act, and accordingly no invitation shall be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 6 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. 7 (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 8 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 9 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 10 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. 11 CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 12 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum 13 from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they 14 shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder 15 of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The 16 transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 17 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general 18 meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member 19 or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the 20 adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 21 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each 22 executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which 23 the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of , being a member/members of the above- named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. 24 signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 25 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of 26 a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as 27 a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 28 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the 29 proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. 30 DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. 31 DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or 32 from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director 33 who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 34 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 35 101. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102. The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. 36 SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. 37 DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets 38 and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as 39 conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital 40 redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 41 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division 42 shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 43 - -------------------------------------------------------------------------------- Name and Address Signature of Subscriber EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 Witness to the above signature 44 TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-3.6 7 MEMORANDUM OF ASSOC. -- (1OM 1-E) 1 THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN A COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-E) LIMITED 1. The name of the Company is:- NAVIGATOR GAS (1OM 1-E) LIMITED 2. The Company is a private company. 3. The liability of the members is limited. 4. Restrictions, if any, on the exercise of the rights, powers and privileges of the Company:- None unless and until decided upon by Special Resolution of the Company in accordance with Section 6 of the Companies Act 1986. 5. The Share Capital of the Company is US$2,000.00 divided into 2,000 Ordinary shares of $1.00 each. 2 3 I, the subscriber to this memorandum of association (a) wish to be formed into a Company pursuant to this memorandum; (b) agree to take the number of shares shown opposite my name; (c) declare that all the requirements of the Companies Acts 1931 to 1993 in respect of matters relating to registration and of matters precedent and incidental thereto have been complied with. - -------------------------------------------------------------------------------- Name and address Signature Number of of Subscriber Shares taken EDWARD HAROLD ONE CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 4 Witness to the above signature TERRY BURNS 15-19 Athol Street Douglas Isle of Man THE COMPANIES ACTS 1931 to 1993 ISLE OF MAN PRIVATE COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF NAVIGATOR GAS (1OM 1-E) LIMITED PRELIMINARY 1. Table A shall not apply to the Company but the articles hereinafter contained shall constitute the regulations of the Company. 5 2. The Company is a "Private Company" within the meaning of the Act, and accordingly no invitation shall be issued to the public to subscribe for any shares or debentures of the Company. INTERPRETATION 3.(1) In these regulations - "the Act" means the Companies Acts 1931-1993 including any statutory modifications or re-enactments thereof for the time being in force; "the articles" means the articles of the Company; "clear days" in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; "executed" includes any mode of execution; "office" means the registered office of the Company; "the holder" in relation to shares means the member whose name is entered in the register of members as the holder of the shares; "the seal" means the common seal of the Company; "secretary" means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary. 6 (2) Unless the context otherwise requires, words or expressions contained in these regulations bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company. 7 (3) In these regulations, unless there is something in the subject of context inconsistent with such construction:- (a) words importing the plural number shall be deemed to include the singular number and words importing the singular number shall be deemed to include the plural number; (b) words importing the masculine gender only include the feminine gender; (c) words importing persons include companies or associations or bodies of persons whether corporate or unincorporate. 4. Statutory references used in these articles shall be read to include any statutory or legislative modification or re-enactment thereof or any substitution therefor. SHARE CAPITAL 5. (1) Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine. (2) Subject to the provisions of the Act, shares may be issued in fractional denominations to the same extent as whole shares. 6. Subject to the provisions of the Act and the articles, redeemable preference shares may be issued on such terms and in such manner as may be provided by the articles. 8 7. The Company may exercise the powers of paying commissions conferred by the Act. Subject to the provisions of the Act, any such commissions may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other. 8. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by the articles or by law) the Company shall not be bound by or recognise any interest in any share except an absolute right to the entirety thereof in the holder. 9. The shares shall be at the disposal of the Directors, and (save as otherwise directed by the Company in General Meeting) they may allot or otherwise dispose of them to such persons at such times and generally on such terms and conditions as they think proper, subject nevertheless to article 2 and provided that no shares shall be issued at a discount, except as provided by Section 47 of the Act. 10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of all of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall in the case of the number of holders of a particular class of shares being two or more mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class, and that any holder of shares of the class present in person or by proxy may demand a poll. In the case of the number of holders of a particular class of shares being one, one person holding or representing all the issued shares of the class shall be a quorum. 9 11. The Company may issue share warrants to bearer in respect of any fully paid-up shares of the Company, stating that the bearer of the warrant is entitled to the shares therein specified. Such warrants shall be issued upon such terms and subject to such conditions as may be resolved upon by the Directors. Subject to the provisions of the Act and of these articles the holder of a share warrant shall be deemed to be a member of the Company and shall be entitled to the same rights and privileges as he would have had if his name had been included in the share register of the Company as the holder of the shares. SHARE CERTIFICATES 12. (1) Every member, upon becoming the holder of any shares shall be entitled (a) without payment, to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares of any class, to a certificate for the balance of such holding); or (b) to several certificates each for one or more of his shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. (2) Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. (3) The Company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. 10 13. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the Company in investigating evidence as the Directors may determine but otherwise free of charge, and (in the case of defacement or wearing-out) on delivery up of the old certificate. 14. The Company shall have a first and paramount lien on every share for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors may at any time declare any share to be wholly or in part exempt from the provisions of this regulation. The Company's lien on a share shall extend to any amount payable in respect of it. 15. The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold. 16. To give effect to a sale the Directors may authorise some person to execute an instrument of transfer of the shares, sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 17. The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. 11 CALLS ON SHARES AND FORFEITURE 18. Subject to the terms of allotment, the Directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or in part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect whereof the call was made. 19. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed. 20. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 21. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the rate of (pound)5 per centum per annum but the Directors may waive payment of the interest wholly or in part. 22. An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the provisions of the articles shall apply as if that amount had become due and payable by virtue of a call. 12 23. Subject to the terms of allotment, the Directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares. 24. If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days' notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 25. If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture. 26. Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the share to that person. 27. A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate of (pound)5 per centum per annum 13 from the date of forfeiture until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal. 28. A statutory declaration by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share. TRANSFER OF SHARES 29. The instrument of transfer of a share may be in any usual form or in any other form which the Directors may approve and shall be executed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. 30. No transfer of any share in the capital of the Company to any person not already a member of the Company shall be made or registered without the previous sanction of the Directors, who may without assigning any reason, decline to give any such sanction. The Directors may also suspend the registration of transfers during the fourteen days immediately preceding the Ordinary General Meeting in each year. The Directors may decline to recognise any instrument of transfer unless accompanied by the certificate of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The Directors may decline to register a transfer of any shares on which the Company has a lien. If the Directors refuse to register a transfer of any share they 14 shall within two months after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal as required by section 67 of the Act. 31. The Company shall be entitled to retain any instrument of transfer which is registered, but any instrument of transfer which the Directors refuse to register shall be returned to the person lodging it when notice of the refusal is given. TRANSMISSION OF SHARES 32. If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him. 33. A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred. 34. A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder 15 of the share, be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company. ALTERATION OF SHARE CAPITAL 35. The Company may by ordinary resolution - (a) increase its share capital by new shares of such amount as the resolution prescribes; (b) consolidate and divide all or any or its share capital into shares of larger amount than its existing shares; (c) subject to the provisions of the Act, sub-divide its shares, or any of them, into shares of smaller amount and the resolution may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others; and (d) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 36. Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, instead of issuing the fractions of a share, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the purchaser. The 16 transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. 37. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way. CONVERSION OF SHARES INTO STOCK 38. The Company may by ordinary resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any denomination. 39. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as, and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the Directors may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 40. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 17 41. Such of the regulations of the Company as are applicable to paid-up shares shall apply to stock and the words "shares" and "shareholder" therein shall include "stock" and "stockholder". REDEMPTION OF PREFERENCE SHARES 42. Subject to the provisions of the Act, the redemption of redeemable preference shares shall be effected on such terms and in such manner, as may be provided by the articles. GENERAL MEETINGS 43. All general meetings other than annual general meetings shall be called extraordinary general meetings. 44. The Directors may call general meetings, and on the requisition of a member pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the Isle of Man sufficient Directors to call a general meeting, any Director or any member of the Company may call a general meeting. NOTICE OF GENERAL MEETINGS 45. An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least twenty-one clear days' notice. All other extraordinary general 18 meetings shall be called by at least fourteen clear days' notice but a general meeting may be called by shorter notice if it is so agreed - (a) In the case of an annual general meeting, by all the members entitled to attend and vote thereat; and (b) In the case of any other meeting by a majority in number of the members having a right to attend and vote being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right. The notice shall specify the time and place of the meeting and the general nature of the business to be transacted and, in the case of an annual general meeting, shall specify the meeting as such. Subject to the provisions of the articles and to any restrictions imposed on any shares, the notice shall be given to all the members, to all persons entitled to a share in consequence of the death or bankruptcy of a member and to the Directors and auditors. 46. The accidental omission to give notice of a meeting to or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 47. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum. When the Company has a single member, the member 19 or the proxy for the member or a duly authorised representative of the corporation which is the member, shall be a quorum. 48. If such a quorum is not present within half an hour from the time appointed for the meeting or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. 49. The Chairman, if any, of the Board of Directors or in his absence some other Director nominated by the Directors shall preside as Chairman of the meeting, but if neither the Chairman nor such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be Chairman and if there is only one Director present and willing to act, he shall be Chairman. 50. If no Director is willing to act as Chairman, or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the members present and entitled to vote shall choose one of their number to be Chairman. 51. A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the Company. 52. The Chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the 20 adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice. 53. A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded - (a) by the Chairman; or (b) by at least two members having the right to vote at the meeting; or (c) by a member or members representing no less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; and a demand by a person as proxy for a member shall be the same as a demand by the member. 54. Unless a poll is duly demanded a declaration by the Chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. 21 55. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. 56. A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 57. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a casting vote in addition to any other vote he may have. 58. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the Chairman directs not being more than thirty days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made. 59. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days notice shall be given specifying the time and place at which the poll is to be taken. 60. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each 22 executed by or on behalf of one or more members, provided the provisions of Section 118B of the Act are complied with and that such resolution is received by the Company at its registered office within seven days of the date of its execution in terms hereof. VOTES OF MEMBERS 61. Subject to any rights or restrictions attached to any shares, on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote and on a poll every member entitled to vote shall have one vote for every share of which he is the holder. 62. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and seniority shall be determined by the order in which the names of the holders stand in the register of members. 63. A member in respect of whom an order has been made by any court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his receiver, curator bonis or other person authorised in that behalf appointed by that court, and any such receiver, curator bonis or other person may, on a poll, vote by proxy. Evidence to the satisfaction of the Directors of the authority of the person claiming to exercise the right to vote shall be deposited at the office, or at such other place as is specified in accordance with the articles for the deposit of instruments of proxy, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which 23 the right to vote is to be exercised and in default the right to vote shall not be exercisable. 64. No member shall vote at any general meeting or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in respect of any share held by him unless all moneys presently payable by him in respect of that share have been paid. 65. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive. 66. On a poll votes may be given either personally or by proxy. A member may appoint more than one proxy to attend on the same occasion. 67. An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of , being a member/members of the above- named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. 24 signed on 19 68. Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near thereto as circumstances allow or in any other form which is usual or which the Directors may approve) - Limited I/We, , of member/members of the above-named Company, hereby appoint of , or failing him, of , as my/our proxy to vote in my/our name(s) and on my/our behalf at the annual/extraordinary general meeting of the Company to be held on 19 , and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as follows: Resolution No. 1 * for * against Resolution No. 2 * for * against * strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of 19 25 69. The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may- (a) be deposited at the office or at such other place within the Isle of Man as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or (b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or (c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded, to the Chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid. 70. A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of 26 a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. 71. Where the Company is a single member company and the sole member takes any decision which may be taken by the Company in general meeting and which has effect as if agreed by the Company in general meeting he shall subject to article 60 provide the Company with a written record of that decision by forwarding such record to the Company at its registered office within seven days of the date upon which the decision was taken. NUMBER OF DIRECTORS 72. Unless otherwise determined by ordinary resolution, the number of Directors (other than alternate Directors) shall not be subject to any maximum. ALTERNATE DIRECTORS 73. Any Director (other than an alternate Director) may appoint any other Director, or any other person approved by resolution of the Directors and willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him. 74. An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present and generally to perform all the functions of his appointor as 27 a Director in his absence but shall not be entitled to receive any remuneration from the Company for his services as an alternate Director. 75. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director; but, if a Director retires by rotation or otherwise but is reappointed or deemed to have been reappointed at the meeting at which he retires; any appointment of an alternate Director made by him which was in force immediately prior to his retirement shall continue after his reappointment. 76. Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. 77. Save as otherwise provided in the articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the Director appointing him. POWERS OF DIRECTORS 78. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Directors by the articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. 28 79. Without prejudice to the generality of the foregoing article the Directors may from time to time at their discretion, raise or borrow, without the consent of the members in General Meeting, such sum or sums of money for the purposes of the Company's business as they may think fit and may secure the repayment of or raise any such sum or sums as aforesaid in such manner and upon such terms and conditions and in all other respects as they may think fit, and in particular by mortgages, deeds of bond and security, or other charges upon the whole or any part of the property and assets of the Company, present or future, including its uncalled or unissued capital, or by the issue at such price as they may think fit, of bonds or debentures or debenture stock of the Company, either charged upon the whole or any part of the property and assets of the Company, or not so charged, or in any other way that the Directors may think expedient, and the Directors may issue debentures or debenture stock or paid-up shares to any person or persons as consideration for the purchase of any goodwill, business or property purchased by the Company. 80. The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. The Company may exercise the powers conferred by Sections 32 and 104 of the Companies Act, 1931 and those powers shall accordingly be exercisable by the Directors. DELEGATION OF DIRECTORS' POWERS 81. The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any Managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the 29 proceedings of a committee with two or more members shall be governed by the articles regulating the proceedings of Directors so far as they are capable of applying. DIRECTORS GENERALLY 82. The Company may from time to time in general meeting increase or reduce the number of Directors. The Company may by special resolution remove any Director or by ordinary resolution appoint any person to be a Director. 83. No person other than a first Director shall be appointed a Director in general meeting unless at least seven days' and not more than fourteen days' notice shall have been left at the registered office of the Company of the intention to propose him, together with a notice in writing by the person to be proposed of his willingness to be appointed. 84. The Directors shall have power at any time, and from time to time, to fill any casual vacancy occurring in the Board of Directors or to appoint a person as an additional Director. 85. A Director may hold any other office or place or profit under the Company, except that of Auditor, upon such terms as to remuneration, tenure of office and otherwise as may be determined by the Board. 86. The remuneration of the Directors shall from time to time be determined by the Company in general meeting and unless otherwise directed any such remuneration shall be divided amongst them as they may agree, or, failing agreement, equally. The Directors shall also be entitled to be repaid all travelling and hotel expenses reasonably incurred by them respectively in or about the performance of their duties as Directors. 30 DISQUALIFICATION AND REMOVAL OF DIRECTORS 87. The office of a Director shall be vacated if - (a) he ceases to be a Director by virtue of any provision of the Act or he becomes prohibited by law from being a Director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he is, or may be, suffering from mental disorder and either - (i) he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1974; or (ii) an Order is made by a Court having jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or ( d ) he resigns his office by notice to the Company; or (e) he shall for more than six consecutive months have been absent without permission of the Directors from meetings of Directors held during that period and the Directors resolve that his office be vacated. 88. The shareholding qualification for Directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required. 31 DIRECTORS' APPOINTMENTS AND INTERESTS 89. Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of Managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such Director for his services as they think fit. Any appointment of a Director to an executive office shall terminate if he ceases to be a Director but without prejudice to any claim to damages for breach of the contract of service between the Director and the Company. 90. Subject to the provisions of the Act and provided that he has disclosed to the Directors the nature and extent of any material interest of his, a Director notwithstanding his office - (a) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; (b) may be a Director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and (c) shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or 32 from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit. 91. For the purposes of the foregoing article - (a) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and (b) an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. 92. Subject to article 90 hereof and the Act if the Company is a single member company and having one member it enters into a contract with the sole member otherwise than in the ordinary course of the Company's business and the sole member is also a director of the Company, the Company should, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the Company following the making of the contract. DIRECTORS' GRATUITIES AND PENSIONS 93. Subject to the provisions of the Act, the Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director 33 who has held but no longer holds any executive office or employment with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor of the Company or of any such subsidiary and for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit. PROCEEDINGS OF DIRECTORS 94. Subject to the provisions of the articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the Chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote. 95. The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum. 96. The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies or of calling a general meeting. 34 97. The Directors may appoint one of their number to be the Chairman of the Board of Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be Chairman of the meeting. 98. All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote. 99. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors, but a resolution signed by an alternate need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity. 100. Save as otherwise provided by the articles, a Director shall not vote at a meeting of Directors or of a committee of Directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interest of the Company unless he has declared the nature of his interest in the manner required by Section 148 of the Act. 35 101. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote. 102. The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors. 103. If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the Chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. 104. Any Director or member of a committee of the Directors may participate in a meeting of the Directors or such committee by means of telephonic or similar communications whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. The location of such a telephonic meeting shall be deemed to be the place at which the Chairman of the meeting was located at the time of the meeting. MANAGEMENT AND CONTROL 105. The management and control of the business of the Company shall be in and from the Isle of Man or in and from such other place as the Directors shall decide. 36 SECRETARY 106. Subject to the provisions of the Act, the secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them. MINUTES 107. The Directors shall cause Minutes to be made in books kept for the purpose - - (a) of all appointments of officers made by the Directors; and (b) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company and of the Directors, and of committees of Directors, including the names of the Directors present at such meeting. THE SEAL 108. The Company shall have a Company Seal. 109. The seal shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the secretary or by a second Director. 37 DIVIDENDS 110. Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Directors. 111. Subject to the provisions of the Act, the Directors may pay interim dividends if it appears to them that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Directors may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if, at the time of payment, any preferential dividend is in arrear. The Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. Provided the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. 112. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. 113. A general meeting declaring a dividend may, upon the recommendation of the Directors, direct that it shall be satisfied wholly or partly by the distribution of assets 38 and where any difficulty arises in regard to the distribution, the Directors may settle the same and in particular may issue fractional certificates and fix the value for distribution of any assets and may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 114. Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of that one of those persons who is first named in the register of members or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. 115. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. 116. Any dividend which has remained unclaimed for twelve years from the date when it became due for payment shall, if the Directors so resolve, be forfeited and cease to remain owing by the Company. ACCOUNTS 117. (a) No member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as 39 conferred by statute or authorised by the Directors or by ordinary resolution of the Company. (b) The Company shall prepare such accounts as may be required by the Act and the laws of the Isle of Man. (c) Subject to the Act and the laws of the Isle of Man the Company may elect to dispense with compliance with the requirements of the Act which relate to the audit of the accounts of the Company. CAPITALISATION OF PROFITS 118. The Directors may with the authority of an ordinary resolution of the Company - (a) subject as hereinafter provided, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of the Company's share premium account or capital redemption reserve; (b) appropriate the sum resolved to be capitalised to the members who would have been entitled to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount, equal to that sum, and allot the shares or debentures credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other: but the share premium account, the capital 40 redemption reserve and any profits which are not available for distribution may, for the purposes of this regulation, only be applied in paying up unissued shares to be allotted to members credited as fully paid; (c) make such provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable under this regulation in fractions; and (d) authorise any person to enter on behalf of all the members concerned into an agreement with the Company providing for the allotment to them respectively, credited as fully paid, of any shares or debentures to which they are entitled upon such capitalisation, any agreement made under such authority being binding on all such members. NOTICES 119. Any notice to be given to or by any person pursuant to the articles shall be in writing except that a notice calling a meeting of the Directors need not be in writing. 120. The Company may give any notice to a member either personally or by sending it by post in a prepaid envelope addressed to the member at his registered address or by leaving it at that address. In the case of joint holders of a share, all notices shall be given to the joint holder whose name stands first in the register of members in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders. A member whose registered address is not within the British Islands and who gives to the Company an address within the British Islands at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such member shall be entitled to receive any notice from the Company. 41 121. A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called. 122. Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of members, has been duly given to a person from whom he derives his title. 123. Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted. 124. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by the articles for the giving of notice to a member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or by any like description at the address, if any, within the British Islands supplied for that purpose by the persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred. WINDING UP 125. If the Company is wound up, the liquidator may, with the sanction of an extraordinary resolution of the Company and any other sanction required by the Act, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division 42 shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he with the like sanction determines, but no member shall be compelled to accept any assets upon which there is a liability. INDEMNITY 126. Every Director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (including any such liability as is mentioned in paragraph (c) of the proviso to Section 151 of the Act) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by the said Section. 127. The Company may purchase and maintain indemnity insurance for the benefit of each Director or other officer of the Company. 43 - -------------------------------------------------------------------------------- Name and Address Signature of Subscriber EDWARD HAROLD CHARLES CAIN 15-19 Athol Street Douglas Isle of Man - -------------------------------------------------------------------------------- Dated this day of 1997 Witness to the above signature 44 TERRY BURNS 15-19 Athol Street Douglas Isle of Man EX-4.1 8 IND. - 10 1/2% FIRST PRIORITY SHIP MORTGAGE NOTES EXECUTION COPY ================================================================================ NAVIGATOR GAS TRANSPORT PLC 10 1/2% First Priority Ship Mortgage Notes Due 2007 the GUARANTORS named herein ---------------------- INDENTURE Dated as of August 1, 1997 ---------------------- UNITED STATES TRUST COMPANY OF NEW YORK, Trustee ================================================================================ CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1) .............................. 7.10 (a)(2) .............................. 7.10 (a)(3) .............................. N.A. (a)(4) .............................. N.A. (b) .............................. 7.08; 7.10 (c) .............................. N.A. 311(a) .............................. 7.11 (b) .............................. 7.11 (c) .............................. N.A. 312(a) .............................. 2.05 (b) .............................. 12.03 (c) .............................. 12.03 313(a) .............................. 7.06 (b)(1) .............................. N.A. (b)(2) .............................. 7.06 (c) .............................. 14.02 (d) .............................. 7.06 314(a) .............................. 4.02; 4.21; 12.02 (b) .............................. N.A. (c)(1) .............................. 12.04 (c)(2) .............................. 12.04 (c)(3) .............................. N.A. (d) .............................. N.A. (e) .............................. 14.05 (f) .............................. 4.21 315(a) .............................. 7.01 (b) .............................. 7.05; 12.02 (c) .............................. 7.01 (d) .............................. 7.01 (e) .............................. 6.11 316(a)(last sentence) .............................. 12.06 (a)(1)(A) .............................. 6.05 (a)(1)(B) .............................. 6.04 (a)(2) .............................. N.A. (b) .............................. 6.07 317(a)(1) .............................. 6.08 (a)(2) .............................. 6.09 (b) .............................. 2.04 318(a) .............................. 12.01 N.A. means Not Applicable. - ---------- Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. TABLE OF CONTENTS Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions ............................ 1 SECTION 1.02. Other Definitions ...................... 23 SECTION 1.03. Incorporation by Reference of Trust Indenture Act ........................ 23 SECTION 1.04. Rules of Construction .................. 24 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating ........................ 25 SECTION 2.02. Execution and Authentication ........... 25 SECTION 2.03. Registrar and Paying Agent ............. 26 SECTION 2.04. Paying Agent To Hold Money in Trust..... 26 SECTION 2.05. Securityholder Lists ................... 27 SECTION 2.06. Replacement Securities ................. 27 SECTION 2.07. Outstanding Securities ................. 27 SECTION 2.08. Temporary Securities ................... 28 SECTION 2.09. Cancelation ............................ 28 SECTION 2.10. Defaulted Interest ..................... 28 SECTION 2.11. CUSIP Numbers .......................... 29 ARTICLE 3 REDEMPTION SECTION 3.01. Notices to Trustee ..................... 29 SECTION 3.02. Selection of Securities To Be Redeemed ............................. 29 SECTION 3.03. Notice of Redemption ................... 30 SECTION 3.04. Effect of Notice of Redemption ......... 31 SECTION 3.05. Deposit of Redemption Price ............ 31 SECTION 3.06. Securities Redeemed in Part ............ 31 2 Page ---- ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities .................. 31 SECTION 4.02. SEC Reports ............................ 32 SECTION 4.03. Limitation on Indebtedness ............. 32 SECTION 4.04. Limitation on Indebtedness of Owners ............................... 33 SECTION 4.05. Limitation on Restricted Payments....... 33 SECTION 4.06. Limitation on Restrictions on Distribu- tions from Owners..................... 33 SECTION 4.07. Limitation on Asset Sales............... 33 SECTION 4.08. Limitation on Affiliate Transactions.......................... 34 SECTION 4.09. Limitation on the Sale or Issuance of Capital Stock of Owners............ 34 SECTION 4.10. Limitation on Liens .................... 35 SECTION 4.11. Limitation on Sale/Leaseback Transactions ......................... 35 SECTION 4.12. Offers To Purchase with Available Cash and upon a Change of Control.......... 35 SECTION 4.13. Limitation on Business Activities....... 37 SECTION 4.14. Impairment of Security Interest......... 38 SECTION 4.15. Amendments to Security Agreements....... 38 SECTION 4.16. Limitation on Activities of Holdings.... 38 SECTION 4.17. Additional Amounts...................... 38 SECTION 4.18. Compliance Certificate.................. 41 SECTION 4.19. Further Instruments and Acts............ 41 ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. When Company and Owners May Merge or Transfer Assets ...................... 41 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default ...................... 44 SECTION 6.02. Acceleration ........................... 47 SECTION 6.03. Other Remedies ......................... 47 SECTION 6.04. Waiver of Past Defaults ................ 47 SECTION 6.05. Control by Majority .................... 48 SECTION 6.06. Limitation on Suits .................... 48 SECTION 6.07. Rights of Holders To Receive Payment ... 49 SECTION 6.08. Collection Suit by Trustee ............. 49 SECTION 6.09. Trustee May File Proofs of Claim ....... 49 3 Page ---- SECTION 6.10. Priorities ............................. 49 SECTION 6.11. Undertaking for Costs .................. 50 SECTION 6.12. Waiver of Stay or Extension Laws ....... 50 ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee ...................... 50 SECTION 7.02. Rights of Trustee ...................... 52 SECTION 7.03. Individual Rights of Trustee ........... 52 SECTION 7.04. Trustee's Disclaimer ................... 53 SECTION 7.05. Notice of Defaults ..................... 53 SECTION 7.06. Reports by Trustee to Holders .......... 53 SECTION 7.07. Compensation and Indemnity ............. 53 SECTION 7.08. Replacement of Trustee ................. 54 SECTION 7.09. Successor Trustee by Merger ............ 55 SECTION 7.10. Eligibility; Disqualification .......... 56 SECTION 7.11. Preferential Collection of Claims Against Company ...................... 56 SECTION 7.12. Not Acting in Individual Capacity....... 56 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Discharge of Liability on Securities; Defeasance ........................... 57 SECTION 8.02. Conditions to Defeasance ............... 58 SECTION 8.03. Application of Trust Money ............. 59 SECTION 8.04. Repayment to Company ................... 60 SECTION 8.05. Indemnity for Government Obligations .......................... 60 SECTION 8.06. Reinstatement .......................... 60 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders ............. 61 SECTION 9.02. With Consent of Holders ................ 61 SECTION 9.03. Compliance with Trust Indenture Act..... 63 SECTION 9.04. Revocation and Effect of Consents and Waivers .......................... 63 SECTION 9.05. Notation on or Exchange of Securities ........................... 63 SECTION 9.06. Trustee To Sign Amendments ............. 63 SECTION 9.07. Payment for Consent .................... 64 4 Page ---- ARTICLE 10 GUARANTEES SECTION 10.01. Guarantees.............................. 64 SECTION 10.02. Limitation on Liability................. 66 SECTION 10.03. Successors and Assigns.................. 66 SECTION 10.04. No Waiver............................... 67 SECTION 10.05. Modification............................ 67 SECTION 10.06. Release of Guarantor.................... 67 ARTICLE 11 SECURITY AGREEMENTS SECTION 11.01. Collateral and Security Agreements...... 68 SECTION 11.02. Recording; Annual Opinions.............. 68 SECTION 11.03. Disposition of Collateral Without Release............................... 69 SECTION 11.04. Release of Collateral................... 71 SECTION 11.05. Permitted Releases Not To Impair Lien; Trust Indenture Act Requirements.......................... 72 SECTION 11.06. Suits To Protect the Collateral......... 72 SECTION 11.07. Purchaser Protected..................... 73 SECTION 11.08. Powers Exercisable by Receiver or Trustee............................... 73 SECTION 11.09. Disposition of Obligations Received..... 73 SECTION 11.10. Determinations Relating to Mortgaged Collateral............................ 74 SECTION 11.11. Release upon Termination of the Company's Obligations................. 74 ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls ........... 75 SECTION 12.02. Notices ................................ 75 SECTION 12.03. Communication by Holders with Other Holders .............................. 76 SECTION 12.04. Certificate and Opinion as to Conditions Precedent ................. 76 SECTION 12.05. Statements Required in Certificate or Opinion ........................... 76 SECTION 12.06. When Securities Disregarded ............ 76 5 Page ---- SECTION 12.07. Rules by Trustee, Paying Agent and Registrar ........................... 77 SECTION 12.08. Legal Holidays ......................... 77 SECTION 12.09. Governing Law .......................... 77 SECTION 12.10. No Recourse Against Others ............. 77 SECTION 12.11. Successors ............................. 77 SECTION 12.12. Multiple Originals ..................... 78 SECTION 12.13. Table of Contents; Headings ............ 78 SECTION 12.14. Agent for Service; Submission to Jurisdiction; Waiver of Immunities... 78 Rule 144A/Regulation S Appendix Exhibit A - Form of Security INDENTURE dated as of August 1, 1997, among NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (the "Company"), NAVIGATOR HOLDINGS PLC, an Isle of Man public limited Company ("Holdings"), the guarantors listed on the signature pages hereto (the "Guarantors"), and UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "Initial Securities") and, if and when issued pursuant to a registered exchange for Initial Securities, the Company's 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "Exchange Securities") and if and when issued pursuant to a private exchange for Initial Securities, the Company's 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "Private Exchange Securities", together with the Exchange Securities and the Initial Securities, the "Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under Sections 4.05 and 4.08 only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. 2 "Allocated Portion of Interest Draw" means, with respect to an Interest Draw and a Vessel that has been accepted by the related Owner under the related Building Contract, an amount equal to the product of (a) the amount of such Interest Draw and (b) a fraction the numerator of which is one and the denominator of which is the number of Vessels that have been accepted by the related Owners as of the date of such Interest Draw. "Allocated Portion of Interest Draws for a Vessel" means, as of any date of determination and with respect to a Vessel, an amount equal to the aggregate principal amount of all Allocated Portion of Interest Draws for such Vessel as of such date of determination. "Allocated Principal Amount" means, when used with reference to the Securities and any Vessel, the following amounts: The quotient of (a) the difference between (i) the sum of the initial principal amount of the Securities and the initial principal amount of the Second Priority Notes and (ii) all amounts applied to the principal thereof and (b) the difference between (i) five and (ii) the sum of (A) the number of Vessels that have been rejected by the Owners pursuant to the terms of the Building Contracts and (B) the number of Vessels released by the Collateral Agent from the lien of the related Mortgage. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Available Cash" means, as of any Available Cash Determination Date, an amount equal to the excess, if any, of (a) the amounts available in the Revenue Account after giving effect to the payments made therefrom on the related Interest Payment Date over (b) the Manager's Fee for the Vessels payable in the next succeeding Management Fee Payment Date. "Available Cash Determination Date" means, with respect to an Available Cash Payment Date, the close of business on the first Business Day of the month immediately preceding such Available Cash Payment Date. 3 "Available Cash Payment Date" means June 30, 2001 and each June 30 and December 31 thereafter so long as the Securities remain outstanding. "Board of Directors" means the Board of Directors of Holdings (or, if Holdings no longer controls the Company, the Company) or any committee thereof duly authorized to act on behalf of such Board. "Budgeted Monthly Operating Balance" means as of any date of determination the product of (i) $500,000 and (ii) the number of Vessels as to which the Delivery Date has occurred. "Builders" means Jiangnan Shipyard and China Shipbuilding Trading Company, Limited. "Building Contract" means any of the shipbuilding contracts for the Vessels between the Builders and Holdings, each dated as of February 4, 1997, as amended and restated as of June 27, 1997, and to be assigned by Holdings to the Owners on or before the Issue Date. "Building Contract Guarantee" means, with respect to each Building Contract, the guarantee on behalf of the Builders to be issued by the Export Import Bank of China. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York, or in the city of the corporate trust office of the Trustee, are authorized by law to close. "Capital Lease Obligations" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. 4 "CGTC" means Cambridge Gas Transport Corporation, a Cayman Islands corporation, and its successors. "Change of Control" shall mean the occurrence of any of the following events: (i) prior to the first public offering of common stock of Holdings, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange act), directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company, whether as a result of issuance of securities of Holdings or the Company, any merger, consolidation, liquidation or dissolution of Holdings or the Company, any direct or indirect transfer of securities by Holdings or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent corporation); (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (ii) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors (for the purposes of this clause (ii), such other person shall be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other person is the beneficial owner (as defined in this clause (ii)), directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent 5 corporation and the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent corporation and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent corporation); (iii) during any period of two consecutive years, individuals who at the beginning of such period consti tuted the board of directors of Holdings or the Company (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of Holdings or the Company was approved by a vote of 66-2/3% of the directors of Holdings or the Company, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for elec tion was previously so approved) cease for any reason to constitute a majority of the board of directors of Holdings or the Company, respectively, then in office; (iv) either CGTC or GEBAB ceases to be a shareholder of Holdings; or (v) prior to the expiration of the warranty period of the final Vessel delivered by the Builders and accepted by the related Owner, TGE (including its Affiliates) disposes of any of its shares in Holdings, except to an Affiliate of TGE. "Charters" is defined to mean each charter party and contract of affreightment between an Owner and any third party with respect to a Vessel, and as the same may be amended from time to time. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" means all the collateral described in the Security Agreements. "Collateral Agent" means United States Trust Company of New York, as collateral agent under the Intercreditor Agreement, and its successors. "Commercial Management Agreement" means the Master Commercial Marketing and Services Agreement between Holdings and GEBAB dated as of February 28, 1997, to be assigned by 6 Holdings to the Manager on behalf of the Owners on or before the Issue Date. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "Compulsory Acquisition" means requisition for title or other compulsory acquisition of any Vessel (otherwise than by requisition for hire), capture, seizure, condemnation, destruction, detention or confiscation of such Vessel by any Governmental Authority or by persons acting or purporting to act on behalf of any Governmental Authority. "Consolidated Net Worth" means, with respect to any Person, the total of the amounts shown on the balance sheet of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of such Person ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of such Person plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "Contractual Delivery Date" means with respect to a Vessel, the date specified in the relating Building Contract for the delivery of such Vessel. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Delivery Date" means, with respect to a Vessel, the date such Vessel is accepted by the related Owner pursuant to the terms of the related Building Contract. "Designated Owners" means CGTC, GEBAB, Xenon Shipping AS, a Norwegian corporation, and any Person actually controlled by any of the foregoing. 7 "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable or subject to required purchase at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the Stated Maturity of the Securities. "Draw Amount" means the amount drawn under an Interest Draw or a Working Capital Draw, as the case may be. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Sections 13 or 15(d) of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GEBAB" means Gesellschaft Fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH, a German corporation. "Governmental Approval" means any authorization, consent, approval, license, franchise, lease, ruling, permit, tariff, rate, certification, exemption, filing or registration by or with any Governmental Authority relating to the ownership of the Collateral or to the execution, delivery or performance of this Indenture, the Second Priority Note Indenture or any Security Agreement. 8 "Governmental Authority" means the United States federal or any foreign government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any other governmental entity with authority over an Owner or the operation of a Vessel. "guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "guarantee" used as a verb has a corresponding meaning. "Guarantee Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a successor Owner becomes subject to the applicable terms and conditions of this Indenture. "Guarantor" means each Owner. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Holdings" means Navigator Holdings PLC, an Isle of Man public limited company, and its successors. "Holdings Pledge" means the pledge by Holdings to the Collateral Agent, for the benefit of the Securityholders, the holders of the Second Priority Notes, the Letter of Credit Issuer, the participating banks party to the Letter of Credit Reimbursement Agreement, the Trustee and the Second Priority Trustee, all of the Capital Stock of the Company. 9 "Incidental Asset" is defined to mean any equipment, outfit, furniture, furnishings, appliances, spare or replacement parts or stores owned by the Company or an Owner that have become obsolete or unfit for use or no longer useful, necessary or profitable in the conduct of the business of the Company or such Owner, as the case may be. In no event shall the term "Incidental Asset" include a Vessel. "Incur" means issue, assume, guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person on any date of determination (without duplication): (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable (other than a written commitment made on or prior to the Issue Date); (ii) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such Person for the reim bursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon 10 or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day follow ing payment on the letter of credit); (v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, the liquidation preference with respect to, any Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "Indenture" means this Indenture as amended or supplemented from time to time. "Initial Letter of Credit Amount for Interest Draws" shall mean $45.5 million. "Insurance Policies" means with respect to a Vessel, those policies of insurance required to be maintained pursuant to the terms of the related Mortgage. "Insurance Proceeds" means the proceeds of the Insurance Policies. "Intercompany Note" means the promissory note, dated the Issue Date, from the Owners evidencing the loans made by the Company to the Owners on the Issue Date as well as any amounts loaned from time to time by the Company to an 11 Owner to fund working capital requirements of such Owner's Vessel. "Intercreditor Agreement" means the Collateral Agency and Intercreditor Agreement, dated as of the date of this Indenture, among the Company, the Owners, Holdings, the Trustee, the Second Priority Note Trustee, the Letter of Credit Issuer and the Collateral Agent, as the same may be amended from time to time. "Interest Amount" means, as of any Interest Payment Date, the amount of interest, determined by the Trustee, that is accrued and unpaid on the Allocated Principal Amount of the Securities as of such Interest Payment Date in respect each Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED, HOWEVER, that the Interest Amount on the Allocated Principal Amount of Securities in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "Interest Payment Date" means any date on which interest is payable on the Securities or the Second Priority Notes. "Interest Shortfall" means, with respect to each Interest Payment Date, the excess of (i) the Interest Amount in respect of such Interest Payment Date over (ii) the amount available in the Revenue Account (after giving effect to the distributions described in Section 3.3(i) and (ii) of the Intercreditor Agreement to be made on such Interest Payment Date) as of the opening of business on the third Business Day prior to such Interest Payment Date. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. The payments of the Purchase Price shall not be deemed to be an Investment. "Issue Date" means the date on which the Securities are originally issued. 12 "Issue of One Debenture" means the issue of one debenture, dated as of the Issue Date, between each Owner and the Collateral Agent wherein such Owner grants to the Collateral Agent a security interest in and to all of such Owner's now owned and hereafter acquired property. "Letter of Credit" means the letter of credit issued pursuant to the Letter of Credit Reimbursement Agreement. "Letter of Credit Issuer" means Credit Suisse First Boston acting through its London branch, as funding bank and as administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement. "Letter of Credit Reimbursement Agreement" means the agreement dated as of the Issue Date among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Company, Holdings and each of the Owners. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Management Agreement" means the management agreement to be entered into among Navigator Gas Management Limited, the Company, Holdings and each of the Owners. "Manager" shall mean the company that manages the Vessels, which initially shall be Navigator Gas Management Limited. "Manager's Fee" means, with respect to each Vessel, (a) prior to the Delivery Date thereof, an amount equal to $30,000 per annum, and (b) from and after the Delivery Date thereof, an amount equal to $120,000 per annum. "Maximum Amount Available under the Letter of Credit" means, as of each date of determination, (1) the Initial Letter of Credit Amount for Interest Draws less (2) all Interest Draws made on the Letter of Credit to such date of determination plus (3) all amounts reimbursed to the Letter of Credit Issuer in repayment of Interest Draws, other than in respect of interest on outstanding Interest Draws, to such date of determination. "Moody's" means Moody's Investor Service, Inc. and its successors. 13 "Mortgage" means the mortgage granted to the Collateral Agent by each Owner on its related Vessel to secure the obligations of such Owner under its Guarantee. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secre tary of the Company. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Owners" shall mean: Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company, and their respective successors. "Performance Bond" means, with respect to the Building Contracts, the performance bonds issued by The Export Import Bank of China, on behalf of the Builders, and Generale de Banque, on behalf of TGE. "Permitted Holder" means CGTC, Xenon and GEBAB and their Related Parties. "Permitted Investment" means an Investment by the Company or any Owner in (i) the Company or an Owner; (ii) Temporary Cash Investments; (iii) receivables owing to the Company or any Owner if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Company or any such Owner deems reasonable under the circumstances; (iv) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; and (v) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Owner or in satisfaction of judgments. "Permitted Liens" means with respect to any Person, (a) Liens securing obligations under this Indenture, the Second Priority Note Indenture, the Securities, the 14 Second Priority Notes, the Letter of Credit Reimbursement Agreement and the Security Agreements; (b) other Liens existing or securing Indebtedness existing (or for which a written commitment has been made on or prior to the Issue Date) on the Issue Date; (c) Liens granted after the Issue Date in favor of the Holders; and in the case of an Owner, the following additional Liens: (d) Liens for crews' wages and pledges or deposits by such Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business; (e) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (f) Liens for property taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate proceedings; (g) Liens in favor of issuer's of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that such letters of credit do not constitute Indebtedness; (h) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (i) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; PROVIDED, HOWEVER, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by such Person or any of its Subsidiaries; (j) any Lien which arises in favor of 15 an unpaid seller in respect of goods, plant or equipment sold and delivered to the Company in the ordinary course of business until payment of the purchase price for such goods or plant or equipment or any other goods, plant or equipment previously sold and delivered by that seller (except to the extent that such Lien secures Indebtedness or arises otherwise than due to deferment of payment of purchase price); (k) any Lien or pledge created or subsisting in the ordinary course of business over documents of title, insurance policies or sale contracts in relation to commercial goods to secure the purchase price thereof; (l) charters, leases or subleases granted to others in the ordinary course of business that are subject to the relevant Mortgage and that do not materially interfere with the ordinary course of business of the Company and the Owners, taken as a whole; (m) (A) Liens in favor of the Company or any Owner, (B) Liens arising from the rendering of a final judgment or order against the Company or any Owner that does not give rise to an Event of Default and (C) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and products and proceeds thereof; (n) Liens in favor of customers and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods; and (o) Liens for salvage. For purposes of this definition, the term "Indebtedness" shall be deemed to include interest on such Indebtedness. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "principal" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time. "Public Equity Offering" means an underwritten primary public offering of common stock of Holdings pursuant 16 to an effective registration statement under the Securities Act. "Public Market" means any time after (x) a Public Equity Offering has been consummated and (y) at least 15% of the total issued and outstanding common stock (being ordinary shares) of Holdings has been distributed by means of an effective registration statement under the Securities Act or is eligible for distribution pursuant to Rule 144(k) under the Securities Act. "Purchase Price" means, with respect to a Vessel, the amount specified under the related Building Contract as the total purchase price to be paid to the Builders for such Vessel. "Rating Agencies" means S&P, DCR and Moody's, or if S&P, DCR or Moody's or all of them shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) which shall be substituted for S&P, DCR or Moody's or all of them, as the case may be. "Refund Amount" means with respect to a Vessel and the related Building Contract, the amount payable by the Builders in the event such Building Contract is rescinded by the related Owner because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel) or is otherwise terminated. "Registration Jurisdiction" means the Republic of Liberia or such other jurisdiction under whose laws a Vessel is permitted to be registered under the terms and subject to the conditions of this Indenture. "Related Business" means any business related, ancillary or complementary to the businesses of the Company and the Owners on the Issue Date. "Related Party" with respect to a Permitted Holder means (A) any controlling stockholder, 80% (or more) owned subsidiary, or spouse or immediate family member (in the case of an individual) of the foregoing or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist 17 of such other persons referred to in the immediately preceding clause (A). "Rescission Amount" means, as of any date of determination and with respect to a Vessel, the sum of (a) the Allocated Principal Amount of the Securities and the Allocated Principal Amount of the Second Priority Notes, in each case for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the redemption of the Securities and the Second Priority Notes, (c) any and all Manager's Fees owing to the Manager in respect of such Vessel, (d) an amount equal to the amounts of all Working Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Company with respect thereto and (e) any cost incurred by the Collateral Agent in connection with the related redemption. "Restricted Payment" with respect to any Person means (i) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of an Owner held by any Affiliate of the Company (other than an Owner), including the exercise of any option to exchange any Capital Stock, (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) the making of any Investment in any Person (other than a Permitted Investment). "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or an Owner transfers such property to a Person and the Company or an Owner leases it from such Person. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Company, Inc. and its successors. 18 "SEC" means the Securities and Exchange Commission. "Second Priority Notes" means the Company's 12% Second Priority Ship Mortgage Notes Due 2007 issued from time to time pursuant to the Second Priority Indenture (including any notes issued under the Second Priority Note Indenture in exchange therefor in an exchange offer). "Second Priority Note Indenture" means the indenture dated as of the date of this Indenture, among the Company, the Guarantors and the Second Priority Note Trustee. "Second Priority Note Interest Amount" means, as of any Interest Payment Date, the amount of interest, determined by the Second Priority Note Trustee, that is accrued and unpaid on the Allocated Principal Amount of the Second Priority Notes as of such Interest Payment Date in respect of each Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED, HOWEVER, that the Second Priority Note Interest Amount on the Allocated Principal Amount of Second Priority Notes in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "Second Priority Note Interest Shortfall" means, with respect to each Interest Payment Date, the excess of (i) the Second Priority Note Interest Amount in respect of such Interest Payment Date over (ii) the amount available in the Revenue Account (after giving effect to distribution of amounts pursuant to Section 3.3(i) - (iii) of the Intercreditor Agreement on such Interest Payment Date) as of the opening of business on the third Business Day prior to such Interest Payment Date; PROVIDED, HOWEVER, that the Second Priority Note Interest Shortfall will be deemed to be zero unless and until the Company shall have issued after the Issue Date $20.9 million in aggregate principal amount of additional Second Priority Notes in lieu of paying accrued and unpaid interest on the Second Priority Notes in cash. "Second Priority Note Trustee" means The Chase Manhattan Bank, a New York banking corporation, and its successors. "Securities" means the Securities issued under this Indenture. "Securities Act" means the Securities Act of 1933. 19 "Security Agreements" means the Intercreditor Agreement, the Mortgages, each Issue of One Debenture and the Assignments of Earnings and Insurances. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities pursuant to a written agreement to that effect, PROVIDED that the Second Priority Notes shall constitute Subordinated Obligations under this Indenture. "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Taxes" means any present or future taxes, duties, assessments or governmental charges of whatever nature (or interest on any taxes, duties, assessments or other governmental charges of whatever nature) imposed or levied by or on behalf of, or within, the Isle of Man (or the jurisdiction of incorporation of any successor of the Company or any of the Owners) or any political subdivision or taxing authority thereof or therein. "Technical Management Agreement" means the Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement between GEBAB and Holdings, on behalf of the Owners, dated as of February 28, 1997, to be assigned by Holdings to the Manager, on behalf of the Owners on or before the Issue Date. "Technical Supervision Agreement" means the Agreement on Contract for Technical Matters among GEBAB, Holdings, on behalf of the Owners, and the Builders dated as of February 28, 1997, to be assigned by Holdings to the Manager on behalf of the Owners on or before the Issue Date. "Temporary Cash Investments" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof; (ii) investments in time deposit 20 accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust issuer which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust issuer has capital, surplus and undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor; (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above; (iv) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's, "A-1" (or higher) according to S&P or "D-1" (or higher) according to DCR; (v) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P, Moody's or DCR and (vi) guaranteed investment contracts, investment agreements or similar agreements initially rated "A" by S&P, Moody's or DCR that are treated as Indebtedness for United States federal income tax purposes. For purposes of determining whether a Temporary Cash Investment matures on or before the next succeeding Interest Payment Date, each payment received under a Temporary Cash Investment described in clause (vi) above will be considered to be the maturity of such Temporary Cash Investment. A guaranteed investment contract, investment agreement or similar agreement that constitutes a senior unsecured long-term debt obligation of a Person shall be deemed to have the same rating as such person's other senior unsecured long-term debt obligations, if any, that are rated by a Rating Agency. "TGE" means Tractebel Gas Engineering GmbH, and its successors and assigns. 21 "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture. "Total Loss" means, with respect to a Vessel that has been accepted by an Owner, either (a) actual or constructive or compromised or arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or (c) a requisition by a Governmental Authority for hire of the Vessel for a period in excess of 180 days. Any actual loss of the Vessel shall be deemed to have occurred at 1200 hours Greenwich Mean Time ("GMT") on the actual date on which the Vessel was lost or in the event of the date of the loss being unknown then the actual total loss shall be deemed to have occurred at 1200 hours GMT on the day next following the day on which the Vessel was last heard from. A constructive total loss shall be deemed to have occurred at 1200 hours GMT on the earliest of: (1) the date that notice of abandonment of the Vessel is given to the insurers, provided a claim for total loss is admitted by the insurers, (2) if the insurers do not admit such a claim, at the date and time GMT at which a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred, or (3) the date that a report is rendered by one or more experts in marine surveying and vessel valuation concluding that salvage, repair and associated costs in restoring the Vessel to the condition specified in each Mortgage exceed the Vessel's fair market value in sound condition. "Total Loss Payment" means, as of any date of determination and with respect to a Vessel, the sum of (a) the Allocated Principal Amount of the Securities and the Allocated Principal Amount of the Second Priority Notes, in each case for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the redemption of the Securities and of the Second Priority Notes, (c) any and all premiums payable with respect to such redemption, (d) any and all Manager's Fees owing to the Manager in respect of such Vessel, (e) an amount equal to the amounts of all Working Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto and (f) an amount equal to the Allocated Portion of all Interest Draws for such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. 22 "Trust Officer" means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "UK Lease" means an arrangement pursuant to which (i) an Owner enters into either a hire purchase agreement or a conditional sale contract with a UK Lessor providing for such UK Lessor to pay a purchase price for the related Vessel and granting such UK Lessor a right of possession in respect of such Vessel, (ii) such UK Lessor charters such Vessel to such Owner under a bareboat charter for a term ending after the maturity date of the Securities and (iii) such Owner's monetary obligations with respect to such charter are effectively satisfied by depositing such purchase price in a defeasance trust; PROVIDED, HOWEVER, that the creation of any such UK Lease shall not result in the lowering of any ratings obtained with respect to the Securities. "UK Lessor" means a leasing subsidiary of a United Kingdom clearing bank. "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "U.S. Government Obligations" means direct obliga tions (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the Company's option. "Vessel" means a Vessel built pursuant to a Building Contract. "Vessel Purchase Installment Date" means, with respect to a Building Contract, each date on which an installment of the Purchase Price is payable by the related Owner pursuant to the terms of such Building Contract. "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Xenon" means Xenon Shipping Inc., a Norwegian corporation, and its successors. 23 SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section ---- ------- "Affiliate Transaction" ................ 4.08 "Appendix" ............................. 2.01 "Bankruptcy Law" ....................... 6.01 "covenant defeasance option" ........... 8.01(b) "Custodian" ............................ 6.01 "Event of Default" ..................... 6.01 "legal defeasance option" .............. 8.01(b) "Legal Holiday" ........................ 12.08 "Obligations" .......................... 10.01 "Paying Agent" ......................... 2.03 "Purchase Date" ........................ 4.18(c) "Registrar"............................. 2.03 "Release Notice"........................ 11.04 "Successor Company" .................... 5.01(a) "Successor uarantor" .................. 5.01(b) SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC; "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 24 SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limita tion; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Indebtedness secured by a Lien merely by virtue of its nature as unsecured Indebtedness; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP and accretion of principal on such security shall be deemed to be the Incurrence of Indebtedness; (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemp tion or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; (9) all references to the date the Securities were originally issued shall refer to the date the Initial Securities were originally issued; and (10) whenever there is mentioned in this Indenture or the Security Agreements the payment of the principal of or any premium or interest on, or in respect of, any Security, any payment pursuant to the Guarantees or the net proceeds received from the Company or a Guarantor on the sale or exchange of any Security, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in Section 4.17 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to Section 4.17. 25 ARTICLE 2 THE SECURITIES SECTION 2.01. FORM AND DATING. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix") which is hereby incorporated in and expressly made part of this Indenture. The Initial Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in the Appendix and Exhibit A are part of the terms of this Indenture. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Securities for the Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenti cates the Security, the Security shall be valid neverthe less. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be con clusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and deliver Securities for original issue upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated. The aggregate principal amount of Securities outstanding at any 26 time may not exceed that amount except as provided in Section 2.06. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appoint ment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authen tication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Secur ities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any addi tional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provi sions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Regis trar or Paying Agent or to notify the Trustee as provided in the previous sentence, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securi ties. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying 27 Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably prac ticable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. REPLACEMENT SECURITIES. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.07. OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section as not outstanding. A Security does not cease to be outstand ing because the Company or an Affiliate of the Company holds the Security. 28 If a Security is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.08. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities. SECTION 2.09. CANCELATION. The Company at any time may deliver Securities to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record reten tion requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancelation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancelation. SECTION 2.10. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Securityholder a notice that states the special record date, 29 the payment date and the amount of defaulted interest to be paid. SECTION 2.11. CUSIP NUMBERS. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities or is required to redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to which the redemption will occur. If the Company is required to redeem Securities pursuant to paragraph 6 of the Securities, it may reduce the principal amount of Securities required to be redeemed to the extent it is permitted a credit by the terms of the Securities and it notifies the Trustee of the amount of the credit and the basis for it. If the reduction is based on a credit for redeemed or canceled Securities that the Company has not previously delivered to the Trustee for cancelation, it shall deliver such Securities with the notice. The Company shall give each notice to the Trustee provided for in this Section at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the condi tions herein. SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies 30 with applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a date for redemp tion of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price or the method of calculating such redemption price pursuant to this Indenture; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemp tion price; (5) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed; (6) that, unless the Company defaults in making such redemption payment, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; (7) the paragraph of the Securities pursuant to which the Securities called for redemption are being redeemed; and 31 (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surren der to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued inter est on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancelation. SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Secur ity surrendered. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due. 32 The Company shall pay interest on overdue princi pal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. SEC REPORTS. Whether or not required by the rules and regulations of the SEC, Holdings shall furnish to the Securityholders (i) all annual and quarterly financial information that would be required to be contained in a filing with the SEC on Forms 20-F and 10-Q if Holdings were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual financial information, a report thereon by Holdings' certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if Holdings were required to file such reports; PROVIDED, HOWEVER, that (x) such quarterly financial information shall be furnished within 60 days following the end of each such fiscal quarter of Holdings (provided that the initial quarterly information shall be furnished within 75 days following the end of the most recently completed fiscal quarter ending prior to the Issue Date) and (y) such annual financial information shall be furnished within 120 days following the end of the fiscal year of Holdings. In addition, whether or not required by the rules and regulations of the SEC, Holdings will file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such filing). In addition, Holdings shall furnish to the Securityholders and to prospective investors, upon the requests of such Securityholders, any information required to be delivered pursuant to Rule 144A (d)(4) under the Securities Act so long as the Securities are not freely transferable under the Securities Act. SECTION 4.03. LIMITATION ON INDEBTEDNESS. The Company shall not Incur, directly or indirectly, any Indebtedness, except that the Company may Incur any or all of the following Indebtedness: (1) the Securities and the Second Priority Notes; and (2) Indebtedness Incurred under the Letter of Credit Reimbursement Agreement and under the Security Agreements. 33 SECTION 4.04. LIMITATION ON INDEBTEDNESS OF OWNERS. (a) The Company shall not permit any Owner to Incur, directly or indirectly, any Indebtedness except that an Owner may Incur the following Indebtedness: (1) Guarantees of the Securities and the Second Priority Notes, the Company's obligations under the Letter of Credit Reimbursement Agreement and any Indebtedness Incurred under the Security Agreements; (2) the Intercompany Note; and (3) Attributable Debt in respect of a UK Lease; PROVIDED, HOWEVER, that prior to such Incurrence, the Company shall have delivered to the Trustee written confirmation from the Rating Agencies that the entry into such UK Lease will not result in a downgrading (or possible downgrading) of the Securities. SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Owner, directly or indirectly, to make a Restricted Payment. (b) The provisions of the foregoing paragraph (a) shall not prohibit the redemption of Second Priority Notes pursuant to the provisions described in paragraph 6 of the Second Priority Notes or the purchase of Second Priority Notes pursuant to the provisions described in Section 4.12 of the Second Priority Note Indenture in each case only to the extent that the provisions in paragraph 6 of the Securities or Section 4.12 of this Indenture, as the case may be, have been complied with prior to or on the date of such redemption or purchase. SECTION 4.06. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM OWNERS. The Company shall not, and shall not permit any Owner to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Owner to (a) pay dividends or make any other distributions on its Capital Stock to the Company or another Owner or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date. SECTION 4.07. LIMITATION ON ASSET SALES. The Company shall not, and shall not permit any Owner to, sell, assign, convey, transfer or otherwise dispose of a Vessel or any other portion of the Collateral, except pursuant to the 34 Security Agreements or a UK Lease and except sales of Incidental Assets. SECTION 4.08. LIMITATION ON AFFILIATE TRANSACTIONS. (a) Except for payments under the Building Contract which the Builders paid to TGE or which the Builders have directed to be paid directly to TGE, the Company shall not, and shall not permit any Owner to, enter into or permit to exist any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof (1) are no less favorable to the Company or such Owner than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction involves an amount in excess of $1,000,000, (i) are set forth in writing and (ii) have been approved by a majority of the members of the Board of Directors having no personal stake in such Affiliate Transaction and (3) if such Affiliate Transaction involves an amount in excess of $5,000,000, have been determined by a reasonably appropriate independent qualified appraiser given the size and nature of the transaction to be fair, from a financial standpoint, to the Company and the Owners. (b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any Restricted Payment permitted to be paid pursuant to Section 4.05, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options, stock ownership and other employee benefit plans approved by the Board of Directors, (iii) the grant of stock options or similar rights to employees and directors of Holdings or the Company pursuant to plans approved by the Board of Directors, (iv) fees paid to directors who are not employees of the Company or the Owners, (v) any Affiliate Transaction between the Company and an Owner or between Owners, (vi) the performance by the Company and the Owners of their obligations under the Management Agreement and, in the case of the Owners, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement, in each case in the form in effect on the Issue Date, and (vii) certain payments to be made to GEBAB, TGE and Xenon on the Issue Date. SECTION 4.09. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF OWNERS. The Company shall not sell or 35 otherwise dispose of any Capital Stock of an Owner, and shall not permit any such Owner, directly or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock except (i) to the Company or another Owner, or (ii) directors' qualifying shares. SECTION 4.10. LIMITATION ON LIENS. The Company shall not, and shall not permit any Owner to, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties (including Capital Stock of an Owner), whether owned at the Issue Date or thereafter acquired, other than Permitted Liens. SECTION 4.11. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Owner to, enter into any Sale/Leaseback Transaction, except for a UK Lease. SECTION 4.12. OFFERS TO PURCHASE WITH AVAILABLE CASH AND UPON A CHANGE OF CONTROL. (a) On each Available Cash Payment Date, the Company shall, to the extent of Available Cash on such Available Cash Payment Date, make an offer (each, an "Available Cash Offer") to each Holder of the Securities to purchase such Holder's Securities, in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right holders of record on the relevant record date to receive interest on the relevant Interest Payment Date), in accordance with the terms contemplated in Section 4.12(c); PROVIDED, HOWEVER, that the Company will not be required to make an Available Cash Offer if Available Cash on such Available Cash Payment Date is less than $1.0 million. (b) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date), in accordance with the terms contemplated in Section 4.12(c). (c) On the next succeeding Business Day after the Available Cash Determination Date with respect to an Available Cash Offer and within 30 days after the occurrence of a Change of Control, the Company will be required to provide, by mail (first class, prepaid) written notice to the Trustee and each Holder stating that: (i) Available 36 Cash is expected to be available on the next succeeding Available Cash Payment Date or a Change of Control has occurred, as applicable; (ii) an Available Cash Offer is being made and Securities of the applicable series having an aggregate principal amount equal to Available Cash divided by 1.02 (the "Maximum Principal Amount") will be accepted for payment or a Change of Control Offer is being made and all Securities validly tendered will be accepted for payment, as applicable; (iii) the purchase price and date of purchase (which shall be the Available Cash Date, in the case of an Available Cash Offer, or which shall be a Business Day not less than 30 days nor more than 60 days from the date on which such Change of Control notice is mailed in the case of a Change of Control Offer); (iv) any Security not tendered will continue to accrue interest pursuant to its terms; (v) any Security accepted for payment pursuant to the Available Cash Offer or the Change of Control Offer, as applicable, shall cease to accrue interest on and after the purchase payment date therefor (in the case of a Change of Control Offer, the "Change of Control Payment Date" and, together with the Available Cash Offer, the "Purchase Payment Date"), unless the Company defaults on such payment; (vi) Holders of Securities electing to have any Security or portion thereof purchased pursuant to an Available Cash Offer or Change of Control Offer will be required, prior to the close of business on the Business Day immediately preceding the applicable Purchase Payment Date, to surrender such Security to the Trustee at the address specified in the notice, together with a completed form entitled "Option of the Holder to Elect Purchase" on the reverse side of such Security; (vii) Holders of Securities will be entitled to withdraw their election if the Trustee receives, not later than the close of business on the third Business Day immediately preceding the applicable Purchase Payment Date, a telegraph, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Securities delivered for purchase, and a statement that such Holder is withdrawing his election to have such Securities purchased; and (viii) Holders whose Securities are being purchased in part will receive new Securities of the same series and in principal amount equal to the unpurchased portion of the Securities surrendered; PROVIDED, HOWEVER, that each Security purchased and each new Security issued shall be in a principal amount of $1,000 or integral multiples thereof. (d) On the applicable Purchase Payment Date, the Company will be required to: (i) accept for payment all Securities or portions thereof tendered pursuant to the Available Cash Offer or Change of Control Offer, as 37 applicable; (ii) deposit with the Trustee funds sufficient to pay the purchase price of all Securities of the applicable series or portions thereof so accepted, on a pro rata basis, in the proportion which the amount payable to each Holder of Securities bears to the aggregate amount payable in respect of all outstanding Securities; and (iii) deliver or cause to be delivered to the Trustee, all Securities or potions thereof so accepted together with an officers' certificate specifying the Securities or portions thereof accepted for payment. The Trustee shall promptly mail, to the Holders of Securities so accepted, payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new Security equal in principal amount to any unpurchased portion of the Securities surrendered; PROVIDED, HOWEVER, that each Security purchased and each new Security issued shall be in a principal amount of $1,000 or integral multiples thereof; PROVIDED FURTHER, HOWEVER, that with respect to an Available Cash Offer, if the aggregate amount of Securities tendered exceeds the Maximum Principal Amount, then the Trustee shall select Securities to be purchased ratably from each Holder that tendered Securities such that the ratio of the principal amount of the Securities to be purchased from each Holder that tendered Securities to the aggregate principal amount of Securities tendered by such Holder shall, as nearly as practicable and subject to rounding, equal the ratio of the Maximum Principal Amount to the aggregate principal amount of the Securities tendered with respect to such Available Cash Offer. The Company will notify the Holders of the results of an Available Cash Offer or Change of Control on or as soon as practicable after the applicable Purchase Payment Date. (e) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws and regulations in connection with the repurchase of Securities pursuant to this Section 4.12. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.12, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof. SECTION 4.13. LIMITATION ON BUSINESS ACTIVITIES. The Company shall not conduct any trade or business other than hold Investments in the Owners. The Company shall not permit any Owner to conduct any trade or business other than the ownership and operation of its respective Vessel and 38 holding Investments in the Company or one or more other Owners. SECTION 4.14. IMPAIRMENT OF SECURITY INTEREST. The Company shall not, and shall not permit any Owner to, take or knowingly or negligently omit to take, any action which action or omission might or would have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Trustee and the Securityholders, and the Company shall not, and shall not permit any Owner to, grant to any Person other than the Collateral Agent, for the benefit of the Trustee, the Second Priority Note Trustee, the Letter of Credit Issuer, the participating banks party to the Letter of Credit Reimbursement Agreement and the holders of the Securities and of the Second Priority Notes, any interest whatsoever in any of the Collateral. SECTION 4.15. AMENDMENTS TO SECURITY AGREEMENTS. The Company shall not, and shall not permit any Owner to, amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Agreements in any way that would be adverse to the holders of the Securities. SECTION 4.16. LIMITATION ON ACTIVITIES OF HOLDINGS. (a) Holdings shall not Incur, directly or indirectly, any Indebtedness other than the Holdings Pledge. (b) Holdings shall at all times be the holder of record of, and shall be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of, 100% of the outstanding Capital Stock of the Company. (c) Holdings shall not engage in any trade or business or hold any assets or make any Investments (other than, in each case, the ownership of the Capital Stock of the Company). (d) Holdings shall not, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties, other than the Holdings Pledge. (e) Holdings shall not consolidate with or merge with or into any Person. SECTION 4.17. ADDITIONAL AMOUNTS. The Company and the Guarantors shall make all payments of, or in respect of, principal of and interest on the Securities, and all payments pursuant to the Guarantees, without withholding or 39 deduction for, or on account of any Taxes, unless such Taxes are required by the Isle of Man or the jurisdiction of incorporation of any successor to the Company or any of the Owners (each a "Successor Jurisdiction"), as the case may be, or any such authority to be withheld or deducted. In the event such Taxes are to be withheld or deducted, the Company, the relevant Guarantor or any successor, as the case may be, will pay such additional amounts of, or in respect of, principal and interest or with respect to payments pursuant to the Guarantees ("Additional Amounts") as may be necessary so that the net amount received by each Holder (including Additional Amounts) after such withholding or deduction will not be less than the amounts that the Holder would have received if such Taxes had not been withheld or deducted, except that no Additional Amounts shall be so payable for or on account of: (1) Taxes that would not have been imposed but for (a) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership or corporation) and the Isle of Man or any Successor Jurisdiction (including any territory or political subdivision of the foregoing), as the case may be, including such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a national, domiciliary or resident of or treated as a resident thereof or being or having been present or engaged in a trade or business therein or having or having had a permanent establishment therein; (b) the presentation of such Security for payment in the Isle of Man or any Successor Jurisdiction, as the case may be, or any of their respective territories or political subdivisions, unless such Security could not have been presented for payment elsewhere; or (c) the presentation of such Security more than 30 days after the date on which the payment in respect of such Security became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of 30 days; 40 (2) any estate, inheritance, gift, sale, transfer, personal property of similar tax, assessment or other governmental charge; (3) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure of the Holder or beneficial owner of a Security to comply with a request of the Company or any of the Guarantors, as the case may be, addressed to the Holder (a) to provide reasonable information concerning the nationality, residence or identity of the Holder or such beneficial owner or (b) to make any reasonable declaration or other similar claim or satisfy any reasonable information or reporting requirement, which, in the case of (a) or (b), is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or governmental charge; or (4) any combination of clauses (1), (2) and (3); nor shall Additional Amounts be paid with respect to any payment of the principal of or any premium or interest on any such Security, or payment pursuant to the Guarantees, to any Holder (including a fiduciary or partnership) to the extent that the beneficial owner would not have been entitled to such Additional Amounts had it been the Holder of the Security. The Company or the relevant Guarantors, as the case may be, will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Company or the relevant Guarantors, as the case may be, will furnish to Holders of Securities that are outstanding on the date of the withholding, or deduction for or on account of Taxes, within 30 days after the date of the payment of any Taxes due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Company or the relevant Guarantors, as the case may be. The Company or the relevant Guarantors, as the case may be, shall pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery, enforcement or registration of the Securities or the Guarantees or any other document or instrument in relation thereto, or the receipt of any payments with respect to the Securities or Guarantees, excluding such taxes, charges or similar levies imposed by any jurisdiction outside of the Isle of Man, any Successor Jurisdiction or any jurisdiction in which a Paying Agent is 41 located (except those resulting from or required to be paid in connection with, the enforcement of the Securities or the Guarantees or an other such document or instrument following the occurrence of any Event of Default), and the Company and the Guarantors hereby agree to indemnify the Holders for any such taxes paid by such Holders. SECTION 4.18. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA ss. 314(a)(4). SECTION 4.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company and the Guarantors agree to execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. WHEN COMPANY AND OWNERS MAY MERGE OR TRANSFER ASSETS. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substan tially all its assets to, any Person, except in connection with the imposition of Additional Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under (a) the laws of the United States of America, any State thereof or the District of Columbia, (b) the laws of the Republic of Liberia, (c) the laws of the Isle of Man or (d) the laws of any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the 42 obligations of the Company under the Securities and this Indenture; (ii) the Successor Company (if not the Company) shall expressly assume all the obligations of the Company under the Intercreditor Agreement and the Letter of Credit Reimbursement Agreement; (iii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iv) immediately after giving effect to such transaction, the Successor Company shall have Consolidated Net Worth in an amount that is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; (v) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and (vi) an opinion of counsel in the jurisdiction where the Successor Company is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Securities by the Successor Company to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes on income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Securities who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect of the acquisition, ownership or disposition of the Securities, including the receipt of interest, principal or premiums thereon, provided that such Holder does not use or hold, and is not deemed to use or hold the Securities in carrying on a business in the Applicable Jurisdiction. The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under 43 this Indenture, but the predecessor Company in the case of a conveyance, transfer or lease shall not be released from the obligation to pay the principal of and interest on the Securities. (b) The Company shall not permit any Owner to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or series of transactions, all or substantially all its assets to any Person, except in connection with the imposition of Addition Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Owner") shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of (a) the United States of America, or any State thereof or the District of Columbia, (b) the Republic of Liberia, (c) the Isle of Man, or (d) any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Owner (if not such Owner) shall expressly assume, by a Guarantee Agreement, all the obligations of such Successor Owner, if any, under its Guarantee; (ii) the Successor Owner (if not the Owner) shall expressly assume, by the Guarantee Agreement, all the obligations of such Owner, if any, under its Guarantee of the Issuer's obligations under the Security Agreements and the Letter of Credit Reimbursement Agreement; (iii) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the Successor Owner as a result of such transaction as having been issued by such Successor Owner at the time of such transaction), no Default shall have occurred and be continuing; (iv) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guarantee Agreement, if any, complies with this Indenture; and (v) an opinion of counsel in the jurisdiction where the Successor Owner is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Guarantee by the Successor Owner to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes on income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Securities who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect of the acquisition, ownership or disposition of the Securities, including the receipt of interest, principal or premiums thereon, PROVIDED 44 that such Holder does not use or hold, and is not deemed to use or hold the Securities in carrying on a business in the Applicable Jurisdiction. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company defaults in any payment of inter est on any Security when the same becomes due and payable, and such default continues for a period of 30 days; (2) the Company (i) defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon required purchase, upon declaration or otherwise, or (ii) fails to redeem or purchase Securities when required pursuant to this Indenture or the Securities following notice thereof properly given under this Indenture; (3) the Company fails to comply with Section 5.01; (4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 (other than a failure to purchase Securities when required under Section 4.12) and such failure continues for 30 days after the notice specified below; (5) the Company fails to comply with any of its agreements in the Securities, this Indenture (other than those referred to in clause (1), (2), (3) or (4) above) or the Security Agreements, or the occurrence of an event of default under a Mortgage, and such failure continues for 60 days after the notice specified below; (6) Indebtedness of Holdings, the Company or any Owner is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $5,000,000, or its foreign currency equivalent at the time; 45 (7) Holdings, the Company or any Owner pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custo dian of it or for any substantial part of its property; or (D) makes a general assignment for the bene fit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against Holdings, the Company or any Owner in an involuntary case; (B) appoints a Custodian of Holdings, the Company or any Owner or for any substantial part of its property; or (C) orders the winding up or liquidation of Holdings, the Company or any Owner; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (9) any judgment or decree for the payment of money in excess of $5,000,000 or its foreign currency equivalent at the time is entered against Holdings, the Company or any Owner, remains outstanding for a period of 60 days following the entry of such judgment or decree and is not discharged, waived or the execution thereof stayed within 10 days after the notice specified below; (10) a Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Guarantee) or a Guarantor denies or disaffirms its obligations under its Guarantee; 46 (11) the security interest under this Indenture or the Security Agreements shall, at any time, cease to be in full force and effect for any reason (other than by operation of this Indenture and the Security Agreements) other than the satisfaction in full of all obligations under this Indenture and discharge of this Indenture or any security interest created thereunder shall be declared invalid or unenforceable or the Company or any Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable; (12) the Designated Owners cease to own (and vote at their discretion) Voting Stock of Holdings representing at least a majority of the Voting Stock of Holdings and cease to own Capital Stock of Holdings entitling them to at least a majority of the equity interests in Holdings; or (13) Holdings fails to comply with Section 4.16 and such failure continues for 10 Business Days after notice of such non-compliance. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clauses (4), (5) or (9) is not an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (6), (10), (11) or (12) and any event which with the giving of notice or the lapse of time would become 47 an Event of Default under clause (4), (5) or (9), its status and what action the Company is taking or proposes to take with respect thereto. SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities then outstanding by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(7) or (8) with respect to the Company occurs, the principal of and interest on all the Securities shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquies cence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Securities by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security or (ii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. 48 When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceed ing for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemni fication satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. 49 SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Inden ture, the right of any Holder to receive payment of princi pal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Secu rities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disburse ments and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. PRIORITIES. If the Trustee col lects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securi ties for principal and interest, respectively; and THIRD: to the Company. 50 The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Inden ture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including rea sonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities. SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatso ever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and the Security Agreements and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. 51 (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Security Agreements and no implied covenants or obligations shall be read into this Indenture and the Security Agreements against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the require ments of this Indenture and the Security Agreements. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture and the Security Agreements. (c) The Trustee may not be relieved from liabil ity for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture and the Security Agreements that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 52 (g) No provision of this Indenture or of the Security Agreements shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture or of the Security Agreements relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genu ine and to have been signed or presented by the proper per son. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opin ion of Counsel or such other information as it may reasonably request. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Security Agreements and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it 53 would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Security Agreements or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture, the Security Agreements or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security (including payments pursuant to the redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 31 in each year, the Trustee shall mail to each Securityholder a brief report dated as of May 15 that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. (a) The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of fiduciaries or a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the 54 compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. (b) The Company shall indemnify the Trustee and hold it harmless from and against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under the Security Agreements. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct, negligence or bad faith. (c) In addition to, but without duplication of, its obligations under subsection (b) above, the Company shall indemnify and hold harmless the Trustee and the Securityholders from and against any and all losses, damages and expenses incurred by the Trustee and the Securityholders as a result of any environmental damage resulting from the operation of any Vessel. (d) To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. (e) The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(7) or (8) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Secur ities then outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; 55 (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appoint ment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. 56 In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIAss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIAss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are out standing if the requirements for such exclusion set forth in TIAss. 310(b)(1) are met. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shalL be subject to TIA ss. 311(a) to the extent indicated. SECTION 7.12. NOT ACTING IN INDIVIDUAL CAPACITY. Except as otherwise provided in this Indenture, the Trustee acts hereunder solely as trustee as herein provided and not in its individual capacity, and all persons, other than the Securityholders as provided in this Indenture, having any claim against the Trustee by reason of the transactions contemplated hereby shall, subject to priorities of payment as herein provided, look only to the Collateral for payment or satisfaction thereof. 57 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. DISCHARGE OF LIABILITY ON SECURI TIES; DEFEASANCE. (a) When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.06) for cancelation or (ii) all outstanding Securities have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Company irrevocably deposits with the Trustee funds suffi cient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.06), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture and the Security Agreements shall, subject to Sections 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture and the Security Agreements on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all its obligations under the Securities and this Indenture ("legal defeasance option") or (ii) its and Holdings obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 and the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9), 6.01(10), 6.01(11) and 6.01(12 (but, in the case of Sections 6.01(7) and (8), with respect only to Owners) and the limitations contained in Sections 5.01(a)(iv) and 5.01(b), each Guarantor's obligations under Articles 10 and 11 and under the Security Agreements ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) 6.01(9), 6.01(10), 6.01(11) and 6.01(12) (but, in the case of Sections 6.01(7) and (8), with respect only to Owners) or because of the failure of the Company to comply 58 with Section 5.01(a)(iv) or 5.01(b). If the Company exercises its legal defeasance option or its covenant defeasance option, each Guarantor shall be released from all its obligations with respect to its Guarantee and under the Security Agreements. Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may exercise its legal defeasance option or its covenant defeasance option only if: (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Secu rities to maturity or redemption, as the case may be; (2) the Company delivers to the Trustee a cer tificate from a nationally recognized firm of indepen dent accountants expressing their opinion that the pay ments of principal and interest when due and without reinvestment on the deposited U.S. Government Obliga tions plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (3) 123 days pass after the deposit is made and during the 123-day period no Default specified in Sections 6.01(7) or (8) with respect to the Company occurs which is continuing at the end of the period; (4) the deposit does not constitute a default under any other agreement binding on the Company; (5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a 59 regulated investment company under the Investment Company Act of 1940; (6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Security holders will not recognize income, gain or loss for Federal income tax purposes as a result of such cove nant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (8) the Company delivers to the Trustee a letter from each of the Rating Agencies and which such Rating Agency confirms that the exercise of such legal defeasance option or covenant defeasance options, as the case may be, will not result in a downgrading of the rating issued by such Rating Agency then in effect with respect to the Securities; and (9) the Company delivers to the Trustee an Offi cers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or U.S. Government Obliga tions deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. 60 Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGA TIONS. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restrain ing or otherwise prohibiting such application, the Company's and the Owners' obligations under this Indenture, the Security Agreements and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 61 ARTICLE 9 AMENDMENTS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, the Guarantors and the Trustee may amend this Indenture, the Security Agreements, any of the agreements referred to in the Intercreditor Agreement or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to comply with Article 5; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; PROVIDED, HOWEVER, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (4) to provide additional security for the Securities; (5) to add guarantees with respect to the Secur ities, including any Guarantees; (6) to add to the covenants of the Company or the Guarantors for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (7) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or (8) to make any change that does not adversely affect the rights of any Securityholder. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Guarantors and the Trustee may amend this 62 Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder affected thereby, an amendment may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the Stated Maturity of any Security; (4) reduce the premium payable upon the redemption of any Security or change the time at which any Secur ity may or shall be redeemed in accordance with Article 3; (5) make any Security payable in money other than that stated in the Security; (6) make any changes in the Security Agreements or in Articles 10 or 11 that adversely affect the Holders or would terminate the Lien of this Indenture or any Security Agreement on any property subject thereto or deprive the Holder of the security afforded by the Lien of this Indenture or the Security Agreements; (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section; or (8) make any change in any Guarantee that would adversely affect the Securityholders. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. 63 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture, the Security Agreements or the Securities shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subse quent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subse quent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Security holder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURI TIES. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. 64 If it does, the Trustee may but need not sign it. In sign ing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permit ted by this Indenture. SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. ARTICLE 10 GUARANTEES SECTION 10.01. GUARANTEES. Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption, by required repurchase or otherwise, and all other monetary obligations of the Company and the other Guarantors under this Indenture and the Securities and of the Owners under the Security Agreements and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company and the other Guarantors under this Indenture, the Security Agreements and the Securities (all the foregoing being hereinafter collectively called the "Obligations"). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article 10 notwithstanding any extension or renewal of any Obligation. Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Obligations. The obligations of each Guarantor hereunder shall not be affected by (a) the 65 failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Security Agreements, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Security Agreements, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (e) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Obligations; or (f) subject to Section 10.06, any change in the ownership of such Guarantor. Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations. Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Security Agreements, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by any Holder or the 66 Trustee upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, each Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of such Obligations, (ii) accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Obligations of the Company or the Guarantors to the Holders and the Trustee. Each Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section. SECTION 10.02. LIMITATION ON LIABILITY. Any term or provision of this Indenture to the contrary notwith standing, the maximum aggregate amount of the Obligations guaranteed hereunder by any Owner shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Owner, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 10.03. SUCCESSORS AND ASSIGNS. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall enure to the benefit of the 67 successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture, in the Security Agreements and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 10.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise. SECTION 10.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 10.06. RELEASE OF GUARANTOR. Upon the sale or other disposition (including by way of consolidation or merger) of an Owner or the sale or disposition of all or substantially all the assets of such Owner (in each case other than to the Company or an Affiliate of the Company), such Owner shall be deemed released from all obligations under this Article 10 without any further action required on the part of the Trustee or any Holder. At the request of the Company and upon receipt of an Officers' Certificate, the Trustee shall execute and deliver an appropriate instrument evidencing such release. 68 ARTICLE 11 SECURITY AGREEMENTS SECTION 11.01. COLLATERAL AND SECURITY AGREEMENTS. (a) To secure the due and punctual payment of the Obligations, the Company, the Owners and the Trustee have entered into the Intercreditor Agreement and have entered or, under the circumstances described in the Intercreditor Agreement, will enter, into the Security Agreements. The Trustee and the Company hereby acknowledge and agree that the Collateral Agent holds the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the terms of the Security Agreements. Each Holder, by accepting a Security, shall be deemed to have agreed to all the terms and provisions of the Security Agreements. (b) As among the Holders, the Collateral shall be held for the equal and ratable benefit of such holders without preference, priority or distinction of any thereof over any other. SECTION 11.02. RECORDING; ANNUAL OPINIONS. (a) The Company and the Owners will take or cause to be taken all action required to maintain, preserve and protect the Lien on the Collateral granted by the Security Agreements, including causing the Mortgages and any other Security Agreement, instruments of further assurance and all amendments or supplements thereto, to be promptly recorded, registered and filed and at all times to be kept recorded, registered and filed, and will execute and file statements and cause to be issued and filed statements, all in such manner and in such places and at such times as are prescribed in the Intercreditor Agreement or in this Indenture as may be required by law fully to preserve and protect the rights of the Holders and the Trustee under this Indenture and the Security Agreements to the Collateral. The Company and the Owners will from time to time promptly pay and discharge all recording or filing fees, charges and taxes relating to the filing or registration of this Indenture and the Security Agreements, any amendments thereto and any other instruments of further assurance. (b) The Company and the Owners shall furnish to the Trustee: (i) as soon as practicable after the execution and delivery of this Indenture, in any event not to exceed 69 30 days after the execution and delivery thereof, an Opinion of Counsel either (a) to the effect that, in the opinion of such Counsel, this Indenture and the assignment of the Collateral intended to be made by the Security Agreements and all other instruments of further assurance or assignment have been properly recorded, registered and filed (or proper provision has been made for such recording, registration and filing) to the extent necessary to make effective the Lien created by such Security Agreements and reciting the details of such action, and stating that as to the Lien created pursuant to such Security Agreements, such recordings, registerings and filings are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-register ings or refilings are necessary to maintain such notice (other than as stated in such opinion), and further stating that all statements have been executed and filed (or proper provision has been made for such filing) that are necessary fully to preserve and protect the rights of the Holders and the Trustee with respect to the Lien under this Indenture and such Security Agreements, or (b) to the effect that, in the opinion of such counsel, no such action is necessary to perfect such Lien; and (ii) within 30 days after August 1 in each year beginning with August 1, 1998, an Opinion of Counsel, dated as of such date, either (a) to the effect that, in the opinion of such counsel, such action has been taken with respect to the recordings, registerings, filings, re-recordings, re-registerings and re-filings of this Indenture, the Security Agreements and all financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Indenture and the Security Agreements and reciting with respect to such Lien the details of such action or referencing to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Holders and the Trustee hereunder and under the Security Agreements with respect to such Lien, or (b) to the effect that, in the opinion of such Counsel, no such action is necessary to maintain such Lien. SECTION 11.03. DISPOSITION OF COLLATERAL WITHOUT RELEASE. (a) Notwithstanding the provisions of Section 11.04, so long as no Event of Default shall have occurred 70 and be continuing, the Company and any Owner, as appropriate, may, without any release or consent by the Trustee: (i) sell or otherwise dispose of any machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other similar property subject to the Lien of this Indenture and the Security Agreements, which may have become worn out or obsolete, not exceeding in aggregate value in any one calendar year $1,000,000, or which may constitute an Incidental Asset, upon substituting for the same other machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other similar property not necessarily of the same character but of at least equal value to the Company as, and costing not less than the amount realized from, the Collateral disposed of, which shall forthwith become, without further action, subject to the Lien of this Indenture and the Security Agreements; (ii) abandon, terminate, cancel, release or make alterations in or substitutions of any contracts subject to the Lien of this Indenture and any of the Security Agreements; PROVIDED, HOWEVER, that any altered or substituted contracts shall forthwith, without further action, be subject to the Lien of this Indenture and the Security Agreements to the same extent as those previously existing; (iii) surrender or modify any franchise, license or permit subject to the Lien of this Indenture and any of the Security Agreements which it may own or under which it may be operating; PROVIDED, HOWEVER, that, after the surrender or modification of any such franchise, license or permit, the Company or the applicable Owner shall still, in the reasonable opinion of the Board of Directors of the Company, be entitled, under some other or without any franchise, license or permit, to conduct its business as it was operating immediately prior to such surrender or modification; (iv) alter, repair, replace and add to its plants, structures, machinery, systems, equipment, fixtures and appurtenances; PROVIDED, HOWEVER, that such alteration, repair or replacement shall comply with the terms of the Security Agreements and will not, in the reasonable opinion of the Board of Directors, be prejudicial to the interests of the Holders; or 71 (v) demolish, dismantle, tear down or scrap any portion of the Collateral (other than a Vessel), if in the good faith opinion of the Board of Directors, as evidenced by a Board Resolution, such demolition, dis mantling, tearing down or scrapping is in the best interests of the Company and the fair market value and utility of the Collateral as an entirety, and the security for the Securities, will not thereby be impaired. (b) In the event that the Company or an Owner has sold, exchanged or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral which under the provisions of this Section 11.03 may be sold, exchanged or otherwise disposed of by the Company without any release or consent of the Trustee or the Collateral Agent, and the Company requests the Trustee to furnish a written disclaimer, release or quitclaim of any interest in such property under this Indenture and the Security Agreements, the Trustee shall execute such an instrument upon delivery to the Trustee of (i) an Officers' Certificate by the Company reciting the sale, exchange or other disposition made or proposed to be made and describing in reasonable detail the property affected thereby, and stating that such property is property which by the provisions of this Section 11.03 may be sold, exchanged or otherwise disposed of or dealt with by the Company without any release or consent of the Trustee and (ii) an Opinion of Counsel stating that the sale, exchange or other disposition made or proposed to be made was duly taken by the Company or the Owner in conformity with a designated subsection of Section 11.03(a) and that the execution of such written disclaimer, release or quitclaim is appropriate to confirm the propriety of such sale, disposition or other disposition under this Section 11.03. SECTION 11.04. RELEASE OF COLLATERAL. Collateral may be released from the security interest created by the Security Agreements at any time or from time to time in accordance with the provisions of the Security Agreements. The release of any Collateral from the terms hereof and of the Security Agreements or the release of, in whole or in part, the Liens created by the Security Agreements, will not be deemed to impair the Lien on the Collateral in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to the applicable Security Agreements and pursuant to the terms of this Article 11. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien strictly in accordance with the terms of the Security Agreements and 72 of this Article 11 will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture. To the extent applicable, the Company and each obligor on the Securities shall cause ss. 314(d) of the TIA relating to the release of property or securities from the Lien hereof and of the Security Agreements to be complied with. Any certificate or opinion required by ss. 314(d) of the TIA may be made by an officer of the Company, except in cases which ss. 314(d) of the TIA requires that such certificate or opinion be made by an independent person. SECTION 11.05. PERMITTED RELEASES NOT TO IMPAIR LIEN; TRUST INDENTURE ACT REQUIREMENTS. The release of any Collateral from the terms hereof and of the Security Agreements or the release of, in whole or in part, the Liens created by the Security Agreements, will not be deemed to impair the Lien on the Collateral in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to the applicable Security Agreements and pursuant to the terms of this Article 11. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien strictly in accordance with the terms of the Security Agreements and of this Article 11 will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture. To the extent applicable, the Company and each obligor on the Securities shall cause ss. 314(d) of the TIA relating to the release of property or securities from the Lien hereof and of the Security Agreements to be complied with. Any certificate or opinion required by ss. 314(d) of the TIA may be made by an officer of the Company, except in cases which ss. 314(d) of the TIA requires that such certificate or opinion be made by an independent person. SECTION 11.06. SUITS TO PROTECT THE COLLATERAL. Subject to the provisions of the Security Agreements, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Security Agreements or this Indenture, and such suits and proceedings as the Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, 73 such enactment, rule or order would impair the Lien on the Collateral or be prejudicial to the interests of the Holders or the Trustee). SECTION 11.07. PURCHASER PROTECTED. In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Trustee or the Collateral Agent to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof or of the Security Agreements for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this Article 11 to be sold be under obligation to ascertain or inquire into the authority of the Company or the applicable Owner to make any such sale or other transfer. SECTION 11.08. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE. In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 11 upon the Company or an Owner with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company or an Owner or of any officer or officers thereof required by the provisions of this Article 11; and if the Trustee or the Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Collateral Agent. SECTION 11.09. DISPOSITION OF OBLIGATIONS RECEIVED. All purchase money and other obligations received by the Collateral Agent under this Article 11 shall be held by the Trustee as a part of the Collateral. Upon payment in cash or cash equivalents by or on behalf of the Company to the Collateral Agent of the entire unpaid principal amount of any such obligation, the Trustee shall or the Collateral Agent release and transfer such obligation and any mortgage securing the same upon receipt of any documentation that the Trustee may reasonably require. Any cash or cash equivalents received by the Collateral Agent in respect of the principal of any such obligations shall be held by the Collateral Agent as Trust Moneys under the Intercreditor Agreement subject to application as therein provided and as provided in the Security Agreements. All interest and other income on any such obligations, when received by the 74 Collateral Agent shall be held and applied in accordance with the Intercreditor Agreement. SECTION 11.10. DETERMINATIONS RELATING TO COLLATERAL. In the event (i) the Trustee shall receive any written request from the Company or an Owner under any Security Agreement for consent or approval with respect to any matter or thing relating to any Collateral or the Company's or an Owner's obligations with respect thereto or (ii) there shall be due to or from the Trustee under the provisions of any Security Agreement any material performance or the delivery of any material instrument or (iii) the Trustee shall become aware of any material nonperformance by the Company or an Owner of any covenant or any material breach of any representation or warranty of the Company or an Owner set forth in any Security Agreement, then, in each such event, the Trustee shall be entitled to hire, at the sole reasonable cost and expense of the Company, experts, consultants, agents and attorneys to advise the Trustee on the manner in which the Trustee should respond, to such request or render any requested performance or response to such nonperformance or breach. The Trustee shall be fully protected in accordance with Article 7 hereof in the taking of any action recommended or approved by any such expert, consultant, agent or attorney and by indemnification provided in accordance with Section 6.05 and other sections of this Indenture if such action is agreed to by Holders of a majority in principal amount of the Securities pursuant to Section 6.05 and, the Trustee may, in its sole discretion, prior to taking such action if such action could subject it to environmental liabilities or taxation, require (i) direction from the Holders of a majority in principal amount of the Securities in accordance with Section 6.05 hereof and (ii) indemnification in accordance with Section 6.05. SECTION 11.11. RELEASE UPON TERMINATION OF THE COMPANY'S OBLIGATIONS. In the event that the Company delivers an Officers' Certificate certifying that all the obligations under this Indenture, the Securities and the Security Agreements have been satisfied and discharged by complying with the provisions of Article 8 or by the payment in full of the Company's obligations under the Securities, this Indenture and the Security Agreements, the Trustee shall deliver to the Company a notice stating that the Trustee, on behalf of the Holders, disclaims and gives up any and all rights it has in or to the Collateral, and any rights it has under the Security Agreements. 75 ARTICLE 12 MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or con flicts with another provision which is required to be included in this Indenture by the TIA, the required provi sion shall control. SECTION 12.02. NOTICES. Any notice or communica tion shall be in writing and delivered in person or mailed by first-class mail or overnight courier addressed as follows: if to the Company or any Guarantor: Navigator Gas Transport PLC 15-19 Athol Street Douglas, Isle of Man IM1 1LB Fax: 011-44-1-624-638-333 Attention of Edward Cain if to the Trustee: United States Trust Company of New York 114 West 47th Street New York, New York 10036-1532 Fax: (212) 852-1626 Attention of Corporate Trust Administration The Company, the Guarantors or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Security holder shall be mailed to the Securityholder at the Secu rityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. 76 SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA ss. 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company or a Guarantor to the Trustee to take or refrain from taking any action under this Indenture, the Company or such Guarantor shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condi tion; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opin ion of such individual, such covenant or condition has been complied with. SECTION 12.06. WHEN SECURITIES DISREGARDED. In determining whether the Holders of the required principal 77 amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the fore going, only Securities outstanding at the time shall be considered in any such determination. SECTION 12.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 12.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or other day on which commercial banks in The City of New York, or in the city of the corporate trust office of the Collateral Agent, are authorized by law to close. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 12.09. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company, Holdings or any of the Guarantors shall not have any liability for any obligations of the Company, Holdings or any of the Guarantors, respectively, under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. 78 SECTION 12.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 12.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. SECTION 12.14. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the execution and delivery of this Indenture, the Company and each of the Guarantors (i) acknowledges that it has, by separate written instrument, irrevocably designated and appointed Cambridge Partners, L.L.C. ("CPLLC"), (and any successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Indenture, the Securities or the Security Agreements that may be instituted in any federal or state court in the State of New York, Borough of Manhattan or brought by the Trustee (whether in its individual capacity or in its capacity as Trustee hereunder), and acknowledges that CPLLC has accepted such designation, (ii) submits to the jurisdiction of any such court in any such suit or proceeding, and (iii) agrees that service of process upon CPLLC and written notice of said service to the Company or the applicable Guarantor, shall be deemed in every respect effective service of process upon the Company or such Guarantor, as the case may be, in any such suit or proceeding. The Company and each of the Guarantors further agree to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CPLLC in full force and effect so long as this Indenture shall be in full force and effect. The Company and each of the Guarantors hereby irrevocably and unconditionally waive, to the fullest extent they may legally effectively do so, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Indenture, the Security Agreements or the Securities in any federal or state court in the State of New York, Borough of Manhattan. The Company and each of the Guarantors hereto hereby irrevocably waives, to the fullest extent permitted 79 by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. To the extent either the Company or any of the Guarantors has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in Securities and the Security Agreements, to the extent permitted by law. 80 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director NAVIGATOR HOLDINGS PLC, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director GUARANTORS: NAVIGATOR GAS (IOM I-A) LIMITED, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-B) LIMITED, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director 81 NAVIGATOR GAS (IOM I-C) LIMITED, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-D) LIMITED, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-E) LIMITED, by /s/ Richard Kaplow --------------------------- Name: Richard Kaplow Title: Director UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, by /s/ Gerard R. Ganey ---------------------------- Name: Gerard R. Ganey Title: Senior Vice President RULE 144A/REGULATION S APPENDIX [FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.] PROVISIONS RELATING TO INITIAL SECURITIES, PRIVATE EXCHANGE SECURITIES AND EXCHANGE SECURITIES 1. DEFINITIONS 1.1 DEFINITIONS For the purposes of this Appendix the following terms shall have the meanings indicated below: "Depositary" means The Depository Trust Company, its nominees and their respective successors. "Exchange Securities" means the 10 1/2% First Priority Ship Mortgage Notes Due 2007 to be issued pursuant to this Indenture in connection with a Registered Exchange Offer pursuant to the Registration Rights Agreement. "Initial Purchasers" means Credit Suisse First Boston Corporation and Cambridge Partners LLC. "Initial Securities" means the 10 1/2% First PrioriTY Ship Mortgage Notes Due 2007, issued under this Indenture on or about the date hereof. "Private Exchange" means the offer by the Company and the Guarantors, pursuant to the Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities. "Private Exchange Securities" means the 10 1/2% FirST Priority Ship Mortgage Notes Due 2007 to be issued pursuant to this Indenture in connection with a Private Exchange. "Purchase Agreement" means the Purchase Agreement dated July 31, 1997, among the Company, the Guarantors and the Initial Purchasers. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registered Exchange Offer" means the offer by the Company and the Guarantors, pursuant to the Registration Rights Agreement, to certain Holders of Initial Securities, 2 to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement dated July 31, 1997, among the Company, the Guarantors and the Initial Purchasers. "Securities" means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class. "Securities Act" means the Securities Act of 1933. "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depositary), or any successor person thereto and shall initially be the Trustee. "Shelf Registration Statement" means the registration statement, if any, issued by the Company and the Guarantors, in connection with the offer and sale of Initial Securities or Private Exchange Securities, pursuant to the Registration Rights Agreement. "Transfer Restricted Securities" means Definitive Securities and Securities that bear or are required to bear the legend set forth in Section 2.3(b) hereto. 1.2 OTHER DEFINITIONS Defined in Term Section: ---- -------- "Agent Members".........................................................2.1(b) "Global Security".......................................................2.1(a) "Regulation S"..........................................................2.1(a) "Rule 144A".............................................................2.1(a) 2. THE SECURITIES 2.1 FORM AND DATING The Initial Securities are being offered and sold by the Company pursuant to the Purchase Agreement. (a) GLOBAL SECURITIES. Initial Securities offered and sold to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on Regulation S under the Securities Act ("Regulation S"), in each case as 3 provided in the Purchase Agreement, shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form without interest coupons with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Trustee, at its New York, New York office, as custodian for the Depositary (or with such other custodian as the Depositary may direct), and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. (b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors, or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors, or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) CERTIFICATED SECURITIES. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global 4 Securities will not be entitled to receive physical delivery of certificated Securities. 2.2 AUTHENTICATION. The Trustee shall authenticate and deliver: (1) Initial Securities for original issue in an aggregate principal amount of $217,000,000 and (2) Exchange Securities or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to the Registration Rights Agreement, for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities, Exchange Securities or Private Exchange Securities. The aggregate principal amount of Securities outstanding at any time may not exceed $217,000,000 except as provided in Section 2.06 of this Indenture. 2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred. (ii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the 5 Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iii) In the event that a Global Security is exchanged for Securities in definitive registered form pursuant to Section 2.4 or Section 2.08 of the Indenture, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company. (b) LEGEND. (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH 6 ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE." (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, in the case of any Transfer Restricted Security that is represented by a Global Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security). (iii) After a transfer of any Initial Securities or Private Exchange Securities during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements that any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security without legends will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such transferring Holder's certificated Initial Security or Private Exchange Security or directions to transfer such Holder's interest in the Global Security, as applicable. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will cease to apply and certificated Initial Securities with the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange 7 Securities in certificated or global form will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer. (v) Upon the consummation of a Private Exchange with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Private Exchange Securities in exchange for their Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply, and Private Exchange Securities in global form with the Restricted Securities Legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange. (c) CANCELATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all beneficial interests in a Global Security have either been exchanged for certificated Securities, redeemed, repurchased or canceled, such Global Security shall be returned to the Depositary for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (d) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF SECURITIES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate certificated Securities, Definitive Securities and Global Securities at the Registrar's or co-registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.12 and 9.05). (iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of 8 (a) any certificated or Definitive Security selected for redemption in whole or in part pursuant to Article 3 of this Indenture, except the unredeemed portion of any certificated or Definitive Security being redeemed in part, or (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Securities or 15 Business Days before an interest payment date. (iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary. (v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. (e) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communica tions to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. 9 (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 CERTIFICATED SECURITIES. (a) A Global Security deposited with the Depositary or with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of certificated Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Securities under this Indenture. (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depositary to the Trustee to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of certificated Initial Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Security delivered in exchange for an interest in the Global Security shall, except as otherwise provided by Section 2.3(d), bear the restricted securities legend set forth in Exhibit 1 hereto. 10 (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (d) In the event of the occurrence of either of the events specified in Section 2.4(a), the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive, fully registered form without interest coupons. 1 EXHIBIT 1 to RULE 144A/REGULATION S APPENDIX [FORM OF FACE OF INITIAL SECURITY] [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Securities Legend] THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED 2 STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. 3 No. $ 10 1/2% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to , or registered assigns, the principal sum of Dollars on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: NAVIGATOR GAS TRANSPORT PLC, by ----------------------------- President ----------------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by ----------------------------- Authorized Signatory 4 [FORM OF REVERSE SIDE OF INITIAL SECURITY] 10 1/2% First Priority Ship Mortgage Note Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest in cash on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, 5 that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 6 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002 . . . . . . . . . . . . . . . . . 105.750% 2003 . . . . . . . . . . . . . . . . . 103.500 2004 . . . . . . . . . . . . . . . . . 101.750 2005 and thereafter . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of 7 redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a 8 redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorse ments or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After 10 any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to para graph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements 11 in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by 12 reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the considera tion for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 13 THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC, 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-333 ATTENTION OF SECRETARY 14 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ________________ Your Signature: _____________________ - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Company; or (2) / / pursuant to an effective registration statement under the Securities Act of 1933; or (3) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each 15 case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) / / pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to 16 request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 17 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount Signature of Exchange in Principal in Principal of this Global authorized officer Amount of this Amount of this Security following of Trustee or Global Security Global Security such decrease or Securities increase Custodian
18 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: _______________ Your Signature: ______________________ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: _______________________________________ (Signature must be guaranteed) EXHIBIT A [FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY] [*/] [**/] No. $ 10 1/2% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to , or registered assigns, the principal sum of Dollars on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: NAVIGATOR GAS TRANSPORT PLC, by ----------------------- President ----------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies that this is one of the Securities referred to in the Indenture. by [Seal] ----------------------------- Authorized Signatory - ---------- */ If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to the Rule 144A/Regulation S 2 Appendix and the attachment from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY". **/ If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and replace the Assignment Form included in this Exhibit A with the Assignment Form included in such Exhibit 1. 3 [FORM OF REVERSE SIDE OF EXCHANGE SECURITY [OR PRIVATE EXCHANGE SECURITY]] 10 1/2% First Priority Ship Mortgage Note Due 2007 1. INTEREST Navigator Gas Transport PLC, an Isle of Man public limited company (such company, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest in cash on the principal amount of this Security at the rate per annum shown above [; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured] ***/. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. - ---------- ***/ Insert if at the time of issuance of the Exchange Security or Private Exchange Security (as the case may be) neither the Registered Exchange Offer has been consummated nor a Shelf Registration Statement has been declared effective in accordance with the Registration Rights Agreement. 4 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Securities (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no U.S. dollar account maintained by the payee with a bank in the United States is designated by any holder to the Trustee or the Paying Agent at least 30 days prior to the relevant due date for payment (or such other date as the Trustee may accept in its discretion), by mailing a check to the registered address of such holder. 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. 5 The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and its subsidiaries, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from subsidiaries. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002.................................................... 105.750% 2003.................................................... 103.500 2004.................................................... 101.750 2005 and thereafter..................................... 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, 6 any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a 7 redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered at the Issue Date (as defined in the Intercreditor Agreement). Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered and the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorse ments or transfer documents and to pay any taxes and fees 9 required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, 10 or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to para graph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings and the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a 11 Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, the Owners or the Trustee shall not have any liability for any obligations of the Company or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the 12 Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 22. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including, the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 23. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 FAX: 44-1624-683-303 ATTENTION OF SECRETARY 13 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ________________ Your Signature: _____________________ - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. 14 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.12 OF THE INDENTURE, CHECK THE BOX: / / IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.12 OF THE INDENTURE, STATE THE AMOUNT: $ DATE: __________________ YOUR SIGNATURE: _________________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY) SIGNATURE GUARANTEE:_______________________________________ (SIGNATURE MUST BE GUARANTEED BY A MEMBER FIRM OF THE NEW YORK STOCK EXCHANGE OR A COMMERCIAL BANK OR TRUST COMPANY) EX-4.2 9 IND. -- 12% SECOND PRIORITY SHIP MORTGAGE NOTES EXECUTION COPY ================================================================================ NAVIGATOR GAS TRANSPORT PLC 12% Second Priority Ship Mortgage Notes Due 2007 the GUARANTORS named herein --------------------- INDENTURE Dated as of August 1, 1997 --------------------- THE CHASE MANHATTAN BANK, Trustee ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions ............................ 1 SECTION 1.02. Other Definitions ...................... 23 SECTION 1.03. Incorporation by Reference of Trust Indenture Act ........................ 23 SECTION 1.04. Rules of Construction .................. 24 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating ........................ 25 SECTION 2.02. Execution and Authentication ........... 25 SECTION 2.03. Registrar and Paying Agent ............. 26 SECTION 2.04. Paying Agent To Hold Money in Trust .... 26 SECTION 2.05. Securityholder Lists ................... 27 SECTION 2.06. Replacement Securities ................. 27 SECTION 2.07. Outstanding Securities ................. 27 SECTION 2.08. Temporary Securities ................... 28 SECTION 2.09. Cancelation ............................ 28 SECTION 2.10. Defaulted Interest ..................... 28 SECTION 2.11. CUSIP Numbers .......................... 29 ARTICLE 3 REDEMPTION SECTION 3.01. Notices to Trustee ..................... 29 SECTION 3.02. Selection of Securities To Be Redeemed ............................. 29 SECTION 3.03. Notice of Redemption ................... 30 SECTION 3.04. Effect of Notice of Redemption ......... 31 SECTION 3.05. Deposit of Redemption Price ............ 31 SECTION 3.06. Securities Redeemed in Part ............ 31 2 Page ---- ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities .................. 31 SECTION 4.02. SEC Reports ............................ 32 SECTION 4.03. Limitation on Indebtedness ............. 32 SECTION 4.04. Limitation on Indebtedness of Owners ............................ 33 SECTION 4.05. Limitation on Restricted Payments ...... 33 SECTION 4.06. Limitation on Restrictions on Distribu- tions from Owners .................... 33 SECTION 4.07. Limitation on Asset Sales .............. 33 SECTION 4.08. Limitation on Affiliate Transactions ......................... 33 SECTION 4.09. Limitation on the Sale or Issuance of Capital Stock of Owners ........... 34 SECTION 4.10. Limitation on Liens .................... 34 SECTION 4.11. Limitation on Sale/Leaseback Transactions ......................... 35 SECTION 4.12. Offers To Purchase with Available Cash and upon a Change of Control .............................. 35 SECTION 4.13. Limitation on Business Activities ...... 37 SECTION 4.14. Impairment of Security Interest ........ 38 SECTION 4.15. Amendments to Security Agreements ...... 38 SECTION 4.16. Limitation on Activities of Holdings .......................... 38 SECTION 4.17. Additional Amounts ..................... 38 SECTION 4.18. Compliance Certificate ................. 41 SECTION 4.19. Further Instruments and Acts ........... 41 ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. When Company and Owners May Merge or Transfer Assets ...................... 41 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default ...................... 44 SECTION 6.02. Acceleration ........................... 47 SECTION 6.03. Other Remedies ......................... 47 SECTION 6.04. Waiver of Past Defaults ................ 47 SECTION 6.05. Control by Majority .................... 48 SECTION 6.06. Limitation on Suits .................... 48 3 Page ---- SECTION 6.07. Rights of Holders To Receive Payment .............................. 49 SECTION 6.08. Collection Suit by Trustee ............. 49 SECTION 6.09. Trustee May File Proofs of Claim ....... 49 SECTION 6.10. Priorities ............................. 49 SECTION 6.11. Undertaking for Costs .................. 50 SECTION 6.12. Waiver of Stay or Extension Laws ....... 50 ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee ...................... 50 SECTION 7.02. Rights of Trustee ...................... 52 SECTION 7.03. Individual Rights of Trustee ........... 52 SECTION 7.04. Trustee's Disclaimer ................... 53 SECTION 7.05. Notice of Defaults ..................... 53 SECTION 7.06. Reports by Trustee to Holders .......... 53 SECTION 7.07. Compensation and Indemnity ............. 53 SECTION 7.08. Replacement of Trustee ................. 54 SECTION 7.09. Successor Trustee by Merger ............ 55 SECTION 7.10. Eligibility; Disqualification .......... 56 SECTION 7.11. Preferential Collection of Claims Against Company ...................... 56 SECTION 7.12. Not Acting in Individual Capacity ...... 56 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Discharge of Liability on Securities; Defeasance ........................... 57 SECTION 8.02. Conditions to Defeasance ............... 58 SECTION 8.03. Application of Trust Money ............. 59 SECTION 8.04. Repayment to Company ................... 60 SECTION 8.05. Indemnity for Government Obligations .......................... 60 SECTION 8.06. Reinstatement .......................... 60 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders ............. 61 SECTION 9.02. With Consent of Holders ................ 61 SECTION 9.03. Compliance with Trust Indenture Act .... 63 SECTION 9.04. Revocation and Effect of Consents and Waivers .......................... 63 4 Page ---- SECTION 9.05. Notation on or Exchange of Securities ........................... 63 SECTION 9.06. Trustee To Sign Amendments ............. 63 SECTION 9.07. Payment for Consent .................... 64 ARTICLE 10 GUARANTEES SECTION 10.01. Guarantees ............................. 64 SECTION 10.02. Limitation on Liability ................ 66 SECTION 10.03. Successors and Assigns ................. 66 SECTION 10.04. No Waiver .............................. 67 SECTION 10.05. Modification ........................... 67 SECTION 10.06. Release of Guarantor ................... 67 ARTICLE 11 SECURITY AGREEMENTS SECTION 11.01. Collateral and Security Agreements ..... 68 SECTION 11.02. Recording; Annual Opinions ............. 68 SECTION 11.03. Disposition of Collateral Without Release .............................. 69 SECTION 11.04. Release of Collateral .................. 71 SECTION 11.05. Permitted Releases Not To Impair Lien; Trust Indenture Act Requirements ......................... 72 SECTION 11.06. Suits To Protect the Mortgaged Collateral ........................... 72 SECTION 11.07. Purchaser Protected .................... 73 SECTION 11.08. Powers Exercisable by Receiver or Trustee .............................. 73 SECTION 11.09. Disposition of Obligations Received .... 73 SECTION 11.10. Determinations Relating to Collateral ........................... 74 SECTION 11.11. Release upon Termination of the Company's Obligations ................ 74 ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls ........... 75 SECTION 12.02. Notices ................................ 75 SECTION 12.03. Communication by Holders with Other Holders ............................. 76 SECTION 12.04. Certificate and Opinion as to Conditions Precedent ................ 76 5 Page ---- SECTION 12.05. Statements Required in Certificate or Opinion ........................... 76 SECTION 12.06. When Securities Disregarded ............ 76 SECTION 12.07. Rules by Trustee, Paying Agent and Registrar ........................... 77 SECTION 12.08. Legal Holidays ........................ 77 SECTION 12.09. Governing Law ......................... 77 SECTION 12.10. No Recourse Against Others ............ 77 SECTION 12.11. Successors ............................ 77 SECTION 12.12. Multiple Originals .................... 78 SECTION 12.13. Table of Contents; Headings ........... 78 SECTION 12.14. Agent for Service; Submission to Jurisdiction; Waiver of Immunities .......................... 78 Rule 144A/Regulation S Appendix Exhibit A - Form of Security CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1) .............................. 7.10 (a)(2) .............................. 7.10 (a)(3) .............................. N.A. (a)(4) .............................. N.A. (b) .............................. 7.08; 7.10 (c) .............................. N.A. 311(a) .............................. 7.11 (b) .............................. 7.11 (c) .............................. N.A. 312(a) .............................. 2.05 (b) .............................. 12.03 (c) .............................. 12.03 313(a) .............................. 7.06 (b)(1) .............................. N.A. (b)(2) .............................. 7.06 (c) .............................. 14.02 (d) .............................. 7.06 314(a) .............................. 4.02; 4.21; 12.02 (b) .............................. N.A. (c)(1) .............................. 12.04 (c)(2) .............................. 12.04 (c)(3) .............................. N.A. (d) .............................. N.A. (e) .............................. 14.05 (f) .............................. 4.21 315(a) .............................. 7.01 (b) .............................. 7.05; 12.02 (c) .............................. 7.01 (d) .............................. 7.01 (e) .............................. 6.11 316(a)(last sentence) .............................. 12.06 (a)(1)(A) .............................. 6.05 (a)(1)(B) .............................. 6.04 (a)(2) .............................. N.A. (b) .............................. 6.07 317(a)(1) .............................. 6.08 (a)(2) .............................. 6.09 (b) .............................. 2.04 318(a) .............................. 12.01 N.A. means Not Applicable. - ---------- Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. INDENTURE dated as of August 1, 1997, among NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (the "Company"), NAVIGATOR HOLDINGS PLC, as Isle of Man public limited company ("Holdings"), the guarantors listed on the signature pages hereto (the "Guarantors"), and THE CHASE MANHATTAN BANK, as Trustee (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's 12% Second Priority Ship Mortgage Notes Due 2007 (the "Initial Securities") and, if and when issued pursuant to a registered exchange for Initial Securities, the Company's 12% Second Priority Ship Mortgage Notes Due 2007 (the "Exchange Securities") and if and when issued pursuant to a private exchange for Initial Securities, the Company's 12% Second Priority Ship Mortgage Notes Due 2007 (the "Private Exchange Securities", together with the Exchange Securities and the Initial Securities, the "Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under Sections 4.05 and 4.08 only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. 2 "Allocated Portion of Interest Draw" means, with respect to an Interest Draw and a Vessel that has been accepted by the related Owner under the related Building Contract, an amount equal to the product of (a) the amount of such Interest Draw and (b) a fraction the numerator of which is one and the denominator of which is the number of Vessels that have been accepted by the related Owners as of the date of such Interest Draw. "Allocated Portion of Interest Draws for a Vessel" means, as of any date of determination and with respect to a Vessel, an amount equal to the aggregate principal amount of all Allocated Portion of Interest Draws for such Vessel as of such date of determination. "Allocated Principal Amount" means, when used with reference to the Securities and any Vessel, the following amounts: The quotient of (a) the difference between (i) the sum of the initial principal amount of the Securities and the initial principal amount of the First Priority Notes and (ii) all amounts applied to the principal thereof and (b) the difference between (i) five and (ii) the sum of (A) the number of Vessels that have been rejected by the Owners pursuant to the terms of the Building Contracts and (B) the number of Vessels released by the Collateral Agent from the lien of the related Mortgage. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Available Cash" means, as of any Available Cash Determination Date, an amount equal to the excess, if any, of (a) the amounts available in the Revenue Account after giving effect to the payments made therefrom on the related Interest Payment Date over (b) the Manager's Fee for the Vessels payable in the next succeeding Management Fee Payment Date. "Available Cash Determination Date" means, with respect to an Available Cash Payment Date, the close of business on the first Business Day of the month immediately preceding such Available Cash Payment Date. 3 "Available Cash Payment Date" means the first June 30 OR December 31 on or after which the First Priority Notes have been paid in full and each June 30 and December 31 thereafter so long as the Securities remain outstanding. "Board of Directors" means the Board of Directors of Holdings (or, if Holdings no longer controls the Company, the Company) or any committee thereof duly authorized to act on behalf of such Board. "Budgeted Monthly Operating Balance" means as of any date of determination the product of (i) $500,000 and (ii) the number of Vessels as to which the Delivery Date has occurred. "Builders" means Jiangnan Shipyard and China Shipbuilding Trading Company, Limited. "Building Contract" means any of the shipbuilding contracts for the Vessels between the Builders and Holdings, each dated as of February 4, 1997, as amended and restated as of June 27, 1997, and to be assigned by Holdings to the Owners on or before the Issue Date. "Building Contract Guarantee" means, with respect to each Building Contract, the guarantee on behalf of the Builders to be issued by the Export Import Bank of China. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York, or in the city of the corporate trust office of the Trustee, are authorized by law to close. "Capital Lease Obligations" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any 4 Preferred Stock, but excluding any debt securities convertible into such equity. "CGTC" means Cambridge Gas Transport Corporation, a Cayman Islands corporation, and its successors. "Change of Control" shall mean the occurrence of any of the following events: (i) prior to the first public offering of common stock of Holdings, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange act), directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company, whether as a result of issuance of securities of Holdings or the Company, any merger, consolidation, liquidation or dissolution of Holdings or the Company, any direct or indirect transfer of securities by Holdings or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent corporation); (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (ii) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors (for the purposes of this clause (ii), such other person shall be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other 5 person is the beneficial owner (as defined in this clause (ii)), directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent corporation and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent corporation); (iii) during any period of two consecutive years, individuals who at the beginning of such period consti tuted the board of directors of Holdings or the Company (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of Holdings or the Company was approved by a vote of 66-2/3% of the directors of Holdings or the Company, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for elec tion was previously so approved) cease for any reason to constitute a majority of the board of directors of Holdings or the Company, respectively, then in office; (iv) either CGTC or GEBAB ceases to be a shareholder of Holdings; or (v) prior to the expiration of the warranty period of the final Vessel delivered by the Builders and accepted by the related Owner, TGE (including its Affiliates) disposes of any of its shares in Holdings, except to an Affiliate of TGE. "Charters" is defined to mean each charter party and contract of affreightment between an Owner and any third party with respect to a Vessel, and as the same may be amended from time to time. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" means all the collateral described in the Security Agreements. "Collateral Agent" means United States Trust Company of New York, as collateral agent under the Intercreditor Agreement, and its successors. 6 "Commercial Management Agreement" means the Master Commercial Marketing and Services Agreement between Holdings and GEBAB dated as of February 28, 1997, to be assigned by Holdings to the Manager on behalf of the Owners on or before the Issue Date. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "Compulsory Acquisition" means requisition for title or other compulsory acquisition of any Vessel (otherwise than by requisition for hire), capture, seizure, condemnation, destruction, detention or confiscation of such Vessel by any Governmental Authority or by persons acting or purporting to act on behalf of any Governmental Authority. "Consolidated Net Worth" means, with respect to any Person, the total of the amounts shown on the balance sheet of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of such Person ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of such Person plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "Contractual Delivery Date" means with respect to a Vessel, the date specified in the relating Building Contract for the delivery of such Vessel. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Delivery Date" means, with respect to a Vessel, the date such Vessel is accepted by the related Owner pursuant to the terms of the related Building Contract. 7 "Designated Owners" means CGTC, GEBAB, Xenon Shipping AS, a Norwegian corporation, and any Person actually controlled by any of the foregoing. "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable or subject to required purchase at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the Stated Maturity of the Securities. "Draw Amount" means the amount drawn under an Interest Draw or a Working Capital Draw, as the case may be. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "First Priority Notes" means the Company's 10 1/2% First Priority Ship Mortgage Notes Due 2007 (including any notes issued under the First Priority Note Indenture in exchange therefor in an exchange offer). "First Priority Note Indenture" means the indenture dated as of the date of this Indenture, among the Company, the Guarantors and the First Priority Note Trustee. "First Priority Note Interest Amount" means, as of any Interest Payment Date, the amount of interest, determined by the First Priority Note Trustee, that is accrued and unpaid on the Allocated Principal Amount of the First Priority Notes as of such Interest Payment Date in respect of each Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED, HOWEVER, that the First Priority Note Interest Amount on the Allocated Principal Amount of First Priority Notes in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "First Priority Note Interest Shortfall" means, with respect to each Interest Payment Date, the excess of (i) the First Priority Note Interest Amount in respect of such Interest Payment Date over (ii) the amount available in 8 the Revenue Account (after giving effect to distribution of amounts pursuant to Section 3.3(i) - (iii) of the Intercreditor Agreement on such Interest Payment Date) as of the opening of business on the third Business Day prior to such Interest Payment Date. "First Priority Note Trustee" means United States Trust Company of New York, a New York banking corporation, and its successors. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Sections 13 or 15(d) of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GEBAB" means Gesellschaft Fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH, a German corporation. "Governmental Approval" means any authorization, consent, approval, license, franchise, lease, ruling, permit, tariff, rate, certification, exemption, filing or registration by or with any Governmental Authority relating to the ownership of the Collateral or to the execution, delivery or performance of this Indenture, the First Priority Note Indenture or any Security Agreement. "Governmental Authority" means the United States federal or any foreign government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any other governmental entity with authority over an Owner or the operation of a Vessel. "guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to 9 purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "guarantee" used as a verb has a corresponding meaning. "Guarantee Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a successor Owner becomes subject to the applicable terms and conditions of this Indenture. "Guarantor" means each Owner. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Holdings" means Navigator Holdings PLC, an Isle of Man public limited company, and its successors. "Holdings Pledge" means the pledge by Holdings to the Collateral Agent, for the benefit of the Securityholders, the holders of the First Priority Notes, the Letter of Credit Issuer, the participating banks party to the Letter of Credit Reimbursement Agreement, the Trustee and the First Priority Trustee, all the Capital Stock of the Company. "Incidental Asset" is defined to mean any equipment, outfit, furniture, furnishings, appliances, spare or replacement parts or stores owned by the Company or an Owner that have become obsolete or unfit for use or no longer useful, necessary or profitable in the conduct of the business of the Company or such Owner, as the case may be. In no event shall the term "Incidental Asset" include a Vessel. "Incur" means issue, assume, guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, 10 consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person on any date of determination (without duplication): (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable (other than a written commitment made on or prior to the Issue Date); (ii) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such Person for the reim bursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day follow ing payment on the letter of credit); (v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, the liquidation preference with respect to, any Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons and all 11 dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "Indenture" means this Indenture as amended or supplemented from time to time. "Initial Letter of Credit Amount for Interest Draws" shall mean $45.5 million. "Insurance Policies" means with respect to a Vessel, those policies of insurance required to be maintained pursuant to the terms of the related Mortgage. "Insurance Proceeds" means the proceeds of the Insurance Policies. "Intercompany Note" means the promissory note, dated the Issue Date, from the Owners evidencing the loans made by the Company to the Owners on the Issue Date as well as any amounts loaned from time to time by the Company to an Owner to fund working capital requirements of such Owner's Vessel. "Intercreditor Agreement" means the Collateral Agency and Intercreditor Agreement, dated as of the date of this Indenture, among the Company, the Owners, Holdings, the Trustee, the First Priority Note Trustee, the Letter of Credit Issuer and the Collateral Agent, as the same may be amended from time to time. "Interest Amount" means, as of any Interest Payment Date, the amount of interest, determined by the Trustee, that is accrued and unpaid on the Allocated Principal Amount of the Securities as of such Interest 12 Payment Date in respect each Vessel as to which the Delivery Date has occurred as of such Interest Payment Date; PROVIDED, HOWEVER, that the Interest Amount on the Allocated Principal Amount of Securities in respect of a Vessel for the period prior to the Delivery Date of such Vessel shall be zero. "Interest Payment Date" means any date on which interest is payable on the Securities or the First Priority Notes. "Interest Shortfall" means, with respect to each Interest Payment Date, the excess of (i) the Interest Amount in respect of such Interest Payment Date over (ii) the amount available in the Revenue Account (after giving effect to the distributions described in Section 3.3(i) and (ii) of the Intercreditor Agreement to be made on such Interest Payment Date) as of the opening of business on the third Business Day prior to such Interest Payment Date. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. The payments of the Purchase Price shall not be deemed to be an Investment. "Issue Date" means the date on which the Securities are originally issued. "Issue of One Debenture" means the issue of one debenture, dated as of the Issue Date, between each Owner and the Collateral Agent wherein such Owner grants to the Collateral Agent a security interest in and to all of such Owner's now owned and hereafter acquired property. "Letter of Credit" means the letter of credit issued pursuant to the Letter of Credit Reimbursement Agreement. "Letter of Credit Issuer" means Credit Suisse First Boston acting through its London branch, as funding bank and as administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement. 13 "Letter of Credit Reimbursement Agreement" means the agreement dated as of the Issue Date among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Company, Holdings and each of the Owners. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Management Agreement" means the management agreement to be entered into among Navigator Gas Management Limited, the Company, Holdings and each of the Owners. "Manager" shall mean the company that manages the Vessels, which initially shall be Navigator Gas Management Limited. "Manager's Fee" means, with respect to each Vessel, (a) prior to the Delivery Date thereof, an amount equal to $30,000 per annum, and (b) from and after the Delivery Date thereof, an amount equal to $120,000 per annum. "Maximum Amount Available under the Letter of Credit" means, as of each date of determination, (1) the Initial Letter of Credit Amount for Interest Draws less (2) all Interest Draws made on the Letter of Credit to such date of determination plus (3) all amounts reimbursed to the Letter of Credit Issuer in repayment of Interest Draws, other than in respect of interest on outstanding Interest Draws, to such date of determination. "Moody's" means Moody's Investor Service, Inc. and its successors. "Mortgage" means the mortgage granted to the Collateral Agent by each Owner on its related Vessel to secure the obligations of such Owner under its Guarantee. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secre tary of the Company. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from 14 legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Owners" shall mean: Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company, and their respective successors. "Performance Bond" means, with respect to the Building Contracts, the performance bonds issued by The Export Import Bank of China, on behalf of the Builders, and Generale de Banque, on behalf of TGE. "Permitted Holder" means CGTC, Xenon and GEBAB and their Related Parties. "Permitted Investment" means an Investment by the Company or any Owner in (i) the Company or an Owner; (ii) Temporary Cash Investments; (iii) receivables owing to the Company or any Owner if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Company or any such Owner deems reasonable under the circumstances; (iv) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; and (v) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Owner or in satisfaction of judgments. "Permitted Liens" means with respect to any Person, (a) Liens securing obligations under this Indenture, the First Priority Note Indenture, the Securities, the First Priority Notes, the Letter of Credit Reimbursement Agreement and the Security Agreements; (b) other Liens existing or securing Indebtedness existing (or for which a written commitment has been made on or prior to the Issue Date) on the Issue Date; (c) Liens granted after the Issue Date in favor of the Holders; and in the case of an Owner, the following additional Liens: (d) Liens for crews' wages and pledges or deposits by such Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or 15 deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business; (e) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (f) Liens for property taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate proceedings; (g) Liens in favor of issuer's of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that such letters of credit do not constitute Indebtedness; (h) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (i) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; PROVIDED, HOWEVER, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by such Person or any of its Subsidiaries; (j) any Lien which arises in favor of an unpaid seller in respect of goods, plant or equipment sold and delivered to the Company in the ordinary course of business until payment of the purchase price for such goods or plant or equipment or any other goods, plant or equipment previously sold and delivered by that seller (except to the extent that such Lien secures Indebtedness or arises otherwise than due to deferment of payment of purchase price); (k) any Lien or pledge created or subsisting in the ordinary course of business over documents of title, insurance policies or sale contracts in relation to commercial goods to secure the purchase price thereof; (l) charters, leases or subleases granted to others in the 16 ordinary course of business that are subject to the relevant Mortgage and that do not materially interfere with the ordinary course of business of the Company and the Owners, taken as a whole; (m) (A) Liens in favor of the Company or any Owner, (B) Liens arising from the rendering of a final judgment or order against the Company or any Owner that does not give rise to an Event of Default and (C) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and products and proceeds thereof; (n) Liens in favor of customers and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods; and (o) Liens for salvage. For purposes of this definition, the term "Indebtedness" shall be deemed to include interest on such Indebtedness. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "principal" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time. "Public Equity Offering" means an underwritten primary public offering of common stock of Holdings pursuant to an effective registration statement under the Securities Act. "Public Market" means any time after (x) a Public Equity Offering has been consummated and (y) at least 15% of the total issued and outstanding common stock (being ordinary shares) of Holdings has been distributed by means of an effective registration statement under the Securities Act or is eligible for distribution pursuant to Rule 144(k) under the Securities Act. 17 "Purchase Price" means, with respect to a Vessel, the amount specified under the related Building Contract as the total purchase price to be paid to the Builders for such Vessel. "Rating Agencies" means S&P, DCR and Moody's, or if S&P, DCR or Moody's or all of them shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) which shall be substituted for S&P, DCR or Moody's or all of them, as the case may be. "Refund Amount" means with respect to a Vessel and the related Building Contract, the amount payable by the Builders in the event such Building Contract is rescinded by the related Owner because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel) or is otherwise terminated. "Registration Jurisdiction" means the Republic of Liberia or such other jurisdiction under whose laws a Vessel is permitted to be registered under the terms and subject to the conditions of this Indenture. "Related Business" means any business related, ancillary or complementary to the businesses of the Company and the Owners on the Issue Date. "Related Party" with respect to a Permitted Holder means (A) any controlling stockholder, 80% (or more) owned subsidiary, or spouse or immediate family member (in the case of an individual) of the foregoing or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such other persons referred to in the immediately preceding clause (A). "Rescission Amount" means, as of any date of determination and with respect to a Vessel, the sum of (a) the Allocated Principal Amount of the Securities and the Allocated Principal Amount of the First Priority Notes, in each case for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the redemption of the Securities and the First Priority Notes, (c) any and all Manager's Fees owing to the Manager in respect of such Vessel, (d) an amount equal to the amounts of all Working 18 Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Company with respect thereto and (e) any cost incurred by the Collateral Agent in connection with the related redemption. "Restricted Payment" with respect to any Person means (i) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of an Owner held by any Affiliate of the Company (other than an Owner), including the exercise of any option to exchange any Capital Stock, (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) the making of any Investment in any Person (other than a Permitted Investment). "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or an Owner transfers such property to a Person and the Company or an Owner leases it from such Person. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Company, Inc. and its successors. "SEC" means the Securities and Exchange Commission. "Securities" means the Securities issued under this Indenture. "Securities Act" means the Securities Act of 1933. "Security Agreements" means the Intercreditor Agreement, the Mortgages, each Issue of One Debenture and the Assignments of Earnings and Insurances. 19 "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities pursuant to a written agreement to that effect. "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Taxes" means any present or future taxes, duties, assessments or governmental charges of whatever nature (or interest on any taxes, duties, assessments or other governmental charges of whatever nature) imposed or levied by or on behalf of, or within, the Isle of Man (or the jurisdiction of incorporation of any successor of the Company or any of the Owners) or any political subdivision or taxing authority thereof or therein. "Technical Management Agreement" means the Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement between GEBAB and Holdings, on behalf of the Owners, dated as of February 28, 1997, to be assigned by Holdings to the Manager, on behalf of the Owners, on or before the Issue Date. "Technical Supervision Agreement" means the Agreement on Contract for Technical Matters among GEBAB, Holdings, on behalf of the Owners, and the Builders dated as of February 28, 1997, to be assigned by Holdings to the Manager on behalf of the Owners on or before the Issue Date. "Temporary Cash Investments" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof; (ii) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust issuer which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust issuer has capital, surplus and 20 undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor; (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above; (iv) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's, "A-1" (or higher) according to S&P or "D-1" (or higher) according to DCR; (v) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P, Moody's or DCR and (vi) guaranteed investment contracts, investment agreements or similar agreements initially rated "A" by S&P, Moody's or DCR that are treated as Indebtedness for United States federal income tax purposes. For purposes of determining whether a Temporary Cash Investment matures on or before the next succeeding Interest Payment Date, each payment received under a Temporary Cash Investment described in clause (vi) above will be considered to be the maturity of such Temporary Cash Investment. A guaranteed investment contract, investment agreement or similar agreement that constitutes a senior unsecured long-term debt obligation of a Person shall be deemed to have the same rating as such person's other senior unsecured long-term debt obligations, if any, that are rated by a Rating Agency. "TGE" means Tractebel Gas Engineering GmbH, and its successors and assigns. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture. "Total Loss" means, with respect to a Vessel that has been accepted by an Owner, either (a) actual or constructive or compromised or arranged total loss of the 21 Vessel, (b) Compulsory Acquisition of the Vessel or (c) a requisition by a Governmental Authority for hire of the Vessel for a period in excess of 180 days. Any actual loss of the Vessel shall be deemed to have occurred at 1200 hours Greenwich Mean Time ("GMT") on the actual date on which the Vessel was lost or in the event of the date of the loss being unknown then the actual total loss shall be deemed to have occurred at 1200 hours GMT on the day next following the day on which the Vessel was last heard from. A constructive total loss shall be deemed to have occurred at 1200 hours GMT on the earliest of: (1) the date that notice of abandonment of the Vessel is given to the insurers, provided a claim for total loss is admitted by the insurers, (2) if the insurers do not admit such a claim, at the date and time GMT at which a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred, or (3) the date that a report is rendered by one or more experts in marine surveying and vessel valuation concluding that salvage, repair and associated costs in restoring the Vessel to the condition specified in each Mortgage exceed the Vessel's fair market value in sound condition. "Total Loss Payment" means, as of any date of determination and with respect to a Vessel, the sum of (a) the Allocated Principal Amount of the Securities and the Allocated Principal Amount of the First Priority Notes, in each case for such Vessel as of such date, (b) all accrued and unpaid interest thereon to the date of the redemption of the Securities and of the First Priority Notes, (c) any and all premiums payable with respect to such redemption, (d) any and all Manager's Fees owing to the Manager in respect of such Vessel, (e) an amount equal to the amounts of all Working Capital Draws made with respect to such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto and (f) an amount equal to the Allocated Portion of all Interest Draws for such Vessel, together with all amounts owing to the Letter of Credit Issuer with respect thereto. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "UK Lease" means an arrangement pursuant to which (i) an Owner enters into either a hire purchase agreement or 22 a conditional sale contract with a UK Lessor providing for such UK Lessor to pay a purchase price for the related Vessel and granting such UK Lessor a right of possession in respect of such Vessel, (ii) such UK Lessor charters such Vessel to such Owner under a bareboat charter for a term ending after the maturity date of the Securities and (iii) such Owner's monetary obligations with respect to such charter are effectively satisfied by depositing such purchase price in a defeasance trust; PROVIDED, HOWEVER, that the creation of any such UK Lease shall not result in the lowering of any ratings obtained with respect to the Securities. "UK Lessor" means a leasing subsidiary of a United Kingdom clearing bank. "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "U.S. Government Obligations" means direct obliga tions (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the Company's option. "Vessel" means a Vessel built pursuant to a Building Contract. "Vessel Purchase Installment Date" means, with respect to a Building Contract, each date on which an installment of the Purchase Price is payable by the related Owner pursuant to the terms of such Building Contract. "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Xenon" means Xenon Shipping Inc., a Norwegian corporation, and its successors. 23 SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section ---- ------- "Affiliate Transaction" ................ 4.08 "Appendix" ............................. 2.01 "Bankruptcy Law" ....................... 6.01 "covenant defeasance option" ........... 8.01(b) "Custodian" ............................ 6.01 "Event of Default" ..................... 6.01 "legal defeasance option" .............. 8.01(b) "Legal Holiday" ........................ 12.08 "Obligations" ...... ................... 10.01 "Paying Agent" ......................... 2.03 "Purchase Date" ........................ 4.18(c) "Registrar"............................. 2.03 "Release Notice"........................ 11.04 "Successor Company" .................... 5.01(a) "Successor Guarantor" .................. 5.01(b) SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC; "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 24 SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limita tion; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Indebtedness secured by a Lien merely by virtue of its nature as unsecured Indebtedness; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP and accretion of principal on such security shall be deemed to be the Incurrence of Indebtedness; (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemp tion or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; (9) all references to the date the Securities were originally issued shall refer to the date the Initial Securities were originally issued; and (10) whenever there is mentioned in this Indenture or the Security Agreements the payment of the principal of or any premium or interest on, or in respect of, any Security, any payment pursuant to the Guarantees or the net proceeds received from the Company or a Guarantor on the sale or exchange of any Security, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in Section 4.17 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to Section 4.17. 25 ARTICLE 2 THE SECURITIES SECTION 2.01. FORM AND DATING. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix") which is hereby incorporated in and expressly made part of this Indenture. The Initial Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in the Appendix and Exhibit A are part of the terms of this Indenture. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Securities for the Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenti cates the Security, the Security shall be valid neverthe less. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be con clusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and deliver Securities for original issue upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated. The aggregate principal amount of Securities outstanding at any 26 time may not exceed that amount except as provided in Section 2.06. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appoint ment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authen tication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Secur ities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any addi tional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provi sions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Regis trar or Paying Agent or to notify the Trustee as provided in the previous sentence, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securi ties. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying 27 Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably prac ticable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. REPLACEMENT SECURITIES. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.07. OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section as not outstanding. A Security does not cease to be outstand ing because the Company or an Affiliate of the Company holds the Security. 28 If a Security is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.08. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities. SECTION 2.09. CANCELATION. The Company at any time may deliver Securities to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record reten tion requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancelation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancelation. SECTION 2.10. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Securityholder a notice that states the special record date, 29 the payment date and the amount of defaulted interest to be paid. SECTION 2.11. CUSIP NUMBERS. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities or is required to redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to which the redemption will occur. If the Company is required to redeem Securities pursuant to paragraph 6 of the Securities, it may reduce the principal amount of Securities required to be redeemed to the extent it is permitted a credit by the terms of the Securities and it notifies the Trustee of the amount of the credit and the basis for it. If the reduction is based on a credit for redeemed or canceled Securities that the Company has not previously delivered to the Trustee for cancelation, it shall deliver such Securities with the notice. The Company shall give each notice to the Trustee provided for in this Section at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the condi tions herein. SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies 30 with applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a date for redemp tion of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price or the method of calculating such redemption price pursuant to this Indenture; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemp tion price; (5) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed; (6) that, unless the Company defaults in making such redemption payment, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; (7) the paragraph of the Securities pursuant to which the Securities called for redemption are being redeemed; and 31 (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surren der to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued inter est on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancelation. SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Secur ity surrendered. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due. 32 The Company shall pay interest on overdue princi pal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. SEC REPORTS. Whether or not required by the rules and regulations of the SEC, Holdings shall furnish to the Securityholders (i) all annual and quarterly financial information that would be required to be contained in a filing with the SEC on Forms 20-F and 10-Q if Holdings were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual financial information, a report thereon by Holdings' certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if Holdings were required to file such reports; PROVIDED, HOWEVER, that (x) such quarterly financial information shall be furnished within 60 days following the end of each such fiscal quarter of Holdings (provided that the initial quarterly information shall be furnished within 75 days following the end of the most recently completed fiscal quarter ending prior to the Issue Date) and (y) such annual financial information shall be furnished within 120 days following the end of the fiscal year of Holdings. In addition, whether or not required by the rules and regulations of the SEC, Holdings will file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such filing). In addition, Holdings shall furnish to the Securityholders and to prospective investors, upon the requests of such Securityholders, any information required to be delivered pursuant to Rule 144A (d)(4) under the Securities Act so long as the Securities are not freely transferable under the Securities Act. SECTION 4.03. LIMITATION ON INDEBTEDNESS. The Company shall not Incur, directly or indirectly, any Indebtedness, except that the Company may Incur any or all of the following Indebtedness: (1) the Securities and the First Priority Notes; and (2) Indebtedness Incurred under the Letter of Credit Reimbursement Agreement and under the Security Agreements. 33 SECTION 4.04. LIMITATION ON INDEBTEDNESS OF OWNERS. (a) The Company shall not permit any Owner to Incur, directly or indirectly, any Indebtedness except that an Owner may Incur the following Indebtedness: (1) Guarantees of the Securities and the First Priority Notes, the Company's obligations under the Letter of Credit Reimbursement Agreement and any Indebtedness Incurred under the Security Agreements; (2) the Intercompany Note; and (3) Attributable Debt in respect of a UK Lease; PROVIDED, HOWEVER, that prior to such Incurrence, the Company shall have delivered to the Trustee written confirmation from the Rating Agencies that the entry into such UK Lease will not result in a downgrading (or possible downgrading) of the Securities. SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS. The Company shall not, and shall not permit any Owner, directly or indirectly, to make a Restricted Payment. SECTION 4.06. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM OWNERS. The Company shall not, and shall not permit any Owner to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Owner to (a) pay dividends or make any other distributions on its Capital Stock to the Company or another Owner or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date. SECTION 4.07. LIMITATION ON ASSET SALES. The Company shall not, and shall not permit any Owner to, sell, assign, convey, transfer or otherwise dispose of a Vessel or any other portion of the Collateral, except pursuant to the Security Agreements or a UK Lease and except sales of Incidental Assets. SECTION 4.08. LIMITATION ON AFFILIATE TRANSACTIONS. (a) Except for payments under the Building Contract which the Builders paid to TGE or which the Builders have directed to be paid directly to TGE, the Company shall not, and shall not permit any Owner to, enter into or permit to exist any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements 34 or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof (1) are no less favorable to the Company or such Owner than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction involves an amount in excess of $1,000,000, (i) are set forth in writing and (ii) have been approved by a majority of the members of the Board of Directors having no personal stake in such Affiliate Transaction and (3) if such Affiliate Transaction involves an amount in excess of $5,000,000, have been determined by a reasonably appropriate independent qualified appraiser given the size and nature of the transaction to be fair, from a financial standpoint, to the Company and the Owners. (b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any Restricted Payment permitted to be paid pursuant to Section 4.05, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options, stock ownership and other employee benefit plans approved by the Board of Directors, (iii) the grant of stock options or similar rights to employees and directors of Holdings or the Company pursuant to plans approved by the Board of Directors, (iv) fees paid to directors who are not employees of the Company or the Owners, (v) any Affiliate Transaction between the Company and an Owner or between Owners, (vi) the performance by the Company and the Owners of their obligations under the Management Agreement and, in the case of the Owners, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement, in each case in the form in effect on the Issue Date, and (vii) certain payments to be made to GEBAB, TGE and Xenon on the Issue Date. SECTION 4.09. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF OWNERS. The Company shall not sell or otherwise dispose of any Capital Stock of an Owner, and shall not permit any such Owner, directly or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock except (i) to the Company or another Owner, or (ii) directors' qualifying shares. SECTION 4.10. LIMITATION ON LIENS. The Company shall not, and shall not permit any Owner to, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties (including Capital Stock 35 of an Owner), whether owned at the Issue Date or thereafter acquired, other than Permitted Liens. SECTION 4.11. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Owner to, enter into any Sale/Leaseback Transaction, except for a UK Lease. SECTION 4.12. OFFERS TO PURCHASE WITH AVAILABLE CASH AND UPON A CHANGE OF CONTROL. (a) Commencing on the first Available Cash Payment Date and on each Available Cash Payment Date thereafter, the Company shall, to the extent of Available Cash on such Available Cash Payment Date, make an offer (each, an "Available Cash Offer") to each Holder of the Securities to purchase such Holder's Securities, in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right holders of record on the relevant record date to receive interest on the relevant Interest Payment Date), in accordance with the terms contemplated in Section 4.12(c); PROVIDED, HOWEVER, that the Company will not be required to make an Available Cash Offer if Available Cash on such Available Cash Payment Date is less than $1.0 million. (b) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date), in accordance with the terms contemplated in Section 4.12(c); PROVIDED that the Company shall purchase any and all First Priority Notes validly tendered pursuant to a change of control offer made pursuant to the First Priority Note Indenture prior to purchasing any Securities validly tendered pursuant to such Change of Control Offer. (c) On the next succeeding Business Day after the Available Cash Determination Date with respect to an Available Cash Offer and within 30 days after the occurrence of a Change of Control, the Company will be required to provide, by mail (first class, prepaid) written notice to the Trustee and each Holder stating that: (i) Available Cash is expected to be available on the next succeeding Available Cash Payment Date or a Change of Control has occurred, as applicable; (ii) an Available Cash Offer is being made and Securities of the applicable series having an aggregate principal amount equal to Available Cash divided 36 by 1.02 (the "Maximum Principal Amount") will be accepted for payment or a Change of Control Offer is being made and all Securities validly tendered will be accepted for payment, as applicable (subject, as applicable, to the limitations on the purchase of Securities set forth in Section 4.12(a) and (b)); (iii) the purchase price and date of purchase (which shall be the Available Cash Date, in the case of an Available Cash Offer, or which shall be a Business Day not less than 30 days nor more than 60 days from the date on which such Change of Control notice is mailed in the case of a Change of Control Offer); (iv) any Security not tendered will continue to accrue interest pursuant to its terms; (v) any Security accepted for payment pursuant to the Available Cash Offer or the Change of Control Offer, as applicable, shall cease to accrue interest on and after the purchase payment date therefor (in the case of a Change of Control Offer, the "Change of Control Payment Date" and, together with the Available Cash Offer, the "Purchase Payment Date"), unless the Company defaults on such payment; (vi) Holders of Securities electing to have any Security or portion thereof purchased pursuant to an Available Cash Offer or Change of Control Offer will be required, prior to the close of business on the Business Day immediately preceding the applicable Purchase Payment Date, to surrender such Security to the Trustee at the address specified in the notice, together with a completed form entitled "Option of the Holder to Elect Purchase" on the reverse side of such Security; (vii) Holders of Securities will be entitled to withdraw their election if the Trustee receives, not later than the close of business on the third Business Day immediately preceding the applicable Purchase Payment Date, a telegraph, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Securities delivered for purchase, and a statement that such Holder is withdrawing his election to have such Securities purchased; and (viii) Holders whose Securities are being purchased in part will receive new Securities of the same series and in principal amount equal to the unpurchased portion of the Securities surrendered; PROVIDED, HOWEVER, that each Security purchased and each new Security issued shall be in a principal amount of $1,000 or integral multiples thereof. (d) On the applicable Purchase Payment Date, the Company will be required to: (i) accept for payment all Securities or portions thereof tendered pursuant to the Available Cash Offer or Change of Control Offer, as applicable (subject, as applicable, to the limitations on the purchase of Securities set forth in Section 4.12(a) and (b)); (ii) deposit with the Trustee funds sufficient to pay 37 the purchase price of all Securities of the applicable series or portions thereof so accepted, on a pro rata basis, in the proportion which the amount payable to each Holder of Securities bears to the aggregate amount payable in respect of all outstanding Securities; and (iii) deliver or cause to be delivered to the Trustee, all Securities or potions thereof so accepted together with an officers' certificate specifying the Securities or portions thereof accepted for payment. The Trustee shall promptly mail, to the Holders of Securities so accepted, payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new Security equal in principal amount to any unpurchased portion of the Securities surrendered; PROVIDED, HOWEVER, that each Security purchased and each new Security issued shall be in a principal amount of $1,000 or integral multiples thereof; PROVIDED FURTHER, HOWEVER, that with respect to an Available Cash Offer, if the aggregate amount of Securities tendered exceeds the Maximum Principal Amount, then the Trustee shall select Securities to be purchased ratably from each Holder that tendered Securities such that the ratio of the principal amount of the Securities to be purchased from each Holder that tendered Securities to the aggregate principal amount of Securities tendered by such Holder shall, as nearly as practicable and subject to rounding, equal the ratio of the Maximum Principal Amount to the aggregate principal amount of the Securities tendered with respect to such Available Cash Offer. The Company will notify the Holders of the results of an Available Cash Offer or Change of Control on or as soon as practicable after the applicable Purchase Payment Date. (e) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws and regulations in connection with the repurchase of Securities pursuant to this Section 4.12. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.12, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof. SECTION 4.13. LIMITATION ON BUSINESS ACTIVITIES. The Company shall not conduct any trade or business other than hold Investments in the Owners. The Company shall not permit any Owner to conduct any trade or business other than the ownership and operation of its respective Vessel and holding Investments in the Company or one or more other Owners. 38 SECTION 4.14. IMPAIRMENT OF SECURITY INTEREST. The Company shall not, and shall not permit any Owner to, take or knowingly or negligently omit to take, any action which action or omission might or would have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Trustee and the Securityholders, and the Company shall not, and shall not permit any Owner to, grant to any Person other than the Collateral Agent, for the benefit of the Trustee, the First Priority Note Trustee, the Letter of Credit Issuer and the holders of the Securities and of the First Priority Notes, any interest whatsoever in any of the Collateral. SECTION 4.15. AMENDMENTS TO SECURITY AGREEMENTS. The Company shall not, and shall not permit any Owner to, amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Agreements in any way that would be adverse to the holders of the Securities. SECTION 4.16. LIMITATION ON ACTIVITIES OF HOLDINGS. (a) Holdings shall not Incur, directly or indirectly, any Indebtedness other than the Holdings Pledge. (b) Holdings shall at all times be the holder of record of, and shall be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of, 100% of the outstanding Capital Stock of the Company. (c) Holdings shall not engage in any trade or business or hold any assets or make any Investments (other than, in each case, the ownership of the Capital Stock of the Company). (d) Holdings shall not, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties, other than the Holdings Pledge. (e) Holdings shall not consolidate with or merge with or into any Person. SECTION 4.17. ADDITIONAL AMOUNTS. The Company and the Guarantors shall make all payments of, or in respect of, principal of and interest on the Securities, and all payments pursuant to the Guarantees, without withholding or deduction for, or on account of any Taxes, unless such Taxes are required by the Isle of Man or the jurisdiction of incorporation of any successor to the Company or any of the Owners (each a "Successor Jurisdiction"), as the case may be, or any such authority to be withheld or deducted. In 39 the event such Taxes are to be withheld or deducted, the Company, the relevant Guarantor or any successor, as the case may be, will pay such additional amounts of, or in respect of, principal and interest or with respect to payments pursuant to the Guarantees ("Additional Amounts") as may be necessary so that the net amount received by each Holder (including Additional Amounts) after such withholding or deduction will not be less than the amounts that the Holder would have received if such Taxes had not been withheld or deducted, except that no Additional Amounts shall be so payable for or on account of: (1) Taxes that would not have been imposed but for (a) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership or corporation) and the Isle of Man or any Successor Jurisdiction (including any territory or political subdivision of the foregoing), as the case may be, including such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a national, domiciliary or resident of or treated as a resident thereof or being or having been present or engaged in a trade or business therein or having or having had a permanent establishment therein; (b) the presentation of such Security for payment in the Isle of Man or any Successor Jurisdiction, as the case may be, or any of their respective territories or political subdivisions, unless such Security could not have been presented for payment elsewhere; or (c) the presentation of such Security more than 30 days after the date on which the payment in respect of such Security became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of 30 days; (2) any estate, inheritance, gift, sale, transfer, personal property of similar tax, assessment or other governmental charge; (3) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure of the Holder or beneficial owner of a Security to comply with a 40 request of the Company or any of the Guarantors, as the case may be, addressed to the Holder (a) to provide reasonable information concerning the nationality, residence or identity of the Holder or such beneficial owner or (b) to make any reasonable declaration or other similar claim or satisfy any reasonable information or reporting requirement, which, in the case of (a) or (b), is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or governmental charge; or (4) any combination of clauses (1), (2) and (3); nor shall Additional Amounts be paid with respect to any payment of the principal of or any premium or interest on any such Security, or payment pursuant to the Guarantees, to any Holder (including a fiduciary or partnership) to the extent that the beneficial owner would not have been entitled to such Additional Amounts had it been the Holder of the Security. The Company or the relevant Guarantors, as the case may be, will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Company or the relevant Guarantors, as the case may be, will furnish to Holders of Securities that are outstanding on the date of the withholding, or deduction for or on account of Taxes, within 30 days after the date of the payment of any Taxes due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Company or the relevant Guarantors, as the case may be. The Company or the relevant Guarantors, as the case may be, shall pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery, enforcement or registration of the Securities or the Guarantees or any other document or instrument in relation thereto, or the receipt of any payments with respect to the Securities or Guarantees, excluding such taxes, charges or similar levies imposed by any jurisdiction outside of the Isle of Man, any Successor Jurisdiction or any jurisdiction in which a Paying Agent is located (except those resulting from or required to be paid in connection with, the enforcement of the Securities or the Guarantees or an other such document or instrument following the occurrence of any Event of Default), and the Company and the Guarantors hereby agree to indemnify the Holders for any such taxes paid by such Holders. 41 SECTION 4.18. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA ss. 314(a)(4). SECTION 4.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company and the Guarantors agree to execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. WHEN COMPANY AND OWNERS MAY MERGE OR TRANSFER ASSETS. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substan tially all its assets to, any Person, except in connection with the imposition of Additional Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under (a) the laws of the United States of America, any State thereof or the District of Columbia, (b) the laws of the Republic of Liberia, (c) the laws of the Isle of Man or (d) the laws of any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; (ii) the Successor Company (if not the Company) shall expressly assume all the obligations of the Company under the Intercreditor Agreement and the Letter of Credit Reimbursement Agreement; 42 (iii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iv) immediately after giving effect to such transaction, the Successor Company shall have Consolidated Net Worth in an amount that is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; (v) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and (vi) an opinion of counsel in the jurisdiction where the Successor Company is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Securities by the Successor Company to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes on income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Securities who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect of the acquisition, ownership or disposition of the Securities, including the receipt of interest, principal or premiums thereon, provided that such Holder does not use or hold, and is not deemed to use or hold the Securities in carrying on a business in the Applicable Jurisdiction. The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, but the predecessor Company in the case of a conveyance, transfer or lease shall not be released from the obligation to pay the principal of and interest on the Securities. (b) The Company shall not permit any Owner to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or series of transactions, all 43 or substantially all its assets to any Person, except in connection with the imposition of Addition Amounts and unless: (i) the resulting, surviving or transferee Person (the "Successor Owner") shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of (a) the United States of America, or any State thereof or the District of Columbia, (b) the Republic of Liberia, (c) the Isle of Man, or (d) any other jurisdiction which at the time is generally deemed acceptable by institutional lenders to the shipping industry, as determined in good faith by the Board of Directors, and the Successor Owner (if not such Owner) shall expressly assume, by a Guarantee Agreement, all the obligations of such Successor Owner, if any, under its Guarantee; (ii) the Successor Owner (if not the Owner) shall expressly assume, by the Guarantee Agreement, all the obligations of such Owner, if any, under its Guarantee of the Issuer's obligations under the Security Agreements and the Letter of Credit Reimbursement Agreement; (iii) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the Successor Owner as a result of such transaction as having been issued by such Successor Owner at the time of such transaction), no Default shall have occurred and be continuing; (iv) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guarantee Agreement, if any, complies with this Indenture; and (v) an opinion of counsel in the jurisdiction where the Successor Owner is domiciled (the "Applicable Jurisdiction") to the effect that (A) any payment of interest, principal or premiums (if any) on the Guarantee by the Successor Owner to a Holder will, after the consolidation, merger, conveyance, transfer or lease of assets be exempt from withholding tax in the Applicable Jurisdiction and (B) no other taxes on income (including taxable capital gains) will be payable under any tax law of the Applicable Jurisdiction by a Holder of the Securities who is or who is deemed to be a non-resident of the Applicable Jurisdiction in respect of the acquisition, ownership or disposition of the Securities, including the receipt of interest, principal or premiums thereon, PROVIDED that such Holder does not use or hold, and is not deemed to use or hold the Securities in carrying on a business in the Applicable Jurisdiction. 44 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company defaults in any payment of inter est on any Security when the same becomes due and payable, and such default continues for a period of 30 days; (2) the Company (i) defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon required purchase, upon declaration or otherwise, or (ii) fails to redeem or purchase Securities when required pursuant to this Indenture or the Securities following notice thereof properly given under this Indenture; (3) the Company fails to comply with Section 5.01; (4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 (other than a failure to purchase Securities when required under Section 4.12) and such failure continues for 30 days after the notice specified below; (5) the Company fails to comply with any of its agreements in the Securities, this Indenture (other than those referred to in clause (1), (2), (3) or (4) above) or the Security Agreements, or the occurrence of an event of default under a Mortgage, and such failure continues for 60 days after the notice specified below; (6) Indebtedness of Holdings, the Company or any Owner is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $5,000,000, or its foreign currency equivalent at the time; 45 (7) Holdings, the Company or any Owner pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custo dian of it or for any substantial part of its property; or (D) makes a general assignment for the bene fit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against Holdings, the Company or any Owner in an involuntary case; (B) appoints a Custodian of Holdings, the Company or any Owner or for any substantial part of its property; or (C) orders the winding up or liquidation of Holdings, the Company or any Owner; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (9) any judgment or decree for the payment of money in excess of $5,000,000 or its foreign currency equivalent at the time is entered against Holdings, the Company or any Owner, remains outstanding for a period of 60 days following the entry of such judgment or decree and is not discharged, waived or the execution thereof stayed within 10 days after the notice specified below; (10) a Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Guarantee) or a Guarantor denies or disaffirms its obligations under its Guarantee; 46 (11) the security interest under this Indenture or the Security Agreements shall, at any time, cease to be in full force and effect for any reason (other than by operation of this Indenture and the Security Agreements) other than the satisfaction in full of all obligations under this Indenture and discharge of this Indenture or any security interest created thereunder shall be declared invalid or unenforceable or the Company or any Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable; (12) the Designated Owners cease to own (and vote at their discretion) Voting Stock of Holdings representing at least a majority of the Voting Stock of Holdings and cease to own Capital Stock of Holdings entitling them to at least a majority of the equity interests in Holdings; or (13) Holdings fails to comply with Section 4.16 and such failure continues for 10 Business Days after notice of such non-compliance. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clauses (4), (5) or (9) is not an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (6), (10), (11) or (12) and any event which with the giving of notice or the lapse of time would become 47 an Event of Default under clause (4), (5) or (9), its status and what action the Company is taking or proposes to take with respect thereto. SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities then outstanding by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(7) or (8) with respect to the Company occurs, the principal of and interest on all the Securities shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquies cence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Securities by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security or (ii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. 48 When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceed ing for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemni fication satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. 49 SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Inden ture, the right of any Holder to receive payment of princi pal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Secu rities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disburse ments and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. PRIORITIES. If the Trustee col lects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securi ties for principal and interest, respectively; and THIRD: to the Company. 50 The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Inden ture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including rea sonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities. SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatso ever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and the Security Agreements and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. 51 (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Security Agreements and no implied covenants or obligations shall be read into this Indenture and the Security Agreements against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the require ments of this Indenture and the Security Agreements. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture and the Security Agreements. (c) The Trustee may not be relieved from liabil ity for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture and the Security Agreements that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 52 (g) No provision of this Indenture or of the Security Agreements shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture or of the Security Agreements relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genu ine and to have been signed or presented by the proper per son. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opin ion of Counsel or such other information as it may reasonably request. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Security Agreements and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it 53 would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Security Agreements or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture, the Security Agreements or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security (including payments pursuant to the redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 31 in each year, the Trustee shall mail to each Securityholder a brief report dated as of May 15 that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. (a) The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of fiduciaries or a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the 54 compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. (b) The Company shall indemnify the Trustee and hold it harmless from and against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under the Security Agreements. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct, negligence or bad faith. (c) In addition to, but without duplication of, its obligations under subsection (b) above, the Company shall indemnify and hold harmless the Trustee and the Securityholders from and against any and all losses, damages and expenses incurred by the Trustee and the Securityholders as a result of any environmental damage resulting from the operation of any Vessel. (d) To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. (e) The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(7) or (8) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Secur ities then outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; 55 (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appoint ment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. 56 In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIAss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIAss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are out standing if the requirements for such exclusion set forth in TIAss. 310(b)(1) are met. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shalL be subject to TIA ss. 311(a) to the extent indicated. SECTION 7.12. NOT ACTING IN INDIVIDUAL CAPACITY. Except as otherwise provided in this Indenture, the Trustee acts hereunder solely as trustee as herein provided and not in its individual capacity, and all persons, other than the Securityholders as provided in this Indenture, having any claim against the Trustee by reason of the transactions contemplated hereby shall, subject to priorities of payment as herein provided, look only to the Collateral for payment or satisfaction thereof. 57 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. DISCHARGE OF LIABILITY ON SECURI TIES; DEFEASANCE. (a) When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.06) for cancelation or (ii) all outstanding Securities have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Company irrevocably deposits with the Trustee funds suffi cient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.06), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture and the Security Agreements shall, subject to Sections 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture and the Security Agreements on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all its obligations under the Securities and this Indenture ("legal defeasance option") or (ii) its and Holdings obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 and the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9), 6.01(10), 6.01(11) and 6.01(12 (but, in the case of Sections 6.01(7) and (8), with respect only to Owners) and the limitations contained in Sections 5.01(a)(iv) and 5.01(b), each Guarantor's obligations under Articles 10 and 11 and under the Security Agreements ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) 6.01(9), 6.01(10), 6.01(11) and 6.01(12) (but, in the case of Sections 6.01(7) and (8), with respect only to Owners) or because of the failure of the Company to comply 58 with Section 5.01(a)(iv) or 5.01(b). If the Company exercises its legal defeasance option or its covenant defeasance option, each Guarantor shall be released from all its obligations with respect to its Guarantee and under the Security Agreements. Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may exercise its legal defeasance option or its covenant defeasance option only if: (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Secu rities to maturity or redemption, as the case may be; (2) the Company delivers to the Trustee a cer tificate from a nationally recognized firm of indepen dent accountants expressing their opinion that the pay ments of principal and interest when due and without reinvestment on the deposited U.S. Government Obliga tions plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (3) 123 days pass after the deposit is made and during the 123-day period no Default specified in Sections 6.01(7) or (8) with respect to the Company occurs which is continuing at the end of the period; (4) the deposit does not constitute a default under any other agreement binding on the Company; (5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a 59 regulated investment company under the Investment Company Act of 1940; (6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Security holders will not recognize income, gain or loss for Federal income tax purposes as a result of such cove nant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (8) the Company delivers to the Trustee a letter from each of the Rating Agencies and which such Rating Agency confirms that the exercise of such legal defeasance option or covenant defeasance options, as the case may be, will not result in a downgrading of the rating issued by such Rating Agency then in effect with respect to the Securities; and (9) the Company delivers to the Trustee an Offi cers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or U.S. Government Obliga tions deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. 60 Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGA TIONS. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restrain ing or otherwise prohibiting such application, the Company's and the Owners' obligations under this Indenture, the Security Agreements and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 61 ARTICLE 9 AMENDMENTS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, the Guarantors and the Trustee may amend this Indenture, the Security Agreements, any of the agreements referred to in the Intercreditor Agreement or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to comply with Article 5; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; PROVIDED, HOWEVER, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (4) to provide additional security for the Securities; (5) to add guarantees with respect to the Secur ities, including any Guarantees; (6) to add to the covenants of the Company or the Guarantors for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (7) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or (8) to make any change that does not adversely affect the rights of any Securityholder. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Guarantors and the Trustee may amend this 62 Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder affected thereby, an amendment may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the Stated Maturity of any Security; (4) reduce the premium payable upon the redemption of any Security or change the time at which any Secur ity may or shall be redeemed in accordance with Article 3; (5) make any Security payable in money other than that stated in the Security; (6) make any changes in the Security Agreements or in Articles 10 or 11 that adversely affect the Holders or would terminate the Lien of this Indenture or any Security Agreement on any property subject thereto or deprive the Holder of the security afforded by the Lien of this Indenture or the Security Agreements; (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section; or (8) make any change in any Guarantee that would adversely affect the Securityholders. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. 63 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture, the Security Agreements or the Securities shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subse quent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subse quent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Security holder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURI TIES. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. 64 If it does, the Trustee may but need not sign it. In sign ing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permit ted by this Indenture. SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. ARTICLE 10 GUARANTEES SECTION 10.01. GUARANTEES. Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption, by required repurchase or otherwise, and all other monetary obligations of the Company and the other Guarantors under this Indenture and the Securities and of the Owners under the Security Agreements and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company and the other Guarantors under this Indenture, the Security Agreements and the Securities (all the foregoing being hereinafter collectively called the "Obligations"). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article 10 notwithstanding any extension or renewal of any Obligation. Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Obligations. The obligations of each Guarantor hereunder shall not be affected by (a) the 65 failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Security Agreements, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Security Agreements, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (e) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Obligations; or (f) subject to Section 10.06, any change in the ownership of such Guarantor. Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations. Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Security Agreements, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by any Holder or the 66 Trustee upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, each Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of such Obligations, (ii) accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Obligations of the Company or the Guarantors to the Holders and the Trustee. Each Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section. SECTION 10.02. LIMITATION ON LIABILITY. Any term or provision of this Indenture to the contrary notwith standing, the maximum aggregate amount of the Obligations guaranteed hereunder by any Owner shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Owner, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 10.03. SUCCESSORS AND ASSIGNS. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall enure to the benefit of the 67 successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture, in the Security Agreements and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 10.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise. SECTION 10.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 10.06. RELEASE OF GUARANTOR. Upon the sale or other disposition (including by way of consolidation or merger) of an Owner or the sale or disposition of all or substantially all the assets of such Owner (in each case other than to the Company or an Affiliate of the Company), such Owner shall be deemed released from all obligations under this Article 10 without any further action required on the part of the Trustee or any Holder. At the request of the Company and upon receipt of an Officers' Certificate, the Trustee shall execute and deliver an appropriate instrument evidencing such release. 68 ARTICLE 11 SECURITY AGREEMENTS SECTION 11.01. COLLATERAL AND SECURITY AGREEMENTS. (a) To secure the due and punctual payment of the Obligations, the Company, the Owners and the Trustee have entered into the Intercreditor Agreement and have entered or, under the circumstances described in the Intercreditor Agreement, will enter, into the Security Agreements. The Trustee and the Company hereby acknowledge and agree that the Collateral Agent holds the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the terms of the Security Agreements. Each Holder, by accepting a Security, shall be deemed to have agreed to all the terms and provisions of the Security Agreements. (b) As among the Holders, the Collateral shall be held for the equal and ratable benefit of such holders without preference, priority or distinction of any thereof over any other. SECTION 11.02. RECORDING; ANNUAL OPINIONS. (a) The Company and the Owners will take or cause to be taken all action required to maintain, preserve and protect the Lien on the Collateral granted by the Security Agreements, including causing the Mortgages and any other Security Agreement, instruments of further assurance and all amendments or supplements thereto, to be promptly recorded, registered and filed and at all times to be kept recorded, registered and filed, and will execute and file statements and cause to be issued and filed statements, all in such manner and in such places and at such times as are prescribed in the Intercreditor Agreement or in this Indenture as may be required by law fully to preserve and protect the rights of the Holders and the Trustee under this Indenture and the Security Agreements to the Collateral. The Company and the Owners will from time to time promptly pay and discharge all recording or filing fees, charges and taxes relating to the filing or registration of this Indenture and the Security Agreements, any amendments thereto and any other instruments of further assurance. (b) The Company and the Owners shall furnish to the Trustee: (i) as soon as practicable after the execution and delivery of this Indenture, in any event not to exceed 69 30 days after the execution and delivery thereof, an Opinion of Counsel either (a) to the effect that, in the opinion of such Counsel, this Indenture and the assignment of the Collateral intended to be made by the Security Agreements and all other instruments of further assurance or assignment have been properly recorded, registered and filed (or proper provision has been made for such recording, registration and filing) to the extent necessary to make effective the Lien created by such Security Agreements and reciting the details of such action, and stating that as to the Lien created pursuant to such Security Agreements, such recordings, registerings and filings are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-register ings or refilings are necessary to maintain such notice (other than as stated in such opinion), and further stating that all statements have been executed and filed (or proper provision has been made for such filing) that are necessary fully to preserve and protect the rights of the Holders and the Trustee with respect to the Lien under this Indenture and such Security Agreements, or (b) to the effect that, in the opinion of such counsel, no such action is necessary to perfect such Lien; and (ii) within 30 days after August 1 in each year beginning with August 1, 1998, an Opinion of Counsel, dated as of such date, either (a) to the effect that, in the opinion of such counsel, such action has been taken with respect to the recordings, registerings, filings, re-recordings, re-registerings and re-filings of this Indenture, the Security Agreements and all financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Indenture and the Security Agreements and reciting with respect to such Lien the details of such action or referencing to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Holders and the Trustee hereunder and under the Security Agreements with respect to such Lien, or (b) to the effect that, in the opinion of such Counsel, no such action is necessary to maintain such Lien. SECTION 11.03. DISPOSITION OF COLLATERAL WITHOUT RELEASE. (a) Notwithstanding the provisions of Section 11.04, so long as no Event of Default shall have occurred 70 and be continuing, the Company and any Owner, as appropriate, may, without any release or consent by the Trustee: (i) sell or otherwise dispose of any machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other similar property subject to the Lien of this Indenture and the Security Agreements, which may have become worn out or obsolete, not exceeding in aggregate value in any one calendar year $1,000,000, or which may constitute an Incidental Asset, upon substituting for the same other machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other similar property not necessarily of the same character but of at least equal value to the Company as, and costing not less than the amount realized from, the Collateral disposed of, which shall forthwith become, without further action, subject to the Lien of this Indenture and the Security Agreements; (ii) abandon, terminate, cancel, release or make alterations in or substitutions of any contracts subject to the Lien of this Indenture and any of the Security Agreements; PROVIDED, HOWEVER, that any altered or substituted contracts shall forthwith, without further action, be subject to the Lien of this Indenture and the Security Agreements to the same extent as those previously existing; (iii) surrender or modify any franchise, license or permit subject to the Lien of this Indenture and any of the Security Agreements which it may own or under which it may be operating; PROVIDED, HOWEVER, that, after the surrender or modification of any such franchise, license or permit, the Company or the applicable Owner shall still, in the reasonable opinion of the Board of Directors of the Company, be entitled, under some other or without any franchise, license or permit, to conduct its business as it was operating immediately prior to such surrender or modification; (iv) alter, repair, replace and add to its plants, structures, machinery, systems, equipment, fixtures and appurtenances; PROVIDED, HOWEVER, that such alteration, repair or replacement shall comply with the terms of the Security Agreements and will not, in the reasonable opinion of the Board of Directors, be prejudicial to the interests of the Holders; or 71 (v) demolish, dismantle, tear down or scrap any portion of the Collateral (other than a Vessel), if in the good faith opinion of the Board of Directors, as evidenced by a Board Resolution, such demolition, dis mantling, tearing down or scrapping is in the best interests of the Company and the fair market value and utility of the Collateral as an entirety, and the security for the Securities, will not thereby be impaired. (b) In the event that the Company or an Owner has sold, exchanged or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral which under the provisions of this Section 11.03 may be sold, exchanged or otherwise disposed of by the Company without any release or consent of the Trustee or the Collateral Agent, and the Company requests the Trustee to furnish a written disclaimer, release or quitclaim of any interest in such property under this Indenture and the Security Agreements, the Trustee shall execute such an instrument upon delivery to the Trustee of (i) an Officers' Certificate by the Company reciting the sale, exchange or other disposition made or proposed to be made and describing in reasonable detail the property affected thereby, and stating that such property is property which by the provisions of this Section 11.03 may be sold, exchanged or otherwise disposed of or dealt with by the Company without any release or consent of the Trustee and (ii) an Opinion of Counsel stating that the sale, exchange or other disposition made or proposed to be made was duly taken by the Company or the Owner in conformity with a designated subsection of Section 11.03(a) and that the execution of such written disclaimer, release or quitclaim is appropriate to confirm the propriety of such sale, disposition or other disposition under this Section 11.03. SECTION 11.04. RELEASE OF COLLATERAL. Collateral may be released from the security interest created by the Security Agreements at any time or from time to time in accordance with the provisions of the Security Agreements. The release of any Collateral from the terms hereof and of the Security Agreements or the release of, in whole or in part, the Liens created by the Security Agreements, will not be deemed to impair the Lien on the Collateral in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to the applicable Security Agreements and pursuant to the terms of this Article 11. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien strictly in accordance with the terms of the Security Agreements and 72 of this Article 11 will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture. To the extent applicable, the Company and each obligor on the Securities shall cause ss. 314(d) of the TIA relating to the release of property or securities from the Lien hereof and of the Security Agreements to be complied with. Any certificate or opinion required by ss. 314(d) of the TIA may be made by an officer of the Company, except in cases which ss. 314(d) of the TIA requires that such certificate or opinion be made by an independent person. SECTION 11.05. PERMITTED RELEASES NOT TO IMPAIR LIEN; TRUST INDENTURE ACT REQUIREMENTS. The release of any Collateral from the terms hereof and of the Security Agreements or the release of, in whole or in part, the Liens created by the Security Agreements, will not be deemed to impair the Lien on the Collateral in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to the applicable Security Agreements and pursuant to the terms of this Article 11. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien strictly in accordance with the terms of the Security Agreements and of this Article 11 will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture. To the extent applicable, the Company and each obligor on the Securities shall cause ss. 314(d) of the TIA relating to the release of property or securities from the Lien hereof and of the Security Agreements to be complied with. Any certificate or opinion required by ss. 314(d) of the TIA may be made by an officer of the Company, except in cases which ss. 314(d) of the TIA requires that such certificate or opinion be made by an independent person. SECTION 11.06. SUITS TO PROTECT THE COLLATERAL. Subject to the provisions of the Security Agreements, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Security Agreements or this Indenture, and such suits and proceedings as the Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, 73 such enactment, rule or order would impair the Lien on the Collateral or be prejudicial to the interests of the Holders or the Trustee). SECTION 11.07. PURCHASER PROTECTED. In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Trustee or the Collateral Agent to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof or of the Security Agreements for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this Article 11 to be sold be under obligation to ascertain or inquire into the authority of the Company or the applicable Owner to make any such sale or other transfer. SECTION 11.08. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE. In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 11 upon the Company or an Owner with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company or an Owner or of any officer or officers thereof required by the provisions of this Article 11; and if the Trustee or the Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Collateral Agent. SECTION 11.09. DISPOSITION OF OBLIGATIONS RECEIVED. All purchase money and other obligations received by the Collateral Agent under this Article 11 shall be held by the Trustee as a part of the Collateral. Upon payment in cash or cash equivalents by or on behalf of the Company to the Collateral Agent of the entire unpaid principal amount of any such obligation, the Trustee shall or the Collateral Agent release and transfer such obligation and any mortgage securing the same upon receipt of any documentation that the Trustee may reasonably require. Any cash or cash equivalents received by the Collateral Agent in respect of the principal of any such obligations shall be held by the Collateral Agent as Trust Moneys under the Intercreditor Agreement subject to application as therein provided and as provided in the Security Agreements. All interest and other income on any such obligations, when received by the 74 Collateral Agent shall be held and applied in accordance with the Intercreditor Agreement. SECTION 11.10. DETERMINATIONS RELATING TO COLLATERAL. In the event (i) the Trustee shall receive any written request from the Company or an Owner under any Security Agreement for consent or approval with respect to any matter or thing relating to any Collateral or the Company's or an Owner's obligations with respect thereto or (ii) there shall be due to or from the Trustee under the provisions of any Security Agreement any material performance or the delivery of any material instrument or (iii) the Trustee shall become aware of any material nonperformance by the Company or an Owner of any covenant or any material breach of any representation or warranty of the Company or an Owner set forth in any Security Agreement, then, in each such event, the Trustee shall be entitled to hire, at the sole reasonable cost and expense of the Company, experts, consultants, agents and attorneys to advise the Trustee on the manner in which the Trustee should respond, to such request or render any requested performance or response to such nonperformance or breach. The Trustee shall be fully protected in accordance with Article 7 hereof in the taking of any action recommended or approved by any such expert, consultant, agent or attorney and by indemnification provided in accordance with Section 6.05 and other sections of this Indenture if such action is agreed to by Holders of a majority in principal amount of the Securities pursuant to Section 6.05 and, the Trustee may, in its sole discretion, prior to taking such action if such action could subject it to environmental liabilities or taxation, require (i) direction from the Holders of a majority in principal amount of the Securities in accordance with Section 6.05 hereof and (ii) indemnification in accordance with Section 6.05. SECTION 11.11. RELEASE UPON TERMINATION OF THE COMPANY'S OBLIGATIONS. In the event that the Company delivers an Officers' Certificate certifying that all the obligations under this Indenture, the Securities and the Security Agreements have been satisfied and discharged by complying with the provisions of Article 8 or by the payment in full of the Company's obligations under the Securities, this Indenture and the Security Agreements, the Trustee shall deliver to the Company a notice stating that the Trustee, on behalf of the Holders, disclaims and gives up any and all rights it has in or to the Collateral, and any rights it has under the Security Agreements. 75 ARTICLE 12 MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or con flicts with another provision which is required to be included in this Indenture by the TIA, the required provi sion shall control. SECTION 12.02. NOTICES. Any notice or communica tion shall be in writing and delivered in person or mailed by first-class mail or overnight courier addressed as follows: if to the Company or any Guarantor: Navigator Gas Transport PLC 15-19 Athol Street Douglas, Isle of Man IM1 1LB Fax: 011-44-1-624-638-333 Attention of Edward Cain if to the Trustee: The Chase Manhattan Bank 450 West 33rd Street 15th Floor New York, NY 10001 Fax: (212) 946-8158 Attention of Corporate Trust Administration The Company, the uarantors or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Security holder shall be mailed to the Securityholder at the Secu rityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. 76 SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA ss. 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company or a Guarantor to the Trustee to take or refrain from taking any action under this Indenture, the Company or such Guarantor shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condi tion; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opin ion of such individual, such covenant or condition has been complied with. SECTION 12.06. WHEN SECURITIES DISREGARDED. In determining whether the Holders of the required principal 77 amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the fore going, only Securities outstanding at the time shall be considered in any such determination. SECTION 12.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 12.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or other day on which commercial banks in The City of New York, or in the city of the corporate trust office of the Collateral Agent, are authorized by law to close. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 12.09. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company, Holdings or any of the Guarantors shall not have any liability for any obligations of the Company, Holdings or any of the Guarantors, respectively, under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. 78 SECTION 12.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 12.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. SECTION 12.14. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the execution and delivery of this Indenture, the Company and each of the Guarantors (i) acknowledges that it has, by separate written instrument, irrevocably designated and appointed Cambridge Partners, L.L.C. ("CPLLC"), (and any successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Indenture, the Securities or the Security Agreements that may be instituted in any federal or state court in the State of New York, Borough of Manhattan or brought by the Trustee (whether in its individual capacity or in its capacity as Trustee hereunder), and acknowledges that CPLLC has accepted such designation, (ii) submits to the jurisdiction of any such court in any such suit or proceeding, and (iii) agrees that service of process upon CPLLC and written notice of said service to the Company or the applicable Guarantor, shall be deemed in every respect effective service of process upon the Company or such Guarantor, as the case may be, in any such suit or proceeding. The Company and each of the Guarantors further agree to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CPLLC in full force and effect so long as this Indenture shall be in full force and effect. The Company and each of the Guarantors hereby irrevocably and unconditionally waive, to the fullest extent they may legally effectively do so, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Indenture, the Security Agreements or the Securities in any federal or state court in the State of New York, Borough of Manhattan. The Company and each of the Guarantors hereto hereby irrevocably waives, to the fullest extent permitted 79 by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. To the extent either the Company or any of the Guarantors has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in Securities and the Security Agreements, to the extent permitted by law. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR HOLDINGS PLC, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director GUARANTORS: NAVIGATOR GAS (IOM I-A) LIMITED, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director 80 NAVIGATOR GAS (IOM I-B) LIMITED, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-C) LIMITED, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-D) LIMITED, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-E) LIMITED, by /s/ Richard Kaplow --------------------------------- Name: Richard Kaplow Title: Director THE CHASE MANHATTAN BANK, as Trustee, by /s/ L. OBrien --------------------------------- Name: L. OBrien Title: Senior Trust Officer RULE 144A/REGULATION S APPENDIX [FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.] PROVISIONS RELATING TO INITIAL SECURITIES, PRIVATE EXCHANGE SECURITIES AND EXCHANGE SECURITIES 1. DEFINITIONS 1.1 DEFINITIONS For the purposes of this Appendix the following terms shall have the meanings indicated below: "Depositary" means The Depository Trust Company, its nominees and their respective successors. "Exchange Securities" means the 12% Second Priority Ship Mortgage Notes Due 2007 to be issued pursuant to this Indenture in connection with a Registered Exchange Offer pursuant to the Registration Rights Agreement. "Initial Purchasers" means Credit Suisse First Boston Corporation and Cambridge Partners L.L.C. "Initial Securities" means the 12% Second Priority Ship Mortgage Notes Due 2007, issued under this Indenture on or about the date hereof. "Private Exchange" means the offer by the Company and the Guarantors, pursuant to the Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities. "Private Exchange Securities" means the 12% Second Priority Ship Mortgage Notes Due 2007 to be issued pursuant to this Indenture in connection with a Private Exchange. "Purchase Agreement" means the Purchase Agreement dated July 31, 1997, among the Company, the Guarantors and the Initial Purchasers. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registered Exchange Offer" means the offer by the Company and the Guarantors, pursuant to the Registration Rights Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for the 2 Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement dated July 31, 1997, among the Company, the Guarantors and the Initial Purchasers. "Securities" means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class. "Securities Act" means the Securities Act of 1933. "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depositary), or any successor person thereto and shall initially be the Trustee. "Shelf Registration Statement" means the registration statement, if any, issued by the Company and the Guarantors, in connection with the offer and sale of Initial Securities or Private Exchange Securities, pursuant to the Registration Rights Agreement. "Transfer Restricted Securities" means Definitive Securities and Securities that bear or are required to bear the legend set forth in Section 2.3(b) hereto. 1.2 OTHER DEFINITIONS Defined in Term Section: ---- -------- "Agent Members"...................................................... ...2.1(b) "Global Security"........................................................2.1(a) "Regulation S"...........................................................2.1(a) "Rule 144A"..............................................................2.1(a) 2. THE SECURITIES 2.1 FORM AND DATING The Initial Securities are being offered and sold by the Company pursuant to the Purchase Agreement. (a) GLOBAL SECURITIES. Initial Securities offered and sold to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on Regulation S under the Securities Act ("Regulation S"), in each case as provided in the Purchase Agreement, shall be issued initially 3 in the form of one or more permanent global Securities in definitive, fully registered form without interest coupons with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Trustee, at its New York, New York office, as custodian for the Depositary (or with such other custodian as the Depositary may direct), and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. (b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors, or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors, or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) CERTIFICATED SECURITIES. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global 4 Securities will not be entitled to receive physical delivery of certificated Securities. 2.2 AUTHENTICATION. The Trustee shall authenticate and deliver: (1) Initial Securities for original issue in an aggregate principal amount of $87,000,000 and (2) Exchange Securities or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to the Registration Rights Agreement, for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities, Exchange Securities or Private Exchange Securities. The aggregate principal amount of Securities outstanding at any time may not exceed $87,000,000 except as provided in Section 2.06 of this Indenture and except that the Company may issue up to an additional $20,900,000 principal amount of Securities under the circumstances described in paragraph 1 of the Notes. 2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred. (ii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the 5 Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iii) In the event that a Global Security is exchanged for Securities in definitive registered form pursuant to Section 2.4 or Section 2.08 of the Indenture, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company. (b) LEGEND. (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT 6 UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE." (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, in the case of any Transfer Restricted Security that is represented by a Global Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security). (iii) After a transfer of any Initial Securities or Private Exchange Securities during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements that any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security without legends will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such transferring Holder's certificated Initial Security or Private Exchange Security or directions to transfer such Holder's interest in the Global Security, as applicable. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will cease to apply and certificated Initial Securities with the restricted securities legend set forth in Exhibit 1 hereto will be 7 available to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer. (v) Upon the consummation of a Private Exchange with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Private Exchange Securities in exchange for their Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply, and Private Exchange Securities in global form with the Restricted Securities Legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange. (c) CANCELATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all beneficial interests in a Global Security have either been exchanged for certificated Securities, redeemed, repurchased or canceled, such Global Security shall be returned to the Depositary for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (d) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF SECURITIES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate certificated Securities, Definitive Securities and Global Securities at the Registrar's or co-registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.12 and 9.05). 8 (iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of (a) any certificated or Definitive Security selected for redemption in whole or in part pursuant to Article 3 of this Indenture, except the unredeemed portion of any certificated or Definitive Security being redeemed in part, or (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Securities or 15 Business Days before an interest payment date. (iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary. (v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. (e) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communica tions to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with 9 respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 CERTIFICATED SECURITIES. (a) A Global Security deposited with the Depositary or with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of certificated Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Securities under this Indenture. (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depositary to the Trustee to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of certificated Initial Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Security delivered in exchange for an interest in the Global Security shall, except as otherwise provided by 10 Section 2.3(d), bear the restricted securities legend set forth in Exhibit 1 hereto. (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (d) In the event of the occurrence of either of the events specified in Section 2.4(a), the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive, fully registered form without interest coupons. EXHIBIT 1 to RULE 144A/REGULATION S APPENDIX [FORM OF FACE OF INITIAL SECURITY] THE NOTES EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF THE NOTES AND WARRANTS TO PURCHASE SHARES OF COMMON STOCK (EACH, A "WARRANT"). THE SECURITIES AND WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE COMMENCEMENT OF AN EXCHANGE OFFER OR THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT FOR THE SECURITIES OR (I) SUCH DATE AFTER SEPTEMBER 6, 1997, AS THE INITIAL PURCHASERS MAY DETERMINE. [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Securities Legend] THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER 2 REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. 3 No. $ 12% Second Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to , or registered assigns, the principal sum of Dollars on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: NAVIGATOR GAS TRANSPORT PLC, by ---------------------------- President ---------------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE CHASE MANHATTAN BANK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by ----------------------------- Authorized Signatory 4 [FORM OF REVERSE SIDE OF INITIAL SECURITY] 12% Second Priority Ship Mortgage Note Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its succes ors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest in cash semiannually on June 30 and December 31 of each year, commencing December 31, 1997, except that at the option of the Company, on any Interest Payment Date following the delivery of the first Vessel, to the extent cash available for distribution to Holders of Securities on such date is insufficient to pay all accrued and unpaid interest on the Securities on such date, the Company may pay such interest by issuing additional Securities having an aggregate principal amount equal to the amount of such deficiency, PROVIDED that the Company may not issue more than $20,900,000 aggregate principal amount of such additional Securities. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for 5 payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, The Chase Manhattan Bank, a New York banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company initially limited to $87,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture and subject to the issuance of up to $20,900,000 aggregate principal amount of Securities under the circumstances described in paragraph 1 above). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or 6 subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002 . . . . . . . . . . . . . . . . . . . 106.000% 2003 . . . . . . . . . . . . . . . . . . . 104.000 2004 . . . . . . . . . . . . . . . . . . . 102.000 2005 and thereafter . . . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be 7 avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 112% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $45 million aggregate principal amount of the Securities and $100 million aggregate principal amount of the First Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the 8 termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE Commencing on the first Available Cash Payment Date each Available Cash Payment Date thereafter, the Company will be required to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to 9 the terms of, the Indenture, PROVIDED that the Company shall purchase any and all First Priority Notes validly tendered pursuant to a change of control offer made pursuant to the First Priority Note Indenture prior to purchasing any Securities validly tendered pursuant to such Change of Control Offer. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorse ments or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless 10 an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to para graph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject 11 to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such 12 liability. The waiver and release are part of the considera tion for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC, 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-333 ATTENTION OF SECRETARY 13 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ________________ Your Signature: _____________________ - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Company; or (2) / / pursuant to an effective registration statement under the Securities Act of 1933; or (3) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each 14 case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) / / pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to 15 request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 16 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount Signature of Exchange in Principal in Principal of this Global authorized officer Amount of this Amount of this Security following of Trustee or Global Security Global Security such decrease or Securities increase Custodian
17 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: _______________ Your Signature: ______________________ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: _______________________________________ (Signature must be guaranteed) EXHIBIT A [FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY] [*/] [**/] No. $ 12% Second Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to , or registered assigns, the principal sum of Dollars on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: NAVIGATOR GAS TRANSPORT PLC, by ----------------------- President ----------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE CHASE MANHATTAN BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture. by [Seal] ----------------------------- Authorized Signatory 2 - ---------- */ If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and the attachment from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY". **/ If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and replace the Assignment Form included in this Exhibit A with the Assignment Form included in such Exhibit 1. 3 [FORM OF REVERSE SIDE OF EXCHANGE SECURITY [OR PRIVATE EXCHANGE SECURITY]] 12% Second Priority Ship Mortgage Note Due 2007 1. INTEREST Navigator Gas Transport PLC, an Isle of Man public limited company (such company, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above [; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured] ***/. The Company will pay interest in cash semiannually on June 30 and December 31 of each year, commencing December 31, 1997, except that at the option of the Company, on any Interest Payment Date following the delivery of the first Vessel, to the extent cash available for distribution to Holders of Securities on such date is insufficient to pay all accrued and unpaid interest on the Securities on such date, the Company may pay such interest by issuing additional Securities having an aggregate principal amount equal to the amount of such deficiency, PROVIDED that the Company may not issue more than $20,900,000 aggregate principal amount of such additional Securities. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 4 - ---------- ***/ Insert if at the time of issuance of the Exchange Security or Private Exchange Security (as the case may be) neither the Registered Exchange Offer has been consummated nor a Shelf Registration Statement has been declared effective in accordance with the Registration Rights Agreement. 5 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Securities (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no U.S. dollar account maintained by the payee with a bank in the United States is designated by any holder to the Trustee or the Paying Agent at least 30 days prior to the relevant due date for payment (or such other date as the Trustee may accept in its discretion), by mailing a check to the registered address of such holder. 3. PAYING AGENT AND REGISTRAR Initially, The Chase Manhattan Bank, a New York banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. 6 The Securities are general secured obligations of the Company initially limited to $87,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture and subject to the issuance of up to $20,900,000 aggregate principal amount of Securities under the circumstances described in paragraph 1 above.). The Indenture limits (i) the incurrence of additional debt by the Company and its subsidiaries, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from subsidiaries. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002..................................................... 106.000% 2003..................................................... 104.000 2004..................................................... 102.000 2005 and thereafter...................................... 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or 7 after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 112% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $45 million aggregate principal amount of the Securities and $100 million aggregate principal amount of the First Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to 8 the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 9 8. OFFERS TO PURCHASE Commencing on the first Available Cash Payment Date and each Available Cash Payment Date thereafter, the Company will be required to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture, PROVIDED that the Company shall purchase any and all First Priority Notes validly tendered pursuant to a change of control offer make pursuant to the First Priority Note Indenture prior to purchasing any Securities validly tendered pursuant to such Change of Control Offer. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 10 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorse ments or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or 11 noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to para graph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings and the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. 12 Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, the Owners or the Trustee shall not have any liability for any obligations of the Company or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in 13 common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 22. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including, the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 23. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-303 ATTENTION OF SECRETARY 14 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ________________ Your Signature: _____________________ - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. 15 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.12 OF THE INDENTURE, CHECK THE BOX: / / IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.12 OF THE INDENTURE, STATE THE AMOUNT: $ DATE: __________________ YOUR SIGNATURE: __________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY) SIGNATURE GUARANTEE:_______________________________________ (SIGNATURE MUST BE GUARANTEED BY A MEMBER FIRM OF THE NEW YORK STOCK EXCHANGE OR A COMMERCIAL BANK OR TRUST COMPANY) EX-4.3 10 ISSUE OF ONE DEBENTURE -- (IOM I-A) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent and NAVIGATOR GAS (IOM I-A) LIMITED ----------------------------------------------------- ISSUE OF ONE DEBENTURE Dated as of August 1, 1997 ----------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Issue of One Debenture, dated as of August l, 1997 (the "Debenture"), from Navigator Gas (IOM I-A) Limited, a private limited company organized under the laws of the Isle of Man (the "Owner") to United States Trust Company of New York, as collateral agent, a bank and trust company organized under the New York Banking Law (the "Collateral Agent"). PRELIMINARY STATEMENT On the Issue Date, Navigator Gas Transport PLC (the "Issuer") issued Notes in connection with the financing of the construction of the Vessels. The net proceeds of such issuance were deposited into the Pre-Funding Account. Pursuant to the Intercreditor Agreement, the Allocated Principal Amount of the Notes for the Vessel has been used, INTER ALIA, to make the installments due under the Building Contract for the Vessel. The Notes are guaranteed jointly and severally by the Owner and the other Owners pursuant to the Guarantees. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston, acting through its London branch as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit"). As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings' pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 7, 1997, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The Vessel will be managed by Navigator Gas Management Limited (the "Manager") pursuant to the Management Agreement, dated as of the date hereof, among Holdings, the Owners and the Manager. As collateral security for its obligations under the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements, the Owner has and will assign, pledge, mortgage and grant the Collateral Agent a security interest in, INTER ALIA, the Vessel, the earnings and insurances of the Vessel and will grant this debenture in favor of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other valuable consideration, receipt of which is hereby acknowledged, the Owner and the Collateral Agent hereby agree as follows: ARTICLE I DEFINITIONS Unless otherwise defined in Schedule 1 to this Debenture, capitalized terms used in this Debenture shall have the meanings assigned to such terms in the Intercreditor Agreement or in the Indentures. -2- ARTICLE II COVENANT TO PAY Section 2.1. COVENANT TO PAY. The Owner hereby covenants and agrees to pay and discharge each sum owing under the Obligations as and when the same shall fall due, whether at maturity, by acceleration or otherwise. ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT Section 3.1. CHARGE. As continuing security for the Obligations, the Owner hereby: (a) conveys, transfers and assigns absolutely to and unto the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner in and to the Current Receivables by way of fixed charge; (b) mortgages, charges and assigns, and agrees to mortgage, charge and assign to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all present and future rights of the Owner in and to all freehold or leasehold property of the Owner and all other estates or interests therein together with all trade fixtures and fixed plant and machinery now and for the time being thereon, by way of a fixed charge; (c) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights now owned or hereafter acquired in and to the goodwill, franchises, patent rights, copyrights, trademarks and other intangible Assets of the Owner by way of fixed charge; (d) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights relating to the aforesaid property specified in Sections 3.1(a), (b) and (c) including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing and unpaid vendor's liens and similar and associated rights, by way of fixed legal mortgage and charge; and -3- (e) mortgages and charges in favor of the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner now owned or hereafter acquired in and to all other Security Assets for the time being of the Owner not subject to the fixed securities created by Sections 3. l(a), (b), (c) and (d) wheresoever situate (including, INTER ALIA, all undertakings and businesses of the Owner) by way of a floating charge and the Owner shall not be at liberty to create any mortgage or charge on any of the securities created by this Section 3.1(e) and no Encumbrance shall in any case or in any manner arise on or affect any part of the said securities in priority to or PARI PASSU with all charges hereby created, it being the intention that the Owner shall have no power, without the written consent of the Collateral Agent, to part with or dispose of any part of the said securities except by way of sale in the ordinary course of its business; PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction of the Obligations the rights of the Collateral Agent hereunder will terminate and the Collateral Agent will at the direction, cost and expense of the Owner release or reassign to the Owner all remaining rights of the Collateral Agent in and to the balance of the Security Assets. Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the request of the Collateral Agent execute a legal mortgage, charge or assignment over all or any of the Security Assets subject to or intended to be subject to any fixed security hereby created in favor of the Collateral Agent in such form as the Collateral Agent may reasonably require. Section 3.3. CONVERSION OF FLOATING CHARGE. The Collateral Agent may at any time by notice to the Owner convert the floating charge hereby created into a fixed charge as regards any Assets specified in the notice which the Collateral Agent shall consider to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy and (whether or not this security has become enforceable) may at any time appoint a Receiver (as defined in Section 7.1 hereof) thereof. Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in the Owner's Mortgage of its Vessel or the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements, the Owner shall not, without the prior written consent of the Collateral Agent, permit the sale, transfer, assignment lease or other disposition of any Security Asset, or any Encumbrance or other right in or over any Security Asset to subsist, arise or be created, other than such Encumbrance as is created by this Debenture. Section 3.5. NEW ACCOUNTS. If the Collateral Agent receives or is deemed to be affected by notice whether actual or constructive of any subsequent Encumbrance or other interest affecting any Security Asset or the proceeds of sale thereof, the Collateral Agent may open a new account or accounts for the Owner. If the Collateral Agent does not open a new account it shall nevertheless -4- be treated as if it had done so at the time when it received or was deemed to have received notice and as from that time all payments made to the Collateral Agent shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount for which this Debenture is security. ARTICLE IV PRESERVATION OF SECURITY Section 4.1. CONTINUING SECURITY. The security constituted by this Debenture shall be a continuing security and shall not be satisfied by any intermediate payment or satisfaction of the Obligations but shall secure the ultimate balance of the Obligations. The security hereby given shall be in addition to and shall not be discharged, released, prejudiced or otherwise affected by any other security or Encumbrance now or hereafter held by the Collateral Agent for the Obligations. Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner under this Debenture and this security shall not be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which but for this provision might so operate or otherwise release or discharge the Owner from the Obligations, or the security created under this Debenture including without limitation and whether or not known to or discoverable by the Owner or the Collateral Agent: (a) any time, indulgence, waiver, consent or other relief granted to or composition with the Owner or any other Person; (b) the taking, variation, extension, compromise, renewal or release of, or refusal or neglect to perfect or enforce, any rights under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, agreement or obligation or any right against, or any security granted by, the Owner or any other Person; (c) any irregularity, invalidity or unenforceability of any obligation of the Owner under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, of any government or authority (whether of right or in fact) purporting to reduce or otherwise affect any such obligation to the extent that such obligation and this security shall remain in full force and this Debenture shall be construed accordingly as if there were no such irregularity, unenforceability, invalidity, law or order; (d) any legal limitation, disability, incapacity or other circumstance relating to the Owner, any guarantor or any other Person; (e) any defect in or invalidity or inadequacy of the constitution or incorporation or borrowing powers of the Owner or of its board of directors, executive committee or -5- other equivalent or analogous body or in the authorization, execution or delivery of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement, or any other guarantee, agreement or obligation; or (f) any supplement, amendment or modification to the terms of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any Security Agreement or any other guarantee. agreement or obligation. Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it may have of first requiring the Collateral Agent to proceed against or claim payment from the Owner or enforce the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, any other Security Agreement or other guarantee, agreement or obligation before enforcing this Debenture. Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations have been irrevocably paid and discharged in full, the Collateral Agent may: (a) refrain from applying or enforcing any other security, money or right held or received by the Collateral Agent in respect of the Obligations or apply and enforce the same in such manner and order as the Collateral Agent sees fit; and (b) hold in a suspense account (without liability to pay interest thereon) any moneys received or on account of this Debenture by way of a partial payment. Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in addition to and shall not in any way be prejudiced by any other security now or hereafter held by the Collateral Agent. Section 4.6. CERTIFICATE. A certificate of the Collateral Agent setting forth the amount due from the Owner in respect of the Obligations shall, in the absence of manifest error, be prima FACIE evidence of such amount. Section 4.7. DISCHARGE. Where any discharge (whether in respect of the Indentures, the Letter of Credit Reimbursement Agreement, the Obligations, this Debenture, or any other guarantee, agreement, obligation or security or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation, winding-up, dissolution or otherwise, this security and the obligations of the Owner under this Debenture shall continue as if there had been no such discharge or arrangement. Section 4.8. REGISTRATION. The Owner hereby agrees to arrange for this Debenture, any Security Asset or any agreement, document or instrument relating thereto to be registered with or notified to any Person to preserve or perfect the Collateral Agent's security in any Security Asset. -6- Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS. The Collateral Agent may without demand or notice to the Owner being required at any time after this security becomes enforceable exercise at its discretion (in the name of the Owner or otherwise) and without any further consent or authority by the Owner, any right which may be exercised by the Person in whose name any Security Asset is registered or who is the holder thereof under the terms thereof or otherwise including, but without limitation, all the powers given to trustees by statute in respect of securities or property subject to a trust; PROVIDED, HOWEVER, that until the security hereby constituted becomes enforceable, the Collateral Agent shall procure that the rights attached to each such Security Asset are exercised in such manner as the Owner shall direct so long as the same is not inconsistent with any term of the Intercreditor Agreement, this Debenture or any other Security Agreement and account to the Owner for any sum or other distribution paid in respect of such Security Asset. Section 4.10. CALLS. The Owner will for so long as the Obligations remain outstanding pay all sums which may become due in respect of the Security Assets and in the event of default the Collateral Agent may if it thinks fit make such payments on behalf of the Owner. Any sums so paid by the Collateral Agent shall be immediately due and payable by the Owner to the Collateral Agent without demand or notice being required. Section 4.11. DELEGATION BY COLLATERAL AGENT. The Collateral Agent may at any time and from time to time delegate by power of attorney or in any other manner to any Person or Persons all or any of the rights and discretions which are for the time being exercisable by the Collateral Agent under this Debenture in relation to any Security Asset. Any such delegation may be made upon such terms (including power to sub-delegate) and subject to such regulations as the Collateral Agent may think fit. The Collateral Agent shall not be in any way liable or responsible to the Owner for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate. Section 4.12. FURTHER ASSURANCES. The Owner shall at its own expense execute and deliver all such agreements, documents and instruments and do all such assurances, acts and things as the Collateral Agent may require for perfecting or protecting this security over any Security Asset or for facilitating the realization of such property and in the exercise of all rights vested in the Collateral Agent or in any sub-delegate as aforesaid. The Owner shall in particular execute all transfers, conveyances, assignments and assurances of such property whether to the Collateral Agent or its nominees and give all notices, orders and directions which the Collateral Agent may think expedient and, for the purposes of this Section, a certificate in writing by the Collateral Agent to the effect that any particular assurance, act or thing required by it is reasonably required shall be conclusive evidence of such fact in favor of all third parties. Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Collateral Agent may at any time after the security hereby constituted has become enforceable redeem any prior Encumbrances against any Security Asset or procure the transfer thereof to itself and may settle and pass the accounts of the prior Encumbrances. Any accounts so settled and passed shall be conclusive and binding on the -7- Owner. All principal moneys, interest, costs, charges and expenses of and incidental to such redemption and transfer shall be immediately due by the Owner to the Collateral Agent without notice or demand being required. Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way of security irrevocably nominates, constitutes and appoints the Collateral Agent and every Receiver of any Security Asset appointed hereunder and every such delegate or sub-delegate as aforesaid, each of them acting alone or jointly with any other of them, to be its attorney (the "Attorney") and on its behalf and in its name or otherwise to sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such assurances, acts and things which the Owner ought to do but fails to do under the covenants and provisions contained in the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture or any other Security Agreement (including without prejudice to the generality of the foregoing to make any demand upon or give any notice or receipt to any Person owing moneys to the Owner and to execute and deliver any charges, legal and equitable generally in its name and on its behalf to exercise all or any of the rights conferred by or pursuant to this Debenture or by statute on the Attorney and (without prejudice to the generality of the foregoing) to sign under seal or otherwise and deliver and otherwise perfect any assurance, agreement, instrument or act which the Attorney may deem proper in or for the purpose of exercising any of such rights). (b) The Owner hereby ratifies and confirms and agrees to ratify and confirm any such Attorney described in Section 4.14(a). Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or payment which may be avoided under any enactment relating to bankruptcy, and no release, settlement or discharge given or made by the Collateral Agent on the faith of any such assurance, security or payment, shall prejudice or affect the right of the Collateral Agent to enforce the security created by or pursuant to this Debenture in respect of the full extent of the moneys thereby secured. The Collateral Agent shall be at liberty at its absolute discretion to retain the security so created as security for the Obligations for a period of seven months in the case of fixed security and thirteen months in the case of floating security after the Obligations shall have been paid in full, notwithstanding any release, settlement, discharge or arrangement given or made by the Collateral Agent on or as a consequence of, such termination of liability. If at any time within the period of six months in the case of fixed security and twelve months in the case of floating security after such termination a petition shall be presented to a competent court for an order for the winding up of the Owner or the Owner shall commence to be wound up voluntarily, the Collateral Agent shall be at liberty, notwithstanding as aforementioned, to continue to retain such security or any part thereof for and during such further period as the Collateral Agent in its absolute discretion shall determine. The Owner agrees that such security shall be deemed to have been and to have remained held by the Collateral Agent as and by way of security for the payment to the Collateral Agent of all or any sums which are now or may become due and owing to the Collateral Agent under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the rest of the Security Agreements. -8- Section 4.16. POWERS TO LEND. The Collateral Agent may advance money on the security of any Security Asset for the purpose of defraying any costs, charges, losses and expenses which shall be paid or incurred by it in relation to this Debenture (including the remuneration of any Receiver (as hereinafter defined)) or which the Collateral Agent anticipates may be paid or incurred in the exercise of the rights vested in it or for all other purposes of this Debenture or any of them and the Collateral Agent may advance such moneys at such rates of interest and generally on such terms and conditions as it shall think fit. ARTICLE V DEALINGS WITH SECURITY ASSETS Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums hereafter received or recovered by or for it in respect of any Current Receivable to be directly credited to a separate and distinct account as the Collateral Agent may from time to time designate and, if called upon to do so by notice in writing from the Collateral Agent, shall execute an absolute assignment of any such Current Receivable in favor of the Collateral Agent, all at the cost of the Owner. Until the security hereby constituted is fully discharged in accordance with the terms hereof, the Owner shall not be entitled to withdraw any sum standing to the credit of any such account established as aforesaid without the prior written consent of the Collateral Agent. Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall, if the Collateral Agent so requires, deposit with the Collateral Agent all certificates and other documents of title or evidence of ownership in relation to the patents and rights referred to in Section 3.1(c). Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other provision herein contained to the contrary, the Owner shall remain liable to observe and perform all of the respective conditions and obligations assumed by it in respect of each Security Asset and the Collateral Agent shall be under no obligation by reason of this Debenture, nor shall the Collateral Agent be required in any manner, to perform or fulfill any obligation of the Owner in respect of any Security Asset or to make any payment or make any enquiry as to the maturity, amount, nature or sufficiency of any rental, interest, proceeds, payments or receipts received by it or them or the Owner or to present or file any claim or take any other action or give any notice to collect, exercise or enforce the payment of any amount or the taking up of any rights or property to which the Owner may have been or to which it may be now or hereafter entitled thereunder at any time. ARTICLE VI ENFORCEMENT Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security hereby conferred shall become immediately enforceable and the floating charge created by this Debenture shall be deemed to have crystallized and an unrestricted power of sale together with any and other powers conferred by statute as varied or amended or granted by this Debenture shall be immediately exercisable by the -9- Collateral Agent (i) if the Owner fails to meet the Obligations in the manner specified in Section 2.1 or (ii) upon and after the occurrence of any Event of Default. After this security has become enforceable, the Collateral Agent may in its discretion enforce all or any part of this security, and exercise all or any rights of enforcement hereby granted, in such manner as the Collateral Agent sees fit. Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all powers implied by statute the Obligations shall be deemed to have become due and payable on the date hereof and any statutory restrictions on the power of sale and restrictions on the right of consolidation shall not apply to this security. Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or omission of the Collateral Agent in exercising any right under this Debenture shall impair or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude any further exercise thereof or the exercise of any other right. The rights provided in this Debenture are cumulative and not exclusive of any rights provided by law, agreement or otherwise. Any waiver and any consent by the Collateral Agent under this Debenture must be in writing and may be given subject to any conditions thought fit by the Collateral Agent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. Section 6.4. EXERCISE OF POWERS. All or any of the powers conferred on a receiver by Article VII hereof may be exercised by the Collateral Agent without first appointing a Receiver or notwithstanding the appointment of a Receiver. ARTICLE VII RECEIVER Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time after this security becomes enforceable the Collateral Agent may without further notice appoint in writing under the hand of its duly authorized officer any one or more Person(s) to be a receiver or receiver and manager (hereinafter each called "a Receiver") as the Collateral Agent at its sole discretion may see fit of any Security Asset in like manner in every respect as if the Collateral Agent had become entitled under this Debenture and/or under statute to exercise the power of sale thereby conferred. Every Receiver so appointed shall, in addition to any powers conferred by statute or common law, have and be entitled to exercise all rights to do any or all of the following things: (a) TAKE POSSESSION. Enter upon and take immediate possession of, get in and collect any Security Asset and undertake any works of demolition, building, reconstruction, repair or decoration thereon; (b) SELL ASSETS. Subject to any necessary consent or approval of any judicial, administrative, governmental or other regulatory body, office or agency, sell, convert -10- into money and realize any Security Asset by public auction or private contract, dispose of, grant options and other rights in respect of and exercise all other rights conferred on an owner under any statute, at common law or otherwise, in respect of any Security Asset and generally in such manner and on such terms (which may consist wholly or partly of shares or securities of any company or body corporate) as the Receiver shall think fit and transfer, convey, assign or grant an assurance of the same in the name and on behalf of the Owner. Without prejudice to the generality of the foregoing, the Receiver may do any of these things for a consideration consisting of cash, debentures or other obligations, shares or other valuable consideration in cash or in any other form whatsoever and any such consideration may be payable in a lump sum or by installments spread over such period as the Receiver may think fit; (c) COMPROMISE. Settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands with or by any Person who is or claims to be a creditor of the Owner or relating in any way to any Security Asset; (d) Borrow and Create Security. Borrow or raise money and secure the repayment thereof and interest thereon by mortgaging, sub-mortgaging or otherwise charging any Security Asset or this Debenture (whether or not in priority to the sums and obligations secured by this Debenture) in such manner and on such terms as the Receiver shall think fit; PROVIDED, HOWEVER, that: (i) no Receiver shall exercise such right without first obtaining the written consent of the Person appointing him and the Collateral Agent shall not incur any responsibility to the Owner or any other Person by reason of giving or refusing its consent, whether directly or subject to any limitation or condition; and (ii) no Person lending such money shall be concerned to enquire as to the existence of such consent or the terms thereof or as to the propriety or purpose of the exercise thereof or to see to the application of any money so borrowed or raised; (e) EMPLOY AGENTS. Employ solicitors, managers, agents and others as the Receiver shall deem necessary; (f) RECEIPTS. Give valid receipts and discharges for all moneys and claims and execute all assurances and things which may be proper or desirable for realizing any Security Assets; -11- (g) CONSIDERATION. Receive or pay any consideration in cash or other valuable consideration and so that the same may be receivable or payable either immediately or at a later time and in a lump sum or by installments spread over such period as the Receiver shall think fit; (h) DEALINGS. Generally to deal with and effect any transaction or arrangement of any kind whatsoever in respect of any Security Asset; (i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with any Security Asset or in any way relating to the security constituted by this Debenture, to bring, take, defend, compromise, submit to and discontinue any actions, suits, arbitration or proceedings whatsoever whether civil or criminal in relation to the matters aforesaid, to enter into, complete, disclaim, abandon or disregard, determine or rectify all or any of the outstanding agreements or arrangements of the Owner in any way relating to or affecting the Security Assets or any part thereof and to allow time for payment of any debts either with or without security as the Receiver shall think expedient; (j) IN OWNER'S NAME. Generally at his option to use the name of the Owner in the exercise of all or any of the rights hereby conferred; (k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any nominee of the Owner to exercise, any rights incident to the ownership of any Security Asset in such manner as the Receiver may think fit and in particular (as regards shares, stock and securities) any voting rights conferred by the same and (as regards securities) any rights of enforcing the same by foreclosure, sale or otherwise; (l) CORPORATE TRANSFERS. Transfer any Security Asset to any other company or body corporate, whether or not formed or acquired for the purpose; (m) CARRY ON BUSINESS. Generally manage and carry on and conduct any of the undertakings and businesses of the Owner; (n) CALLS. Make calls, conditionally or unconditionally, on the members of the Owner in respect of all or any part of its uncalled capital with such and the same rights of enforcement as are conferred by the Memorandum of Association and Articles of Association of the Owner upon its directors in this respect; (o) GENERAL POWERS. Sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such other acts and things as the Receiver may consider desirable or necessary for realizing any Security Asset or incidental or -12- conducive to any of the matters or rights conferred on a Receiver under or by virtue of this Debenture and to exercise in relation to any Security Asset all such rights as the Receiver should be capable of exercising if the Receiver were the beneficial owner of the same; and (p) MONEYS RECEIVED BV RECEIVER. All moneys received by a Receiver shall after providing for the matters specified by any law be applied by him in or towards satisfaction of this Debenture and thereafter of any other Encumbrance of which he shall have notice and thereafter the Receiver shall pay the residue of the moneys received by him to the Owner. Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in the exercise of the Receiver's rights conform to any regulations and directions from time to time made and given by the Collateral Agent as appointed but so that no Person dealing with the Collateral Agent or any Receiver shall be concerned to enquire whether the Receiver has so conformed to any such regulations or directions. Section 7.3. REMOVAL AND REMUNERATION. The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may whenever it may deem it expedient appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it. Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS. All or any of the rights which are conferred by this Debenture (either expressly or impliedly) upon a Receiver of any Security Asset may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to any Security Asset without first appointing a Receiver of the same or notwithstanding the appointment of a Receiver of the same. Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION. The Collateral Agent shall not nor shall any Receiver appointed as aforesaid by reason of the Collateral Agent or the Receiver entering into possession of any Security Asset be liable to account for such entry into possession or be liable for any loss or realization or for any fault or omission for which such acts may have made them liable. Every Receiver duly appointed by the Collateral Agent shall be deemed to be the agent of the Owner for all purposes and shall as such agent be deemed to be in the same position as a Receiver duly appointed under this Debenture. The Owner alone shall be responsible for its agreements, obligations, acts, omissions, defaults and losses and the Collateral Agent shall not incur any responsibility therefor (either to the Owner or to any other Person whatsoever) by reason of appointing such Receiver or for any other reason whatsoever. Every such Receiver and the Collateral Agent shall be entitled to all the rights, privileges and immunities by statute conferred on receivers when such receivers have been duly appointed. -13- Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser, mortgagee or other Person dealing with the Collateral Agent or the Receiver or the agents of the Collateral Agent or the Receiver shall be concerned to enquire whether any of the Obligations are due or owing, the right which the Collateral Agent or the Receiver is purporting to exercise has become exercisable or any money remains due under this Debenture, as to the propriety or regularity of the actions of the Collateral Agent or such Receiver, or to see to the application of any money paid to the Collateral Agent or to such Receiver. Section 7.7. EXPENSES. All costs, charges and expenses incurred and all payments made by the Collateral Agent or any Receiver appointed hereunder in the exercise in good faith of any right hereby conferred whether or not occasioned by any act, neglect or default of the Collateral Agent or such Receiver shall bear interest from the date of the same being incurred or becoming due at the rate at which interest accrues on the Second Priority Notes. The amount of all such costs, charges, expenses and payments and all interest thereon and all remuneration payable hereunder shall be payable by the Owner on demand. All such costs, charges, expenses and payments shall be paid and charged as between the Collateral Agent and the Owner on the basis of a full indemnity and not on the basis of party and party or any other kind of taxation. Section 7.8. INDEMNITY. Each of the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and every Receiver, attorney, manager, agent or other Person appointed by the Collateral Agent hereunder shall be entitled to be indemnified out of the Security Assets in respect of all obligations, costs, charges and expenses incurred and payments made by such Person in good faith in the execution or purported execution of any right vested in such Person pursuant hereto and against all actions, proceedings, obligations, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to any Security Asset and the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and any such Receiver may retain and pay all sums in respect of the same out of any moneys received under the rights hereby conferred. ARTICLE VIII APPLICATION OF PROCEEDS Section 8.1. ORDER OF APPLICATION. Any moneys received by the Collateral Agent pursuant to this Debenture or under the powers hereby conferred shall after the security hereby constituted shall have become enforceable but subject to the payment of any claims having priority to this security be applied for the purposes and in the order of priority indicated in the Intercreditor Agreement. Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the rights hereby conferred may, at the discretion of the Collateral Agent, be placed in a suspense account and kept there for so long as the Collateral Agent thinks fit. -14- ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. AMENDMENT. This Debenture may be amended from time to time by written agreement signed by the parties hereto. Section 9.2. SEVERABILITY. If any provision of this Debenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Debenture contained, shall not affect the remaining portions of this Debenture, or any part thereof. Section 9.3. NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as shall be designated by such party in a written notice to the other parties. Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action or proceeding against the Owner arising out of or relating to this Debenture, or any transaction contemplated hereby, may be instituted in any federal or state court in The City of New York, State of New York and the Owner hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and the Owner hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. To the extent the Owner has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement to the extent permitted by law. The Owner hereby irrevocably appoints and designates Cambridge Partners, L.L.C., having an address at 535 Madison Avenue, New York, New York, its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting servicing of legal process and the Owner agrees that service of process upon such party shall constitute personal service of such process on the Owner. The Owner shall maintain the designation and appointment of such authorized agent until all amounts payable under this Debenture shall have been paid in full. If such agent shall cease to so act, the Owner shall immediately designate and appoint another such agent satisfactory to the Collateral Agent and shall promptly deliver to the Collateral Agent evidence in writing of such other agent's acceptance of such appointment. The Owner further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such -15- designation and appointment in full force and effect so long as this Debenture shall remain in full force and effect. Section 9.5. CAPTIONS. The captions or headings in this Debenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Debenture. Section 9.6. GOVERNING LAW. This Debenture shall be governed by and interpreted in accordance with the laws of the Isle of Man, without giving effect to the principles of conflicts of law. Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 9.8. COUNTERPARTS. This Debenture may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 9.9. SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Debenture in respect of either party hereto shall survive the execution and delivery of this Debenture and shall continue in effect so long as such party's obligations hereunder remain outstanding. Section 9.10. INTEGRATION. This Debenture and the Schedule hereto, the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. -16- Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Debenture shall be binding upon and inure to the benefit of the Owner and the Collateral Agent and their respective successors and assigns. The Owner shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Collateral Agent. The Collateral Agent, at its sole option, shall have the right to assign this Debenture and any of its rights and interest hereunder and thereunder. Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Debenture except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Debenture shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles ", "Sections", " Subsections", "paragraphs ", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Debenture; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Debenture as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. IN WITNESS WHEREOF this Debenture has been executed by the Owner the day and year first above written. SIGNED, SEALED and DELIVERED ) as a Deed and Debenture ) Richard Klapow by ) Director for and on behalf of ) Navigator Gas (IOM I-A) Limited ) Geoffrey Richardson in the presence:- ) SIGNED by ) for and on behalf of ) Christine C. Collins United States Trust Company of New York as Collateral Agent ) Adam Levine in the presence of:- ) SCHEDULE 1 Defined Terms Used in the Debenture "ASSETS" means, in relation to any person, the whole or any part of its business, undertaking, property and assets and includes, without limitation, any right to receive revenues. "CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of the Owner due or owing to the Owner on account of the prevailing debit balances of the present book debts of the Owner and (b) all rights relating to the aforesaid property specified in clause (a), including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing an unpaid vendor's liens and similar and associated rights (and each reference to a "Current Receivable" shall be construed as a reference to the whole or any part of any one or more of them). "ENCUMBRANCE" means any encumbrance and includes any mortgage, charge (whether fixed or floating, pledge, lien, hypothecation, title retention or other security agreement or security interest of any kind whatsoever and howsoever arising and any equivalent or analogous interest to any of the foregoing. "PERSON" means an individual, a partnership, a corporation, a joint venture, unincorporated association, a joint stock company, a trust or any other entity or a Governmental Authority. "SECURITY ASSETS" means all of the present and future Assets of the Owner, including, INTER ALIA, the Current Receivables (and each reference to a "Security Asset" shall be construed as a reference to the whole or any part of any one or more of them).
TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT .........................................................2 ARTICLE I DEFINITIONS...................................................2 ARTICLE II COVENANT TO PAY.................................................2 Section 2.1. COVENANT TO PAY............................................................................2 ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT...............................................2 Section 3.1. CHARGE.....................................................................................2 Section 3.2. LEGAL SECURITIES...........................................................................3 Section 3.3. CONVERSION OF FLOATING CHARGE..............................................................3 Section 3.4. NEGATIVE PLEDGE............................................................................3 Section 3.5. NEW ACCOUNTS...............................................................................3 ARTICLE IV PRESERVATION OF SECURITY.............................................4 Section 4.1. CONTINUING SECURITY........................................................................4 Section 4.2. WAIVER OF DEFENSES.........................................................................4 Section 4.3. IMMEDIATE RECOURSE.........................................................................5 Section 4.4. PRESERVATION OF RIGHTS.....................................................................5 Section 4.5. ADDITIONAL SECURITY........................................................................5 Section 4.6. CERTIFICATE................................................................................5 Section 4.7. DISCHARGE..................................................................................5 Section 4.8. REGISTRATION...............................................................................6 Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS..................................6 Section 4.10. CALLS.....................................................................................6 Section 4.11. DELEGATION BY COLLATERAL AGENT............................................................6 Section 4.12. FURTHER ASSURANCES........................................................................6 Section 4.13. REDEMPTION OF PRIOR MORTGAGES.............................................................7 Section 4.14. POWER OF ATTORNEY.........................................................................7 Section 4.15. AVOIDANCE OF PAYMENTS.....................................................................7 Section 4.16. POWERS TO LEND............................................................................8 ARTICLE V DEALINGS WITH SECURITY ASSETS..........................................8 Section 5.1. CHARGED ACCOUNTS...........................................................................8
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Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS..............................................................8 Section 5.3. LIABILITY TO PERFORM.......................................................................8 ARTICLE VI ENFORCEMENT...................................................9 Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE..........................................................9 Section 6.2. ENFORCEMENT OF SECURITY....................................................................9 Section 6.3. REMEDIES, WAIVERS AND CONSENTS.............................................................9 Section 6.4. EXERCISE OF POWERS.........................................................................9 ARTICLE VII RECEIVER.....................................................9 Section 7.1. APPOINTMENT AND POWERS OF RECEIVER.........................................................9 Section 7.2. COMPLY WITH INSTRUCTIONS..................................................................12 Section 7.3. REMOVAL AND REMUNERATION..................................................................12 Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS...........................................12 Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION.................................................12 Section 7.6. PROTECTION OF THIRD PARTIES...............................................................13 Section 7.7. EXPENSES..................................................................................13 Section 7.8. INDEMNITY.................................................................................13 ARTICLE VIII APPLICATION OF PROCEEDS............................................14 Section 8.1. ORDER OF APPLICATION......................................................................14 Section 8.2. SUSPENSE ACCOUNTS.........................................................................14 ARTICLE IX MISCELLANEOUS PROVISIONS............................................14 Section 9.1. AMENDMENT.................................................................................14 Section 9.2. SEVERABILITY..............................................................................14 Section 9.3. NOTICES...................................................................................14 Section 9.4. CONSENT TO JURISDICTION...................................................................14 Section 9.5. CAPTIONS..................................................................................15 Section 9.6. GOVERNING LAW.............................................................................15 Section 9.7. NO PARTNERSHIP............................................................................15 Section 9.8. COUNTERPARTS..............................................................................15 Section 9.9. SURVIVAL..................................................................................15 Section 9.10. INTEGRATION..............................................................................15 Section 9.11. REPRODUCTION OF DOCUMENTS................................................................16 Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT.......................................................16 Section 9.13. GENERAL INTERPRETIVE PRINCIPLES..........................................................16 SCHEDULE 1 Defined Terms Used in the Debenture
-ii- EX-4.4 11 ISSUE OF ONE DEBENTURE -- (IOM I-B) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent and NAVIGATOR GAS (IOM I-B) LIMITED ----------------------------------------------------- ISSUE OF ONE DEBENTURE Dated as of August 1, 1997 ----------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Issue of One Debenture, dated as of August l, 1997 (the "Debenture"), from Navigator Gas (IOM I-B) Limited, a private limited company organized under the laws of the Isle of Man (the "Owner") to United States Trust Company of New York, as collateral agent, a bank and trust company organized under the New York Banking Law (the "Collateral Agent"). PRELIMINARY STATEMENT On the Issue Date, Navigator Gas Transport PLC (the "Issuer") issued Notes in connection with the financing of the construction of the Vessels. The net proceeds of such issuance were deposited into the Pre-Funding Account. Pursuant to the Intercreditor Agreement, the Allocated Principal Amount of the Notes for the Vessel has been used, INTER ALIA, to make the installments due under the Building Contract for the Vessel. The Notes are guaranteed jointly and severally by the Owner and the other Owners pursuant to the Guarantees. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston, acting through its London branch as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit"). As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings' pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 7, 1997, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The Vessel will be managed by Navigator Gas Management Limited (the "Manager") pursuant to the Management Agreement, dated as of the date hereof, among Holdings, the Owners and the Manager. As collateral security for its obligations under the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements, the Owner has and will assign, pledge, mortgage and grant the Collateral Agent a security interest in, INTER ALIA, the Vessel, the earnings and insurances of the Vessel and will grant this debenture in favor of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other valuable consideration, receipt of which is hereby acknowledged, the Owner and the Collateral Agent hereby agree as follows: ARTICLE I DEFINITIONS Unless otherwise defined in Schedule 1 to this Debenture, capitalized terms used in this Debenture shall have the meanings assigned to such terms in the Intercreditor Agreement or in the Indentures. -2- ARTICLE II COVENANT TO PAY Section 2.1. COVENANT TO PAY. The Owner hereby covenants and agrees to pay and discharge each sum owing under the Obligations as and when the same shall fall due, whether at maturity, by acceleration or otherwise. ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT Section 3.1. CHARGE. As continuing security for the Obligations, the Owner hereby: (a) conveys, transfers and assigns absolutely to and unto the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner in and to the Current Receivables by way of fixed charge; (b) mortgages, charges and assigns, and agrees to mortgage, charge and assign to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all present and future rights of the Owner in and to all freehold or leasehold property of the Owner and all other estates or interests therein together with all trade fixtures and fixed plant and machinery now and for the time being thereon, by way of a fixed charge; (c) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights now owned or hereafter acquired in and to the goodwill, franchises, patent rights, copyrights, trademarks and other intangible Assets of the Owner by way of fixed charge; (d) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights relating to the aforesaid property specified in Sections 3.1(a), (b) and (c) including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing and unpaid vendor's -3- liens and similar and associated rights, by way of fixed legal mortgage and charge; and (e) mortgages and charges in favor of the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner now owned or hereafter acquired in and to all other Security Assets for the time being of the Owner not subject to the fixed securities created by Sections 3. l(a), (b), (c) and (d) wheresoever situate (including, INTER ALIA, all undertakings and businesses of the Owner) by way of a floating charge and the Owner shall not be at liberty to create any mortgage or charge on any of the securities created by this Section 3.1(e) and no Encumbrance shall in any case or in any manner arise on or affect any part of the said securities in priority to or PARI PASSU with all charges hereby created, it being the intention that the Owner shall have no power, without the written consent of the Collateral Agent, to part with or dispose of any part of the said securities except by way of sale in the ordinary course of its business; PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction of the Obligations the rights of the Collateral Agent hereunder will terminate and the Collateral Agent will at the direction, cost and expense of the Owner release or reassign to the Owner all remaining rights of the Collateral Agent in and to the balance of the Security Assets. Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the request of the Collateral Agent execute a legal mortgage, charge or assignment over all or any of the Security Assets subject to or intended to be subject to any fixed security hereby created in favor of the Collateral Agent in such form as the Collateral Agent may reasonably require. Section 3.3. CONVERSION OF FLOATING CHARGE. The Collateral Agent may at any time by notice to the Owner convert the floating charge hereby created into a fixed charge as regards any Assets specified in the notice which the Collateral Agent shall consider to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy and (whether or not this security has become enforceable) may at any time appoint a Receiver (as defined in Section 7.1 hereof) thereof. Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in the Owner's Mortgage of its Vessel or the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements, the Owner shall not, without the prior written consent of the Collateral Agent, permit the sale, transfer, assignment lease or other disposition of any Security Asset, or any Encumbrance or other right in or over any Security Asset to subsist, arise or be created, other than such Encumbrance as is created by this Debenture. -4- Section 3.5. NEW ACCOUNTS. If the Collateral Agent receives or is deemed to be affected by notice whether actual or constructive of any subsequent Encumbrance or other interest affecting any Security Asset or the proceeds of sale thereof, the Collateral Agent may open a new account or accounts for the Owner. If the Collateral Agent does not open a new account it shall nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice and as from that time all payments made to the Collateral Agent shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount for which this Debenture is security. ARTICLE IV PRESERVATION OF SECURITY Section 4.1. CONTINUING SECURITY. The security constituted by this Debenture shall be a continuing security and shall not be satisfied by any intermediate payment or satisfaction of the Obligations but shall secure the ultimate balance of the Obligations. The security hereby given shall be in addition to and shall not be discharged, released, prejudiced or otherwise affected by any other security or Encumbrance now or hereafter held by the Collateral Agent for the Obligations. Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner under this Debenture and this security shall not be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which but for this provision might so operate or otherwise release or discharge the Owner from the Obligations, or the security created under this Debenture including without limitation and whether or not known to or discoverable by the Owner or the Collateral Agent: (a) any time, indulgence, waiver, consent or other relief granted to or composition with the Owner or any other Person; (b) the taking, variation, extension, compromise, renewal or release of, or refusal or neglect to perfect or enforce, any rights under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, agreement or obligation or any right against, or any security granted by, the Owner or any other Person; (c) any irregularity, invalidity or unenforceability of any obligation of the Owner under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, of any government or authority (whether of right or in fact) purporting to reduce or otherwise affect any such obligation to the extent that such obligation and this security shall remain in full force and this Debenture shall be construed accordingly as if there were no such irregularity, unenforceability, invalidity, law or order; -5- (d) any legal limitation, disability, incapacity or other circumstance relating to the Owner, any guarantor or any other Person; (e) any defect in or invalidity or inadequacy of the constitution or incorporation or borrowing powers of the Owner or of its board of directors, executive committee or other equivalent or analogous body or in the authorization, execution or delivery of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement, or any other guarantee, agreement or obligation; or (f) any supplement, amendment or modification to the terms of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any Security Agreement or any other guarantee. agreement or obligation. Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it may have of first requiring the Collateral Agent to proceed against or claim payment from the Owner or enforce the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, any other Security Agreement or other guarantee, agreement or obligation before enforcing this Debenture. Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations have been irrevocably paid and discharged in full, the Collateral Agent may: (a) refrain from applying or enforcing any other security, money or right held or received by the Collateral Agent in respect of the Obligations or apply and enforce the same in such manner and order as the Collateral Agent sees fit; and (b) hold in a suspense account (without liability to pay interest thereon) any moneys received or on account of this Debenture by way of a partial payment. Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in addition to and shall not in any way be prejudiced by any other security now or hereafter held by the Collateral Agent. Section 4.6. CERTIFICATE. A certificate of the Collateral Agent setting forth the amount due from the Owner in respect of the Obligations shall, in the absence of manifest error, be prima FACIE evidence of such amount. Section 4.7. DISCHARGE. Where any discharge (whether in respect of the Indentures, the Letter of Credit Reimbursement Agreement, the Obligations, this Debenture, or any other guarantee, agreement, obligation or security or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation, winding-up, dissolution or otherwise, this security and the obligations -6- of the Owner under this Debenture shall continue as if there had been no such discharge or arrangement. Section 4.8. REGISTRATION. The Owner hereby agrees to arrange for this Debenture, any Security Asset or any agreement, document or instrument relating thereto to be registered with or notified to any Person to preserve or perfect the Collateral Agent's security in any Security Asset. Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS. The Collateral Agent may without demand or notice to the Owner being required at any time after this security becomes enforceable exercise at its discretion (in the name of the Owner or otherwise) and without any further consent or authority by the Owner, any right which may be exercised by the Person in whose name any Security Asset is registered or who is the holder thereof under the terms thereof or otherwise including, but without limitation, all the powers given to trustees by statute in respect of securities or property subject to a trust; PROVIDED, HOWEVER, that until the security hereby constituted becomes enforceable, the Collateral Agent shall procure that the rights attached to each such Security Asset are exercised in such manner as the Owner shall direct so long as the same is not inconsistent with any term of the Intercreditor Agreement, this Debenture or any other Security Agreement and account to the Owner for any sum or other distribution paid in respect of such Security Asset. Section 4.10. CALLS. The Owner will for so long as the Obligations remain outstanding pay all sums which may become due in respect of the Security Assets and in the event of default the Collateral Agent may if it thinks fit make such payments on behalf of the Owner. Any sums so paid by the Collateral Agent shall be immediately due and payable by the Owner to the Collateral Agent without demand or notice being required. Section 4.11. DELEGATION BY COLLATERAL AGENT. The Collateral Agent may at any time and from time to time delegate by power of attorney or in any other manner to any Person or Persons all or any of the rights and discretions which are for the time being exercisable by the Collateral Agent under this Debenture in relation to any Security Asset. Any such delegation may be made upon such terms (including power to sub-delegate) and subject to such regulations as the Collateral Agent may think fit. The Collateral Agent shall not be in any way liable or responsible to the Owner for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate. Section 4.12. FURTHER ASSURANCES. The Owner shall at its own expense execute and deliver all such agreements, documents and instruments and do all such assurances, acts and things as the Collateral Agent may require for perfecting or protecting this security over any Security Asset or for facilitating the realization of such property and in the exercise of all rights vested in the Collateral Agent or in any sub-delegate as aforesaid. The Owner shall in particular execute all transfers, conveyances, assignments and assurances of such property whether to the Collateral Agent or its nominees and give all notices, orders and directions which the Collateral Agent may think expedient -7- and, for the purposes of this Section, a certificate in writing by the Collateral Agent to the effect that any particular assurance, act or thing required by it is reasonably required shall be conclusive evidence of such fact in favor of all third parties. Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Collateral Agent may at any time after the security hereby constituted has become enforceable redeem any prior Encumbrances against any Security Asset or procure the transfer thereof to itself and may settle and pass the accounts of the prior Encumbrances. Any accounts so settled and passed shall be conclusive and binding on the Owner. All principal moneys, interest, costs, charges and expenses of and incidental to such redemption and transfer shall be immediately due by the Owner to the Collateral Agent without notice or demand being required. Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way of security irrevocably nominates, constitutes and appoints the Collateral Agent and every Receiver of any Security Asset appointed hereunder and every such delegate or sub-delegate as aforesaid, each of them acting alone or jointly with any other of them, to be its attorney (the "Attorney") and on its behalf and in its name or otherwise to sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such assurances, acts and things which the Owner ought to do but fails to do under the covenants and provisions contained in the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture or any other Security Agreement (including without prejudice to the generality of the foregoing to make any demand upon or give any notice or receipt to any Person owing moneys to the Owner and to execute and deliver any charges, legal and equitable generally in its name and on its behalf to exercise all or any of the rights conferred by or pursuant to this Debenture or by statute on the Attorney and (without prejudice to the generality of the foregoing) to sign under seal or otherwise and deliver and otherwise perfect any assurance, agreement, instrument or act which the Attorney may deem proper in or for the purpose of exercising any of such rights). (b) The Owner hereby ratifies and confirms and agrees to ratify and confirm any such Attorney described in Section 4.14(a). Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or payment which may be avoided under any enactment relating to bankruptcy, and no release, settlement or discharge given or made by the Collateral Agent on the faith of any such assurance, security or payment, shall prejudice or affect the right of the Collateral Agent to enforce the security created by or pursuant to this Debenture in respect of the full extent of the moneys thereby secured. The Collateral Agent shall be at liberty at its absolute discretion to retain the security so created as security for the Obligations for a period of seven months in the case of fixed security and thirteen months in the case of floating security after the Obligations shall have been paid in full, notwithstanding any release, settlement, discharge or arrangement given or made by the Collateral Agent on or as a consequence of, such termination of liability. If at any time within the period of six months in the case of fixed -8- security and twelve months in the case of floating security after such termination a petition shall be presented to a competent court for an order for the winding up of the Owner or the Owner shall commence to be wound up voluntarily, the Collateral Agent shall be at liberty, notwithstanding as aforementioned, to continue to retain such security or any part thereof for and during such further period as the Collateral Agent in its absolute discretion shall determine. The Owner agrees that such security shall be deemed to have been and to have remained held by the Collateral Agent as and by way of security for the payment to the Collateral Agent of all or any sums which are now or may become due and owing to the Collateral Agent under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the rest of the Security Agreements. Section 4.16. POWERS TO LEND. The Collateral Agent may advance money on the security of any Security Asset for the purpose of defraying any costs, charges, losses and expenses which shall be paid or incurred by it in relation to this Debenture (including the remuneration of any Receiver (as hereinafter defined)) or which the Collateral Agent anticipates may be paid or incurred in the exercise of the rights vested in it or for all other purposes of this Debenture or any of them and the Collateral Agent may advance such moneys at such rates of interest and generally on such terms and conditions as it shall think fit. ARTICLE V DEALINGS WITH SECURITY ASSETS Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums hereafter received or recovered by or for it in respect of any Current Receivable to be directly credited to a separate and distinct account as the Collateral Agent may from time to time designate and, if called upon to do so by notice in writing from the Collateral Agent, shall execute an absolute assignment of any such Current Receivable in favor of the Collateral Agent, all at the cost of the Owner. Until the security hereby constituted is fully discharged in accordance with the terms hereof, the Owner shall not be entitled to withdraw any sum standing to the credit of any such account established as aforesaid without the prior written consent of the Collateral Agent. Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall, if the Collateral Agent so requires, deposit with the Collateral Agent all certificates and other documents of title or evidence of ownership in relation to the patents and rights referred to in Section 3.1(c). Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other provision herein contained to the contrary, the Owner shall remain liable to observe and perform all of the respective conditions and obligations assumed by it in respect of each Security Asset and the Collateral Agent shall be under no obligation by reason of this Debenture, nor shall the Collateral Agent be required in any manner, to perform or fulfill any obligation of the Owner in respect of any Security Asset or to make any payment or make any enquiry as to the maturity, amount, nature or sufficiency of any rental, interest, proceeds, payments or receipts received by it or them or the Owner or to present or file any -9- claim or take any other action or give any notice to collect, exercise or enforce the payment of any amount or the taking up of any rights or property to which the Owner may have been or to which it may be now or hereafter entitled thereunder at any time. ARTICLE VI ENFORCEMENT Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security hereby conferred shall become immediately enforceable and the floating charge created by this Debenture shall be deemed to have crystallized and an unrestricted power of sale together with any powers conferred by statute as varied or amended or granted by this Debenture shall be immediately exercisable by the Collateral Agent (i) if the Owner fails to meet the Obligations in the manner specified in Section 2.1 or (ii) upon and after the occurrence of any Event of Default. After this security has become enforceable, the Collateral Agent may in its discretion enforce all or any part of this security, and exercise all or any rights of enforcement hereby granted, in such manner as the Collateral Agent sees fit. Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all powers implied by statute the Obligations shall be deemed to have become due and payable on the date hereof and any statutory restrictions on the power of sale and restrictions on the right of consolidation shall not apply to this security. Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or omission of the Collateral Agent in exercising any right under this Debenture shall impair or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude any further exercise thereof or the exercise of any other right. The rights provided in this Debenture are cumulative and not exclusive of any rights provided by law, agreement or otherwise. Any waiver and any consent by the Collateral Agent under this Debenture must be in writing and may be given subject to any conditions thought fit by the Collateral Agent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. Section 6.4. EXERCISE OF POWERS. All or any of the powers conferred on a receiver by Article VII hereof may be exercised by the Collateral Agent without first appointing a Receiver or notwithstanding the appointment of a Receiver. ARTICLE VII RECEIVER Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time after this security becomes enforceable the Collateral Agent may without further notice appoint in writing under the hand of its duly authorized officer any one or more Person(s) to be a receiver or receiver and manager (hereinafter each called "a Receiver") as the Collateral Agent at its sole discretion may see fit of any -10- Security Asset in like manner in every respect as if the Collateral Agent had become entitled under this Debenture and/or under statute to exercise the power of sale thereby conferred. Every Receiver so appointed shall, in addition to any powers conferred by statute or common law, have and be entitled to exercise all rights to do any or all of the following things: (a) TAKE POSSESSION. Enter upon and take immediate possession of, get in and collect any Security Asset and undertake any works of demolition, building, reconstruction, repair or decoration thereon; (b) SELL ASSETS. Subject to any necessary consent or approval of any judicial, administrative, governmental or other regulatory body, office or agency, sell, convert into money and realize any Security Asset by public auction or private contract, dispose of, grant options and other rights in respect of and exercise all other rights conferred on an owner under any statute, at common law or otherwise, in respect of any Security Asset and generally in such manner and on such terms (which may consist wholly or partly of shares or securities of any company or body corporate) as the Receiver shall think fit and transfer, convey, assign or grant an assurance of the same in the name and on behalf of the Owner. Without prejudice to the generality of the foregoing, the Receiver may do any of these things for a consideration consisting of cash, debentures or other obligations, shares or other valuable consideration in cash or in any other form whatsoever and any such consideration may be payable in a lump sum or by installments spread over such period as the Receiver may think fit; (c) COMPROMISE. Settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands with or by any Person who is or claims to be a creditor of the Owner or relating in any way to any Security Asset; (d) Borrow and Create Security. Borrow or raise money and secure the repayment thereof and interest thereon by mortgaging, sub-mortgaging or otherwise charging any Security Asset or this Debenture (whether or not in priority to the sums and obligations secured by this Debenture) in such manner and on such terms as the Receiver shall think fit; PROVIDED, HOWEVER, that: (i) no Receiver shall exercise such right without first obtaining the written consent of the Person appointing him and the Collateral Agent shall not incur any responsibility to the Owner or any other Person by reason of giving or refusing its consent, whether directly or subject to any limitation or condition; and -11- (ii) no Person lending such money shall be concerned to enquire as to the existence of such consent or the terms thereof or as to the propriety or purpose of the exercise thereof or to see to the application of any money so borrowed or raised; (e) EMPLOY AGENTS. Employ solicitors, managers, agents and others as the Receiver shall deem necessary; (f) RECEIPTS. Give valid receipts and discharges for all moneys and claims and execute all assurances and things which may be proper or desirable for realizing any Security Assets; (g) CONSIDERATION. Receive or pay any consideration in cash or other valuable consideration and so that the same may be receivable or payable either immediately or at a later time and in a lump sum or by installments spread over such period as the Receiver shall think fit; (h) DEALINGS. Generally to deal with and effect any transaction or arrangement of any kind whatsoever in respect of any Security Asset; (i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with any Security Asset or in any way relating to the security constituted by this Debenture, to bring, take, defend, compromise, submit to and discontinue any actions, suits, arbitration or proceedings whatsoever whether civil or criminal in relation to the matters aforesaid, to enter into, complete, disclaim, abandon or disregard, determine or rectify all or any of the outstanding agreements or arrangements of the Owner in any way relating to or affecting the Security Assets or any part thereof and to allow time for payment of any debts either with or without security as the Receiver shall think expedient; (j) IN OWNER'S NAME. Generally at his option to use the name of the Owner in the exercise of all or any of the rights hereby conferred; (k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any nominee of the Owner to exercise, any rights incident to the ownership of any Security Asset in such manner as the Receiver may think fit and in particular (as regards shares, stock and securities) any voting rights conferred by the same and (as regards securities) any rights of enforcing the same by foreclosure, sale or otherwise; -12- (l) CORPORATE TRANSFERS. Transfer any Security Asset to any other company or body corporate, whether or not formed or acquired for the purpose; (m) CARRY ON BUSINESS. Generally manage and carry on and conduct any of the undertakings and businesses of the Owner; (n) CALLS. Make calls, conditionally or unconditionally, on the members of the Owner in respect of all or any part of its uncalled capital with such and the same rights of enforcement as are conferred by the Memorandum of Association and Articles of Association of the Owner upon its directors in this respect; (o) GENERAL POWERS. Sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such other acts and things as the Receiver may consider desirable or necessary for realizing any Security Asset or incidental or conducive to any of the matters or rights conferred on a Receiver under or by virtue of this Debenture and to exercise in relation to any Security Asset all such rights as the Receiver should be capable of exercising if the Receiver were the beneficial owner of the same; and (p) MONEYS RECEIVED BV RECEIVER. All moneys received by a Receiver shall after providing for the matters specified by any law be applied by him in or towards satisfaction of this Debenture and thereafter of any other Encumbrance of which he shall have notice and thereafter the Receiver shall pay the residue of the moneys received by him to the Owner. Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in the exercise of the Receiver's rights conform to any regulations and directions from time to time made and given by the Collateral Agent as appointed but so that no Person dealing with the Collateral Agent or any Receiver shall be concerned to enquire whether the Receiver has so conformed to any such regulations or directions. Section 7.3. REMOVAL AND REMUNERATION. The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may whenever it may deem it expedient appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it. Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS. All or any of the rights which are conferred by this Debenture (either expressly or impliedly) upon a Receiver of any Security Asset may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to any Security Asset without first appointing a Receiver of the same or notwithstanding the appointment of a Receiver of the same. -13- Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION. The Collateral Agent shall not nor shall any Receiver appointed as aforesaid by reason of the Collateral Agent or the Receiver entering into possession of any Security Asset be liable to account for such entry into possession or be liable for any loss or realization or for any fault or omission for which such acts may have made them liable. Every Receiver duly appointed by the Collateral Agent shall be deemed to be the agent of the Owner for all purposes and shall as such agent be deemed to be in the same position as a Receiver duly appointed under this Debenture. The Owner alone shall be responsible for its agreements, obligations, acts, omissions, defaults and losses and the Collateral Agent shall not incur any responsibility therefor (either to the Owner or to any other Person whatsoever) by reason of appointing such Receiver or for any other reason whatsoever. Every such Receiver and the Collateral Agent shall be entitled to all the rights, privileges and immunities by statute conferred on receivers when such receivers have been duly appointed. Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser, mortgagee or other Person dealing with the Collateral Agent or the Receiver or the agents of the Collateral Agent or the Receiver shall be concerned to enquire whether any of the Obligations are due or owing, the right which the Collateral Agent or the Receiver is purporting to exercise has become exercisable or any money remains due under this Debenture, as to the propriety or regularity of the actions of the Collateral Agent or such Receiver, or to see to the application of any money paid to the Collateral Agent or to such Receiver. Section 7.7. EXPENSES. All costs, charges and expenses incurred and all payments made by the Collateral Agent or any Receiver appointed hereunder in the exercise in good faith of any right hereby conferred whether or not occasioned by any act, neglect or default of the Collateral Agent or such Receiver shall bear interest from the date of the same being incurred or becoming due at the rate at which interest accrues on the Second Priority Notes. The amount of all such costs, charges, expenses and payments and all interest thereon and all remuneration payable hereunder shall be payable by the Owner on demand. All such costs, charges, expenses and payments shall be paid and charged as between the Collateral Agent and the Owner on the basis of a full indemnity and not on the basis of party and party or any other kind of taxation. Section 7.8. INDEMNITY. Each of the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and every Receiver, attorney, manager, agent or other Person appointed by the Collateral Agent hereunder shall be entitled to be indemnified out of the Security Assets in respect of all obligations, costs, charges and expenses incurred and payments made by such Person in good faith in the execution or purported execution of any right vested in such Person pursuant hereto and against all actions, proceedings, obligations, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to any Security Asset and the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and any such Receiver may retain and pay all sums in respect of the same out of any moneys received under the rights hereby conferred. -14- ARTICLE VIII APPLICATION OF PROCEEDS Section 8.1. ORDER OF APPLICATION. Any moneys received by the Collateral Agent pursuant to this Debenture or under the powers hereby conferred shall after the security hereby constituted shall have become enforceable but subject to the payment of any claims having priority to this security be applied for the purposes and in the order of priority indicated in the Intercreditor Agreement. Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the rights hereby conferred may, at the discretion of the Collateral Agent, be placed in a suspense account and kept there for so long as the Collateral Agent thinks fit. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. AMENDMENT. This Debenture may be amended from time to time by written agreement signed by the parties hereto. Section 9.2. SEVERABILITY. If any provision of this Debenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Debenture contained, shall not affect the remaining portions of this Debenture, or any part thereof. Section 9.3. NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as shall be designated by such party in a written notice to the other parties. Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action or proceeding against the Owner arising out of or relating to this Debenture, or any transaction contemplated hereby, may be instituted in any federal or state court in The City of New York, State of New York and the Owner hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and the Owner hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. To the extent the Owner has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process -15- (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement to the extent permitted by law. The Owner hereby irrevocably appoints and designates Cambridge Partners, L.L.C., having an address at 535 Madison Avenue, New York, New York, its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting servicing of legal process and the Owner agrees that service of process upon such party shall constitute personal service of such process on the Owner. The Owner shall maintain the designation and appointment of such authorized agent until all amounts payable under this Debenture shall have been paid in full. If such agent shall cease to so act, the Owner shall immediately designate and appoint another such agent satisfactory to the Collateral Agent and shall promptly deliver to the Collateral Agent evidence in writing of such other agent's acceptance of such appointment. The Owner further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect so long as this Debenture shall remain in full force and effect. Section 9.5. CAPTIONS. The captions or headings in this Debenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Debenture. Section 9.6. GOVERNING LAW. This Debenture shall be governed by and interpreted in accordance with the laws of the Isle of Man, without giving effect to the principles of conflicts of law. Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 9.8. COUNTERPARTS. This Debenture may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 9.9. SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Debenture in respect of either party hereto shall survive the execution and delivery of this Debenture and shall continue in effect so long as such party's obligations hereunder remain outstanding. Section 9.10. INTEGRATION. This Debenture and the Schedule hereto, the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or -16- representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Debenture shall be binding upon and inure to the benefit of the Owner and the Collateral Agent and their respective successors and assigns. The Owner shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Collateral Agent. The Collateral Agent, at its sole option, shall have the right to assign this Debenture and any of its rights and interest hereunder and thereunder. Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Debenture except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Debenture shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles ", "Sections", " Subsections", "paragraphs ", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Debenture; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Debenture as a whole and not to any particular provision; and -17- (f) the term "include" or "including" shall mean without limitation by reason of enumeration. IN WITNESS WHEREOF this Debenture has been executed by the Owner the day and year first above written. SIGNED, SEALED and DELIVERED ) as a Deed and Debenture ) Richard Klapow by ) Director for and on behalf of ) Navigator Gas (IOM I-C) Limited ) Geoffrey Richardson in the presence:- ) SIGNED by ) Christine C. Collins for and on behalf of ) United States Trust Company of New York as Collateral Agent ) in the presence of:- ) Adam Levine SCHEDULE 1 Defined Terms Used in the Debenture "ASSETS" means, in relation to any person, the whole or any part of its business, undertaking, property and assets and includes, without limitation, any right to receive revenues. "CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of the Owner due or owing to the Owner on account of the prevailing debit balances of the present book debts of the Owner and (b) all rights relating to the aforesaid property specified in clause (a), including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing an unpaid vendor's liens and similar and associated rights (and each reference to a "Current Receivable" shall be construed as a reference to the whole or any part of any one or more of them). "ENCUMBRANCE" means any encumbrance and includes any mortgage, charge (whether fixed or floating, pledge, lien, hypothecation, title retention or other security agreement or security interest of any kind whatsoever and howsoever arising and any equivalent or analogous interest to any of the foregoing. "PERSON" means an individual, a partnership, a corporation, a joint venture, unincorporated association, a joint stock company, a trust or any other entity or a Governmental Authority. "SECURITY ASSETS" means all of the present and future Assets of the Owner, including, INTER ALIA, the Current Receivables (and each reference to a "Security Asset" shall be construed as a reference to the whole or any part of any one or more of them).
TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT .........................................................2 ARTICLE I DEFINITIONS...................................................2 ARTICLE II COVENANT TO PAY.................................................2 Section 2.1. COVENANT TO PAY............................................................................2 ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT...............................................2 Section 3.1. CHARGE.....................................................................................2 Section 3.2. LEGAL SECURITIES...........................................................................3 Section 3.3. CONVERSION OF FLOATING CHARGE..............................................................3 Section 3.4. NEGATIVE PLEDGE............................................................................3 Section 3.5. NEW ACCOUNTS...............................................................................3 ARTICLE IV PRESERVATION OF SECURITY.............................................4 Section 4.1. CONTINUING SECURITY........................................................................4 Section 4.2. WAIVER OF DEFENSES.........................................................................4 Section 4.3. IMMEDIATE RECOURSE.........................................................................5 Section 4.4. PRESERVATION OF RIGHTS.....................................................................5 Section 4.5. ADDITIONAL SECURITY........................................................................5 Section 4.6. CERTIFICATE................................................................................5 Section 4.7. DISCHARGE..................................................................................5 Section 4.8. REGISTRATION...............................................................................6 Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS..................................6 Section 4.10. CALLS.....................................................................................6 Section 4.11. DELEGATION BY COLLATERAL AGENT............................................................6 Section 4.12. FURTHER ASSURANCES........................................................................6 Section 4.13. REDEMPTION OF PRIOR MORTGAGES.............................................................7 Section 4.14. POWER OF ATTORNEY.........................................................................7 Section 4.15. AVOIDANCE OF PAYMENTS.....................................................................7 Section 4.16. POWERS TO LEND............................................................................8 ARTICLE V DEALINGS WITH SECURITY ASSETS..........................................8 Section 5.1. CHARGED ACCOUNTS...........................................................................8
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Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS..............................................................8 Section 5.3. LIABILITY TO PERFORM.......................................................................8 ARTICLE VI ENFORCEMENT...................................................9 Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE..........................................................9 Section 6.2. ENFORCEMENT OF SECURITY....................................................................9 Section 6.3. REMEDIES, WAIVERS AND CONSENTS.............................................................9 Section 6.4. EXERCISE OF POWERS.........................................................................9 ARTICLE VII RECEIVER.....................................................9 Section 7.1. APPOINTMENT AND POWERS OF RECEIVER.........................................................9 Section 7.2. COMPLY WITH INSTRUCTIONS..................................................................12 Section 7.3. REMOVAL AND REMUNERATION..................................................................12 Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS...........................................12 Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION.................................................12 Section 7.6. PROTECTION OF THIRD PARTIES...............................................................13 Section 7.7. EXPENSES..................................................................................13 Section 7.8. INDEMNITY.................................................................................13 ARTICLE VIII APPLICATION OF PROCEEDS............................................14 Section 8.1. ORDER OF APPLICATION......................................................................14 Section 8.2. SUSPENSE ACCOUNTS.........................................................................14 ARTICLE IX MISCELLANEOUS PROVISIONS............................................14 Section 9.1. AMENDMENT.................................................................................14 Section 9.2. SEVERABILITY..............................................................................14 Section 9.3. NOTICES...................................................................................14 Section 9.4. CONSENT TO JURISDICTION...................................................................14 Section 9.5. CAPTIONS..................................................................................15 Section 9.6. GOVERNING LAW.............................................................................15 Section 9.7. NO PARTNERSHIP............................................................................15 Section 9.8. COUNTERPARTS..............................................................................15 Section 9.9. SURVIVAL..................................................................................15 Section 9.10. INTEGRATION..............................................................................15 Section 9.11. REPRODUCTION OF DOCUMENTS................................................................16 Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT.......................................................16 Section 9.13. GENERAL INTERPRETIVE PRINCIPLES..........................................................16
-ii- SCHEDULE 1 Defined Terms Used in the Debenture -iii- EX-4.5 12 ISSUE OF ONE DEBENTURE -- (IOM I-C) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent and NAVIGATOR GAS (IOM I-C) LIMITED ----------------------------------------------------- ISSUE OF ONE DEBENTURE Dated as of August 1, 1997 ----------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Issue of One Debenture, dated as of August l, 1997 (the "Debenture"), from Navigator Gas (IOM I-C) Limited, a private limited company organized under the laws of the Isle of Man (the "Owner") to United States Trust Company of New York, as collateral agent, a bank and trust company organized under the New York Banking Law (the "Collateral Agent"). PRELIMINARY STATEMENT On the Issue Date, Navigator Gas Transport PLC (the "Issuer") issued Notes in connection with the financing of the construction of the Vessels. The net proceeds of such issuance were deposited into the Pre-Funding Account. Pursuant to the Intercreditor Agreement, the Allocated Principal Amount of the Notes for the Vessel has been used, INTER ALIA, to make the installments due under the Building Contract for the Vessel. The Notes are guaranteed jointly and severally by the Owner and the other Owners pursuant to the Guarantees. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston, acting through its London branch as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit"). As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings' pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 7, 1997, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The Vessel will be managed by Navigator Gas Management Limited (the "Manager") pursuant to the Management Agreement, dated as of the date hereof, among Holdings, the Owners and the Manager. As collateral security for its obligations under the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements, the Owner has and will assign, pledge, mortgage and grant the Collateral Agent a security interest in, INTER ALIA, the Vessel, the earnings and insurances of the Vessel and will grant this debenture in favor of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other valuable consideration, receipt of which is hereby acknowledged, the Owner and the Collateral Agent hereby agree as follows: ARTICLE I DEFINITIONS Unless otherwise defined in Schedule 1 to this Debenture, capitalized terms used in this Debenture shall have the meanings assigned to such terms in the Intercreditor Agreement or in the Indentures. -2- ARTICLE II COVENANT TO PAY Section 2.1. COVENANT TO PAY. The Owner hereby covenants and agrees to pay and discharge each sum owing under the Obligations as and when the same shall fall due, whether at maturity, by acceleration or otherwise. ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT Section 3.1. CHARGE. As continuing security for the Obligations, the Owner hereby: (a) conveys, transfers and assigns absolutely to and unto the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner in and to the Current Receivables by way of fixed charge; (b) mortgages, charges and assigns, and agrees to mortgage, charge and assign to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all present and future rights of the Owner in and to all freehold or leasehold property of the Owner and all other estates or interests therein together with all trade fixtures and fixed plant and machinery now and for the time being thereon, by way of a fixed charge; (c) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights now owned or hereafter acquired in and to the goodwill, franchises, patent rights, copyrights, trademarks and other intangible Assets of the Owner by way of fixed charge; (d) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights relating to the aforesaid property specified in Sections 3.1(a), (b) and (c) including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing and unpaid vendor's -3- liens and similar and associated rights, by way of fixed legal mortgage and charge; and (e) mortgages and charges in favor of the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner now owned or hereafter acquired in and to all other Security Assets for the time being of the Owner not subject to the fixed securities created by Sections 3. l(a), (b), (c) and (d) wheresoever situate (including, INTER ALIA, all undertakings and businesses of the Owner) by way of a floating charge and the Owner shall not be at liberty to create any mortgage or charge on any of the securities created by this Section 3.1(e) and no Encumbrance shall in any case or in any manner arise on or affect any part of the said securities in priority to or PARI PASSU with all charges hereby created, it being the intention that the Owner shall have no power, without the written consent of the Collateral Agent, to part with or dispose of any part of the said securities except by way of sale in the ordinary course of its business; PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction of the Obligations the rights of the Collateral Agent hereunder will terminate and the Collateral Agent will at the direction, cost and expense of the Owner release or reassign to the Owner all remaining rights of the Collateral Agent in and to the balance of the Security Assets. Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the request of the Collateral Agent execute a legal mortgage, charge or assignment over all or any of the Security Assets subject to or intended to be subject to any fixed security hereby created in favor of the Collateral Agent in such form as the Collateral Agent may reasonably require. Section 3.3. CONVERSION OF FLOATING CHARGE. The Collateral Agent may at any time by notice to the Owner convert the floating charge hereby created into a fixed charge as regards any Assets specified in the notice which the Collateral Agent shall consider to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy and (whether or not this security has become enforceable) may at any time appoint a Receiver (as defined in Section 7.1 hereof) thereof. Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in the Owner's Mortgage of its Vessel or the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements, the Owner shall not, without the prior written consent of the Collateral Agent, permit the sale, transfer, assignment lease or other disposition of any Security Asset, or any Encumbrance or other right in or over any Security Asset to subsist, arise or be created, other than such Encumbrance as is created by this Debenture. -4- Section 3.5. NEW ACCOUNTS. If the Collateral Agent receives or is deemed to be affected by notice whether actual or constructive of any subsequent Encumbrance or other interest affecting any Security Asset or the proceeds of sale thereof, the Collateral Agent may open a new account or accounts for the Owner. If the Collateral Agent does not open a new account it shall nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice and as from that time all payments made to the Collateral Agent shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount for which this Debenture is security. ARTICLE IV PRESERVATION OF SECURITY Section 4.1. CONTINUING SECURITY. The security constituted by this Debenture shall be a continuing security and shall not be satisfied by any intermediate payment or satisfaction of the Obligations but shall secure the ultimate balance of the Obligations. The security hereby given shall be in addition to and shall not be discharged, released, prejudiced or otherwise affected by any other security or Encumbrance now or hereafter held by the Collateral Agent for the Obligations. Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner under this Debenture and this security shall not be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which but for this provision might so operate or otherwise release or discharge the Owner from the Obligations, or the security created under this Debenture including without limitation and whether or not known to or discoverable by the Owner or the Collateral Agent: (a) any time, indulgence, waiver, consent or other relief granted to or composition with the Owner or any other Person; (b) the taking, variation, extension, compromise, renewal or release of, or refusal or neglect to perfect or enforce, any rights under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, agreement or obligation or any right against, or any security granted by, the Owner or any other Person; (c) any irregularity, invalidity or unenforceability of any obligation of the Owner under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, of any government or authority (whether of right or in fact) purporting to reduce or otherwise affect any such obligation to the extent that such obligation and this security shall remain in full force and this Debenture shall be construed accordingly as if there were no such irregularity, unenforceability, invalidity, law or order; -5- (d) any legal limitation, disability, incapacity or other circumstance relating to the Owner, any guarantor or any other Person; (e) any defect in or invalidity or inadequacy of the constitution or incorporation or borrowing powers of the Owner or of its board of directors, executive committee or other equivalent or analogous body or in the authorization, execution or delivery of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement, or any other guarantee, agreement or obligation; or (f) any supplement, amendment or modification to the terms of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any Security Agreement or any other guarantee. agreement or obligation. Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it may have of first requiring the Collateral Agent to proceed against or claim payment from the Owner or enforce the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, any other Security Agreement or other guarantee, agreement or obligation before enforcing this Debenture. Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations have been irrevocably paid and discharged in full, the Collateral Agent may: (a) refrain from applying or enforcing any other security, money or right held or received by the Collateral Agent in respect of the Obligations or apply and enforce the same in such manner and order as the Collateral Agent sees fit; and (b) hold in a suspense account (without liability to pay interest thereon) any moneys received or on account of this Debenture by way of a partial payment. Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in addition to and shall not in any way be prejudiced by any other security now or hereafter held by the Collateral Agent. Section 4.6. CERTIFICATE. A certificate of the Collateral Agent setting forth the amount due from the Owner in respect of the Obligations shall, in the absence of manifest error, be prima FACIE evidence of such amount. Section 4.7. DISCHARGE. Where any discharge (whether in respect of the Indentures, the Letter of Credit Reimbursement Agreement, the Obligations, this Debenture, or any other guarantee, agreement, obligation or security or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation, winding-up, dissolution or otherwise, this security and the obligations -6- of the Owner under this Debenture shall continue as if there had been no such discharge or arrangement. Section 4.8. REGISTRATION. The Owner hereby agrees to arrange for this Debenture, any Security Asset or any agreement, document or instrument relating thereto to be registered with or notified to any Person to preserve or perfect the Collateral Agent's security in any Security Asset. Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS. The Collateral Agent may without demand or notice to the Owner being required at any time after this security becomes enforceable exercise at its discretion (in the name of the Owner or otherwise) and without any further consent or authority by the Owner, any right which may be exercised by the Person in whose name any Security Asset is registered or who is the holder thereof under the terms thereof or otherwise including, but without limitation, all the powers given to trustees by statute in respect of securities or property subject to a trust; PROVIDED, HOWEVER, that until the security hereby constituted becomes enforceable, the Collateral Agent shall procure that the rights attached to each such Security Asset are exercised in such manner as the Owner shall direct so long as the same is not inconsistent with any term of the Intercreditor Agreement, this Debenture or any other Security Agreement and account to the Owner for any sum or other distribution paid in respect of such Security Asset. Section 4.10. CALLS. The Owner will for so long as the Obligations remain outstanding pay all sums which may become due in respect of the Security Assets and in the event of default the Collateral Agent may if it thinks fit make such payments on behalf of the Owner. Any sums so paid by the Collateral Agent shall be immediately due and payable by the Owner to the Collateral Agent without demand or notice being required. Section 4.11. DELEGATION BY COLLATERAL AGENT. The Collateral Agent may at any time and from time to time delegate by power of attorney or in any other manner to any Person or Persons all or any of the rights and discretions which are for the time being exercisable by the Collateral Agent under this Debenture in relation to any Security Asset. Any such delegation may be made upon such terms (including power to sub-delegate) and subject to such regulations as the Collateral Agent may think fit. The Collateral Agent shall not be in any way liable or responsible to the Owner for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate. Section 4.12. FURTHER ASSURANCES. The Owner shall at its own expense execute and deliver all such agreements, documents and instruments and do all such assurances, acts and things as the Collateral Agent may require for perfecting or protecting this security over any Security Asset or for facilitating the realization of such property and in the exercise of all rights vested in the Collateral Agent or in any sub-delegate as aforesaid. The Owner shall in particular execute all transfers, conveyances, assignments and assurances of such property whether to the Collateral Agent or its nominees and give all notices, orders and directions which the Collateral Agent may think expedient -7- and, for the purposes of this Section, a certificate in writing by the Collateral Agent to the effect that any particular assurance, act or thing required by it is reasonably required shall be conclusive evidence of such fact in favor of all third parties. Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Collateral Agent may at any time after the security hereby constituted has become enforceable redeem any prior Encumbrances against any Security Asset or procure the transfer thereof to itself and may settle and pass the accounts of the prior Encumbrances. Any accounts so settled and passed shall be conclusive and binding on the Owner. All principal moneys, interest, costs, charges and expenses of and incidental to such redemption and transfer shall be immediately due by the Owner to the Collateral Agent without notice or demand being required. Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way of security irrevocably nominates, constitutes and appoints the Collateral Agent and every Receiver of any Security Asset appointed hereunder and every such delegate or sub-delegate as aforesaid, each of them acting alone or jointly with any other of them, to be its attorney (the "Attorney") and on its behalf and in its name or otherwise to sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such assurances, acts and things which the Owner ought to do but fails to do under the covenants and provisions contained in the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture or any other Security Agreement (including without prejudice to the generality of the foregoing to make any demand upon or give any notice or receipt to any Person owing moneys to the Owner and to execute and deliver any charges, legal and equitable generally in its name and on its behalf to exercise all or any of the rights conferred by or pursuant to this Debenture or by statute on the Attorney and (without prejudice to the generality of the foregoing) to sign under seal or otherwise and deliver and otherwise perfect any assurance, agreement, instrument or act which the Attorney may deem proper in or for the purpose of exercising any of such rights). (b) The Owner hereby ratifies and confirms and agrees to ratify and confirm any such Attorney described in Section 4.14(a). Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or payment which may be avoided under any enactment relating to bankruptcy, and no release, settlement or discharge given or made by the Collateral Agent on the faith of any such assurance, security or payment, shall prejudice or affect the right of the Collateral Agent to enforce the security created by or pursuant to this Debenture in respect of the full extent of the moneys thereby secured. The Collateral Agent shall be at liberty at its absolute discretion to retain the security so created as security for the Obligations for a period of seven months in the case of fixed security and thirteen months in the case of floating security after the Obligations shall have been paid in full, notwithstanding any release, settlement, discharge or arrangement given or made by the Collateral Agent on or as a consequence of, such termination of liability. If at any time within the period of six months in the case of fixed -8- security and twelve months in the case of floating security after such termination a petition shall be presented to a competent court for an order for the winding up of the Owner or the Owner shall commence to be wound up voluntarily, the Collateral Agent shall be at liberty, notwithstanding as aforementioned, to continue to retain such security or any part thereof for and during such further period as the Collateral Agent in its absolute discretion shall determine. The Owner agrees that such security shall be deemed to have been and to have remained held by the Collateral Agent as and by way of security for the payment to the Collateral Agent of all or any sums which are now or may become due and owing to the Collateral Agent under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the rest of the Security Agreements. Section 4.16. POWERS TO LEND. The Collateral Agent may advance money on the security of any Security Asset for the purpose of defraying any costs, charges, losses and expenses which shall be paid or incurred by it in relation to this Debenture (including the remuneration of any Receiver (as hereinafter defined)) or which the Collateral Agent anticipates may be paid or incurred in the exercise of the rights vested in it or for all other purposes of this Debenture or any of them and the Collateral Agent may advance such moneys at such rates of interest and generally on such terms and conditions as it shall think fit. ARTICLE V DEALINGS WITH SECURITY ASSETS Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums hereafter received or recovered by or for it in respect of any Current Receivable to be directly credited to a separate and distinct account as the Collateral Agent may from time to time designate and, if called upon to do so by notice in writing from the Collateral Agent, shall execute an absolute assignment of any such Current Receivable in favor of the Collateral Agent, all at the cost of the Owner. Until the security hereby constituted is fully discharged in accordance with the terms hereof, the Owner shall not be entitled to withdraw any sum standing to the credit of any such account established as aforesaid without the prior written consent of the Collateral Agent. Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall, if the Collateral Agent so requires, deposit with the Collateral Agent all certificates and other documents of title or evidence of ownership in relation to the patents and rights referred to in Section 3.1(c). Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other provision herein contained to the contrary, the Owner shall remain liable to observe and perform all of the respective conditions and obligations assumed by it in respect of each Security Asset and the Collateral Agent shall be under no obligation by reason of this Debenture, nor shall the Collateral Agent be required in any manner, to perform or fulfill any obligation of the Owner in respect of any Security Asset or to make any payment or make any enquiry as to the maturity, amount, nature or sufficiency of any rental, interest, proceeds, payments or receipts received by it or them or the Owner or to present or file any -9- claim or take any other action or give any notice to collect, exercise or enforce the payment of any amount or the taking up of any rights or property to which the Owner may have been or to which it may be now or hereafter entitled thereunder at any time. ARTICLE VI ENFORCEMENT Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security hereby conferred shall become immediately enforceable and the floating charge created by this Debenture shall be deemed to have crystallized and an unrestricted power of sale together with any powers conferred by statute as varied or amended or granted by this Debenture shall be immediately exercisable by the Collateral Agent (i) if the Owner fails to meet the Obligations in the manner specified in Section 2.1 or (ii) upon and after the occurrence of any Event of Default. After this security has become enforceable, the Collateral Agent may in its discretion enforce all or any part of this security, and exercise all or any rights of enforcement hereby granted, in such manner as the Collateral Agent sees fit. Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all powers implied by statute the Obligations shall be deemed to have become due and payable on the date hereof and any statutory restrictions on the power of sale and restrictions on the right of consolidation shall not apply to this security. Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or omission of the Collateral Agent in exercising any right under this Debenture shall impair or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude any further exercise thereof or the exercise of any other right. The rights provided in this Debenture are cumulative and not exclusive of any rights provided by law, agreement or otherwise. Any waiver and any consent by the Collateral Agent under this Debenture must be in writing and may be given subject to any conditions thought fit by the Collateral Agent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. Section 6.4. EXERCISE OF POWERS. All or any of the powers conferred on a receiver by Article VII hereof may be exercised by the Collateral Agent without first appointing a Receiver or notwithstanding the appointment of a Receiver. ARTICLE VII RECEIVER Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time after this security becomes enforceable the Collateral Agent may without further notice appoint in writing under the hand of its duly authorized officer any one or more Person(s) to be a receiver or receiver and manager (hereinafter each called "a Receiver") as the Collateral Agent at its sole discretion may see fit of any -10- Security Asset in like manner in every respect as if the Collateral Agent had become entitled under this Debenture and/or under statute to exercise the power of sale thereby conferred. Every Receiver so appointed shall, in addition to any powers conferred by statute or common law, have and be entitled to exercise all rights to do any or all of the following things: (a) TAKE POSSESSION. Enter upon and take immediate possession of, get in and collect any Security Asset and undertake any works of demolition, building, reconstruction, repair or decoration thereon; (b) SELL ASSETS. Subject to any necessary consent or approval of any judicial, administrative, governmental or other regulatory body, office or agency, sell, convert into money and realize any Security Asset by public auction or private contract, dispose of, grant options and other rights in respect of and exercise all other rights conferred on an owner under any statute, at common law or otherwise, in respect of any Security Asset and generally in such manner and on such terms (which may consist wholly or partly of shares or securities of any company or body corporate) as the Receiver shall think fit and transfer, convey, assign or grant an assurance of the same in the name and on behalf of the Owner. Without prejudice to the generality of the foregoing, the Receiver may do any of these things for a consideration consisting of cash, debentures or other obligations, shares or other valuable consideration in cash or in any other form whatsoever and any such consideration may be payable in a lump sum or by installments spread over such period as the Receiver may think fit; (c) COMPROMISE. Settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands with or by any Person who is or claims to be a creditor of the Owner or relating in any way to any Security Asset; (d) Borrow and Create Security. Borrow or raise money and secure the repayment thereof and interest thereon by mortgaging, sub-mortgaging or otherwise charging any Security Asset or this Debenture (whether or not in priority to the sums and obligations secured by this Debenture) in such manner and on such terms as the Receiver shall think fit; PROVIDED, HOWEVER, that: (i) no Receiver shall exercise such right without first obtaining the written consent of the Person appointing him and the Collateral Agent shall not incur any responsibility to the Owner or any other Person by reason of giving or refusing its consent, whether directly or subject to any limitation or condition; and -11- (ii) no Person lending such money shall be concerned to enquire as to the existence of such consent or the terms thereof or as to the propriety or purpose of the exercise thereof or to see to the application of any money so borrowed or raised; (e) EMPLOY AGENTS. Employ solicitors, managers, agents and others as the Receiver shall deem necessary; (f) RECEIPTS. Give valid receipts and discharges for all moneys and claims and execute all assurances and things which may be proper or desirable for realizing any Security Assets; (g) CONSIDERATION. Receive or pay any consideration in cash or other valuable consideration and so that the same may be receivable or payable either immediately or at a later time and in a lump sum or by installments spread over such period as the Receiver shall think fit; (h) DEALINGS. Generally to deal with and effect any transaction or arrangement of any kind whatsoever in respect of any Security Asset; (i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with any Security Asset or in any way relating to the security constituted by this Debenture, to bring, take, defend, compromise, submit to and discontinue any actions, suits, arbitration or proceedings whatsoever whether civil or criminal in relation to the matters aforesaid, to enter into, complete, disclaim, abandon or disregard, determine or rectify all or any of the outstanding agreements or arrangements of the Owner in any way relating to or affecting the Security Assets or any part thereof and to allow time for payment of any debts either with or without security as the Receiver shall think expedient; (j) IN OWNER'S NAME. Generally at his option to use the name of the Owner in the exercise of all or any of the rights hereby conferred; (k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any nominee of the Owner to exercise, any rights incident to the ownership of any Security Asset in such manner as the Receiver may think fit and in particular (as regards shares, stock and securities) any voting rights conferred by the same and (as regards securities) any rights of enforcing the same by foreclosure, sale or otherwise; -12- (l) CORPORATE TRANSFERS. Transfer any Security Asset to any other company or body corporate, whether or not formed or acquired for the purpose; (m) CARRY ON BUSINESS. Generally manage and carry on and conduct any of the undertakings and businesses of the Owner; (n) CALLS. Make calls, conditionally or unconditionally, on the members of the Owner in respect of all or any part of its uncalled capital with such and the same rights of enforcement as are conferred by the Memorandum of Association and Articles of Association of the Owner upon its directors in this respect; (o) GENERAL POWERS. Sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such other acts and things as the Receiver may consider desirable or necessary for realizing any Security Asset or incidental or conducive to any of the matters or rights conferred on a Receiver under or by virtue of this Debenture and to exercise in relation to any Security Asset all such rights as the Receiver should be capable of exercising if the Receiver were the beneficial owner of the same; and (p) MONEYS RECEIVED BV RECEIVER. All moneys received by a Receiver shall after providing for the matters specified by any law be applied by him in or towards satisfaction of this Debenture and thereafter of any other Encumbrance of which he shall have notice and thereafter the Receiver shall pay the residue of the moneys received by him to the Owner. Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in the exercise of the Receiver's rights conform to any regulations and directions from time to time made and given by the Collateral Agent as appointed but so that no Person dealing with the Collateral Agent or any Receiver shall be concerned to enquire whether the Receiver has so conformed to any such regulations or directions. Section 7.3. REMOVAL AND REMUNERATION. The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may whenever it may deem it expedient appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it. Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS. All or any of the rights which are conferred by this Debenture (either expressly or impliedly) upon a Receiver of any Security Asset may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to any Security Asset without first appointing a Receiver of the same or notwithstanding the appointment of a Receiver of the same. -13- Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION. The Collateral Agent shall not nor shall any Receiver appointed as aforesaid by reason of the Collateral Agent or the Receiver entering into possession of any Security Asset be liable to account for such entry into possession or be liable for any loss or realization or for any fault or omission for which such acts may have made them liable. Every Receiver duly appointed by the Collateral Agent shall be deemed to be the agent of the Owner for all purposes and shall as such agent be deemed to be in the same position as a Receiver duly appointed under this Debenture. The Owner alone shall be responsible for its agreements, obligations, acts, omissions, defaults and losses and the Collateral Agent shall not incur any responsibility therefor (either to the Owner or to any other Person whatsoever) by reason of appointing such Receiver or for any other reason whatsoever. Every such Receiver and the Collateral Agent shall be entitled to all the rights, privileges and immunities by statute conferred on receivers when such receivers have been duly appointed. Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser, mortgagee or other Person dealing with the Collateral Agent or the Receiver or the agents of the Collateral Agent or the Receiver shall be concerned to enquire whether any of the Obligations are due or owing, the right which the Collateral Agent or the Receiver is purporting to exercise has become exercisable or any money remains due under this Debenture, as to the propriety or regularity of the actions of the Collateral Agent or such Receiver, or to see to the application of any money paid to the Collateral Agent or to such Receiver. Section 7.7. EXPENSES. All costs, charges and expenses incurred and all payments made by the Collateral Agent or any Receiver appointed hereunder in the exercise in good faith of any right hereby conferred whether or not occasioned by any act, neglect or default of the Collateral Agent or such Receiver shall bear interest from the date of the same being incurred or becoming due at the rate at which interest accrues on the Second Priority Notes. The amount of all such costs, charges, expenses and payments and all interest thereon and all remuneration payable hereunder shall be payable by the Owner on demand. All such costs, charges, expenses and payments shall be paid and charged as between the Collateral Agent and the Owner on the basis of a full indemnity and not on the basis of party and party or any other kind of taxation. Section 7.8. INDEMNITY. Each of the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and every Receiver, attorney, manager, agent or other Person appointed by the Collateral Agent hereunder shall be entitled to be indemnified out of the Security Assets in respect of all obligations, costs, charges and expenses incurred and payments made by such Person in good faith in the execution or purported execution of any right vested in such Person pursuant hereto and against all actions, proceedings, obligations, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to any Security Asset and the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and any such Receiver may retain and pay all sums in respect of the same out of any moneys received under the rights hereby conferred. -14- ARTICLE VIII APPLICATION OF PROCEEDS Section 8.1. ORDER OF APPLICATION. Any moneys received by the Collateral Agent pursuant to this Debenture or under the powers hereby conferred shall after the security hereby constituted shall have become enforceable but subject to the payment of any claims having priority to this security be applied for the purposes and in the order of priority indicated in the Intercreditor Agreement. Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the rights hereby conferred may, at the discretion of the Collateral Agent, be placed in a suspense account and kept there for so long as the Collateral Agent thinks fit. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. AMENDMENT. This Debenture may be amended from time to time by written agreement signed by the parties hereto. Section 9.2. SEVERABILITY. If any provision of this Debenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Debenture contained, shall not affect the remaining portions of this Debenture, or any part thereof. Section 9.3. NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as shall be designated by such party in a written notice to the other parties. Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action or proceeding against the Owner arising out of or relating to this Debenture, or any transaction contemplated hereby, may be instituted in any federal or state court in The City of New York, State of New York and the Owner hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and the Owner hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. To the extent the Owner has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process -15- (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement to the extent permitted by law. The Owner hereby irrevocably appoints and designates Cambridge Partners, L.L.C., having an address at 535 Madison Avenue, New York, New York, its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting servicing of legal process and the Owner agrees that service of process upon such party shall constitute personal service of such process on the Owner. The Owner shall maintain the designation and appointment of such authorized agent until all amounts payable under this Debenture shall have been paid in full. If such agent shall cease to so act, the Owner shall immediately designate and appoint another such agent satisfactory to the Collateral Agent and shall promptly deliver to the Collateral Agent evidence in writing of such other agent's acceptance of such appointment. The Owner further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect so long as this Debenture shall remain in full force and effect. Section 9.5. CAPTIONS. The captions or headings in this Debenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Debenture. Section 9.6. GOVERNING LAW. This Debenture shall be governed by and interpreted in accordance with the laws of the Isle of Man, without giving effect to the principles of conflicts of law. Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 9.8. COUNTERPARTS. This Debenture may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 9.9. SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Debenture in respect of either party hereto shall survive the execution and delivery of this Debenture and shall continue in effect so long as such party's obligations hereunder remain outstanding. Section 9.10. INTEGRATION. This Debenture and the Schedule hereto, the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or -16- representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Debenture shall be binding upon and inure to the benefit of the Owner and the Collateral Agent and their respective successors and assigns. The Owner shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Collateral Agent. The Collateral Agent, at its sole option, shall have the right to assign this Debenture and any of its rights and interest hereunder and thereunder. Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Debenture except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Debenture shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles ", "Sections", " Subsections", "paragraphs ", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Debenture; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Debenture as a whole and not to any particular provision; and -17- (f) the term "include" or "including" shall mean without limitation by reason of enumeration. IN WITNESS WHEREOF this Debenture has been executed by the Owner the day and year first above written. SIGNED, SEALED and DELIVERED ) as a Deed and Debenture ) Richard Klapow by ) Director for and on behalf of ) Navigator Gas (IOM I-C) Limited ) Geoffrey Richardson in the presence:- ) SIGNED by ) Christine C. Collins for and on behalf of ) United States Trust Company of New York as Collateral Agent ) in the presence of:- ) Adam Levine SCHEDULE 1 Defined Terms Used in the Debenture "ASSETS" means, in relation to any person, the whole or any part of its business, undertaking, property and assets and includes, without limitation, any right to receive revenues. "CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of the Owner due or owing to the Owner on account of the prevailing debit balances of the present book debts of the Owner and (b) all rights relating to the aforesaid property specified in clause (a), including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing an unpaid vendor's liens and similar and associated rights (and each reference to a "Current Receivable" shall be construed as a reference to the whole or any part of any one or more of them). "ENCUMBRANCE" means any encumbrance and includes any mortgage, charge (whether fixed or floating, pledge, lien, hypothecation, title retention or other security agreement or security interest of any kind whatsoever and howsoever arising and any equivalent or analogous interest to any of the foregoing. "PERSON" means an individual, a partnership, a corporation, a joint venture, unincorporated association, a joint stock company, a trust or any other entity or a Governmental Authority. "SECURITY ASSETS" means all of the present and future Assets of the Owner, including, INTER ALIA, the Current Receivables (and each reference to a "Security Asset" shall be construed as a reference to the whole or any part of any one or more of them).
TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT .........................................................2 ARTICLE I DEFINITIONS...................................................2 ARTICLE II COVENANT TO PAY.................................................2 Section 2.1. COVENANT TO PAY............................................................................2 ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT...............................................2 Section 3.1. CHARGE.....................................................................................2 Section 3.2. LEGAL SECURITIES...........................................................................3 Section 3.3. CONVERSION OF FLOATING CHARGE..............................................................3 Section 3.4. NEGATIVE PLEDGE............................................................................3 Section 3.5. NEW ACCOUNTS...............................................................................3 ARTICLE IV PRESERVATION OF SECURITY.............................................4 Section 4.1. CONTINUING SECURITY........................................................................4 Section 4.2. WAIVER OF DEFENSES.........................................................................4 Section 4.3. IMMEDIATE RECOURSE.........................................................................5 Section 4.4. PRESERVATION OF RIGHTS.....................................................................5 Section 4.5. ADDITIONAL SECURITY........................................................................5 Section 4.6. CERTIFICATE................................................................................5 Section 4.7. DISCHARGE..................................................................................5 Section 4.8. REGISTRATION...............................................................................6 Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS..................................6 Section 4.10. CALLS.....................................................................................6 Section 4.11. DELEGATION BY COLLATERAL AGENT............................................................6 Section 4.12. FURTHER ASSURANCES........................................................................6 Section 4.13. REDEMPTION OF PRIOR MORTGAGES.............................................................7 Section 4.14. POWER OF ATTORNEY.........................................................................7 Section 4.15. AVOIDANCE OF PAYMENTS.....................................................................7 Section 4.16. POWERS TO LEND............................................................................8 ARTICLE V DEALINGS WITH SECURITY ASSETS..........................................8 Section 5.1. CHARGED ACCOUNTS...........................................................................8
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Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS..............................................................8 Section 5.3. LIABILITY TO PERFORM.......................................................................8 ARTICLE VI ENFORCEMENT...................................................9 Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE..........................................................9 Section 6.2. ENFORCEMENT OF SECURITY....................................................................9 Section 6.3. REMEDIES, WAIVERS AND CONSENTS.............................................................9 Section 6.4. EXERCISE OF POWERS.........................................................................9 ARTICLE VII RECEIVER.....................................................9 Section 7.1. APPOINTMENT AND POWERS OF RECEIVER.........................................................9 Section 7.2. COMPLY WITH INSTRUCTIONS..................................................................12 Section 7.3. REMOVAL AND REMUNERATION..................................................................12 Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS...........................................12 Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION.................................................12 Section 7.6. PROTECTION OF THIRD PARTIES...............................................................13 Section 7.7. EXPENSES..................................................................................13 Section 7.8. INDEMNITY.................................................................................13 ARTICLE VIII APPLICATION OF PROCEEDS............................................14 Section 8.1. ORDER OF APPLICATION......................................................................14 Section 8.2. SUSPENSE ACCOUNTS.........................................................................14 ARTICLE IX MISCELLANEOUS PROVISIONS............................................14 Section 9.1. AMENDMENT.................................................................................14 Section 9.2. SEVERABILITY..............................................................................14 Section 9.3. NOTICES...................................................................................14 Section 9.4. CONSENT TO JURISDICTION...................................................................14 Section 9.5. CAPTIONS..................................................................................15 Section 9.6. GOVERNING LAW.............................................................................15 Section 9.7. NO PARTNERSHIP............................................................................15 Section 9.8. COUNTERPARTS..............................................................................15 Section 9.9. SURVIVAL..................................................................................15 Section 9.10. INTEGRATION..............................................................................15 Section 9.11. REPRODUCTION OF DOCUMENTS................................................................16 Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT.......................................................16 Section 9.13. GENERAL INTERPRETIVE PRINCIPLES..........................................................16
-ii- SCHEDULE 1 Defined Terms Used in the Debenture -iii- EX-4.6 13 ISSUE OF ONE DEBENTURE -- (IOM I-D) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent and NAVIGATOR GAS (IOM I-D) LIMITED ----------------------------------------------------- ISSUE OF ONE DEBENTURE Dated as of August 1, 1997 ----------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Issue of One Debenture, dated as of August l, 1997 (the "Debenture"), from Navigator Gas (IOM I-D) Limited, a private limited company organized under the laws of the Isle of Man (the "Owner") to United States Trust Company of New York, as collateral agent, a bank and trust company organized under the New York Banking Law (the "Collateral Agent"). PRELIMINARY STATEMENT On the Issue Date, Navigator Gas Transport PLC (the "Issuer") issued Notes in connection with the financing of the construction of the Vessels. The net proceeds of such issuance were deposited into the Pre-Funding Account. Pursuant to the Intercreditor Agreement, the Allocated Principal Amount of the Notes for the Vessel has been used, INTER ALIA, to make the installments due under the Building Contract for the Vessel. The Notes are guaranteed jointly and severally by the Owner and the other Owners pursuant to the Guarantees. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston, acting through its London branch as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit"). As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings' pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 7, 1997, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The Vessel will be managed by Navigator Gas Management Limited (the "Manager") pursuant to the Management Agreement, dated as of the date hereof, among Holdings, the Owners and the Manager. As collateral security for its obligations under the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements, the Owner has and will assign, pledge, mortgage and grant the Collateral Agent a security interest in, INTER ALIA, the Vessel, the earnings and insurances of the Vessel and will grant this debenture in favor of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other valuable consideration, receipt of which is hereby acknowledged, the Owner and the Collateral Agent hereby agree as follows: ARTICLE I DEFINITIONS Unless otherwise defined in Schedule 1 to this Debenture, capitalized terms used in this Debenture shall have the meanings assigned to such terms in the Intercreditor Agreement or in the Indentures. -2- ARTICLE II COVENANT TO PAY Section 2.1. COVENANT TO PAY. The Owner hereby covenants and agrees to pay and discharge each sum owing under the Obligations as and when the same shall fall due, whether at maturity, by acceleration or otherwise. ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT Section 3.1. CHARGE. As continuing security for the Obligations, the Owner hereby: (a) conveys, transfers and assigns absolutely to and unto the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner in and to the Current Receivables by way of fixed charge; (b) mortgages, charges and assigns, and agrees to mortgage, charge and assign to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all present and future rights of the Owner in and to all freehold or leasehold property of the Owner and all other estates or interests therein together with all trade fixtures and fixed plant and machinery now and for the time being thereon, by way of a fixed charge; (c) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights now owned or hereafter acquired in and to the goodwill, franchises, patent rights, copyrights, trademarks and other intangible Assets of the Owner by way of fixed charge; (d) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights relating to the aforesaid property specified in Sections 3.1(a), (b) and (c) including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing and unpaid vendor's -3- liens and similar and associated rights, by way of fixed legal mortgage and charge; and (e) mortgages and charges in favor of the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner now owned or hereafter acquired in and to all other Security Assets for the time being of the Owner not subject to the fixed securities created by Sections 3. l(a), (b), (c) and (d) wheresoever situate (including, INTER ALIA, all undertakings and businesses of the Owner) by way of a floating charge and the Owner shall not be at liberty to create any mortgage or charge on any of the securities created by this Section 3.1(e) and no Encumbrance shall in any case or in any manner arise on or affect any part of the said securities in priority to or PARI PASSU with all charges hereby created, it being the intention that the Owner shall have no power, without the written consent of the Collateral Agent, to part with or dispose of any part of the said securities except by way of sale in the ordinary course of its business; PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction of the Obligations the rights of the Collateral Agent hereunder will terminate and the Collateral Agent will at the direction, cost and expense of the Owner release or reassign to the Owner all remaining rights of the Collateral Agent in and to the balance of the Security Assets. Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the request of the Collateral Agent execute a legal mortgage, charge or assignment over all or any of the Security Assets subject to or intended to be subject to any fixed security hereby created in favor of the Collateral Agent in such form as the Collateral Agent may reasonably require. Section 3.3. CONVERSION OF FLOATING CHARGE. The Collateral Agent may at any time by notice to the Owner convert the floating charge hereby created into a fixed charge as regards any Assets specified in the notice which the Collateral Agent shall consider to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy and (whether or not this security has become enforceable) may at any time appoint a Receiver (as defined in Section 7.1 hereof) thereof. Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in the Owner's Mortgage of its Vessel or the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements, the Owner shall not, without the prior written consent of the Collateral Agent, permit the sale, transfer, assignment lease or other disposition of any Security Asset, or any Encumbrance or other right in or over any Security Asset to subsist, arise or be created, other than such Encumbrance as is created by this Debenture. -4- Section 3.5. NEW ACCOUNTS. If the Collateral Agent receives or is deemed to be affected by notice whether actual or constructive of any subsequent Encumbrance or other interest affecting any Security Asset or the proceeds of sale thereof, the Collateral Agent may open a new account or accounts for the Owner. If the Collateral Agent does not open a new account it shall nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice and as from that time all payments made to the Collateral Agent shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount for which this Debenture is security. ARTICLE IV PRESERVATION OF SECURITY Section 4.1. CONTINUING SECURITY. The security constituted by this Debenture shall be a continuing security and shall not be satisfied by any intermediate payment or satisfaction of the Obligations but shall secure the ultimate balance of the Obligations. The security hereby given shall be in addition to and shall not be discharged, released, prejudiced or otherwise affected by any other security or Encumbrance now or hereafter held by the Collateral Agent for the Obligations. Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner under this Debenture and this security shall not be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which but for this provision might so operate or otherwise release or discharge the Owner from the Obligations, or the security created under this Debenture including without limitation and whether or not known to or discoverable by the Owner or the Collateral Agent: (a) any time, indulgence, waiver, consent or other relief granted to or composition with the Owner or any other Person; (b) the taking, variation, extension, compromise, renewal or release of, or refusal or neglect to perfect or enforce, any rights under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, agreement or obligation or any right against, or any security granted by, the Owner or any other Person; (c) any irregularity, invalidity or unenforceability of any obligation of the Owner under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, of any government or authority (whether of right or in fact) purporting to reduce or otherwise affect any such obligation to the extent that such obligation and this security shall remain in full force and this Debenture shall be construed accordingly as if there were no such irregularity, unenforceability, invalidity, law or order; -5- (d) any legal limitation, disability, incapacity or other circumstance relating to the Owner, any guarantor or any other Person; (e) any defect in or invalidity or inadequacy of the constitution or incorporation or borrowing powers of the Owner or of its board of directors, executive committee or other equivalent or analogous body or in the authorization, execution or delivery of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement, or any other guarantee, agreement or obligation; or (f) any supplement, amendment or modification to the terms of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any Security Agreement or any other guarantee. agreement or obligation. Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it may have of first requiring the Collateral Agent to proceed against or claim payment from the Owner or enforce the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, any other Security Agreement or other guarantee, agreement or obligation before enforcing this Debenture. Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations have been irrevocably paid and discharged in full, the Collateral Agent may: (a) refrain from applying or enforcing any other security, money or right held or received by the Collateral Agent in respect of the Obligations or apply and enforce the same in such manner and order as the Collateral Agent sees fit; and (b) hold in a suspense account (without liability to pay interest thereon) any moneys received or on account of this Debenture by way of a partial payment. Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in addition to and shall not in any way be prejudiced by any other security now or hereafter held by the Collateral Agent. Section 4.6. CERTIFICATE. A certificate of the Collateral Agent setting forth the amount due from the Owner in respect of the Obligations shall, in the absence of manifest error, be prima FACIE evidence of such amount. Section 4.7. DISCHARGE. Where any discharge (whether in respect of the Indentures, the Letter of Credit Reimbursement Agreement, the Obligations, this Debenture, or any other guarantee, agreement, obligation or security or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation, winding-up, dissolution or otherwise, this security and the obligations -6- of the Owner under this Debenture shall continue as if there had been no such discharge or arrangement. Section 4.8. REGISTRATION. The Owner hereby agrees to arrange for this Debenture, any Security Asset or any agreement, document or instrument relating thereto to be registered with or notified to any Person to preserve or perfect the Collateral Agent's security in any Security Asset. Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS. The Collateral Agent may without demand or notice to the Owner being required at any time after this security becomes enforceable exercise at its discretion (in the name of the Owner or otherwise) and without any further consent or authority by the Owner, any right which may be exercised by the Person in whose name any Security Asset is registered or who is the holder thereof under the terms thereof or otherwise including, but without limitation, all the powers given to trustees by statute in respect of securities or property subject to a trust; PROVIDED, HOWEVER, that until the security hereby constituted becomes enforceable, the Collateral Agent shall procure that the rights attached to each such Security Asset are exercised in such manner as the Owner shall direct so long as the same is not inconsistent with any term of the Intercreditor Agreement, this Debenture or any other Security Agreement and account to the Owner for any sum or other distribution paid in respect of such Security Asset. Section 4.10. CALLS. The Owner will for so long as the Obligations remain outstanding pay all sums which may become due in respect of the Security Assets and in the event of default the Collateral Agent may if it thinks fit make such payments on behalf of the Owner. Any sums so paid by the Collateral Agent shall be immediately due and payable by the Owner to the Collateral Agent without demand or notice being required. Section 4.11. DELEGATION BY COLLATERAL AGENT. The Collateral Agent may at any time and from time to time delegate by power of attorney or in any other manner to any Person or Persons all or any of the rights and discretions which are for the time being exercisable by the Collateral Agent under this Debenture in relation to any Security Asset. Any such delegation may be made upon such terms (including power to sub-delegate) and subject to such regulations as the Collateral Agent may think fit. The Collateral Agent shall not be in any way liable or responsible to the Owner for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate. Section 4.12. FURTHER ASSURANCES. The Owner shall at its own expense execute and deliver all such agreements, documents and instruments and do all such assurances, acts and things as the Collateral Agent may require for perfecting or protecting this security over any Security Asset or for facilitating the realization of such property and in the exercise of all rights vested in the Collateral Agent or in any sub-delegate as aforesaid. The Owner shall in particular execute all transfers, conveyances, assignments and assurances of such property whether to the Collateral Agent or its nominees and give all notices, orders and directions which the Collateral Agent may think expedient -7- and, for the purposes of this Section, a certificate in writing by the Collateral Agent to the effect that any particular assurance, act or thing required by it is reasonably required shall be conclusive evidence of such fact in favor of all third parties. Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Collateral Agent may at any time after the security hereby constituted has become enforceable redeem any prior Encumbrances against any Security Asset or procure the transfer thereof to itself and may settle and pass the accounts of the prior Encumbrances. Any accounts so settled and passed shall be conclusive and binding on the Owner. All principal moneys, interest, costs, charges and expenses of and incidental to such redemption and transfer shall be immediately due by the Owner to the Collateral Agent without notice or demand being required. Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way of security irrevocably nominates, constitutes and appoints the Collateral Agent and every Receiver of any Security Asset appointed hereunder and every such delegate or sub-delegate as aforesaid, each of them acting alone or jointly with any other of them, to be its attorney (the "Attorney") and on its behalf and in its name or otherwise to sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such assurances, acts and things which the Owner ought to do but fails to do under the covenants and provisions contained in the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture or any other Security Agreement (including without prejudice to the generality of the foregoing to make any demand upon or give any notice or receipt to any Person owing moneys to the Owner and to execute and deliver any charges, legal and equitable generally in its name and on its behalf to exercise all or any of the rights conferred by or pursuant to this Debenture or by statute on the Attorney and (without prejudice to the generality of the foregoing) to sign under seal or otherwise and deliver and otherwise perfect any assurance, agreement, instrument or act which the Attorney may deem proper in or for the purpose of exercising any of such rights). (b) The Owner hereby ratifies and confirms and agrees to ratify and confirm any such Attorney described in Section 4.14(a). Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or payment which may be avoided under any enactment relating to bankruptcy, and no release, settlement or discharge given or made by the Collateral Agent on the faith of any such assurance, security or payment, shall prejudice or affect the right of the Collateral Agent to enforce the security created by or pursuant to this Debenture in respect of the full extent of the moneys thereby secured. The Collateral Agent shall be at liberty at its absolute discretion to retain the security so created as security for the Obligations for a period of seven months in the case of fixed security and thirteen months in the case of floating security after the Obligations shall have been paid in full, notwithstanding any release, settlement, discharge or arrangement given or made by the Collateral Agent on or as a consequence of, such termination of liability. If at any time within the period of six months in the case of fixed -8- security and twelve months in the case of floating security after such termination a petition shall be presented to a competent court for an order for the winding up of the Owner or the Owner shall commence to be wound up voluntarily, the Collateral Agent shall be at liberty, notwithstanding as aforementioned, to continue to retain such security or any part thereof for and during such further period as the Collateral Agent in its absolute discretion shall determine. The Owner agrees that such security shall be deemed to have been and to have remained held by the Collateral Agent as and by way of security for the payment to the Collateral Agent of all or any sums which are now or may become due and owing to the Collateral Agent under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the rest of the Security Agreements. Section 4.16. POWERS TO LEND. The Collateral Agent may advance money on the security of any Security Asset for the purpose of defraying any costs, charges, losses and expenses which shall be paid or incurred by it in relation to this Debenture (including the remuneration of any Receiver (as hereinafter defined)) or which the Collateral Agent anticipates may be paid or incurred in the exercise of the rights vested in it or for all other purposes of this Debenture or any of them and the Collateral Agent may advance such moneys at such rates of interest and generally on such terms and conditions as it shall think fit. ARTICLE V DEALINGS WITH SECURITY ASSETS Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums hereafter received or recovered by or for it in respect of any Current Receivable to be directly credited to a separate and distinct account as the Collateral Agent may from time to time designate and, if called upon to do so by notice in writing from the Collateral Agent, shall execute an absolute assignment of any such Current Receivable in favor of the Collateral Agent, all at the cost of the Owner. Until the security hereby constituted is fully discharged in accordance with the terms hereof, the Owner shall not be entitled to withdraw any sum standing to the credit of any such account established as aforesaid without the prior written consent of the Collateral Agent. Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall, if the Collateral Agent so requires, deposit with the Collateral Agent all certificates and other documents of title or evidence of ownership in relation to the patents and rights referred to in Section 3.1(c). Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other provision herein contained to the contrary, the Owner shall remain liable to observe and perform all of the respective conditions and obligations assumed by it in respect of each Security Asset and the Collateral Agent shall be under no obligation by reason of this Debenture, nor shall the Collateral Agent be required in any manner, to perform or fulfill any obligation of the Owner in respect of any Security Asset or to make any payment or make any enquiry as to the maturity, amount, nature or sufficiency of any rental, interest, proceeds, payments or receipts received by it or them or the Owner or to present or file any -9- claim or take any other action or give any notice to collect, exercise or enforce the payment of any amount or the taking up of any rights or property to which the Owner may have been or to which it may be now or hereafter entitled thereunder at any time. ARTICLE VI ENFORCEMENT Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security hereby conferred shall become immediately enforceable and the floating charge created by this Debenture shall be deemed to have crystallized and an unrestricted power of sale together with any powers conferred by statute as varied or amended or granted by this Debenture shall be immediately exercisable by the Collateral Agent (i) if the Owner fails to meet the Obligations in the manner specified in Section 2.1 or (ii) upon and after the occurrence of any Event of Default. After this security has become enforceable, the Collateral Agent may in its discretion enforce all or any part of this security, and exercise all or any rights of enforcement hereby granted, in such manner as the Collateral Agent sees fit. Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all powers implied by statute the Obligations shall be deemed to have become due and payable on the date hereof and any statutory restrictions on the power of sale and restrictions on the right of consolidation shall not apply to this security. Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or omission of the Collateral Agent in exercising any right under this Debenture shall impair or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude any further exercise thereof or the exercise of any other right. The rights provided in this Debenture are cumulative and not exclusive of any rights provided by law, agreement or otherwise. Any waiver and any consent by the Collateral Agent under this Debenture must be in writing and may be given subject to any conditions thought fit by the Collateral Agent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. Section 6.4. EXERCISE OF POWERS. All or any of the powers conferred on a receiver by Article VII hereof may be exercised by the Collateral Agent without first appointing a Receiver or notwithstanding the appointment of a Receiver. ARTICLE VII RECEIVER Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time after this security becomes enforceable the Collateral Agent may without further notice appoint in writing under the hand of its duly authorized officer any one or more Person(s) to be a receiver or receiver and manager (hereinafter each called "a Receiver") as the Collateral Agent at its sole discretion may see fit of any -10- Security Asset in like manner in every respect as if the Collateral Agent had become entitled under this Debenture and/or under statute to exercise the power of sale thereby conferred. Every Receiver so appointed shall, in addition to any powers conferred by statute or common law, have and be entitled to exercise all rights to do any or all of the following things: (a) TAKE POSSESSION. Enter upon and take immediate possession of, get in and collect any Security Asset and undertake any works of demolition, building, reconstruction, repair or decoration thereon; (b) SELL ASSETS. Subject to any necessary consent or approval of any judicial, administrative, governmental or other regulatory body, office or agency, sell, convert into money and realize any Security Asset by public auction or private contract, dispose of, grant options and other rights in respect of and exercise all other rights conferred on an owner under any statute, at common law or otherwise, in respect of any Security Asset and generally in such manner and on such terms (which may consist wholly or partly of shares or securities of any company or body corporate) as the Receiver shall think fit and transfer, convey, assign or grant an assurance of the same in the name and on behalf of the Owner. Without prejudice to the generality of the foregoing, the Receiver may do any of these things for a consideration consisting of cash, debentures or other obligations, shares or other valuable consideration in cash or in any other form whatsoever and any such consideration may be payable in a lump sum or by installments spread over such period as the Receiver may think fit; (c) COMPROMISE. Settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands with or by any Person who is or claims to be a creditor of the Owner or relating in any way to any Security Asset; (d) Borrow and Create Security. Borrow or raise money and secure the repayment thereof and interest thereon by mortgaging, sub-mortgaging or otherwise charging any Security Asset or this Debenture (whether or not in priority to the sums and obligations secured by this Debenture) in such manner and on such terms as the Receiver shall think fit; PROVIDED, HOWEVER, that: (i) no Receiver shall exercise such right without first obtaining the written consent of the Person appointing him and the Collateral Agent shall not incur any responsibility to the Owner or any other Person by reason of giving or refusing its consent, whether directly or subject to any limitation or condition; and -11- (ii) no Person lending such money shall be concerned to enquire as to the existence of such consent or the terms thereof or as to the propriety or purpose of the exercise thereof or to see to the application of any money so borrowed or raised; (e) EMPLOY AGENTS. Employ solicitors, managers, agents and others as the Receiver shall deem necessary; (f) RECEIPTS. Give valid receipts and discharges for all moneys and claims and execute all assurances and things which may be proper or desirable for realizing any Security Assets; (g) CONSIDERATION. Receive or pay any consideration in cash or other valuable consideration and so that the same may be receivable or payable either immediately or at a later time and in a lump sum or by installments spread over such period as the Receiver shall think fit; (h) DEALINGS. Generally to deal with and effect any transaction or arrangement of any kind whatsoever in respect of any Security Asset; (i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with any Security Asset or in any way relating to the security constituted by this Debenture, to bring, take, defend, compromise, submit to and discontinue any actions, suits, arbitration or proceedings whatsoever whether civil or criminal in relation to the matters aforesaid, to enter into, complete, disclaim, abandon or disregard, determine or rectify all or any of the outstanding agreements or arrangements of the Owner in any way relating to or affecting the Security Assets or any part thereof and to allow time for payment of any debts either with or without security as the Receiver shall think expedient; (j) IN OWNER'S NAME. Generally at his option to use the name of the Owner in the exercise of all or any of the rights hereby conferred; (k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any nominee of the Owner to exercise, any rights incident to the ownership of any Security Asset in such manner as the Receiver may think fit and in particular (as regards shares, stock and securities) any voting rights conferred by the same and (as regards securities) any rights of enforcing the same by foreclosure, sale or otherwise; -12- (l) CORPORATE TRANSFERS. Transfer any Security Asset to any other company or body corporate, whether or not formed or acquired for the purpose; (m) CARRY ON BUSINESS. Generally manage and carry on and conduct any of the undertakings and businesses of the Owner; (n) CALLS. Make calls, conditionally or unconditionally, on the members of the Owner in respect of all or any part of its uncalled capital with such and the same rights of enforcement as are conferred by the Memorandum of Association and Articles of Association of the Owner upon its directors in this respect; (o) GENERAL POWERS. Sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such other acts and things as the Receiver may consider desirable or necessary for realizing any Security Asset or incidental or conducive to any of the matters or rights conferred on a Receiver under or by virtue of this Debenture and to exercise in relation to any Security Asset all such rights as the Receiver should be capable of exercising if the Receiver were the beneficial owner of the same; and (p) MONEYS RECEIVED BV RECEIVER. All moneys received by a Receiver shall after providing for the matters specified by any law be applied by him in or towards satisfaction of this Debenture and thereafter of any other Encumbrance of which he shall have notice and thereafter the Receiver shall pay the residue of the moneys received by him to the Owner. Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in the exercise of the Receiver's rights conform to any regulations and directions from time to time made and given by the Collateral Agent as appointed but so that no Person dealing with the Collateral Agent or any Receiver shall be concerned to enquire whether the Receiver has so conformed to any such regulations or directions. Section 7.3. REMOVAL AND REMUNERATION. The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may whenever it may deem it expedient appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it. Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS. All or any of the rights which are conferred by this Debenture (either expressly or impliedly) upon a Receiver of any Security Asset may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to any Security Asset without first appointing a Receiver of the same or notwithstanding the appointment of a Receiver of the same. -13- Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION. The Collateral Agent shall not nor shall any Receiver appointed as aforesaid by reason of the Collateral Agent or the Receiver entering into possession of any Security Asset be liable to account for such entry into possession or be liable for any loss or realization or for any fault or omission for which such acts may have made them liable. Every Receiver duly appointed by the Collateral Agent shall be deemed to be the agent of the Owner for all purposes and shall as such agent be deemed to be in the same position as a Receiver duly appointed under this Debenture. The Owner alone shall be responsible for its agreements, obligations, acts, omissions, defaults and losses and the Collateral Agent shall not incur any responsibility therefor (either to the Owner or to any other Person whatsoever) by reason of appointing such Receiver or for any other reason whatsoever. Every such Receiver and the Collateral Agent shall be entitled to all the rights, privileges and immunities by statute conferred on receivers when such receivers have been duly appointed. Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser, mortgagee or other Person dealing with the Collateral Agent or the Receiver or the agents of the Collateral Agent or the Receiver shall be concerned to enquire whether any of the Obligations are due or owing, the right which the Collateral Agent or the Receiver is purporting to exercise has become exercisable or any money remains due under this Debenture, as to the propriety or regularity of the actions of the Collateral Agent or such Receiver, or to see to the application of any money paid to the Collateral Agent or to such Receiver. Section 7.7. EXPENSES. All costs, charges and expenses incurred and all payments made by the Collateral Agent or any Receiver appointed hereunder in the exercise in good faith of any right hereby conferred whether or not occasioned by any act, neglect or default of the Collateral Agent or such Receiver shall bear interest from the date of the same being incurred or becoming due at the rate at which interest accrues on the Second Priority Notes. The amount of all such costs, charges, expenses and payments and all interest thereon and all remuneration payable hereunder shall be payable by the Owner on demand. All such costs, charges, expenses and payments shall be paid and charged as between the Collateral Agent and the Owner on the basis of a full indemnity and not on the basis of party and party or any other kind of taxation. Section 7.8. INDEMNITY. Each of the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and every Receiver, attorney, manager, agent or other Person appointed by the Collateral Agent hereunder shall be entitled to be indemnified out of the Security Assets in respect of all obligations, costs, charges and expenses incurred and payments made by such Person in good faith in the execution or purported execution of any right vested in such Person pursuant hereto and against all actions, proceedings, obligations, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to any Security Asset and the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and any such Receiver may retain and pay all sums in respect of the same out of any moneys received under the rights hereby conferred. -14- ARTICLE VIII APPLICATION OF PROCEEDS Section 8.1. ORDER OF APPLICATION. Any moneys received by the Collateral Agent pursuant to this Debenture or under the powers hereby conferred shall after the security hereby constituted shall have become enforceable but subject to the payment of any claims having priority to this security be applied for the purposes and in the order of priority indicated in the Intercreditor Agreement. Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the rights hereby conferred may, at the discretion of the Collateral Agent, be placed in a suspense account and kept there for so long as the Collateral Agent thinks fit. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. AMENDMENT. This Debenture may be amended from time to time by written agreement signed by the parties hereto. Section 9.2. SEVERABILITY. If any provision of this Debenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Debenture contained, shall not affect the remaining portions of this Debenture, or any part thereof. Section 9.3. NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as shall be designated by such party in a written notice to the other parties. Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action or proceeding against the Owner arising out of or relating to this Debenture, or any transaction contemplated hereby, may be instituted in any federal or state court in The City of New York, State of New York and the Owner hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and the Owner hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. To the extent the Owner has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process -15- (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement to the extent permitted by law. The Owner hereby irrevocably appoints and designates Cambridge Partners, L.L.C., having an address at 535 Madison Avenue, New York, New York, its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting servicing of legal process and the Owner agrees that service of process upon such party shall constitute personal service of such process on the Owner. The Owner shall maintain the designation and appointment of such authorized agent until all amounts payable under this Debenture shall have been paid in full. If such agent shall cease to so act, the Owner shall immediately designate and appoint another such agent satisfactory to the Collateral Agent and shall promptly deliver to the Collateral Agent evidence in writing of such other agent's acceptance of such appointment. The Owner further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect so long as this Debenture shall remain in full force and effect. Section 9.5. CAPTIONS. The captions or headings in this Debenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Debenture. Section 9.6. GOVERNING LAW. This Debenture shall be governed by and interpreted in accordance with the laws of the Isle of Man, without giving effect to the principles of conflicts of law. Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 9.8. COUNTERPARTS. This Debenture may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 9.9. SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Debenture in respect of either party hereto shall survive the execution and delivery of this Debenture and shall continue in effect so long as such party's obligations hereunder remain outstanding. Section 9.10. INTEGRATION. This Debenture and the Schedule hereto, the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or -16- representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Debenture shall be binding upon and inure to the benefit of the Owner and the Collateral Agent and their respective successors and assigns. The Owner shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Collateral Agent. The Collateral Agent, at its sole option, shall have the right to assign this Debenture and any of its rights and interest hereunder and thereunder. Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Debenture except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Debenture shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles ", "Sections", " Subsections", "paragraphs ", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Debenture; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Debenture as a whole and not to any particular provision; and -17- (f) the term "include" or "including" shall mean without limitation by reason of enumeration. IN WITNESS WHEREOF this Debenture has been executed by the Owner the day and year first above written. SIGNED, SEALED and DELIVERED ) as a Deed and Debenture ) by ) Richard Klapow for and on behalf of ) Director Navigator Gas (IOM I-E) Limited ) Geoffrey Richardson in the presence:- ) SIGNED by ) for and on behalf of ) Christine C. Collins United States Trust Company of New York Adam Levine as Collateral Agent ) in the presence of:- ) SCHEDULE 1 Defined Terms Used in the Debenture "ASSETS" means, in relation to any person, the whole or any part of its business, undertaking, property and assets and includes, without limitation, any right to receive revenues. "CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of the Owner due or owing to the Owner on account of the prevailing debit balances of the present book debts of the Owner and (b) all rights relating to the aforesaid property specified in clause (a), including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing an unpaid vendor's liens and similar and associated rights (and each reference to a "Current Receivable" shall be construed as a reference to the whole or any part of any one or more of them). "ENCUMBRANCE" means any encumbrance and includes any mortgage, charge (whether fixed or floating, pledge, lien, hypothecation, title retention or other security agreement or security interest of any kind whatsoever and howsoever arising and any equivalent or analogous interest to any of the foregoing. "PERSON" means an individual, a partnership, a corporation, a joint venture, unincorporated association, a joint stock company, a trust or any other entity or a Governmental Authority. "SECURITY ASSETS" means all of the present and future Assets of the Owner, including, INTER ALIA, the Current Receivables (and each reference to a "Security Asset" shall be construed as a reference to the whole or any part of any one or more of them).
TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT .................................................... 2 ARTICLE I DEFINITIONS ................................................................... 2 ARTICLE II COVENANT TO PAY ................................................................. 2 Section 2.1. COVENANT TO PAY............................................................................ 2 ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT............................................... 2 Section 3.1. CHARGE..................................................................................... 2 Section 3.2. LEGAL SECURITIES........................................................................... 3 Section 3.3. CONVERSION OF FLOATING CHARGE.............................................................. 3 Section 3.4. NEGATIVE PLEDGE............................................................................ 3 Section 3.5. NEW ACCOUNTS............................................................................... 3 ARTICLE IV PRESERVATION OF SECURITY............................................. 4 Section 4.1. CONTINUING SECURITY........................................................................ 4 Section 4.2. WAIVER OF DEFENSES......................................................................... 4 Section 4.3. IMMEDIATE RECOURSE......................................................................... 5 Section 4.4. PRESERVATION OF RIGHTS..................................................................... 5 Section 4.5. ADDITIONAL SECURITY........................................................................ 5 Section 4.6. CERTIFICATE................................................................................ 5 Section 4.7. DISCHARGE.................................................................................. 5 Section 4.8. REGISTRATION............................................................................... 6 Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS.................................. 6 Section 4.10. CALLS..................................................................................... 6 Section 4.11. DELEGATION BY COLLATERAL AGENT............................................................ 6 Section 4.12. FURTHER ASSURANCES........................................................................ 6 Section 4.13. REDEMPTION OF PRIOR MORTGAGES............................................................. 7 Section 4.14. POWER OF ATTORNEY......................................................................... 7 Section 4.15. AVOIDANCE OF PAYMENTS..................................................................... 7 Section 4.16. POWERS TO LEND............................................................................ 8 ARTICLE V DEALINGS WITH SECURITY ASSETS.......................................... 8 Section 5.1. CHARGED ACCOUNTS........................................................................... 8
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Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS.............................................................. 8 Section 5.3. LIABILITY TO PERFORM....................................................................... 8 ARTICLE VI ENFORCEMENT................................................... 9 Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE.......................................................... 9 Section 6.2. ENFORCEMENT OF SECURITY.................................................................... 9 Section 6.3. REMEDIES, WAIVERS AND CONSENTS............................................................. 9 Section 6.4. EXERCISE OF POWERS......................................................................... 9 ARTICLE VII RECEIVER..................................................... 9 Section 7.1. APPOINTMENT AND POWERS OF RECEIVER......................................................... 9 Section 7.2. COMPLY WITH INSTRUCTIONS.................................................................. 12 Section 7.3. REMOVAL AND REMUNERATION.................................................................. 12 Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS........................................... 12 Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION................................................. 12 Section 7.6. PROTECTION OF THIRD PARTIES............................................................... 13 Section 7.7. EXPENSES.................................................................................. 13 Section 7.8. INDEMNITY................................................................................. 13 ARTICLE VIII APPLICATION OF PROCEEDS............................................ 14 Section 8.1. ORDER OF APPLICATION...................................................................... 14 Section 8.2. SUSPENSE ACCOUNTS......................................................................... 14 ARTICLE IX MISCELLANEOUS PROVISIONS............................................ 14 Section 9.1. AMENDMENT................................................................................. 14 Section 9.2. SEVERABILITY.............................................................................. 14 Section 9.3. NOTICES.................................................................................. 14 Section 9.4. CONSENT TO JURISDICTION................................................................... 14 Section 9.5. CAPTIONS.................................................................................. 15 Section 9.6. GOVERNING LAW............................................................................. 15 Section 9.7. NO PARTNERSHIP............................................................................ 15 Section 9.8. COUNTERPARTS.............................................................................. 15 Section 9.9. SURVIVAL.................................................................................. 15 Section 9.10. INTEGRATION.............................................................................. 15 Section 9.11. REPRODUCTION OF DOCUMENTS................................................................ 16 Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT....................................................... 16 Section 9.13. GENERAL INTERPRETIVE PRINCIPLES.......................................................... 16
-ii- SCHEDULE 1 Defined Terms Used in the Debenture -iii- EX-4.7 14 ISSUE OF ONE DEBENTURE -- (IOM I-E) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent and NAVIGATOR GAS (IOM I-E) LIMITED ----------------------------------------------------- ISSUE OF ONE DEBENTURE Dated as of August 1, 1997 ----------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Issue of One Debenture, dated as of August l, 1997 (the "Debenture"), from Navigator Gas (IOM I-E) Limited, a private limited company organized under the laws of the Isle of Man (the "Owner") to United States Trust Company of New York, as collateral agent, a bank and trust company organized under the New York Banking Law (the "Collateral Agent"). PRELIMINARY STATEMENT On the Issue Date, Navigator Gas Transport PLC (the "Issuer") issued Notes in connection with the financing of the construction of the Vessels. The net proceeds of such issuance were deposited into the Pre-Funding Account. Pursuant to the Intercreditor Agreement, the Allocated Principal Amount of the Notes for the Vessel has been used, INTER ALIA, to make the installments due under the Building Contract for the Vessel. The Notes are guaranteed jointly and severally by the Owner and the other Owners pursuant to the Guarantees. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston, acting through its London branch as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit"). As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings' pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 7, 1997, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The Vessel will be managed by Navigator Gas Management Limited (the "Manager") pursuant to the Management Agreement, dated as of the date hereof, among Holdings, the Owners and the Manager. As collateral security for its obligations under the Indentures, the Letter of Credit Reimbursement Agreement and the other Security Agreements, the Owner has and will assign, pledge, mortgage and grant the Collateral Agent a security interest in, INTER ALIA, the Vessel, the earnings and insurances of the Vessel and will grant this debenture in favor of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other valuable consideration, receipt of which is hereby acknowledged, the Owner and the Collateral Agent hereby agree as follows: ARTICLE I DEFINITIONS Unless otherwise defined in Schedule 1 to this Debenture, capitalized terms used in this Debenture shall have the meanings assigned to such terms in the Intercreditor Agreement or in the Indentures. -2- ARTICLE II COVENANT TO PAY Section 2.1. COVENANT TO PAY. The Owner hereby covenants and agrees to pay and discharge each sum owing under the Obligations as and when the same shall fall due, whether at maturity, by acceleration or otherwise. ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT Section 3.1. CHARGE. As continuing security for the Obligations, the Owner hereby: (a) conveys, transfers and assigns absolutely to and unto the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner in and to the Current Receivables by way of fixed charge; (b) mortgages, charges and assigns, and agrees to mortgage, charge and assign to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all present and future rights of the Owner in and to all freehold or leasehold property of the Owner and all other estates or interests therein together with all trade fixtures and fixed plant and machinery now and for the time being thereon, by way of a fixed charge; (c) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights now owned or hereafter acquired in and to the goodwill, franchises, patent rights, copyrights, trademarks and other intangible Assets of the Owner by way of fixed charge; (d) mortgages, charges and assigns, and agrees to mortgage, charge and assign, to the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights relating to the aforesaid property specified in Sections 3.1(a), (b) and (c) including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing and unpaid vendor's liens and similar and associated rights, by way of fixed legal mortgage and charge; and -3- (e) mortgages and charges in favor of the Collateral Agent, for the benefit of the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee and the Second Priority Trustee, all rights of the Owner now owned or hereafter acquired in and to all other Security Assets for the time being of the Owner not subject to the fixed securities created by Sections 3. l(a), (b), (c) and (d) wheresoever situate (including, INTER ALIA, all undertakings and businesses of the Owner) by way of a floating charge and the Owner shall not be at liberty to create any mortgage or charge on any of the securities created by this Section 3.1(e) and no Encumbrance shall in any case or in any manner arise on or affect any part of the said securities in priority to or PARI PASSU with all charges hereby created, it being the intention that the Owner shall have no power, without the written consent of the Collateral Agent, to part with or dispose of any part of the said securities except by way of sale in the ordinary course of its business; PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction of the Obligations the rights of the Collateral Agent hereunder will terminate and the Collateral Agent will at the direction, cost and expense of the Owner release or reassign to the Owner all remaining rights of the Collateral Agent in and to the balance of the Security Assets. Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the request of the Collateral Agent execute a legal mortgage, charge or assignment over all or any of the Security Assets subject to or intended to be subject to any fixed security hereby created in favor of the Collateral Agent in such form as the Collateral Agent may reasonably require. Section 3.3. CONVERSION OF FLOATING CHARGE. The Collateral Agent may at any time by notice to the Owner convert the floating charge hereby created into a fixed charge as regards any Assets specified in the notice which the Collateral Agent shall consider to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy and (whether or not this security has become enforceable) may at any time appoint a Receiver (as defined in Section 7.1 hereof) thereof. Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in the Owner's Mortgage of its Vessel or the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements, the Owner shall not, without the prior written consent of the Collateral Agent, permit the sale, transfer, assignment lease or other disposition of any Security Asset, or any Encumbrance or other right in or over any Security Asset to subsist, arise or be created, other than such Encumbrance as is created by this Debenture. Section 3.5. NEW ACCOUNTS. If the Collateral Agent receives or is deemed to be affected by notice whether actual or constructive of any subsequent Encumbrance or other interest affecting any Security Asset or the proceeds of sale thereof, the Collateral Agent may open a new account or accounts for the Owner. If the Collateral Agent does not open a new account it shall nevertheless -4- be treated as if it had done so at the time when it received or was deemed to have received notice and as from that time all payments made to the Collateral Agent shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount for which this Debenture is security. ARTICLE IV PRESERVATION OF SECURITY Section 4.1. CONTINUING SECURITY. The security constituted by this Debenture shall be a continuing security and shall not be satisfied by any intermediate payment or satisfaction of the Obligations but shall secure the ultimate balance of the Obligations. The security hereby given shall be in addition to and shall not be discharged, released, prejudiced or otherwise affected by any other security or Encumbrance now or hereafter held by the Collateral Agent for the Obligations. Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner under this Debenture and this security shall not be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which but for this provision might so operate or otherwise release or discharge the Owner from the Obligations, or the security created under this Debenture including without limitation and whether or not known to or discoverable by the Owner or the Collateral Agent: (a) any time, indulgence, waiver, consent or other relief granted to or composition with the Owner or any other Person; (b) the taking, variation, extension, compromise, renewal or release of, or refusal or neglect to perfect or enforce, any rights under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, agreement or obligation or any right against, or any security granted by, the Owner or any other Person; (c) any irregularity, invalidity or unenforceability of any obligation of the Owner under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement or any other guarantee, of any government or authority (whether of right or in fact) purporting to reduce or otherwise affect any such obligation to the extent that such obligation and this security shall remain in full force and this Debenture shall be construed accordingly as if there were no such irregularity, unenforceability, invalidity, law or order; (d) any legal limitation, disability, incapacity or other circumstance relating to the Owner, any guarantor or any other Person; (e) any defect in or invalidity or inadequacy of the constitution or incorporation or borrowing powers of the Owner or of its board of directors, executive committee or -5- other equivalent or analogous body or in the authorization, execution or delivery of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any other Security Agreement, or any other guarantee, agreement or obligation; or (f) any supplement, amendment or modification to the terms of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture, any Security Agreement or any other guarantee. agreement or obligation. Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it may have of first requiring the Collateral Agent to proceed against or claim payment from the Owner or enforce the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, any other Security Agreement or other guarantee, agreement or obligation before enforcing this Debenture. Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations have been irrevocably paid and discharged in full, the Collateral Agent may: (a) refrain from applying or enforcing any other security, money or right held or received by the Collateral Agent in respect of the Obligations or apply and enforce the same in such manner and order as the Collateral Agent sees fit; and (b) hold in a suspense account (without liability to pay interest thereon) any moneys received or on account of this Debenture by way of a partial payment. Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in addition to and shall not in any way be prejudiced by any other security now or hereafter held by the Collateral Agent. Section 4.6. CERTIFICATE. A certificate of the Collateral Agent setting forth the amount due from the Owner in respect of the Obligations shall, in the absence of manifest error, be prima FACIE evidence of such amount. Section 4.7. DISCHARGE. Where any discharge (whether in respect of the Indentures, the Letter of Credit Reimbursement Agreement, the Obligations, this Debenture, or any other guarantee, agreement, obligation or security or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation, winding-up, dissolution or otherwise, this security and the obligations of the Owner under this Debenture shall continue as if there had been no such discharge or arrangement. Section 4.8. REGISTRATION. The Owner hereby agrees to arrange for this Debenture, any Security Asset or any agreement, document or instrument relating thereto to be registered with or notified to any Person to preserve or perfect the Collateral Agent's security in any Security Asset. -6- Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS. The Collateral Agent may without demand or notice to the Owner being required at any time after this security becomes enforceable exercise at its discretion (in the name of the Owner or otherwise) and without any further consent or authority by the Owner, any right which may be exercised by the Person in whose name any Security Asset is registered or who is the holder thereof under the terms thereof or otherwise including, but without limitation, all the powers given to trustees by statute in respect of securities or property subject to a trust; PROVIDED, HOWEVER, that until the security hereby constituted becomes enforceable, the Collateral Agent shall procure that the rights attached to each such Security Asset are exercised in such manner as the Owner shall direct so long as the same is not inconsistent with any term of the Intercreditor Agreement, this Debenture or any other Security Agreement and account to the Owner for any sum or other distribution paid in respect of such Security Asset. Section 4.10. CALLS. The Owner will for so long as the Obligations remain outstanding pay all sums which may become due in respect of the Security Assets and in the event of default the Collateral Agent may if it thinks fit make such payments on behalf of the Owner. Any sums so paid by the Collateral Agent shall be immediately due and payable by the Owner to the Collateral Agent without demand or notice being required. Section 4.11. DELEGATION BY COLLATERAL AGENT. The Collateral Agent may at any time and from time to time delegate by power of attorney or in any other manner to any Person or Persons all or any of the rights and discretions which are for the time being exercisable by the Collateral Agent under this Debenture in relation to any Security Asset. Any such delegation may be made upon such terms (including power to sub-delegate) and subject to such regulations as the Collateral Agent may think fit. The Collateral Agent shall not be in any way liable or responsible to the Owner for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate. Section 4.12. FURTHER ASSURANCES. The Owner shall at its own expense execute and deliver all such agreements, documents and instruments and do all such assurances, acts and things as the Collateral Agent may require for perfecting or protecting this security over any Security Asset or for facilitating the realization of such property and in the exercise of all rights vested in the Collateral Agent or in any sub-delegate as aforesaid. The Owner shall in particular execute all transfers, conveyances, assignments and assurances of such property whether to the Collateral Agent or its nominees and give all notices, orders and directions which the Collateral Agent may think expedient and, for the purposes of this Section, a certificate in writing by the Collateral Agent to the effect that any particular assurance, act or thing required by it is reasonably required shall be conclusive evidence of such fact in favor of all third parties. Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Collateral Agent may at any time after the security hereby constituted has become enforceable redeem any prior Encumbrances against any Security Asset or procure the transfer thereof to itself and may settle and pass the accounts of the prior Encumbrances. Any accounts so settled and passed shall be conclusive and binding on the -7- Owner. All principal moneys, interest, costs, charges and expenses of and incidental to such redemption and transfer shall be immediately due by the Owner to the Collateral Agent without notice or demand being required. Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way of security irrevocably nominates, constitutes and appoints the Collateral Agent and every Receiver of any Security Asset appointed hereunder and every such delegate or sub-delegate as aforesaid, each of them acting alone or jointly with any other of them, to be its attorney (the "Attorney") and on its behalf and in its name or otherwise to sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such assurances, acts and things which the Owner ought to do but fails to do under the covenants and provisions contained in the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, this Debenture or any other Security Agreement (including without prejudice to the generality of the foregoing to make any demand upon or give any notice or receipt to any Person owing moneys to the Owner and to execute and deliver any charges, legal and equitable generally in its name and on its behalf to exercise all or any of the rights conferred by or pursuant to this Debenture or by statute on the Attorney and (without prejudice to the generality of the foregoing) to sign under seal or otherwise and deliver and otherwise perfect any assurance, agreement, instrument or act which the Attorney may deem proper in or for the purpose of exercising any of such rights). (b) The Owner hereby ratifies and confirms and agrees to ratify and confirm any such Attorney described in Section 4.14(a). Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or payment which may be avoided under any enactment relating to bankruptcy, and no release, settlement or discharge given or made by the Collateral Agent on the faith of any such assurance, security or payment, shall prejudice or affect the right of the Collateral Agent to enforce the security created by or pursuant to this Debenture in respect of the full extent of the moneys thereby secured. The Collateral Agent shall be at liberty at its absolute discretion to retain the security so created as security for the Obligations for a period of seven months in the case of fixed security and thirteen months in the case of floating security after the Obligations shall have been paid in full, notwithstanding any release, settlement, discharge or arrangement given or made by the Collateral Agent on or as a consequence of, such termination of liability. If at any time within the period of six months in the case of fixed security and twelve months in the case of floating security after such termination a petition shall be presented to a competent court for an order for the winding up of the Owner or the Owner shall commence to be wound up voluntarily, the Collateral Agent shall be at liberty, notwithstanding as aforementioned, to continue to retain such security or any part thereof for and during such further period as the Collateral Agent in its absolute discretion shall determine. The Owner agrees that such security shall be deemed to have been and to have remained held by the Collateral Agent as and by way of security for the payment to the Collateral Agent of all or any sums which are now or may become due and owing to the Collateral Agent under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the rest of the Security Agreements. -8- Section 4.16. POWERS TO LEND. The Collateral Agent may advance money on the security of any Security Asset for the purpose of defraying any costs, charges, losses and expenses which shall be paid or incurred by it in relation to this Debenture (including the remuneration of any Receiver (as hereinafter defined)) or which the Collateral Agent anticipates may be paid or incurred in the exercise of the rights vested in it or for all other purposes of this Debenture or any of them and the Collateral Agent may advance such moneys at such rates of interest and generally on such terms and conditions as it shall think fit. ARTICLE V DEALINGS WITH SECURITY ASSETS Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums hereafter received or recovered by or for it in respect of any Current Receivable to be directly credited to a separate and distinct account as the Collateral Agent may from time to time designate and, if called upon to do so by notice in writing from the Collateral Agent, shall execute an absolute assignment of any such Current Receivable in favor of the Collateral Agent, all at the cost of the Owner. Until the security hereby constituted is fully discharged in accordance with the terms hereof, the Owner shall not be entitled to withdraw any sum standing to the credit of any such account established as aforesaid without the prior written consent of the Collateral Agent. Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall, if the Collateral Agent so requires, deposit with the Collateral Agent all certificates and other documents of title or evidence of ownership in relation to the patents and rights referred to in Section 3.1(c). Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other provision herein contained to the contrary, the Owner shall remain liable to observe and perform all of the respective conditions and obligations assumed by it in respect of each Security Asset and the Collateral Agent shall be under no obligation by reason of this Debenture, nor shall the Collateral Agent be required in any manner, to perform or fulfill any obligation of the Owner in respect of any Security Asset or to make any payment or make any enquiry as to the maturity, amount, nature or sufficiency of any rental, interest, proceeds, payments or receipts received by it or them or the Owner or to present or file any claim or take any other action or give any notice to collect, exercise or enforce the payment of any amount or the taking up of any rights or property to which the Owner may have been or to which it may be now or hereafter entitled thereunder at any time. ARTICLE VI ENFORCEMENT Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security hereby conferred shall become immediately enforceable and the floating charge created by this Debenture shall be deemed to have crystallized and an unrestricted power of sale together with any powers conferred by statute as varied or amended or granted by this Debenture shall be immediately exercisable by the -9- Collateral Agent (i) if the Owner fails to meet the Obligations in the manner specified in Section 2.1 or (ii) upon and after the occurrence of any Event of Default. After this security has become enforceable, the Collateral Agent may in its discretion enforce all or any part of this security, and exercise all or any rights of enforcement hereby granted, in such manner as the Collateral Agent sees fit. Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all powers implied by statute the Obligations shall be deemed to have become due and payable on the date hereof and any statutory restrictions on the power of sale and restrictions on the right of consolidation shall not apply to this security. Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or omission of the Collateral Agent in exercising any right under this Debenture shall impair or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude any further exercise thereof or the exercise of any other right. The rights provided in this Debenture are cumulative and not exclusive of any rights provided by law, agreement or otherwise. Any waiver and any consent by the Collateral Agent under this Debenture must be in writing and may be given subject to any conditions thought fit by the Collateral Agent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. Section 6.4. EXERCISE OF POWERS. All or any of the powers conferred on a receiver by Article VII hereof may be exercised by the Collateral Agent without first appointing a Receiver or notwithstanding the appointment of a Receiver. ARTICLE VII RECEIVER Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time after this security becomes enforceable the Collateral Agent may without further notice appoint in writing under the hand of its duly authorized officer any one or more Person(s) to be a receiver or receiver and manager (hereinafter each called "a Receiver") as the Collateral Agent at its sole discretion may see fit of any Security Asset in like manner in every respect as if the Collateral Agent had become entitled under this Debenture and/or under statute to exercise the power of sale thereby conferred. Every Receiver so appointed shall, in addition to any powers conferred by statute or common law, have and be entitled to exercise all rights to do any or all of the following things: (a) TAKE POSSESSION. Enter upon and take immediate possession of, get in and collect any Security Asset and undertake any works of demolition, building, reconstruction, repair or decoration thereon; (b) SELL ASSETS. Subject to any necessary consent or approval of any judicial, administrative, governmental or other regulatory body, office or agency, sell, convert -10- into money and realize any Security Asset by public auction or private contract, dispose of, grant options and other rights in respect of and exercise all other rights conferred on an owner under any statute, at common law or otherwise, in respect of any Security Asset and generally in such manner and on such terms (which may consist wholly or partly of shares or securities of any company or body corporate) as the Receiver shall think fit and transfer, convey, assign or grant an assurance of the same in the name and on behalf of the Owner. Without prejudice to the generality of the foregoing, the Receiver may do any of these things for a consideration consisting of cash, debentures or other obligations, shares or other valuable consideration in cash or in any other form whatsoever and any such consideration may be payable in a lump sum or by installments spread over such period as the Receiver may think fit; (c) COMPROMISE. Settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands with or by any Person who is or claims to be a creditor of the Owner or relating in any way to any Security Asset; (d) Borrow and Create Security. Borrow or raise money and secure the repayment thereof and interest thereon by mortgaging, sub-mortgaging or otherwise charging any Security Asset or this Debenture (whether or not in priority to the sums and obligations secured by this Debenture) in such manner and on such terms as the Receiver shall think fit; PROVIDED, HOWEVER, that: (i) no Receiver shall exercise such right without first obtaining the written consent of the Person appointing him and the Collateral Agent shall not incur any responsibility to the Owner or any other Person by reason of giving or refusing its consent, whether directly or subject to any limitation or condition; and (ii) no Person lending such money shall be concerned to enquire as to the existence of such consent or the terms thereof or as to the propriety or purpose of the exercise thereof or to see to the application of any money so borrowed or raised; (e) EMPLOY AGENTS. Employ solicitors, managers, agents and others as the Receiver shall deem necessary; (f) RECEIPTS. Give valid receipts and discharges for all moneys and claims and execute all assurances and things which may be proper or desirable for realizing any Security Assets; -11- (g) CONSIDERATION. Receive or pay any consideration in cash or other valuable consideration and so that the same may be receivable or payable either immediately or at a later time and in a lump sum or by installments spread over such period as the Receiver shall think fit; (h) DEALINGS. Generally to deal with and effect any transaction or arrangement of any kind whatsoever in respect of any Security Asset; (i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with any Security Asset or in any way relating to the security constituted by this Debenture, to bring, take, defend, compromise, submit to and discontinue any actions, suits, arbitration or proceedings whatsoever whether civil or criminal in relation to the matters aforesaid, to enter into, complete, disclaim, abandon or disregard, determine or rectify all or any of the outstanding agreements or arrangements of the Owner in any way relating to or affecting the Security Assets or any part thereof and to allow time for payment of any debts either with or without security as the Receiver shall think expedient; (j) IN OWNER'S NAME. Generally at his option to use the name of the Owner in the exercise of all or any of the rights hereby conferred; (k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any nominee of the Owner to exercise, any rights incident to the ownership of any Security Asset in such manner as the Receiver may think fit and in particular (as regards shares, stock and securities) any voting rights conferred by the same and (as regards securities) any rights of enforcing the same by foreclosure, sale or otherwise; (l) CORPORATE TRANSFERS. Transfer any Security Asset to any other company or body corporate, whether or not formed or acquired for the purpose; (m) CARRY ON BUSINESS. Generally manage and carry on and conduct any of the undertakings and businesses of the Owner; (n) CALLS. Make calls, conditionally or unconditionally, on the members of the Owner in respect of all or any part of its uncalled capital with such and the same rights of enforcement as are conferred by the Memorandum of Association and Articles of Association of the Owner upon its directors in this respect; (o) GENERAL POWERS. Sign under seal or otherwise and deliver all such agreements, documents and instruments and do all such other acts and things as the Receiver may consider desirable or necessary for realizing any Security Asset or incidental or -12- conducive to any of the matters or rights conferred on a Receiver under or by virtue of this Debenture and to exercise in relation to any Security Asset all such rights as the Receiver should be capable of exercising if the Receiver were the beneficial owner of the same; and (p) MONEYS RECEIVED BV RECEIVER. All moneys received by a Receiver shall after providing for the matters specified by any law be applied by him in or towards satisfaction of this Debenture and thereafter of any other Encumbrance of which he shall have notice and thereafter the Receiver shall pay the residue of the moneys received by him to the Owner. Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in the exercise of the Receiver's rights conform to any regulations and directions from time to time made and given by the Collateral Agent as appointed but so that no Person dealing with the Collateral Agent or any Receiver shall be concerned to enquire whether the Receiver has so conformed to any such regulations or directions. Section 7.3. REMOVAL AND REMUNERATION. The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may whenever it may deem it expedient appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it. Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS. All or any of the rights which are conferred by this Debenture (either expressly or impliedly) upon a Receiver of any Security Asset may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to any Security Asset without first appointing a Receiver of the same or notwithstanding the appointment of a Receiver of the same. Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION. The Collateral Agent shall not nor shall any Receiver appointed as aforesaid by reason of the Collateral Agent or the Receiver entering into possession of any Security Asset be liable to account for such entry into possession or be liable for any loss or realization or for any fault or omission for which such acts may have made them liable. Every Receiver duly appointed by the Collateral Agent shall be deemed to be the agent of the Owner for all purposes and shall as such agent be deemed to be in the same position as a Receiver duly appointed under this Debenture. The Owner alone shall be responsible for its agreements, obligations, acts, omissions, defaults and losses and the Collateral Agent shall not incur any responsibility therefor (either to the Owner or to any other Person whatsoever) by reason of appointing such Receiver or for any other reason whatsoever. Every such Receiver and the Collateral Agent shall be entitled to all the rights, privileges and immunities by statute conferred on receivers when such receivers have been duly appointed. -13- Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser, mortgagee or other Person dealing with the Collateral Agent or the Receiver or the agents of the Collateral Agent or the Receiver shall be concerned to enquire whether any of the Obligations are due or owing, the right which the Collateral Agent or the Receiver is purporting to exercise has become exercisable or any money remains due under this Debenture, as to the propriety or regularity of the actions of the Collateral Agent or such Receiver, or to see to the application of any money paid to the Collateral Agent or to such Receiver. Section 7.7. EXPENSES. All costs, charges and expenses incurred and all payments made by the Collateral Agent or any Receiver appointed hereunder in the exercise in good faith of any right hereby conferred whether or not occasioned by any act, neglect or default of the Collateral Agent or such Receiver shall bear interest from the date of the same being incurred or becoming due at the rate at which interest accrues on the Second Priority Notes. The amount of all such costs, charges, expenses and payments and all interest thereon and all remuneration payable hereunder shall be payable by the Owner on demand. All such costs, charges, expenses and payments shall be paid and charged as between the Collateral Agent and the Owner on the basis of a full indemnity and not on the basis of party and party or any other kind of taxation. Section 7.8. INDEMNITY. Each of the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and every Receiver, attorney, manager, agent or other Person appointed by the Collateral Agent hereunder shall be entitled to be indemnified out of the Security Assets in respect of all obligations, costs, charges and expenses incurred and payments made by such Person in good faith in the execution or purported execution of any right vested in such Person pursuant hereto and against all actions, proceedings, obligations, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to any Security Asset and the Collateral Agent, the Letter of Credit Issuer, the Participating Banks, the First Priority Trustee, the Second Priority Trustee and any such Receiver may retain and pay all sums in respect of the same out of any moneys received under the rights hereby conferred. ARTICLE VIII APPLICATION OF PROCEEDS Section 8.1. ORDER OF APPLICATION. Any moneys received by the Collateral Agent pursuant to this Debenture or under the powers hereby conferred shall after the security hereby constituted shall have become enforceable but subject to the payment of any claims having priority to this security be applied for the purposes and in the order of priority indicated in the Intercreditor Agreement. Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the rights hereby conferred may, at the discretion of the Collateral Agent, be placed in a suspense account and kept there for so long as the Collateral Agent thinks fit. -14- ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. AMENDMENT. This Debenture may be amended from time to time by written agreement signed by the parties hereto. Section 9.2. SEVERABILITY. If any provision of this Debenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Debenture contained, shall not affect the remaining portions of this Debenture, or any part thereof. Section 9.3. NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as shall be designated by such party in a written notice to the other parties. Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action or proceeding against the Owner arising out of or relating to this Debenture, or any transaction contemplated hereby, may be instituted in any federal or state court in The City of New York, State of New York and the Owner hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and the Owner hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. To the extent the Owner has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement to the extent permitted by law. The Owner hereby irrevocably appoints and designates Cambridge Partners, L.L.C., having an address at 535 Madison Avenue, New York, New York, its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting servicing of legal process and the Owner agrees that service of process upon such party shall constitute personal service of such process on the Owner. The Owner shall maintain the designation and appointment of such authorized agent until all amounts payable under this Debenture shall have been paid in full. If such agent shall cease to so act, the Owner shall immediately designate and appoint another such agent satisfactory to the Collateral Agent and shall promptly deliver to the Collateral Agent evidence in writing of such other agent's acceptance of such appointment. The Owner further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such -15- designation and appointment in full force and effect so long as this Debenture shall remain in full force and effect. Section 9.5. CAPTIONS. The captions or headings in this Debenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Debenture. Section 9.6. GOVERNING LAW. This Debenture shall be governed by and interpreted in accordance with the laws of the Isle of Man, without giving effect to the principles of conflicts of law. Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 9.8. COUNTERPARTS. This Debenture may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 9.9. SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Debenture in respect of either party hereto shall survive the execution and delivery of this Debenture and shall continue in effect so long as such party's obligations hereunder remain outstanding. Section 9.10. INTEGRATION. This Debenture and the Schedule hereto, the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement and the other Security Agreements constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. -16- Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Debenture shall be binding upon and inure to the benefit of the Owner and the Collateral Agent and their respective successors and assigns. The Owner shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Collateral Agent. The Collateral Agent, at its sole option, shall have the right to assign this Debenture and any of its rights and interest hereunder and thereunder. Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Debenture except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Debenture shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles ", "Sections", " Subsections", "paragraphs ", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Debenture; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Debenture as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. IN WITNESS WHEREOF this Debenture has been executed by the Owner the day and year first above written. SIGNED, SEALED and DELIVERED ) as a Deed and Debenture ) by ) Richard Klapow for and on behalf of ) Director Navigator Gas (IOM I-E) Limited ) Geoffrey Richardson in the presence:- ) SIGNED by ) for and on behalf of ) Christine C. Collins United States Trust Company of New York Adam Levine as Collateral Agent ) in the presence of:- ) SCHEDULE 1 Defined Terms Used in the Debenture "ASSETS" means, in relation to any person, the whole or any part of its business, undertaking, property and assets and includes, without limitation, any right to receive revenues. "CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of the Owner due or owing to the Owner on account of the prevailing debit balances of the present book debts of the Owner and (b) all rights relating to the aforesaid property specified in clause (a), including, INTER ALIA, negotiable instruments, legal and equitable charges, reservations of property rights, rights of action, collection, recovery or security, rights of tracing an unpaid vendor's liens and similar and associated rights (and each reference to a "Current Receivable" shall be construed as a reference to the whole or any part of any one or more of them). "ENCUMBRANCE" means any encumbrance and includes any mortgage, charge (whether fixed or floating, pledge, lien, hypothecation, title retention or other security agreement or security interest of any kind whatsoever and howsoever arising and any equivalent or analogous interest to any of the foregoing. "PERSON" means an individual, a partnership, a corporation, a joint venture, unincorporated association, a joint stock company, a trust or any other entity or a Governmental Authority. "SECURITY ASSETS" means all of the present and future Assets of the Owner, including, INTER ALIA, the Current Receivables (and each reference to a "Security Asset" shall be construed as a reference to the whole or any part of any one or more of them).
TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT .................................................... 2 ARTICLE I DEFINITIONS ................................................................... 2 ARTICLE II COVENANT TO PAY ................................................................. 2 Section 2.1. COVENANT TO PAY............................................................................ 2 ARTICLE III MORTGAGE, CHARGE AND ASSIGNMENT............................................... 2 Section 3.1. CHARGE..................................................................................... 2 Section 3.2. LEGAL SECURITIES........................................................................... 3 Section 3.3. CONVERSION OF FLOATING CHARGE.............................................................. 3 Section 3.4. NEGATIVE PLEDGE............................................................................ 3 Section 3.5. NEW ACCOUNTS............................................................................... 3 ARTICLE IV PRESERVATION OF SECURITY............................................. 4 Section 4.1. CONTINUING SECURITY........................................................................ 4 Section 4.2. WAIVER OF DEFENSES......................................................................... 4 Section 4.3. IMMEDIATE RECOURSE......................................................................... 5 Section 4.4. PRESERVATION OF RIGHTS..................................................................... 5 Section 4.5. ADDITIONAL SECURITY........................................................................ 5 Section 4.6. CERTIFICATE................................................................................ 5 Section 4.7. DISCHARGE.................................................................................. 5 Section 4.8. REGISTRATION............................................................................... 6 Section 4.9. COLLATERAL AGENT'S POWERS WITH RESPECT TO SECURITY ASSETS.................................. 6 Section 4.10. CALLS..................................................................................... 6 Section 4.11. DELEGATION BY COLLATERAL AGENT............................................................ 6 Section 4.12. FURTHER ASSURANCES........................................................................ 6 Section 4.13. REDEMPTION OF PRIOR MORTGAGES............................................................. 7 Section 4.14. POWER OF ATTORNEY......................................................................... 7 Section 4.15. AVOIDANCE OF PAYMENTS..................................................................... 7 Section 4.16. POWERS TO LEND............................................................................ 8 ARTICLE V DEALINGS WITH SECURITY ASSETS.......................................... 8 Section 5.1. CHARGED ACCOUNTS........................................................................... 8
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Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS.............................................................. 8 Section 5.3. LIABILITY TO PERFORM....................................................................... 8 ARTICLE VI ENFORCEMENT................................................... 9 Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE.......................................................... 9 Section 6.2. ENFORCEMENT OF SECURITY.................................................................... 9 Section 6.3. REMEDIES, WAIVERS AND CONSENTS............................................................. 9 Section 6.4. EXERCISE OF POWERS......................................................................... 9 ARTICLE VII RECEIVER..................................................... 9 Section 7.1. APPOINTMENT AND POWERS OF RECEIVER......................................................... 9 Section 7.2. COMPLY WITH INSTRUCTIONS.................................................................. 12 Section 7.3. REMOVAL AND REMUNERATION.................................................................. 12 Section 7.4. COLLATERAL AGENT MAY EXERCISE RECEIVER'S POWERS........................................... 12 Section 7.5. NO LIABILITY FOR ENTERING INTO POSSESSION................................................. 12 Section 7.6. PROTECTION OF THIRD PARTIES............................................................... 13 Section 7.7. EXPENSES.................................................................................. 13 Section 7.8. INDEMNITY................................................................................. 13 ARTICLE VIII APPLICATION OF PROCEEDS............................................ 14 Section 8.1. ORDER OF APPLICATION...................................................................... 14 Section 8.2. SUSPENSE ACCOUNTS......................................................................... 14 ARTICLE IX MISCELLANEOUS PROVISIONS............................................ 14 Section 9.1. AMENDMENT................................................................................. 14 Section 9.2. SEVERABILITY.............................................................................. 14 Section 9.3. NOTICES.................................................................................. 14 Section 9.4. CONSENT TO JURISDICTION................................................................... 14 Section 9.5. CAPTIONS.................................................................................. 15 Section 9.6. GOVERNING LAW............................................................................. 15 Section 9.7. NO PARTNERSHIP............................................................................ 15 Section 9.8. COUNTERPARTS.............................................................................. 15 Section 9.9. SURVIVAL.................................................................................. 15 Section 9.10. INTEGRATION.............................................................................. 15 Section 9.11. REPRODUCTION OF DOCUMENTS................................................................ 16 Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT....................................................... 16 Section 9.13. GENERAL INTERPRETIVE PRINCIPLES.......................................................... 16
-ii- SCHEDULE 1 Defined Terms Used in the Debenture -iii- EX-4.8 15 FACE OF EXCH. FIRST PRIORITY SHIP MORTGAGE NOTES FACE OF EXCHANGE FIRST PRIORITY SHIP MORTGAGE NOTES UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. CUSIP NO. _________ No. __ $__________ __% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to CEDE & CO., or registered assigns, the principal sum of _________________ on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Dated: _________ NAVIGATOR GAS TRANSPORT PLC, by ------------------------ ------------------------ TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by ----------------------------- Authorized Signatory 2 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus _% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately pre ceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 3 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, PERIOD PERCENTAGE 2002 . . . . . . . . . . . . . . . . . 105.750% 2003 . . . . . . . . . . . . . . . . . 103.500 2004 . . . . . . . . . . . . . . . . . 101.750 2005 and thereafter . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made 4 by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; provided, however, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); provided, however, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 5 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer 6 of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 7 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 8 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: Navigator Gas Transport PLC, 15-19 Athol Street Douglas, Isle of Man IM1 1LB Fax: 44-1624-638-333 Attention of Secretary ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) 9 (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Company; or (2) / / pursuant to an effective registration statement under the Securities Act of 1933; or (3) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) / / pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, 10 or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - ------------------------------------------------------------ TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 11
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized Exchange Principal Amount of this Principal Amount of Global Security following officer of Trustee or this Global Security Global Security such decrease or increase Securities Custodian
12 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: _______________ Your Signature: _________________________________ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: _________________________________ (Signature must be guaranteed) 13 EX-4.9 16 FACE OF EXCH. SECOND PRIORITY SHIP MORTGAGE NOTE FACE OF EXCHANGE SECOND PRIORITY SHIP MORTGAGE NOTE THE NOTES EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF THE NOTES AND WARRANTS TO PURCHASE SHARES OF COMMON STOCK (EACH, A "WARRANT"). THE SECURITIES AND WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE COMMENCEMENT OF AN EXCHANGE OFFER OR THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT FOR THE SECURITIES OR (I) SUCH DATE AFTER SEPTEMBER 6, 1997, AS THE INITIAL PURCHASERS MAY DETERMINE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. CUSIP No. ________ No. __ $__________ __% Second Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to CEDE & CO., or registered assigns, the principal sum of EIGHTY-SEVEN MILLION DOLLARS on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Dated: _________ NAVIGATOR GAS TRANSPORT PLC, by ------------------------ ------------------------ TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE CHASE MANHATTAN BANK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by ----------------------------- Authorized Signatory 2 __% Second Priority Ship Mortgage Notes Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest in cash semiannually on June 30 and December 31 of each year, commencing December 31, 1997, except that at the option of the Company, on any Interest Payment Date following the delivery of the first Vessel, to the extent cash available for distribution to Holders of Securities on such date is insufficient to pay all accrued and unpaid interest on the Securities on such date, the Company may pay such interest by issuing additional Securities having an aggregate principal amount equal to the amount of such deficiency, provided that the Company may not issue more than $20,900,000 aggregate principal amount of such additional Securities. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus _% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately pre ceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, The Chase Manhattan Bank, a New York banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its 3 domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company initially limited to $87,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture and subject to the issuance of up to $20,900,000 aggregate principal amount of Securities under the circumstances described in paragraph 1 above). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage 2002 . . . . . . . . . . . . . . . . . . . 106.000% 2003 . . . . . . . . . . . . . . . . . . . 104.000 2004 . . . . . . . . . . . . . . . . . . . 102.000 2005 and thereafter . . . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the 4 case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; provided, however, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 112% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); provided, however, that at least $45 million aggregate principal amount of the Securities and $100 million aggregate principal amount of the First Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 5 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE Commencing on the first Available Cash Payment Date and on each Available Cash Payment Date thereafter, the Company will be required to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture, provided that the Company shall purchase any and all First Priority Notes validly tendered pursuant to a change of control offer made pursuant to the First Priority Note Indenture prior to purchasing any Securities validly tendered pursuant to such Change of Control Offer. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be 6 redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and 7 lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bankruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 8 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: Navigator Gas Transport PLC, 15-19 Athol Street Douglas, Isle of Man IM1 1LB Fax: 44-1624-638-333 Attention of Secretary 9 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Company; or (2) / / pursuant to an effective registration statement under the Securities Act of 1933; or (3) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) / / pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. 10 Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - ------------------------------------------------------------ TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 11
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized Exchange Principal Amount of this Principal Amount of Global Security following officer of Trustee or this Global Security Global Security such decrease or increase Securities Custodian
12 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: _______________ Your Signature: _________________________________ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: _________________________________ (Signature must be guaranteed) 13 EX-4.10 17 COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT EXECUTION COPY COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT dated as of August 1, 1997, by and among UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized under the New York Banking Law, not in its individual capacity but solely as trustee with respect to the First Priority Notes issued under the First Priority Indenture (the "First Priority Trustee") and as the Collateral Agent hereunder (the "Collateral Agent"), THE CHASE MANHATTAN BANK, a New York banking corporation, not in its individual capacity but solely as trustee with respect to the Second Priority Notes issued under the Second Priority Indenture (the "Second Priority Trustee"), CREDIT SUISSE FIRST BOSTON, a Swiss banking corporation acting through its London Branch in its capacity as administrating bank for the Funding Bank and the Participating Banks party to the Letter of Credit Reimbursement Agreement ("CSFB"), NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (the "Company"), each subsidiary of the Company listed on the signature pages hereto (each such subsidiary referred to herein individually as an "Owner" and, collectively, as the "Owners") and NAVIGATOR HOLDINGS PLC ("Holdings" and, together with the Company and the Owners, the "Grantors"). Concurrently herewith the Company has issued the First Priority Notes and the Second Priority Notes and entered into the Letter of Credit Reimbursement Agreement. To induce the holders of the First Priority Notes and of the Second Priority Notes to purchase such securities and to induce CSFB, in its capacity as Funding Bank, to issue the Letter of Credit, the Company, Holdings and the Owners have agreed to enter into this Agreement in order to secure the obligations and to provide for certain rights and obligations with respect to the Collateral. The Company has requested the Collateral Agent to act, and the Collateral Agent has agreed to so act, as the agent of (i) the First Priority Trustee for the benefit of the holders of the First Priority Notes, (ii) the Second Priority Trustee for the benefit of the holders of the Second Priority Notes and (iii) CSFB for the benefit of the Funding Bank and the Participating Banks party to the Letter of Credit Reimbursement Agreement. 2 The parties hereto desire to set forth their understanding with respect to the Collateral Agent's duties regarding the Collateral and the respective interests of the parties hereto in and to the Collateral. In consideration of the premises and other benefits, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS. As used herein, the following terms shall have the meanings set forth in this Section 1, and all other capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Indentures. "ACCEPTABLE BANK" means a corporation organized and doing business under the laws of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and, to the extent there is such an institution eligible and willing to serve, having a corporate trust office in The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this definition, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. "AGREEMENT" means this Collateral Agency and Intercreditor Agreement, as the same may from time to time be amended in accordance with its terms and the terms of the Debt Instruments. "APPLICABLE REPRESENTATIVES" means at any time all the Representatives other than a Representative acting on behalf of holders of Secured Debt which is no longer outstanding in accordance with its related Debt Instrument; PROVIDED, that CSFB shall continue to be an Applicable Representative until such time as the Letter of Credit Reimbursement Agreement has been terminated in accordance with its terms. 3 "ASSIGNMENT OF EARNINGS AND INSURANCES" means, for each Vessel, the Assignment of Earnings and Insurances, dated on or before the Delivery Date for such Vessel, between the related Owner and the Collateral Agent, substantially in the form attached hereto as Exhibit B, as the same may be amended from time to time. "CAPITALIZED INTEREST ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(b). "CASUALTY ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(f). "COLLATERAL" means the property in which the Collateral Agent is granted a Lien from time to time hereunder or under any other Security Agreement, which Lien has not been released in accordance with the terms hereof or thereof. "COLLATERAL ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(g). "COLLATERAL AGENT" means United States Trust Company of New York in its capacity as Collateral Agent under this Agreement until its resignation or removal as Collateral Agent pursuant to the provisions of Section 11 hereof and, upon such resignation or removal, any successor Collateral Agent appointed pursuant to the provisions of Section 7.5 hereof until such successor's resignation or removal as Collateral Agent pursuant to the provisions of Section 7.5 hereof. "COMMERCIAL MANAGEMENT AGREEMENT" means the Master Commercial Marketing and Services Agreement between Holdings, on behalf of the Owners, and GEBAB dated as of February 28, 1997, to be assigned by Holdings to the Manager on behalf of the Owners on or before the Issue Date. "COMPANY" means Navigator Gas Transport PLC, an Isle of Man public limited company, unless and until a successor replaces it pursuant to the terms of the Indentures and thereafter means such successor. "DCR" means Duff & Phelps Credit Rating Co. and its successors. "DEBT INSTRUMENTS" means, collectively, the Indentures and the Letter of Credit Reimbursement Agreement. 4 "DEFAULT" means a "DEFAULT" as defined in each of the Indentures and a "REIMBURSEMENT DEFAULT" as defined in the Letter of Credit Reimbursement Agreement. "DRAWING CERTIFICATE" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. "EVENT OF DEFAULT" means an "EVENT OF DEFAULT" as defined in each of the Indentures and a "REIMBURSEMENT EVENT OF DEFAULT" as defined in the Letter of Credit Reimbursement Agreement. "FINAL DRAW" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. "FIRST PRIORITY INDENTURE" means the Indenture dated as of the date hereof among the Company, Holdings, the Owners, and the First Priority Trustee pursuant to which the First Priority Notes were issued, as the same may from time to time be amended in accordance with its terms. "FIRST PRIORITY TRUSTEE" means United States Trust Company of New York, not in its individual capacity but solely as trustee under the First Priority Indenture, and any successor trustee appointed thereunder. "FIRST PRIORITY NOTES" means the 10 1/2% First Priority Ship Mortgage Notes Due 2007 issued by the Company in an aggregate principal amount of $217,000,000 under the First Priority Indenture. "FUNDING BANK" means Credit Suisse First Boston acting through its London Branch, in its capacity as Funding Bank under the Letter of Credit. "GEBAB" means Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH. "HOLDINGS" means Navigator Holdings PLC, an Isle of Man public limited company. "INDENTURES" means, collectively, the First Priority Indenture and the Second Priority Indenture. "INTERCOMPANY NOTE" means the promissory note, dated the Issue Date, from the Owners evidencing the loan made by the Company to the Owners on the Issue Date as well as any loans made from time to time by the Company to the Owners to fund working capital requirements of the Vessels. 5 "INTEREST DRAW" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. "ISSUE DATE" means August 7, 1997. "ISSUE OF ONE DEBENTURE" means, with respect to each Owner, the issue of one debenture, dated as of the Issue Date, between each Owner and the Collateral Agent wherein such Owner grants to the Collateral Agent a security interest in and to all of such Owner's now owned and hereafter acquired property, substantially in the form attached hereto as Exhibit C. "LETTER OF CREDIT" means the Letter of Credit issued pursuant to the Letter of Credit Reimbursement Agreement. "LETTER OF CREDIT ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(d). "LETTER OF CREDIT REIMBURSEMENT AGREEMENT" means the Letter of Credit Reimbursement Agreement and Guaranty dated as of the Issue Date among CSFB, the Funding Bank, the Participating Banks, the Company, Holdings and the Owners. "MAJORITY SECURED CREDITORS" means, at any time, holders of a majority in aggregate principal amount of the outstanding First Priority Notes and of the outstanding Second Priority Notes and the Required Banks under the Letter of Credit Reimbursement Agreement, in each case at such time. "MANAGEMENT AGREEMENT" means the management agreement to be entered into among Navigator Gas Management Limited, the Company, Holdings and each of the Owners. "MANAGER" means the company that manages the Vessels, which initially shall be Navigator Gas Management Limited, an Isle of Man private limited company. "MORTGAGE" means each of the mortgages granted to the Collateral Agent by the Owners on the Vessels to secure the obligations under the Indentures and the Letter of Credit Reimbursement Agreement, substantially in the form attached hereto as Exhibit A. "NOTES" means, collectively, the First Priority Notes and the Second Priority Notes. 6 "OBLIGATIONS" means, collectively, the Company's obligations under or in respect of the First Priority Notes, the Second Priority Notes, the Letter of Credit Reimburse ment Agreement and the related Security Agreements and the Obligations of Holdings and the Owners under the Indentures, the Security Agreements and the Letter of Credit Reimbursement Agreement. "OPERATING ACCOUNT" means the trust account established and maintained by the Collateral Agent pursuant to Section 3.1(e). "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Collateral Agent and the Representatives. "OWNERS" means Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company. "PARTICIPATING BANKS" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. "PLEDGED SHARES" means the shares of the Company and the Owners listed on Schedule I attached hereto. "POTENTIAL PAYMENT EVENT OF DEFAULT" means a default in the payment of principal, premium or interest when due and payable under any Obligations represented by any Debt Instruments that, after notice or lapse of time or both, would constitute an Event of Default if such payment was not made within the applicable grace or cure period. "PRE-FUNDING ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(a). "PROCEEDS" includes (a) all proceeds relating to the conversion, voluntary or involuntary, and the interest payable thereon of the Collateral, or any part thereof, into cash or liquidated claims, including proceeds of insurance and the right to collect and receive the same; (b) all proceeds, both cash and non-cash, of the Collateral which may be sold or otherwise disposed of; and (c) all tolls, rents, issues, profits, revenues and other income, and in and to all proceeds and payments, from or on account of the Collateral. 7 "REGISTRATION JURISDICTION" means the Republic of Liberia or such other jurisdiction under whose laws a Vessel is permitted to be registered under the terms and subject to the conditions of the Indentures. "REPRESENTATIVES" means, collectively, the Trustees and CSFB. "REQUIRED BANKS" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. "RESPONSIBLE OFFICER" when used with respect to the Collateral Agent means any officer assigned to the corporate trust office of the Collateral Agent and also means, with respect to any particular corporate trust matter, any other officer of the Collateral Agent to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "REVENUE ACCOUNT" means the account established and maintained by the Collateral Agent pursuant to Section 3.1(c). "SECOND PRIORITY INDENTURE" means the Indenture, dated as of the date hereof, among the Company, Holdings, the Owners and the Second Priority Trustee pursuant to which the Second Priority Notes were issued, as the same may from time to time be amended in accordance with its terms. "SECOND PRIORITY NOTES" means the 12% Second Priority Ship Mortgage Notes Due 2007 issued by the Company in an initial aggregate principal amount of $87,000,000 under the Second Priority Indenture, which amount may increase pursuant to the terms of the Second Priority Note Indenture to $107,900,000. "SECOND PRIORITY TRUSTEE" means The Chase Manhattan Bank, not in its individual capacity but solely as trustee under the Second Priority Indenture, and any successor trustee appointed thereunder. "SECURED CREDITORS" means any holders from time to time of Secured Debt then outstanding in accordance with their related Debt Instruments, including without limitation CSFB, the Funding Bank and the Participating Banks, together with the Representatives and the Collateral Agent. "SECURED DEBT" means the First Priority Notes, the Second Priority Notes, and the reimbursement obligations and all other amounts owing under the Letter of Credit Reimbursement Agreement. 8 "SECURITY AGREEMENTS" means (i) this Agreement, (ii) the Mortgages, (iii) the Assignments of Earnings and Insurances, (iv) each Issue of One Debenture and any other similar instruments or documents entered into or delivered in connection with any of the foregoing, as such agreements, instruments or documents may from time to time be amended in accordance with their respective terms and the Debt Instruments. "SENIOR DEBT INSTRUMENT" means, as of any time, the agreement, indenture or other instrument pursuant to which the then Senior Representative is Representative thereunder. "SENIOR REPRESENTATIVE" means, until such time as the Letter of Credit Reimbursement Agreement has been terminated in accordance with its terms, CSFB, and at any time thereafter so long as any First Priority Notes are outstanding, the First Priority Trustee, and at any time thereafter, the Second Priority Trustee. "TECHNICAL MANAGEMENT AGREEMENT" means the Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement dated as of February 28, 1997, between Holdings, on behalf of the Owners, and GEBAB to be assigned by Holdings to the Manager, on behalf of the Owners, on or before the Issue Date. "TECHNICAL SUPERVISION AGREEMENT" means the Agreement on Contract for Technical Matters among GEBAB, Holdings, on behalf of the Owners, and the Builders dated as of February 28, 1997, to be assigned by Holdings to the Manager on behalf of the Owners on or before the Issue Date. "TEMPORARY CASH INVESTMENTS" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obliga tions guaranteed by the United States of America or any agency thereof; (ii) investment in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust issuer which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust issuer has capital, surplus and undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor; (iii) repurchase 9 obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifica tions described in clause (ii) above; (iv) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Issuer) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's, of "A-1"(or higher) according to S&P or of "D-1" (or higher) according to DCR; (v) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P, Moody's or DCR and (vi) guaranteed investment contracts, investment agreements or similar agreements initially rated "A" by S&P, Moody's or DCR that are treated as Indebtedness for United States federal income tax purposes. For purposes of determining whether a Temporary Cash Investment matures on or before the next succeeding Interest Payment Date, each payment received under a Temporary Cash Investment described in clause (vi) above will be considered to be the maturity of such Temporary Cash Investment. A guaranteed investment contract, investment agreement or similar agreement that constitutes a senior unsecured long-term debt obligation of a Person shall be deemed to have the same rating as such Person's other senior unsecured long-term debt obligations, if any, that are rated by a Rating Agency. "TERMINATION ACCOUNT" means the account established and maintained by Collateral Agent pursuant to Section 3.1(g). "TRUST ACCOUNTS" means the following trust accounts established and maintained by the Collateral Agent pursuant to Article III, on behalf of the Representatives, for the benefit of the Secured Creditors entitled to the benefits of the Debt Instrument pursuant to which the Representatives act, with respect to the Collateral only: (i) the Pre-Funding Account, (ii) the Capitalized Interest Account, (iii) the Revenue Account, (iv) the Letter of Credit Account, (v) the Operating Account, (vi) the Casualty Account, (vii) the Collateral Account and (viii) the Termination Account. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in effect on the date of this Agreement. 10 "TRUST MONEYS" means the funds, together with any income thereon from Temporary Cash Investments, deposited in the Trust Accounts. "TRUSTEES" means the First Priority Trustee and the Second Priority Trustee. "WORKING CAPITAL DRAWS" shall have the meaning assigned thereto in the Letter of Credit Reimbursement Agreement. ARTICLE II APPOINTMENT OF THE COLLATERAL AGENT SECTION 2.1. APPOINTMENT. Each Representative, for the benefit of the Secured Creditors entitled to the benefits of the Debt Instrument pursuant to which such Representative acts, hereby designates and appoints the Collateral Agent, and the Collateral Agent hereby accepts such designation and appointment, to serve as Collateral Agent for such Representative in the manner and upon the terms and conditions set forth herein and in the applicable Debt Instrument and the other Security Agreements. Each Representative, on behalf of the Secured Creditors entitled to the benefits of the Debt Instrument pursuant to which such Representative acts, hereby irrevocably authorizes, and each Secured Creditor, by its acceptance of the benefit of any Security Agreement or Debt Instrument, shall be deemed irrevocably to have authorized such Representative to authorize the Collateral Agent upon written instructions from such Representative, to take such action on behalf of such Representative, for the benefit of the Secured Creditors entitled to the benefits of the Debt Instrument pursuant to which such Representative acts, as such Representative may direct and as shall be permitted to be taken under the provisions hereof and under the Security Agreements, including to foreclose or otherwise realize upon any Collateral and, upon the specific direction of such Representative, to initiate, prosecute and defend any and all legal proceedings against the Company or any other party (excluding the Representatives) to any Security Agreement. ARTICLE III TRUST ACCOUNTS SECTION 3.1. TRUST ACCOUNTS. (a) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, 11 there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent, a trust account (the "Pre-Funding Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited by the Company, and the Company hereby agrees to deposit, (i) $225.4 million on the Issue Date, representing (A) an amount that shall be sufficient to pay the Purchase Price of each Vessel; (B) an amount that shall be sufficient to pay all fees allocable to each Vessel and due and payable prior to the Delivery Date of such Vessel, including the Manager's Fees and those payable to CSFB in connection with the Letter of Credit; and (C) all amounts in respect of the cost of Vessels' supplies and (ii) from time to time, income earned on Temporary Cash Investments from amounts on deposit in the Pre-Funding Account. In connection with the foregoing, the Company shall be required to deliver on the Issue Date to the Trustees, CSFB and the Collateral Agent a verification report of a nationally recognized firm of independent accountants stating that funds deposited pursuant to clause (i) (A) and (B) above will provide cash at such times and in such amounts as will be sufficient to pay, when due, each installment payment for the Purchase Price of each Vessel as well as all fees allocable to the Vessels prior to their respective Delivery Dates. Funds on deposit in the Pre- Funding Account shall be disbursed by the Collateral Agent in accordance with Section 3.3(a). (b) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent, a trust account (the "Capitalized Interest Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited by the Company on the Issue Date, and the Company hereby agrees to deposit $47.3 million, representng an amount, which, together with the investment income earned thereon from Temporary Cash Investments of amounts on deposit in the Capitalized Interest Account as well as any investment income from Temporary Cash Investments deposited therein from the Pre-Funding Account, will be sufficient to pay interest (excluding additional interest payable on such Notes pursuant to a Registration Default) on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of the related Vessel. In connection with the foregoing deposit, the Company shall be required to deliver on the Issue Date to the Trustees, CSFB and the Collateral Agent a verification report of a nationally recognized firm of independent 12 accountants stating that the payments scheduled to be received, without reinvestment, on the Temporary Cash Investments made with funds deposited in the Capitalized Interest Account pursuant to this paragraph (b), together with amounts deposited in the Capitalized Interest Account from the Pre-Funding Account as set forth in Section 3.3(a)(vii) and together with any cash, without reinvestment, deposited pursuant to this paragraph (b), that is not invested on the Issue Date, will provide cash at such times and in such amounts as will be sufficient to pay, when due, interest on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of such Vessel (excluding additional interest payable on such Notes pursuant to a Registration Default). Funds on deposit in the Capitalized Interest Account shall be disbursed by the Collateral Agent in accordance with Section 3.3(b). (c) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent, a trust account (the "Revenue Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited, and the Company and the Owners hereby agree to deposit or cause to be deposited, (i) on a daily basis, any and all revenue (including charterhire) received by the Owners or the Manager in connection with the employment of the Vessels; (ii) on the first Business Day of each calendar month following the Delivery Date of the first Vessel, income earned during the preceding calendar month on Temporary Cash Investments from amounts on deposit in the Revenue Account; (iii) Interest Draws; (iv) Working Capital Draws in an amount equal to additional interest being paid or payable on the Allocated Principal Amount of the Notes for such Vessel pursuant to a Registration Default to the extent the balance remaining in the Capitalized Interest Account is insufficient to pay such additional interest; and (v) on the Delivery Date of the last Vessel, any amounts remaining in the Pre-Funding Account after the payment of the final installment of the Purchase Price to the Builders and the remittance of the fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel to the Manager. Deposits will also be made into the Revenue Account from time to time (i) from certain with drawals of funds from the Pre-Funding Account, the Capitalized Interest Account and the Casualty Account, as set forth in Section 3.3(a)(iv) and (vi), 3.3(b) and 3.3(f), respectively; and (ii) from amounts held in the Termination 13 Account to the extent Insurance Proceeds exceed the related Total Loss Payment. Funds on deposit in the Revenue Account shall be disbursed by the Collateral Agent in accordance with Section 3.3(c) and (d). (d) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent a trust account (the "Letter of Credit Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited, and the Collateral Agent is hereby directed to deposit, no later than the Business Day prior to each Interest Payment Date with respect to which the Collateral Agent has made an Interest Draw under the Letter of Credit for payment of interest on the First Priority Notes or the Second Priority Notes, such Draw Amount. Funds on deposit in the Letter of Credit Account shall be disbursed by the Collateral Agent in accordance with Section 3.3(e). (e) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent a trust account (the "Operating Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors, with the Manager having the right to withdraw amounts held therein subject to the limitations set forth in Section 3.3(f), into which there shall be deposited on the first Business Day of each calendar month, and the Collateral Agent is hereby directed to deposit, commencing after the Delivery Date of the first Vessel, from amounts withdrawn from the Revenue Account an amount (the "Monthly Operating Deposit") by which the Budgeted Monthly Operating Balance then in effect exceeds the balance of funds in the Operating Account as of the opening of business on such first Business Day, as certified by the Manager to the Trustees, CSFB and the Collateral Agent as of such first Business Day. In addition, on and after any Business Day commencing 90 days prior to the Delivery Date of the first Vessel, as reasonably expected by the Company and evidenced by an Officer's Certificate of the Company delivered to the Collateral Agent, upon receipt by the Collateral Agent of a written request from the Manager that a Working Capital Draw be made under the Letter of Credit to the extent the funds in the Operating Account are insufficient to meet actual operating expenses (including the Manager's Fees and the fees of GEBAB under the Technical Supervision Agreement and the Commercial Management Agreement for which the Manager 14 has received an invoice), the Collateral Agent will make a Working Capital Draw in the amount requested by the Manager (but not to exceed the maximum amount then available under the Letter of Credit for Working Capital Draws) and deposit the Draw Amount into the Operating Account. Funds on deposit in the Operating Account shall be disbursed by the Manager in accordance with Section 3.3(f). (f) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent a trust account (the "Casualty Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited, and the Collateral Agent is hereby directed to deposit, (i) any cash proceeds (other than amounts representing the Refund Amount or the proceeds of the Performance Bonds or any Building Contract Guarantee) from the exercise of remedies against a Builder in respect of any Vessel; and (ii) any Insurance Proceeds (other than with respect to a Total Loss) payable to the Collateral Agent as assignee of the Owners and the Manager, pursuant to the terms of the Insurance Policies. Funds on deposit in the Casualty Account shall be disbursed by the Collateral Agent in accordance with Section 3.3(g). (g) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent a trust account (the "Termination Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited, and the Collateral Agent is hereby directed to deposit, in the event of a Total Loss or in the event of a termination by an Owner of its Building Contract, any Insurance Proceeds or the Refund Amounts with respect to the related Vessel and any other Vessel that has not been accepted as of such date of termination, if any, and any amounts collected in respect of the related Building Contract Guarantees and Performance Bonds, as the case may be. The Refund Amounts and any amounts collected in respect of the related Building Contract Guarantees and the Performance Bonds, together with the amounts withdrawn from the Pre-Funding Account and the Capitalized Interest Account as set forth in Section 3.3(a)(v) and 3.3(b) shall be deposited into the Termination Account to be remitted FIRST, to CSFB in an aggregate amount equal to the sum of (i) any accrued and unpaid fees owing under the Letter of Credit Reimbursement 15 Agreement, (ii) all Working Capital Draws made with respect to such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and (iii) the Allocated Portion of Interest Draws for such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and THEN, to the Trustees for application in redemption of the Allocated Principal Amount of the Notes for such Vessels. Any Insurance Proceeds deposited in the Termination Account in the event of a Total Loss shall be disbursed by the Collateral Agent, in accordance with Section 3.3(g). (h) There is hereby established and, at all times hereafter until the trusts created by this Agreement shall have terminated, there shall be maintained with the Collateral Agent at the corporate trust office of the Collateral Agent, a trust account (the "Collateral Account") in the name and under the control of the Collateral Agent for the benefit of the Representatives for the benefit of the Secured Creditors into which there shall be deposited by the Collateral Agent (i) the cash proceeds of any sale of, or other realization upon, all or any part of the Collateral upon exercise by the Collateral Agent of any rights and remedies under this Agreement, the Letter of Credit Reimbursement Agreement, and the Indentures, (ii) any other amounts received by the Collateral Agent upon the occurrence and continuation of an Event of Default, if such amounts are not otherwise applied as set forth in Section 3.3(c), (iii) any other amounts received by the Collateral Agent pursuant to any of the Security Agreements for which this Agreement does not specify a Trust Account into which such amount is to be deposited, and (iv) upon the occurrence and continuation of an Event of Default, at the instruction of the Senior Representative, funds from any other Trust Account. Funds on deposit in the Collateral Account shall be disbursed in accordance with Section 3.4. (i) Any income received by the Collateral Agent with respect to the balance from time to time outstanding to the credit of any Trust Account, including any interest or capital gains on Temporary Cash Investments, shall be deposited in the Revenue Account. All cash amounts on deposit from time to time in the Trust Accounts, together with any Temporary Cash Investments from time to time made with amounts on deposit therein as provided herein, shall constitute part of the Collateral. The deposit or holding of such amounts in any Trust Account or the Operating Account shall not constitute payment of the Obligations until applied to the payment of the Obligations as provided herein. The parties to this Agreement agree that all income from Temporary Cash Investments shall be income of the 16 Owners, to be held in the sole and exclusive control of the Collateral Agent pursuant to this Agreement. (j) The Collateral Agent shall establish the Trust Accounts in The City of New York and shall hold all Trust Moneys relating to the Collateral in its name as Collateral Agent under this Agreement in the Trust Accounts, on behalf of the Representatives for the benefit of their respective Secured Creditors, and shall maintain such Trust Accounts and, subject to this Section 3.1(j), administer the funds in accordance with the specific direction of the Senior Representative given in accordance with the applicable Debt Instrument; PROVIDED, HOWEVER, that in the event that any such Trust Moneys shall consist of Proceeds, such Proceeds shall in each instance be (i) segregated from all other Trust Moneys and (ii) maintained in a separate Trust Account by the Collateral Agent in the jurisdiction in which the Collateral to which such Proceeds relate is, or was, as the case may be, located if necessary to preserve the Collateral Agent's perfected security interest in such Proceeds under the laws of such jurisdiction. The Collateral Agent may require an Opinion of Counsel (at the Company's expense) for the purpose of making the foregoing determination. The Collateral Agent hereby represents that (i) it is not directly or indirectly controlled by any Owner, the Company or Holdings, or any affiliate of them and (ii) it does not have any knowledge of any adverse claim with respect to the Collateral. SECTION 3.2. INVESTMENT OF FUNDS DEPOSITED IN TRUST ACCOUNTS. Amounts on deposit in the Trust Accounts shall be invested and re-invested from time to time in such Temporary Cash Investments as the Company shall direct by written instruction to the Collateral Agent, which Temporary Cash Investments shall be held in the name and be under the control of the Collateral Agent or a successor Collateral Agent as provided under Section 7.5. If the amounts on deposit in any of the Trust Accounts are invested in a Temporary Cash Investment described in clause (iv), (v) or (vii) of the definition thereof and the ratings thereof fall below the ratings that are indicated in such clause, either the Company or the Majority Secured Creditors shall direct the Collateral Agent in writing to re-invest such amounts in another Temporary Cash Investment. In order to provide the Collateral Agent, for the benefit of the Secured Creditors, with a perfected security interest in any Temporary Investment, each Temporary Investment shall be either: (A) evidenced by negotiable certificates or instruments, or if nonnegotiable then issued in the name of the Collateral Agent, which (together with any appropriate instruments of transfer) are delivered to, 17 and held by, the Collateral Agent or any agent thereof in the State of New York; or (B) in book-entry form and issued by the United States or any agency thereof and backed by the full faith and credit of the United States, and subject to pledge under applicable state law and Treasury regulations and as to which appropriate measures shall have been taken for perfection of the security interests; or (C) in the case of a guaranteed investment contract, issued in the name of the Collateral Agent (or any agent) and delivered to and held by the Collateral Agent (or such agent). In the absence of negligence or willful misconduct, the Collateral Agent shall not be responsible for any loss resulting from any such Temporary Cash Investment. SECTION 3.3. PAYMENTS FROM TRUST ACCOUNTS. (a) The Collateral Agent will withdraw funds from the Pre- Funding Account and apply such amounts as follows: (i) on each Vessel Purchase Installment Date for each Vessel, an amount equal to the installment then due with respect to such Vessel to be remitted to the Builders as an installment payment of the Purchase Price of such Vessel, PROVIDED that each of CSFB, the Trustees and the Collateral Agent has received written notice from the Company of such Vessel Purchase Installment Date at least three Business Days prior to such date, and PROVIDED FURTHER, that in such written notice the Company shall represent and warrant to the Collateral Agent that there has not been any material default under the related Building Contract; (ii) at any time and from time to time, PROVIDED that CSFB, the Collateral Agent and the Trustees have received a written request from the Company for such payment at least three Business Days prior to such date of withdrawal, (A) an amount equal to that portion of any fee allocable to a Vessel and then due and payable prior to the Delivery Date of such Vessel pursuant to the terms of the Management Agreement or any fees due and payable pursuant to the Letter of Credit Reimbursement Agreement to be remitted to the Manager or CSFB, as the case may be; PROVIDED, HOWEVER, that amounts withdrawn from the Pre-Funding Account to make payments as described in this clause (A) shall not in the aggregate exceed the sum of all amounts deposited into the Pre-Funding Account pursuant to Section 3.1(a)(i)(B); (B) an amount equal to any payments due in connection with the purchase of Vessels' supplies; PROVIDED, HOWEVER, that amounts withdrawn from the Pre-Funding Account to make 18 payments described in this clause (B) shall not in the aggregate exceed the sum of all amounts deposited into the Pre-Funding Account pursuant to Section 3.1(a)(i)(C); (iii) on the Delivery Date for each Vessel, PROVIDED that the conditions precedent set forth in Section 3.5 of this Agreement have been satisfied, an amount equal to (A) the final installment of the Purchase Price for such Vessel, and to be remitted to the Builders, plus (B) fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel, as certified by, and to be remitted to, the Manager; (iv) on each Interest Payment Date occurring after the Contractual Delivery Date of a Vessel and before the Delivery Date of such Vessel, an amount, certified by the Trustees, equal to the interest accrued on the Allocated Principal Amount of the Notes for such Vessel to be deposited in the Revenue Account; (v) if any Owner elects to terminate the Building Contract for its Vessel due to a material breach of such Building Contract by the Builders, unless the Builders shall have remitted all liquidated damages in accordance with the terms of the Building Contract to the Collateral Agent, an amount equal to the remaining funds in the Pre-Funding Account to be deposited into the Termination Account for application FIRST, to CSFB in an aggregate amount equal to the sum of (i) any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement, (ii) all Working Capital Draws made with respect to such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and (iii) the Allocated Portion of Interest Draws for such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and THEN, in redemption of such portion of the First Priority Notes or the Second Priority Notes, as the case may be, as required by the terms of the Notes; (vi) on the Delivery Date of the last Vessel, the amounts remaining in the Pre-Funding Account after the payment of the final installment of the Purchase Price to the Builders and the remittance of the fees and expenses incurred in connection with the recordation and filing of the related Security Agreements in the Registration Jurisdiction related to such Vessel to the Manager, to be deposited into the Revenue Account; and (vii) any and all investment income earned from Temporary Cash Investments held therein, from time to time, at the request of the Owners, for deposit in the Capitalized Interest Account. (b) On each Interest Payment Date prior to the Contractual Delivery Date of a Vessel, the Collateral Agent will withdraw from the Capitalized Interest Account in respect of each such Vessel an amount equal to the interest accrued on the Allocated Principal Amount of the Notes for such Vessel and shall deposit such amount into the Revenue 19 Account. In addition, if an Owner elects to terminate the Building Contract for its Vessel due to a material breach of such Building Contract by the Builders, then the remaining funds in the Capitalized Interest Account shall be withdrawn from the Capitalized Interest Account and deposited into the Termination Account for application FIRST, to CSFB in an aggregate amount equal to the sum of (i) any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement, (ii) all Working Capital Draws made with respect to such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and (iii) the Allocated Portion of Interest Draws for such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and THEN, in redemption of such portion of the First Priority Notes or the Second Priority Notes, as the case may be, as required by the terms of the Notes. (c)(i) On the first Business Day of each calendar month, the Collateral Agent is hereby directed and authorized to withdraw funds from the Revenue Account and to apply such funds in the following order of priority: (A) FIRST, for deposit into the Operating Account, an amount equal to the Monthly Operating Deposit (as certified by the manager); (B) SECOND, to CSFB, an amount, as certified to the Collateral Agent by CSFB, equal to all accrued and unpaid interest on all outstanding Draws under the Letter of Credit, to such date and, after the Delivery Date of the last Vessel, the sum of all accrued and unpaid fees payable in respect of the Letter of Credit to such date; (C) THIRD, to CSFB, an amount as certified to the Collateral Agent by CSFB, equal to the aggregate amount of Working Capital Draws outstanding on such date; and (D) FOURTH, to CSFB, an amount, as certified to the Collateral Agent by CSFB, equal to the aggregate amount of Interest Draws outstanding on such date; PROVIDED, HOWEVER, that, in the event the first Business Day of any calendar month is a Management Fee Payment Date (as defined below), the application of funds on such Business Day pursuant to subparagraphs (c)(i) (B), (C) and (D) above shall be subordinate to the prior payment of the Manager's Fee as set forth in the following paragraph; PROVIDED FURTHER, HOWEVER, that in the event that the first Business Day of any calendar month is an Interest Payment Date, the application of funds on such Business Day pursuant to subparagraphs (c)(i)(C) and (D) above shall also be 20 subordinate to the prior payments set forth in subparagraph (c)(iii)(A) below. (ii) On the first Business Day of each January, April, July and October (each a "Management Fee Payment Date") after the Delivery Date of the first Vessel, after its receipt from the Manager of a written statement describing the amounts then due and payable, subject to the prior application of funds in the Revenue Account on such Business Day in accordance with paragraph (c)(i)(A), the Collateral Agent is hereby directed and authorized to withdraw from the Revenue Account, to the extent of funds available therein, an amount equal to the aggregate Manager's Fee then payable pursuant to the Management Agreement, the Commercial Management Agreement and the Technical Management Agreement, and to remit such amount to the Manager. (iii) Subject to the prior application of funds in the Revenue Account on such Interest Payment Date in accordance with paragraph (C)(i)(A) and (B) and (C)(ii), if applicable, on each Interest Payment Date the Collateral Agent is hereby directed and authorized to withdraw funds from the Revenue Account, to the extent of funds available therein, and to apply such funds in the following order of priority: (A) prior to the Delivery Date of the last Vessel, to CSFB, the sum of all accrued and unpaid fees allocable to Vessels for which the Delivery Date has occurred and payable in respect of the Letter of Credit to such date; (B) after the Delivery Date of the first Vessel, to the Trustees and the Collateral Agent, on a PRO RATA basis in accordance with amounts owed, an amount, as calculated and certified by the respective Trustee or the Collateral Agent, equal to the accrued and unpaid fees and expenses payable in respect of the Indentures and this Agreement; (C) to the First Priority Trustee for the benefit of the Holders of First Priority Notes, an amount, as certified to the Collateral Agent by the First Priority Trustee, equal to all accrued and unpaid interest to such Interest Payment Date on the First Priority Notes; and (D) to the Second Priority Trustee for the benefit of the Second Priority Notes, an amount, as certified to the Collateral Agent by the Second Priority Trustee, 21 equal to the accrued and unpaid interest to such Interest Payment Date on the Second Priority Notes. Any amounts that remain in the Revenue Account on an Interest Payment Date after application in accordance with this paragraph (c) will be treated as Available Cash for purposes of the Indentures. The Company may from time to time direct the Collateral Agent to withdraw, to the extent of Available Cash, cash from the Revenue Account to be remitted to the Company for the purpose of enabling the Company to purchase Notes in open market transactions, provided that concurrently therewith the Company tenders such Notes to the applicable Trustee for cancelation pursuant to the applicable Indenture and the applicable Trustee acknowledges such tender and cancelation to the Collateral Agent. (d) From time to time after the Delivery Date of the first Vessel, in the event of an extraordinary expense incurred by an Owner or the Manager on behalf of an Owner in order to maintain and operate a Vessel in accordance with the related Mortgage, as certified and described in reasonable detail in writing by the Manager to CSFB, the Trustees and the Collateral Agent, which expense is immediately due and payable, the Collateral Agent is hereby directed and authorized to withdraw (each, an "Extraordinary Remittance") from amounts on deposit in the Revenue Account an amount sufficient to meet such extraordinary expense and to deposit such amount into the Operating Account. (e) On each Interest Payment Date after the Delivery Date for the first Vessel, the Collateral Agent is hereby directed and authorized to withdraw any funds on deposit in the Letter of Credit Account and to deposit such funds into the Revenue Account and to apply such funds on such Interest Payment Date solely to discharge amounts payable as described in subparagraphs (c)(iii)(B) and (C) above; PROVIDED, HOWEVER, that the Collateral Agent shall not apply such funds to pay amounts owed as described in subparagraph (c)(iii)(C) unless the Company shall have, prior to or on such Interest Payment Date, issued additional Second Priority Notes in an aggregate principal amount of $16.5 million, as evidenced by an Officers' Certificate furnished to the Collateral Agent by the Company. (f) The Manager is hereby authorized to withdraw amounts on deposit in the Operating Account, from time to time, to pay the operating expenses of (i) Vessels as to which the Delivery Date has occurred and (ii) to the extent of Working Capital Draws deposited therein, Vessels the Delivery Date of which is reasonably expected by the 22 Company, as evidenced by an Officer's Certificate delivered to the Collateral Agent, to occur within 90 days of the date of such withdrawal; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default, the Manager shall not make any withdrawals from the Operating Account without the prior written consent of the Collateral Agent. On the fifteenth day of each January, April, July and October, the Company and the Owners shall cause the Manager to provide to the Trustees, CSFB and the Collateral Agent a reasonably detailed statement setting forth, on an aggregate and per Vessel basis, how the amounts withdrawn from the Operating Account were applied during the immediately preceding calendar quarter. (g)(i) The Collateral Agent is hereby directed and authorized to apply funds on deposit in the Casualty Account from time to time to pay, upon the written request of the Manager, for the repair or salvage of any of the Vessels, if, in each case, the following conditions have been met: (A) if no Event of Default has occurred or is continuing, the Manager has certified to the Trustees and the Collateral Agent that such repairs are necessary or desirable for the use, operation and maintenance of such Vessel; and (B) if an Event of Default has occurred and is continuing, the Collateral Agent, in its sole discretion, has determined to apply such amounts to pay for the repair or salvage of such Vessel. If repair of such Vessel is deemed not to be desirable by the Manager or the Collateral Agent, pursuant to either clause (A) or (B) above, the Collateral Agent is hereby directed and authorized (x) to retain such funds in the Casualty Account if no Event of Default has occurred or is continuing, and (y) to withdraw such funds and to deposit them into the Collateral Account if an Event of Default has occurred and is continuing. (ii) Upon receipt of a written instruction from the Manager, the Collateral Agent may withdraw funds from the Casualty Account on any Interest Payment Date to cover any deficiency which would otherwise arise if funds then available in the Revenue Account are insufficient to pay amounts required to be paid from the Revenue Account on such Interest Payment Date as described under Section 3.3(c) but only to the extent that such funds on deposit in the Casualty Account have not previously been designated to pay the costs of the repair or salvage of the related Vessel giving rise to the deposit of such funds. (h)(i) The Collateral Agent is hereby directed and authorized to apply any Insurance Proceeds deposited into the Termination Account in the event of a Total Loss in the following order of priority within 30 days following such deposit: 23 FIRST: to CSFB, the Trustees and the Collateral Agent, pro rata to each of them in accordance with the amounts owed, an amount equal to any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement and Trustee and Collateral Agent fees and all reasonable expenses and charges incurred by or on behalf of CSFB, the Trustees and the Collateral Agent in connection with the ascertainment or protection of their respective rights and the pursuance of their respective remedies under the Indentures, the Letter of Credit Reimbursement Agreement or any of the Security Agreements (including the reasonable fees and expenses of counsel) in each case as certified in writing to the Collateral Agent by CSFB, the Trustees or the Collateral Agent, as the case may be; SECOND: to CSFB, an amount, as certified in writing to the Collateral Agent by CSFB, equal to all Working Capital Draws made with respect to such Vessel which remain unreimbursed, together with interest thereon payable pursuant to the Letter of Credit Reimbursement Agreement; THIRD: to CSFB, an amount, as certified in writing to the Collateral Agent by CSFB, equal to the Allocated Portion of Interest Draws for a Vessel which remain unreimbursed, together with interest thereon payable pursuant to the Letter of Credit Reimbursement Agreement; FOURTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Notes, an amount, as certified in writing to the Collateral Agent by the First Priority Trustee, equal to any accrued and unpaid interest in respect of the First Priority Notes then outstanding; FIFTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Notes, an amount, as certified in writing to the Collateral Agent by the Second Priority Trustee, equal to any accrued and unpaid interest in respect of the Second Priority Notes then outstanding; SIXTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Notes, an amount, as certified in writing to the Collateral Agent by the First Priority Trustee, equal to the outstanding principal of the First Priority Notes; SEVENTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Notes, an amount, as certified in writing to the Collateral Agent by the Second Priority Trustee, equal to the outstanding principal of the Second Priority Notes; and 24 EIGHTH: to the Revenue Account, any remaining funds. (ii) In the event of a termination by an Owner of its Building Contract and upon receipt of written instructions from the relevant Trustee setting forth the amount of such withdrawal and the proper application thereof in accordance with the Indentures, the Collateral Agent may withdraw funds on deposit in the Termination Account to be applied FIRST, to CSFB in an aggregate amount equal to the sum of (i) any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement, (ii) all Working Capital Draws made with respect to such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and (iii) the Allocated Portion of Interest Draws for such Vessels which remain unreimbursed, together with accrued and unpaid interest thereon and THEN, for the redemption of the First Priority Notes or the Second Priority Notes, as the case may be, as required by the terms of the Indentures. SECTION 3.4. APPLICATION OF MONEYS IN THE TRUST ACCOUNTS UPON AN EVENT OF DEFAULT. Upon the occurrence of an Event of Default under a Debt Instrument, the applicable Representative may, subject to the terms and provisions of this Agreement and upon the acceleration of all amounts owing under such Debt Instrument to be immediately due and payable, direct the Collateral Agent to exercise one or more remedies permitted by Article VII of this Agreement in order to satisfy the claims of the applicable Secured Creditors. All amounts on deposit in the Trust Accounts that may be distributed in the event of an Event of Default will be distributed on one or more distribution dates selected by the Collateral Agent or at the request of the Senior Representative or the Majority Secured Creditors, in the following order of priority, to the extent of funds available therein: FIRST: to CSFB, the Trustees and the Collateral Agent, pro rata to each of them in accordance with the amounts owed, an amount equal to any accrued and unpaid fees owing under the Letter of Credit Reimbursement Agreement, any Trustee and Collateral Agent fees and all reasonable expenses and charges incurred by or on behalf of CSFB, the Trustees and the Collateral Agent in connection with the ascertainment or protection of their respective rights and the pursuance of their respective remedies under the Debt Instruments or any of the Security Agreements (including the reasonable fees and expenses of counsel) in each case as certified in writing to the Collateral Agent by CSFB, the Trustees or the Collateral Agent, as the case may be; 25 SECOND: to CSFB, an amount, as certified in writing to the Collateral Agent by CSFB, equal to any amounts owing pursuant to the Letter of Credit Reimbursement Agreement with respect to Working Capital Draws, including all accrued and unpaid interest thereon; THIRD: to CSFB, an amount, as certified in writing to the Collateral Agent by CSFB, equal to any amounts owing pursuant to the Letter of Credit Reimbursement Agreement with respect to Interest Draws, including all accrued and unpaid interest thereon; FOURTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Notes, an amount, as certified in writing to the Collateral Agent by the First Priority Trustee, equal to any accrued and unpaid interest in respect of the First Priority Notes then outstanding; FIFTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Notes, an amount, as certified in writing to the Collateral Agent by the Second Priority Trustee, equal to any accrued and unpaid interest in respect of the Second Priority Notes then outstanding; SIXTH: to the First Priority Trustee for the benefit of the Holders of the First Priority Notes, an amount, as certified in writing to the Collateral Agent by the First Priority Trustee, equal to the outstanding principal of the First Priority Notes; SEVENTH: to the Second Priority Trustee for the benefit of the Holders of the Second Priority Notes, an amount, as certified in writing to the Collateral Agent by the Second Priority Trustee, equal to the outstanding principal of the Second Priority Notes; and EIGHTH: to the Company, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, the excess, if any. SECTION 3.5. CONDITIONS TO CERTAIN DISBURSEMENTS FROM THE PRE-FUNDING ACCOUNT. With respect to each Vessel, the remittance to the Builders of the (a) final installment of the Purchase Price for such Vessel on the Delivery Date of such Vessel as described in Section 3.3(a)(iii) shall be subject to the Collateral Agent's receipt of the following items on or prior to the Delivery Date for such Vessel: (i) executed originals of the Security Agreements (in the forms attached hereto as Exhibits A and B) 26 relating to such Vessel to the extent not previously delivered to the Collateral Agent; (ii) written evidence that the Vessel has been registered in the name of the applicable Owner under the laws of the Registration Jurisdiction; (iii) evidence that the related Mortgage has been recorded under the laws of the Registration Jurisdiction; (iv) written confirmation from the Classification Society that such Vessel is classed in the highest category for ships of the same type as the Vessel with the Classification Society free of recommendations and notations affecting class; (v) an Officers Certificate of the Company that all necessary governmental or regulatory approvals, licenses and authorities which are necessary to the operation of such Vessel have been obtained; (vi) written confirmation from each of the Builders that upon remittance to them of the final installment of the Purchase Price for such Vessel, such Builder will have no further claims of any nature in respect of such Vessel and that there are no disputes between such Builder and the Company or its Affiliates relating to the related Building Contract; (vii) an executed Opinion of Counsel substantially in the form of Exhibit D hereto; and (viii) such other items as the Collateral Agent may reasonably require. (b) the fourth installment of the Purchase Price for such Vessel on the related Vessel Purchase Installment Date as described in Section 3.3(a)(i) shall be subject to the Collateral Agent's receipt of evidence of delivery and acceptance of each of the Vessels having a Contractual Delivery Date prior to the Contractual Delivery Date of such Vessel. SECTION 3.6. COLLATERAL AGENT'S CALCULATIONS. All distributions made by the Collateral Agent pursuant to this Article III shall (subject to any decree of any court of competent jurisdiction) be final, and the Collateral Agent shall have no duty to inquire as to the application of any amounts so distributed. However, if at any time the Collateral Agent determines that an allocation or distribution previously made pursuant to this Article III 27 was based on a mistake of fact, the Collateral Agent may in its discretion, but shall not be obligated to, adjust subsequent allocations and distributions thereunder upon written confirmation from the Company of the amount of such allocations and distributions so that, on a cumulative basis, the Secured Creditors receive the distributions to which they would have been entitled if such mistake of fact had not been made. SECTION 3.7. DISTRIBUTION TO THE COMPANY. Except as specifically set forth in Section 3.4, so long as any Obligations under the Debt Instruments remain outstanding, the Collateral Agent shall not distribute any amounts held in the Trust Accounts to the Company. SECTION 3.8. ACTIONS OF THE COLLATERAL AGENT UNDER THE LETTER OF CREDIT. The Collateral Agent is hereby authorized and directed to take all actions and deliver all documents necessary to make Interest Draws, Working Capital Draws and Final Draws under the Letter of Credit as contemplated by the terms of the Indentures, and the Company hereby agrees to deliver to the Collateral Agent any certificates requested by the Collateral Agent to enable the Collateral Agent to take such action. In furtherance of the foregoing, the Collateral Agent is hereby directed and authorized to deliver a Drawing Certificate to CSFB from time to time in connection with (a) Interest Draws under the Letter of Credit to be applied to the payment of (i) unreimbursed principal and interest owing under the Letter of Credit Reimbursement Agreement on Interest Draws (ii) unpaid fees owing under the Letter of Credit Reimbursement Agreement and (b) Working Capital Draws under the Letter of Credit to be applied to the payment of unreimbursed principal and interest owing under the Letter of Credit Reimbursement Agreement on Working Capital Draws, in each case, to the extent that such amounts due have not been paid when due from amounts on deposit in the Trust Accounts. SECTION 3.9. TEMPORARY CASH INVESTMENTS. The Company hereby covenants and agrees that it will direct the Collateral Agent to invest amounts on deposit in the Pre- Funding Account and the Capitalized Interest Account, respectively, in Temporary Cash Investments that will provide cash at such times and in such amounts as will be sufficient to pay each installment of the Purchase Price of the Vessels and to pay interest (excluding additional interest payable on such Notes pursuant to a Registration Default) on the Allocated Principal Amount of the Notes for each Vessel during the period prior to the Contractual Delivery Date of such Vessel. 28 ARTICLE IV THE SECURITY INTEREST; LETTER OF CREDIT SECTION 4.1. GRANT OF SECURITY INTEREST. (a) To secure the payment in full of the principal of, premium, if any, and interest on the Obligations, any other amounts due under this Agreement or any other Security Agreement and the performance of all covenants, terms and conditions under the Debt Instruments, this Agreement and the other Security Agreements, the Company and each Owner does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a security interest in and confirm to the Collateral Agent, its successors and assigns, in trust for the ratable benefit of the Secured Creditors, a first priority security interest in and first Lien on all estate, right, title and interest of the Company and such Owner in, to and under the following described property, rights and privileges (the "Trust Estate"), whether now owned or existing or hereafter acquired or arising and regardless of where located, which collectively, including all property specifically subjected to the Lien of this Agreement by the terms hereof, by any supplement or amendment hereto, are included within the Trust Estate, subject to the other terms and conditions of this Agreement: (i) each Vessel, in accordance with the terms and conditions of the related Mortgage; (ii) the Management Agreement; (iii) the Commercial Management Agreement; (iv) the Technical Management Agreement; (v) the Technical Supervision Agreement; (vi) each Building Contract; (vii) each Building Contract Guarantee; (viii) each Performance Bond; (ix) each Issue of One Debenture; (x) all rights of the Company or such Owner to receive payments of any kind, to execute any election or option or to give or receive any notice, consent, waiver or approval under or in respect of any of the foregoing documents and instruments; 29 (xi) all the charterhire, tolls, rents, issues, profits, products, revenues and other income (including insurance, warranty and sales proceeds) of the property subjected or required to be subjected to the Lien of this Agreement, and all of the estate, right, title and interest of the Company or such Owner in and to the same and every part of said property, in accordance with the related Assignment of Earnings and Insurances; (xii) all moneys and securities, including any Temporary Cash Investments, now or hereafter paid or deposited or required to be paid or deposited to or with the Collateral Agent or for the account of the Company or such Guarantor or otherwise pursuant to any term of any Security Agreement, and held or required to be held by the Collateral Agent hereunder whether in a Trust Account or otherwise; (xiii) all requisition proceeds with respect to any Vessel or any part thereof (to the extent of the Collateral Agent's interest therein, as mortgagee of such Vessel, pursuant to the terms of the Mortgage) and all Insurance Proceeds with respect to any Vessel or any part thereof (to the extent of the Collateral Agent's interest therein, as mortgagee of such Vessel, pursuant to the terms of the Mortgage and pursuant to the related Assignment of Earnings and Insurances); (xiv) any charter assigned to the Collateral Agent pursuant to the Assignment of Earnings and Insurances; and (xv) all income, replacements, substitutions, payments and proceeds of the foregoing. (b) It is expressly agreed that anything contained in this Agreement to the contrary notwithstanding, each Grantor shall remain liable under all agreements, documents or instruments to which such Grantor is a party which are assigned pursuant to the Security Agreements to perform all the obligations assumed by it under any of those documents or instruments, all in accordance with and pursuant to the terms and provisions of those agreements, documents or instruments, and the Collateral Agent and the other Secured Creditors shall have no obligation or liability by reason of the Security Agreements by reason of or arising out of the assignment of such agreements documents or instruments pursuant to the Security Agreements, nor shall the Collateral Agent and the other Secured Creditors be required or obligated in any manner to perform or fulfill any obligations of the Grantors under or pursuant to such agreements documents or instruments or, 30 except as expressly provided in this Agreement, to make any payment thereunder, or to make any inquiry as to the nature or sufficiency of any payment received by it thereunder, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. SECTION 4.2. RECORDING, ETC. (a) The Grantors will cause the applicable Security Agreements, including the Mortgages and any financing statements, all amendments or supplements to each of the foregoing and any other similar security documents as necessary, to be registered, recorded and filed or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law or reasonably requested by the Collateral Agent and shall take all further action that may be necessary and desirable in order fully to preserve, protect and perfect the Lien of the Collateral Agent securing the Obligations (for the ratable benefit of the Secured Creditors) and to effectuate and preserve the security of the Secured Creditors and all rights of the Collateral Agent. Without limiting the foregoing, the Collateral Agent is hereby authorized to file one or more financing statements, continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Lien created hereunder and under the other Security Agreements, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party. (b) The Company, as agent for the other Grantors, shall furnish the Collateral Agent: (i) promptly after the execution and delivery of this Agreement, and promptly after the execution and delivery of any other instrument of further assurance or amendment, an Opinion of Counsel either (i) stating that, in the opinion of such counsel, and as of the date of such opinion, this Agreement and the other applicable Security Agreements (other than the Mortgages and the Assignments of Earnings and Insurances) and all other instruments of further assurance or amendment have been properly recorded, registered and filed, as appropriate, to the extent necessary to make effective the Lien intended to be created by such Security Agreements on the Collateral delivered on the Issue Date and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to such Security Agreements and such other instruments such recording, registering and filing are the only 31 recordings, registering and filings necessary to give notice thereof and that no re-recordings, re-registering or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Secured Creditors and the Collateral Agent hereunder and under the other Security Agreements or (ii) stating that, in the opinion of such counsel, no such action is necessary to make any Lien created under any of the Security Agreements in and to the Collateral delivered on the Issue Date effective as intended by such Security Agreements; and (ii) within 30 days after August 1 in each year beginning with the year 1998, an Opinion of Counsel, dated as of such date, either (i) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of this Agreement and all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Agreement and the other Security Agreements in and to all the Collateral then required to be delivered by the Grantors to the Collateral Agent hereunder as of such date and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Secured Creditors hereunder and under the other Security Agreements to such Collateral or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien. SECTION 4.3. REPRESENTATION AND WARRANTIES. Each of the Grantors hereby represents and warrants on the Issue Date as follows: (a) such Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a security interest hereunder and has full power and authority to grant to the Collateral Agent the security interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval which has been obtained; 32 (b) the security interest constitutes a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations; the security interest is and shall be prior to any other Lien on any of the Collateral, other than Permitted Liens; and (c) such Grantor owns the Collateral free and clear of any Lien, except for Permitted Liens; has not filed or consented to the filing of (a) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Collateral other than those that may be filed in favor of the Collateral Agent pursuant to this Agreement, or (b) any assignment in which it assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document is still in effect, except, in each case, for Permitted Liens. SECTION 4.4. PROTECTION OF THE TRUST ESTATE. The Collateral Agent shall have the power to enforce the obligations of the Grantors under this Agreement and under the other Security Agreements, to the extent permitted hereunder and thereunder, to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral under any of the Security Agreements and in the profits, rents, revenues and other income arising therefrom, including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair any Collateral or be prejudicial to the interests of the Secured Creditors. SECTION 4.5. RELEASE OF LIEN. (a) So long as no Event of Default has occurred and is continuing, Collateral may be released from the Lien and security created by this Agreement and the other Security Agreements, as the case may be, at any time or from time to time in accordance with the express provisions of the Debt Instruments, this Agreement, the other Security Agreements and the Trust Indenture Act. In the case of Collateral consisting of cash or Temporary Cash Investments which are permitted to be withdrawn from the Trust Accounts and paid to Persons other than the Secured Creditors pursuant to Article III, such Collateral shall be released as provided herein without the need for any Officer's Certificate, Opinion of Counsel, release, waiver or other action. 33 (b) Upon the request of the Grantors and pursuant to an Officer's Certificate and an Opinion of Counsel certifying that all conditions precedent hereunder have been met (to be provided at the sole cost and expense of the Grantors) and upon the satisfaction of such conditions precedent hereunder, the Collateral Agent shall release (i) any portion of the Collateral as to the release of which the consent of the Representative of each class of Secured Creditors (including CSFB, the Funding Bank and each of the Participating Banks) has been obtained, and (ii) all Collateral upon discharge of all Obligations under the Debt Instruments and the Security Agreements. (c) Upon receipt of such Officer's Certificate and Opinion of Counsel described in paragraph (b) above, the Collateral Agent shall execute, deliver or acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release of any Collateral permitted to be released pursuant to this Agreement or this Agreement and the other Security Agreements, as the case may be. Whenever Collateral is to be released pursuant to this Section 4.5, the Collateral Agent shall execute any document or termination statement reasonably necessary to release the Lien of this Agreement or this Agreement and the other Security Agreements, as the case may be. (d) The release of any Collateral from the terms of this Agreement or this Agreement and the other Security Agreements, as the case may be, will not be deemed to impair the Lien created by this Agreement in contravention of the provisions hereof. To the extent applicable, the Grantors shall cause Section 314(d) of the Trust Indenture Act relating to the release of property from the Lien arising out of the Security Agreements to be complied with. Any certificate or opinion required by Section 314(d) of the Trust Indenture Act may be made by any Responsible Officer of the Company; PROVIDED that to the extent required by Section 314(d) of the Trust Indenture Act, any such certificate or opinion shall be made by an independent engineer, appraiser or other expert (as such terms are set forth in Section 314(d) of the Trust Indenture Act), who is not an Affiliate of the Company or any other Grantor. (e) Notwithstanding the other provisions of this Section 4.5, if no Event of Default has occurred and is continuing, upon the Collateral Agent's receipt of the Total Loss Payment for a Vessel, together with all other amounts owing under the Debt Instruments and the Security Agreements in respect of such Vessel, the Collateral Agent shall (i) release such Vessel and any portion of the Collateral delivered in connection with such Vessel from the Lien of this Agreement and (ii) release the Company and the related 34 Owner from any and all of its obligations hereunder, under the Debt Instruments and the related Security Agreements to the extent they arise in connection with such Vessel. SECTION 4.6. LIMITATION ON COLLATERAL AGENT'S DUTY IN RESPECT OF COLLATERAL. Beyond its duties as to the custody thereof expressly provided herein or in any other Security Agreement and to account to the Secured Creditors and the Grantors for moneys and other property received by it under any Security Agreement, the Collateral Agent shall not have any duty to the Secured Creditors or the Grantors as to any Collateral in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property. SECTION 4.7. DELIVERY OF LETTER OF CREDIT. On the date hereof, the Company shall deliver to the Collateral Agent, for the benefit of the Trustees, a Letter of Credit substantially in the form attached hereto as Exhibit E. SECTION 4.8. COLLATERAL AGENT APPOINTED ATTORNEY- IN-FACT. The Grantors hereby appoint the Collateral Agent as the Grantors' attorney-in-fact, with full authority in the place and stead of the Grantors and in the name of the Grantors or otherwise, from time to time in the Collateral Agent's discretion but only after the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable in order to accomplish the purposes of this Article IV, including to receive, endorse and collect all instruments made payable to the Grantors representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. This power, being coupled with an interest, is irrevocable. SECTION 4.9. COLLATERAL AGENT MAY PERFORM. If the Grantors fail to perform any agreement contained in this Article IV, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Grantors under Section 7.3. SECTION 4.10. APPLICATION OF PROCEEDS. Upon the occurrence and during the continuance of an Event of Default and after the acceleration of any Secured Debt pursuant to 35 the Debt Instruments (so long as such acceleration has not been rescinded), any cash held by the Collateral Agent as Collateral and all cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral, shall be held in the Termination Account and shall be distributed by the Collateral Agent in the order of priority specified with respect to amounts on deposit in the Trust Accounts in Section 3.4. SECTION 4.11. CONTINUING LIEN. Except as provided in Section 4.5, this Agreement shall create a continuing Lien on the Collateral that shall (i) remain in full force and effect until payment in full of the Obligations, (ii) be binding upon the Grantors and their successors and assigns and (iii) enure to the benefit of the Collateral Agent and its successors, transferees and assigns. ARTICLE V ASSIGNMENT SECTION 5.1. ASSIGNMENT. Each Grantor hereby absolutely and unconditionally sells, assigns, transfers, sets over and delivers to the Collateral Agent, for the benefit of the Secured Creditors, in each case to the extent assignable, all right, title and interest that such Grantor may now or hereafter have in and to, and the right to exercise all rights and remedies that such Grantor may now or hereafter have under the Management Agreement, the Commercial Management Agreement, the Technical Management Agreement, the Technical Supervision Agreement, each Building Contract, each Building Contract Guarantee and each Performance Bond (collectively, the "Contracts"). The foregoing assignment encompasses the right of each Grantor to enjoy the benefits of the Contracts, from and during the continuance of an Event of Default to amend, modify or terminate any of the Contracts, to perform thereunder and to compel performance and otherwise exercise all rights and remedies thereunder, together with, from and during the continuance of an Event of Default, the continuing right to collect and receive all sums that may become due to such Grantor or that such Grantor may now or shall hereafter become entitled to demand or claim, arising from or out of the Contracts, including claims of such Grantor for refunds or damages arising out of, or for breach of, or default under, any of the Contracts and all rights of such Grantor to receive proceeds of any insurance, 36 indemnity, warranty or guaranty with respect to any of the Contracts. SECTION 5.2. REPRESENTATION AND WARRANTIES. Each Grantor represents and warrants that: (a) such Grantor has the rights, power and authority to sell, assign, transfer, set over and deliver all of its rights, title and interest in and to the Contracts and no other Persons (other than the other parties to such Contracts (each such other party, a "Contractor", and collectively, the "Contractors")) have any right, title or interest therein; (b) such Grantor has duly and timely performed to date all of the obligations, terms, covenants, conditions and warranties of the Contracts to be kept, observed and performed by such Grantor; (c) to the knowledge of such Grantor, the Contractors have duly and timely performed to date all of the obligations, terms, covenants, conditions and warranties of the Contracts to be kept, observed and performed by each such Contractor; and (d) as of the date hereof, there is no outstanding sale, assignment, mortgage, pledge, or other transfer or encumbrance by such Grantor of any of the Contracts, or any right, title or interest therein by such Grantor other than the assignment pursuant hereto. SECTION 5.3. AFFIRMATIVE COVENANTS. Each Grantor shall, at its sole cost and expense: (a) give prompt written notice to the Collateral Agent of any notice of default received from any Contractor or given by such Grantor to any Contractor (together with a copy of any such notice); (b) deliver to the Collateral Agent at its request executed copies of the Contracts; and (c) except to the extent provided to the Collateral Agent on the Issue Date, such Grantor shall use commercially reasonable efforts to obtain, within thirty (30) days after the Collateral Agent's request therefor, a written consent to the assignment pursuant hereto containing an agreement in form and substance reasonably satisfactory to the Collateral Agent, from the Contractor under each Contract, that, upon the exercise by the Collateral Agent of its rights hereunder, such Contractor shall continue to perform 37 under its respective Contract for the benefit of the Collateral Agent, unless, with respect to such Contract, the Collateral Agent waives such requirement. SECTION 5.4. NEGATIVE COVENANTS. Each Grantor shall not, except with the Collateral Agent's prior written consent in each instance: (a) further pledge, assign, mortgage or otherwise encumber or transfer (except hereby) the Contracts or any right, title or interest of such Grantor therein; (b) except as expressly permitted under this Agreement or the Debt Instruments, waive, excuse, condone, discount, set off, compromise, or in any manner release or discharge any Contractor of and from any material monetary obligations of such Contractor under any Contract; and (c) without obtaining the Collateral Agent's prior written consent, amend, modify or extend any existing Contract. ARTICLE VI PLEDGED COLLATERAL SECTION 6.1. PLEDGED COLLATERAL. (a) To secure the payment in full of the principal of, premium, if any, and interest on the Obligations, any other amounts due under this Agreement or any other Security Agreement and the performance of all covenants, terms and conditions under the Debt Instrument, this Agreement and the other Security Agreements: (i) the Company hereby grants, bargains, sells, assigns, transfers, conveys, mortgages, pledges and delivers and grants a security interest to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Creditors, in all its right, title and interest in and to the following (the "Pledged Subsidiary Collateral"): (A) all shares of Capital Stock of the Owners now owned by the Company, which on the date hereof are identified on Schedule I hereto, and any shares of Capital Stock of the Owners hereafter acquired by the Company (collectively, the "Pledged Subsidiary Shares"); 38 (B) all certificates representing any of the Pledged Subsidiary Shares; (C) the Intercompany Note identified on Schedule I hereto; and (D) all dividends, cash, instruments and other property and proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any of the foregoing; and (ii) Holdings (together with the Company, the "Pledgors") hereby grants, bargains, sells, assigns, transfers, conveys, mortgages, pledges and delivers and grants a security interest to the Collateral Agent, its successor and assigns, for the ratable benefit of the Secured Creditors, a security interest in all its right, title and interest in and to the following (the "Pledged Company Collateral" and, together with the Pledged Subsidiary Collateral, the "Pledged Collateral"): (A) all shares of Capital Stock of the Company of which Holdings is now the record Owner, which on the date hereof are identified on Schedule I hereto and any shares of Capital Stock of the Owners hereafter acquired by the Company (collectively, the "Pledged Company Shares" and, together with the Pledged Subsidiary Shares, the "Pledged Shares") (simultaneously herewith the record holder of the balance of the record interest in the shares of Capital Stock of the Company is pledging all such record interest to the Collateral Agent pursuant to a letter agreement dated the date hereof); (B) all certificates representing any of the Pledged Company Shares; and (C) all dividends, cash, instruments and other property and proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any of the foregoing. SECTION 6.2. DELIVERY OF COLLATERAL. Any and all cash, certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Collateral Agent and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in 39 blank, all in form and substance satisfactory to the Collateral Agent. The Collateral Agent shall have the right, at any time after the occurrence and during the continuance of an Event of Default, in its discretion and without notice to the Pledgors, to transfer to or to register in the name of the Collateral Agent or any of its nominees any or all the Pledged Collateral. In addition, the Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of different denominations. SECTION 6.3. REPRESENTATIONS AND WARRANTIES. Each of the Pledgors hereby represents and warrants on the Issue Date as follows: (a) it is the record owner of the Pledged Shares listed beside its name and described on Schedule I hereto, free and clear of any Lien, except for the Lien created by this Agreement; (b) it has full corporate power, authority and legal right to pledge all the Pledged Collateral pledged by it pursuant to this Agreement; (c) the Pledged Shares listed beside its name and described on Schedule I hereto have been duly authorized and are validly issued, fully paid and nonassessable; (d) its pledge in accordance with the terms of this Agreement creates a valid and perfected first priority Lien on the Pledged Collateral pledged by it securing the payment and performance of the Obligations; (e) in the case of the Company, the shares listed beside its name and described in Schedule I hereto represent 100.0% of the shares of Capital Stock of the Owners and, in the case of Holdings, the shares listed beside its name and described in Schedule I hereto represent 100.0% of the shares of Capital Stock of the Company in which Holdings holds a beneficial interest and represent 50% of the record interest of all shares of Capital Stock of the Company; and (f) in the case of the Company, there are no existing options, warrants, calls or commitments of any character relating to any authorized and unissued Capital Stock of any Owners and, in the case of Holdings, there are no existing options, warrants, 40 calls or commitments of any character relating to any authorized and unissued Capital Stock of the Company. SECTION 6.4. FURTHER ASSURANCES. The Pledgors agree that at any time and from time to time, at their own expense, the Pledgors will promptly execute and deliver all further instruments and documents and take all further action that may be necessary or that the Collateral Agent may reasonably request in order to perfect and protect any Lien granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. The Company further agrees that it will not issue any additional shares of its Capital Stock other than such shares that may be issued to Holdings. Without limiting the foregoing, the Pledgors shall, (i) at the time of the issuance by an Owner or the Company, as the case may be, of any shares of Capital Stock after the Issue Date, deliver 100.0% of such shares to the Collateral Agent as Pledged Collateral and provide to the Collateral Agent a revised Schedule I hereto, and (ii) at the time of any release of Pledged Shares pursuant to Section 4.4, provide to the Collateral Agent a revised Schedule I hereto. Any such revised Schedule I shall reflect any changes made necessary by the applicable acquisition or release, at which time the Pledgors shall be deemed to make their representations and warranties set forth in paragraphs (a) through (f) of Section 6.3 with respect to such Schedule I, as so revised. SECTION 6.5. DIVIDENDS; VOTING RIGHTS; RELEASE OF PLEDGED COLLATERAL. (a) The Collateral Agent shall be entitled to receive and retain as Collateral all dividends paid and distributions made in respect of the Pledged Shares, whether so paid or made before or after any Default. Any such dividends shall, if received by the Pledgors, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of the Pledgors and be forthwith delivered to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement). Any cash dividends or distributions delivered to or otherwise held by the Collateral Agent pursuant to this Section 6.5, and any other cash constituting Collateral delivered to the Collateral Agent, shall be invested, at the written direction of the Pledgors, by the Collateral Agent in Temporary Cash Investments. (b) As long as no Default shall have occurred and be continuing and until written notice thereof from the Collateral Agent to the Pledgors, the Pledgors shall be entitled to exercise any and all voting and other consensual rights relating to Pledged Shares or any part thereof for any purpose; PROVIDED, HOWEVER, that no vote shall be cast, 41 and no consent, waiver or ratification given or action taken, which would be inconsistent with or violate any provision of this Agreement, the other Security Agreements or the Debt Instruments. (c) Upon the occurrence and during the continuance of a Default, all rights of the Pledgors to exercise the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 6.5(b) shall cease upon notice from the Collateral Agent to the Pledgors and upon the giving of such notice all such rights shall thereupon be vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights. (d) In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to Section 6.5(c), and to receive all dividends and distributions which it may be entitled to receive under Section 6.5(a), the Pledgors shall, if necessary, upon written notice of the Collateral Agent, from time to time execute and deliver to the Collateral Agent such instruments as the Collateral Agent may reasonably request. (e) Notwithstanding anything to the contrary in this Article VI, upon the request of the Grantors and pursuant to an Officer's Certificate and an Opinion of Counsel certifying that all conditions precedent hereunder have been met (to be provided at the sole cost and expense of the Grantors) and upon the satisfaction of such conditions precedent hereunder, the Collateral Agent shall release (i) any portion of the Collateral as to the release of which the consent of the Representative of each class of Secured Creditors (including CSFB, the Funding Bank and each of the Participating Banks) has been obtained, and (ii) all Collateral upon satisfaction of all Obligations under the Debt Instruments and the Security Agreements. At the request of the Pledgors, the Collateral Agent shall execute and deliver appropriate instruments evidencing any release pursuant to this Section 6.5(e). SECTION 6.6. COLLATERAL AGENT APPOINTED ATTORNEY- IN-FACT. The Pledgors hereby appoint the Collateral Agent as the Pledgors' attorney-in-fact, with full authority in the place and stead of the Pledgors and in the name of the Pledgors or otherwise, from time to time in the Collateral Agent's discretion but only after the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable in order to accomplish the purposes of this Article VI, including to receive, endorse 42 and collect all instruments made payable to the Pledgors representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. This power, being coupled with an interest, is irrevocable. SECTION 6.7. COLLATERAL AGENT MAY PERFORM. If the Pledgors fail to perform any agreement contained in this Article VI, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Pledgors under Section 7.3. SECTION 6.8. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default shall have occurred and be continuing, the Collateral Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies provided a secured party upon the default of a debtor under the Uniform Commercial Code at that time, and the Collateral Agent may also, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, upon such terms as the Collateral Agent may determine to be commercially reasonable, and the Collateral Agent or any other Secured Party may be the purchaser of any or all the Pledged Collateral so sold and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. The Pledgors agree that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Pledgors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification within the meaning of Section 9-504(3) of the Uniform Commercial Code. The Collateral Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Collateral Agent shall incur no liability as a result of the sale of the Pledged Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner. The Pledgors hereby waive any claims against the Collateral Agent arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree. 43 The Pledgors recognize that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to those who will agree, among other things, to acquire such securities for their own account, for investment, and not with a view to the distribution or resale thereof. The Pledgors acknowledge and agree that any such sale may result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions and, notwithstanding such circumstances, agree that any such sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay the sale of any of the Pledged Collateral for the period of time necessary to permit the Pledgors to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Pledgors would agree to do so. SECTION 6.9. APPLICATION OF PROCEEDS. Upon the occurrence and during the continuance of an Event of Default and after the acceleration of any Secured Debt pursuant to the Debt Instruments (so long as such acceleration has not been rescinded), any cash held by the Collateral Agent as Pledged Collateral and all cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Pledged Collateral, shall be held in the Termination Account and shall be distributed by the Collateral Agent in the order of priority specified with respect to amounts on deposit in the Trust Accounts in Section 3.4. SECTION 6.10. CONTINUING LIEN. Except as provided in Section 6.5, this Agreement shall create a continuing Lien on the Pledged Collateral that shall (i) remain in full force and effect until payment in full of the Obligations, (ii) be binding upon the Pledgors and their successors and assigns and (iii) enure to the benefit of the Collateral Agent and its successors, transferees and assigns. SECTION 6.11. CERTIFICATES AND OPINIONS. The Pledgors shall comply with (a) TIA ss. 314(b), relating tO Opinions of Counsel regarding the Lien of this Agreement and (b) TIA ss. 314(d), relating to the release of Pledged Collateral from the Lien of this Agreement and Officers' Certificates or other documents regarding fair value of the Pledged Collateral, to the extent such provisions are applicable. Any certificate or opinion required by TIA ss. 314(d) may be executed and delivered by Officers of the Pledgor to the extent permitted by TIA ss. 314(d). 44 SECTION 6.12. ADDITIONAL AGREEMENTS. The Pledgors agree that, upon the occurrence and during the continuance of a Default, they will, at any time and from time to time, upon the written request of the Collateral Agent, use their best efforts to take or to cause the issuer of the Pledged Shares and any other securities distributed in respect of the Pledged Shares (collectively with the Pledged Shares, the "Pledged Securities") to take such action and prepare, distribute or file such documents, as are required or advisable in the reasonable opinion of counsel for the Collateral Agent to permit the public sale of such Pledged Securities. The Pledgors further agree to indemnify, defend and hold harmless the Collateral Agent, each Holder, CSFB, any underwriter and their respective officers, directors, affiliates and controlling persons from and against all loss, liability, expenses, costs of counsel (including reasonable fees and expenses of legal counsel to the Collateral Agent), and claims (including the costs of investigation) that they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any alleged omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same may have been caused by any untrue statement or omission based upon information furnished in writing to the Pledgors or the issuer of such Pledged Securities by the Collateral Agent or any Holder expressly for use therein. The Pledgors further agree, upon such written request referred to above, to use their best efforts to qualify, file or register, or cause the issuer of such Pledged Securities to qualify, file or register, any of the Pledged Securities under the Blue Sky or other securities laws of such states as may be requested by the Collateral Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. The Pledgors will bear all costs and expenses of carrying out their obligations under this Section 6.13. The Company agrees to record all loans and advances made by it to the Owners (all of which shall be evidenced by the Intercompany Note), and all repayments thereof, in its books and records, such books and records constituting prima facie evidence and the accuracy of the information contained therein. The Pledgors acknowledge that there is no adequate remedy at law for failure by them to comply with the provisions of this Section 6.13 and that such failure would not be adequately compensable in damages, and therefore agree that their agreements contained in this Section 6.13 may be specially enforced. 45 ARTICLE VII THE COLLATERAL AGENT SECTION 7.1. NATURE OF DUTIES. The Collateral Agent shall be responsible for taking only such actions as are expressly set forth herein or any instructions received from any Representative, pursuant to the terms hereof and of any other Security Agreement and no implied duties or obligations shall be read into this Agreement or any such instructions or other Security Agreement. Notwithstanding any provision in any other Security Agreement, neither the Collateral Agent nor any of its officers, directors, employees or agents shall be liable for any claims, losses, damages, penalties, actions, judgments, suits, liabilities, obligations, costs or expenses of any kind or nature whatsoever resulting from any action the Collateral Agent takes or omits to take under any Security Agreement or in connection therewith, unless caused by its or their negligence, bad faith or wilful misconduct. The Collateral Agent may perform any of its duties hereunder by or through its agents or employees. The Collateral Agent shall at all times be entitled to follow instructions of the Senior Representative delivered or deemed to be delivered in accordance with this Agreement, notwithstanding the fact that the same Person may be acting in both such capacities hereunder, and all Secured Creditors shall be bound by any action taken by the Collateral Agent in accordance therewith. SECTION 7.2. LACK OF RELIANCE ON THE COLLATERAL AGENT. The Collateral Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Representative or any Secured Creditor with any credit or other information with respect to the Company or any of its Affiliates whether coming into its possession before the date hereof or at any time or times thereafter, except as specifically instructed by any Representative. SECTION 7.3. COMPENSATION AND INDEMNIFICATION. (a) The Company agrees to pay to the Collateral Agent, from time to time upon demand, reasonable compensation for the services of the Collateral Agent hereunder and under the other Security Agreements and all reasonable fees, costs and expenses of the Collateral Agent (including the reasonable expenses, fees and disbursements of counsel, agents and experts of the Collateral Agent) incurred by the Collateral Agent in connection with (i) the preparation, execution, delivery, administration, modification, amendment or termination of this Agreement, each Security Agreement or the enforcement of any of the provisions hereof or thereof, 46 (ii) the custody or preservation and protection of, or the sale of, collection from, or other realization upon, any of the Collateral pursuant to this Agreement or any other Security Agreement, (iii) the preservation, protection, defense, exercise or enforcement of any of the rights of the Collateral Agent under this Agreement or the other Security Agreements and in and to the Collateral arising under applicable law or (iv) the failure by the Company to perform or observe any of the provisions of this Agreement or any other Security Agreement. When the Collateral Agent incurs expenses or renders services after an Event of Default specified in Sections 6.01(7) or 6.01(8) of the Indentures, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law. (b) The Company hereby agrees to indemnify the Collateral Agent, each Representative and each Secured Creditor for, and hold each of them harmless against, any future claim for liability for any stamp, transfer or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with any Security Agreement or any Collateral; PROVIDED, HOWEVER, that the Company shall not be obligated under this paragraph (b) in respect of any income tax or any tax imposed in connection with any transfer of securities. (c) The Company hereby agrees to pay or to reimburse the Collateral Agent for any and all amounts in respect of all search, filing, recording and registration fees, excise taxes and other similar imposts which may be payable or determined to be payable in respect of the execution, delivery, performance and enforcement of each Security Agreement. (d) The Company hereby agrees to indemnify the Collateral Agent (including within such term for purposes of this Section 7.3, its officers, directors, employees and agents) for, and hold it and them harmless, in its capacity as Collateral Agent, against, any and all claims, demands, expenses (including reasonable compensation, disbursements and expenses of the Collateral Agent's agents, experts and counsel), losses, obligations, damages, penalties, actions, judgments, suits, costs, liabilities or disbursements of any kind and nature whatsoever (the "Indemnified Obligations") which may be imposed on, incurred by or asserted against the Collateral Agent in its capacity as such (or such officers, directors, employees or agents) howsoever arising. The Collateral Agent shall notify the Company promptly of any claim asserted against the Collateral Agent for which it may seek indemnity; PROVIDED, HOWEVER, that the Collateral 47 Agent's failure to notify the Company of any such claim shall not affect the Collateral Agent's right to indemnification except to the extent that such failure to notify is materially prejudicial to the Company's ability to defend such claim. The Company shall defend any such claim and the Collateral Agent shall reasonably cooperate at the Company's expense in such defense. The Collateral Agent shall have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; PROVIDED, HOWEVER, that the Company will not be required to pay such fees and expenses from and after the date it assumes the Collateral Agent's defense so long as there is no material conflict of interest between the Company and the Collateral Agent in connection with such defense. In the event of a material conflict of interest, the Collateral Agent's right to reimbursement of reasonable fees and expenses of its separate counsel shall be restored. The Company need not pay for any settlement made without its prior written consent. The Company need not reimburse any expense or indemnify against any Indemnified Obligation to the extent incurred by the Collateral Agent through its gross neg ligence, bad faith or wilful misconduct. The Company agrees to pay, and to save the Collateral Agent and the Representatives harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes that may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement or any other Security Agreement. The Company agrees to pay, and to save the Secured Creditors harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes that may be payable or determined to be payable with respect to any of the Collateral or in connection with this Agreement or any other Security Agreement; PROVIDED, HOWEVER, that this sentence shall not obligate the Company in respect of any income tax or any tax imposed in connection with any transfer of Securities. (e) All obligations set forth in this Section 7.3 shall survive the execution, delivery and termination of this Agreement and the other Security Agreements and the payment or other satisfaction of all the obligations. SECTION 7.4. COLLATERAL AGENT'S DEALINGS WITH THE COMPANY. The Collateral Agent may accept deposits from, lend money to, or generally engage in any kind of banking, trust or other business with the Company or any of its Affiliates, in each case as if it were not the Collateral Agent hereunder. 48 SECTION 7.5. RESIGNATION BY OR REMOVAL OF THE COLLATERAL AGENT. (a) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Security Agreements at any time by giving 30 Business Days' prior written notice to the Company and the Representatives. The Senior Representative may, at any time, remove the Collateral Agent by giving 30 Business Days' prior written notice to the Collateral Agent, the Company and each other Representative. The Company shall have the right to remove the Collateral Agent by written notice to the Collateral Agent and the Representatives if (i) the Collateral Agent fails to be an Acceptable Bank, (ii) the Collateral Agent is adjudged bankrupt or insolvent; (iii) a receiver or other public officer takes charge of the Collateral Agent or its property, or (iv) the Collateral Agent otherwise becomes incapable of acting. Such resignation or removal shall take effect upon the appointment of a successor Collateral Agent pursuant to paragraph (b) or (c) below or as otherwise provided below. (b) Upon any such notice of resignation or removal, the Senior Representative shall, with prior notice to the Company, appoint a successor Collateral Agent hereunder, which shall be an Acceptable Bank. If a successor Collateral Agent shall not have been so appointed and take office within 30 days after the retiring Trustee resigns or is removed, the Company shall then appoint a successor Collateral Agent which shall be an Acceptable Bank and which shall serve as Collateral Agent hereunder until such time, if any, as the Senior Representative appoints a successor Collateral Agent as provided above. If no successor Collateral Agent shall have been so appointed by the Company or the Senior Representative and accepted appointment in the manner herein provided, the Collateral Agent or any Secured Creditor may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. (c) A successor Collateral Agent shall deliver a written acceptance of its appointment to the retiring Collateral Agent, to the Company and each Representative. Immediately thereafter, the retiring Collateral Agent shall transfer all property held by it as Collateral Agent to the successor Collateral Agent and shall execute and deliver to the successor Collateral Agent such documents as are necessary to perfect or maintain the Liens created under the Security Agreements, including any documents necessary to assign or transfer all interests of the retiring Collateral Agent in the Collateral to the successor Collateral Agent, in a form adequate for proper filing or recording in such offices and such jurisdictions as are necessary to put the successor Collateral Agent in the same position as the 49 retiring Collateral Agent with respect to the Collateral. Thereafter, the resignation or removal of the retiring Collateral Agent shall become effective and the successor Collateral Agent shall have all the rights, powers and duties of the Collateral Agent under this Agreement. Any successor Collateral Agent shall give notice of its succession to each Secured Creditor as of the date of such succession. (d) If the Collateral Agent consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is an Acceptable Bank, be the successor Collateral Agent. The transferring, merging or converting Collateral Agent shall have all documents necessary to perfect or maintain the Liens created under the Security Agreements, including any documents necessary to assign or transfer all interests of the transferring, merging or converting Collateral Agent in the Collateral, executed and delivered in a form adequate for proper filing or recording in such offices and such jurisdictions as are necessary to put the successor Collateral Agent in the same position as the transferring, merging or converting Collateral Agent with respect to the Collateral. (e) Any person acting as Collateral Agent shall continue to be entitled to receive compensation and indemnification as provided in Section 7.3 hereof so long as such Person acts as Collateral Agent hereunder. (f) Nothing herein shall prevent any Representative that is also an Acceptable Bank from also serving as the Collateral Agent. SECTION 7.6. ADVICES; ACTIONS REQUESTED OF COLLATERAL AGENT. (a) The Collateral Agent shall forward promptly to each Applicable Representative a copy of each notice, certificate, instruction or other communication received by the Collateral Agent from the Company or any other Representative under this Agreement, any other Security Agreement or any of the Debt Instruments (except for any which the Company shall be obligated to furnish directly to such Representative). The Collateral Agent shall also promptly furnish to each Applicable Representative, upon its written request, such other information and documents concerning the Collateral and the Collateral Agent's actions with respect thereto as such Representative may reasonably request. 50 (b) In connection with any request by the Company to the Collateral Agent to give its consent pursuant to a provision in any Security Agreement (other than a consent to amend any Security Agreement), the Collateral Agent shall be deemed to be authorized by each Representative to give its consent to the Company on behalf of such Representative at any time after the Specified Date (as defined below) upon the following conditions: (i) the Company shall provide an Officers' Certificate to the Collateral Agent stating that (A) written notice was duly sent, in accordance with the applicable Debt Instrument, to all the Secured Creditors to the effect that the Company intended to seek the consent of the Collateral Agent, (B) that such notice explained in reasonable detail the circumstances surrounding the consent sought, (C) that such notice explained that the Collateral Agent was permitted pursuant to this Agreement to give its consent as requested unless any such Representative notifies the Collateral Agent on or prior to the date specified (the "Specified Date") in such notice (which shall not be less than 30 days after the effectiveness of such notice) that it has received written objection from Secured Creditors representing, in the aggregate, 25% or more of the aggregate principal amount of the Secured Debt for which such Representative is acting (or, with respect to the Letter of Credit Reimbursement Agreement, written objection from CSFB), and (D) that such notice informed the Secured Creditors that if they had any objection to the Collateral Agent's giving such consent, they should notify such Representative prior to the Specified Date; (ii) the Company shall have provided to the Collateral Agent and the Representatives copies of the notice referred to above; and (iii) any such Representative shall not have notified the Collateral Agent to withhold its consent as a result of such Representative's receipt of objection from Secured Creditors representing, in the aggregate, 25% or more of the aggregate principal amount of the Secured Debt for which such Representative is acting (or with respect to the Letter of Credit Reimbursement Agreement, written objection from CSFB). SECTION 7.7. CO-COLLATERAL AGENT; SEPARATE COLLATERAL AGENT. (a) If at any time or times it shall be necessary or prudent in order to conform to any law of any jurisdiction in which any of the Collateral shall be 51 located, or to avoid any violation of law or imposition on the Collateral Agent of taxes by such jurisdiction not otherwise imposed on the Collateral Agent, or the Collateral Agent shall be advised by counsel, satisfactory to it, that it is necessary or prudent in the interest of the Secured Creditors, or the Majority Secured Creditors or the Trustees shall in writing so request, or the Collateral Agent shall deem it desirable for its own protection in the performance of its own duties under any Security Agreement, the Collateral Agent, the Trustees and the Company as shall be necessary or prudent shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Agent and the Company, either to act as co-agent or co-agents of all or any of the Collateral under any of the Security Agreements jointly with the Collateral Agent originally named herein or therein or any successor Collateral Agent, or to act as separate agent or agents of any of the Collateral (any of the foregoing, a "Co-Collateral Agent"). If the Company shall not have joined in the execution of such instruments and agreements within 10 days after it receives a written request from the Collateral Agent to do so, the Collateral Agent may act under the foregoing provisions of this Section 7.7(a) without the concurrence of the Company and execute and deliver such instruments and agreements on behalf of the Company. The Company hereby appoints the Collateral Agent as its agent and attorney to act for it under the foregoing provisions of this Section 7.7(a) in either of such contingencies. (b) Every Co-Collateral Agent, other than any successor Collateral Agent appointed pursuant to Section 7.5, shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred upon the Collateral Agent in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by the Collateral Agent or any agent appointed by the Collateral Agent; (ii) all rights, powers, duties and obligations conferred or imposed upon the Collateral Agent under the relevant Security Agreements shall be conferred or imposed and exercised or performed by the Collateral Agent and such separate agent or separate agents or co- agent or co-agents, jointly, as shall be provided in the instrument appointing such separate agent or separate agents or co-agent or co-agents, except to the extent that under any law of any jurisdiction in which 52 any particular act or acts are to be performed the Collateral Agent shall be incompetent or unqualified to perform such act or acts, or unless the performance of such act or acts would result in the imposition of any tax on the Collateral Agent which would not be imposed absent such joint act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate agent or separate agents or co-agent or co-agents; (iii) no power given by any Security Agreement to, or which it is provided herein or therein may be exercised by, any such co-agent or co-agents or separate agent or separate agents, shall be exercised hereunder or thereunder by such co-agent or co-agents or separate agent or separate agents except jointly with, or with the consent in writing of, the Collateral Agent, anything contained in any Security Agreement to the contrary notwithstanding; (iv) no agent hereunder shall be personally liable by reason of any act or omission of any other agent hereunder; and (v) the Company and the Collateral Agent, at any time by an instrument in writing executed by them jointly, may accept the resignation of or remove any such separate agent or co-agent and, in that case by an instrument in writing executed by them jointly, may appoint a successor to such separate agent or co-agent, as the case may be, anything contained herein to the contrary notwithstanding. If the Company shall not have joined in the execution of any such instrument within 10 days after it receives a written request from the Collateral Agent to do so, the Collateral Agent shall have the power to accept the resignation of or remove any such separate agent or co-agent and to appoint a successor without the concurrence of the Company, the Company hereby appointing the Collateral Agent its agent and attorney to act for it in such connection in such contingency. If the Collateral Agent shall have appointed a separate agent or separate agents or co-agent or co-agents as above provided, the Collateral Agent may at any time, by an instrument in writing, accept the resignation of or remove any such separate agent or co-agent and the successor to any such separate agent or co-agent shall be appointed by the Company and the Collateral Agent, or by the Collateral Agent alone pursuant to this Section 7.7(b). 53 ARTICLE VIII EXERCISE OF REMEDIES SECTION 8.1. EXERCISE OF REMEDIES UNDER SECURITY AGREEMENTS. (a) If any Representative has notice of a Potential Payment Event of Default or Event of Default, such Representative shall promptly give written notice to the other Representatives and to the Collateral Agent. As promptly as practicable, after receipt of such notice of Potential Payment Event of Default or Event of Default, the Senior Representative shall give written instructions to the Collateral Agent as to the actions, if any, that are permitted by the Debt Instruments and the Security Agreements to be taken by the Collateral Agent. Upon receipt by the Collateral Agent of notice of a Potential Payment Event of Default or Event of Default and written instructions from the Senior Representative as to such actions, if any, to be taken by the Collateral Agent, the Collateral Agent shall, within four Business Days after receipt of such instructions, commence the taking of such actions, as specifically instructed in writing by the Senior Representative or, in the event the Senior Representative fails to deliver such instructions, by the Majority Secured Creditors. If any Potential Payment Event of Default or Event of Default which was the basis for the giving of a notice to the Collateral Agent shall be cured or waived in accordance with the terms of the applicable Debt Instrument, any direction to the Collateral Agent to take any action in connection with such notice shall be deemed rescinded with respect to any action to be taken by the Collateral Agent upon notification by the Representative to the Collateral Agent under the applicable Debt Instrument of such cure or waiver, as applicable. In no event may any Representative direct the exercise by the Collateral Agent, nor shall the Collateral Agent exercise, any remedy which would result in the discharge of any of the Obligations by reason of any anti deficiency statute or law relating to sales of Collateral other than through judicial proceedings. (b) Prior to the occurrence of a Potential Payment Event of Default or an Event of Default and receipt of a notice to such effect by the Collateral Agent pursuant to Section 8.1(a) hereof, in the event (i) the Collateral Agent shall receive any written request from the Company under any Security Agreement for consent or approval with respect to any matter or thing relating to any Collateral or the Company's obligations with respect thereto or (ii) there shall be due to or from the Collateral Agent under the 54 provisions of any Security Agreement any material performance or the delivery of any material instrument or (iii) a Responsible Officer of the Collateral Agent shall have actual knowledge of any nonperformance by the Company of any covenant or any breach of any representation or warranty set forth in any Security Agreement, then, in each such event, the Collateral Agent shall advise the Representatives in writing of the matter or thing as to which consent has been requested or the performance or instrument required to be delivered or the nonperformance or breach of which the Collateral Agent has become aware; PROVIDED, HOWEVER, that, subject to Section 7.6(b), the Senior Representative shall have the exclusive authority to direct (subject to the right of the Majority Secured Creditors to otherwise direct in the absence of such direction) the Collateral Agent's response to any of the circumstances contemplated in clauses (i), (ii) and (iii) above. (c) All the Secured Creditors shall be bound by any instruction or direction given by the Senior Representative or, in the absence of such instructions or direction, by the Majority Secured Creditors pursuant to this Section 8.1 or deemed given pursuant to Section 7.6(b). The Representatives shall take such actions as are necessary to enable the Collateral Agent to comply with the provisions of the Security Agreements. Anything in this Agreement to the contrary notwithstanding, under no circumstances shall the Senior Representative have, or be deemed to have, any fiduciary or other duty to any other Representative or any Secured Creditor with respect to actions it is permitted to take hereunder, and the Senior Representative (if CSFB or the First Priority Trustee) shall at all times be entitled to take, and fully protected in taking, such actions in accordance with instructions received under and pursuant to the Letter of Credit Reimbursement Agreement or the First Priority Indenture, as the case may be. (d) The Collateral Agent may rely on any document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Collateral Agent need not investigate any fact or matter stated in any such document. Before the Collateral Agent acts or refrains from acting it may consult with counsel and may require an Officers' Certificate, an Opinion of Counsel (to be delivered at the expense of the Company or any other source deemed acceptable to the Collateral Agent, at its sole discretion) or both. The Collateral Agent shall not be liable for any action it takes, omits to take or suffers in good faith in reliance on any such certificate or opinion or in accordance with a direction or instruction received by it from any Representative hereunder. 55 The Collateral Agent may act through its attorneys and agents and shall not be responsible for the misconduct of any agent appointed with due care. The Collateral Agent shall not be liable for any action it takes or omits to take in the good faith belief that such act or omission was authorized or within its rights or powers conferred upon it hereunder or under the other Security Agreements. The Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Collateral Agent, upon specific written instructions from any Representative, may make such further inquiry or investigation into such facts or matters in accordance with such instructions. The Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by any Security Agreement at the request, order or direction of any Representative or pursuant to Section 7.6(b) hereof, unless the Collateral Agent shall have been provided by any Representative, by any other Secured Creditor or by the Company, as may be agreed at the time, security or indemnity satisfactory to the Collateral Agent in its sole discretion and from any source acceptable to the Collateral Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request, order or direction. Upon receipt of such security or indemnity, however, the Collateral Agent shall act upon the specific instructions of the Senior Representative. Notwithstanding the foregoing, the Collateral Agent shall not take such action if such action would violate the terms of the Security Agreements. The Collateral Agent is acting hereunder not in its individual capacity but solely as agent for the Representatives, and the Collateral Agent shall not be responsible for and makes no representation as to the validity or adequacy of the Debt Instruments, the Letter of Credit Reimbursement Agreement, the First Priority Notes, the Second Priority Notes, this Agreement or any other Security Agreement, shall not be responsible for the use by the Grantors of any funds payable to or retainable by the Grantors hereunder and shall not be responsible for the accuracy of any statements, certifications or other information provided to it by the Grantors or any other person pursuant hereto. The Collateral Agent shall not be liable for any error of judgment made in good faith by a responsible officer of the Collateral Agent unless it is proved that the Collateral Agent was negligent in ascertaining the pertinent facts. Any reference herein to 56 knowledge of the Collateral Agent with respect to any circumstance, fact or event shall mean the actual knowledge of a responsible officer in the corporate trust department of the Collateral Agent. Except during the continuance of an Event of Default, the Collateral Agent undertakes to perform such duties, and only such duties, as are specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Collateral Agent. If an Event of Default has occurred and is continuing, the Collateral Agent shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such Person's own affairs. (e) Each of the Grantors hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its respective true and lawful attorney-in-fact with full power and authority in the name of such Grantor or in its own name, as the case may be, from time to time in the Collateral Agent's discretion, so long as any Event of Default is in effect, to take any and all appropriate action directed by the Senior Representative or the Majority Secured Creditors and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms hereof and accomplish the purposes hereof and, without limiting the generality of the foregoing or any of the rights conferred on the Collateral Agent, whether in its own right or as assignee of the Grantors; pursuant to the other Security Agreements, each of the Grantors hereby gives the Collateral Agent the power and right on its behalf, without notice to or further assent by any other Grantor, so long as any Event of Default is in effect, to do the following (to the extent the Collateral Agent is directed to do so by the Senior Representative or the Majority Secured Creditors): (i) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due upon, or in connection with, the Collateral; (ii) to receive, take, endorse, assign and deliver any and all checks, notes, drafts, acceptances, documents and other negotiable and nonnegotiable instruments taken or received by the Collateral Agent as, or in connection with, the Collateral; (iii) to commence, prosecute, defend, settle, compromise, compound or adjust any claim, suit, action or proceeding with respect to, or in connection with, the Collateral; 57 (iv) to sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof as fully and effectively as if the Collateral Agent were the absolute owner thereof; (v) to do, at its option and at the expense and for the account of the Grantors, at any time or from time to time, all acts and things which the Collateral Agent shall deem necessary or advisable to protect or preserve the Collateral and to realize upon the Collateral; (vi) to extend the time of payment of any or all of the Collateral and to make any allowance and other adjustments with reference thereto; and (vii) to exercise any of the remedies set forth in the Security Agreements; PROVIDED that, except as provided in Section 6.9, the Collateral Agent shall give each of the Grantors not less than 30 days' prior written notice of the time and place of any sale or other intended disposition of any Collateral. Each of the Grantors agrees that such notice constitutes "reasonable notification" within the meaning of Section 9-504(3) of the Uniform Commercial Code. ARTICLE IX PRIORITY OF RIGHTS SECTION 9.1. PRIORITY OF RIGHTS. (a) The First Priority Trustee and the Second Priority Trustee and each holder of any First Priority Notes or Second Priority Notes (i) agree that the lien and security interests of CSFB in the Collateral, including its interests in any payments to be made from the proceeds of any sale or other disposition thereof, shall, irrespective of the time, manner or order of perfection, grant or creation of any security interests or Liens in the Collateral on behalf of any Secured Creditor or the incurrence of any such Notes or Indebtedness and notwithstanding any provision of the Uniform Commercial Code or any applicable law of any jurisdiction or any other circumstance, be prior to the lien and security interests of the First Priority Trustee and the Second Priority Trustee and the holders of the First Priority Notes and the Second Priority Notes in the Collateral, including their interests in any such payments, and any Lien of the First Priority Trustee or the Second Priority Trustee in the Collateral now or hereafter held and regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, 58 shall be junior and subordinate to all Liens in the Collateral held by CSFB (and from time to time agree to execute and deliver any instruments or agreements as may be reasonably necessary or desirable to confirm the same), (ii) agree not to contest or support any other Person in contesting, in any proceeding (including without limitation any insolvency or liquidation proceeding), the priority, validity or enforceability of the Lien held by CSFB in the Collateral, (iii) agree not to exercise any right of setoff or counterclaim with respect to the Collateral and all proceeds thereof and agree that all proceeds of the Collateral shall be paid to CSFB for application to any amounts owing under the Letter of Credit Reimbursement Agreement, and (iv) unless the First Priority Trustee or the Second Priority Trustee is the Senior Representative, shall refrain from taking any action to foreclose upon, acquire title to (by bidding in at foreclosure or otherwise), take possession of, liquidate or otherwise exercise any right or remedy in respect of the Collateral or proceed against any of the Collateral. (b) The Second Priority Trustee and each holder of any Second Priority Notes (i) agree that the interests of the First Priority Trustee and each holder of any First Priority Notes in the Collateral, including their interests in any payments to be made from the proceeds of any sale or other disposition thereof, shall, irrespective of the time of perfection or creation of any security interests or Liens in the Collateral on behalf of any Secured Creditor or the incurrence of any such Notes or Indebtedness, be prior to the interests of the Second Priority Trustee and the holders of the Second Priority Notes in the Collateral, including their interests in any such payments, to the extent and in the manner provided below (and from time to time shall execute and deliver any instruments or agreements as may be reasonably necessary or desirable to confirm the same) and (ii) unless the Second Priority Trustee is the Senior Representative, shall refrain from taking any action to foreclose upon, acquire title to (by bidding in at foreclosure or otherwise), take possession of, liquidate or otherwise proceed against any of the Collateral. ARTICLE X MISCELLANEOUS PROVISIONS SECTION 10.1. FURTHER ASSURANCES. Each party hereto covenants to execute and deliver, in each case at the Company's expense, such further instruments and to take such further action as the Collateral Agent may at any time or 59 times reasonably request in order to carry out the provisions and intent of this Agreement. SECTION 10.2. NOTICES. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: To the Company, Holdings and the Owners: Navigator Gas Transport PLC 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Attn: Edward Cain Fax: 011-44-1-624-638-333 To the Collateral Agent: United States Trust Company of New York 114 West 47th Street New York, NY 10036-1532 Attn: Corporate Trust Administration Fax: (212) 852-1626 To the First Priority Trustee: United States Trust Company of New York 114 West 47th Street New York, NY 10036-1532 Attn: Corporate Trust Administration Fax: (212) 852-1626 To the Second Priority Trustee: The Chase Manhattan Bank 450 West 33rd Street 15th Floor New York, NY 10001 Attn: Corporate Trust Administration Fax: (212) 946-8158 To CSFB: Credit Suisse First Boston London Branch Five Cabot Square London E14 4QR England Attn: Trade Finance Operation Fax: 011-44-171-888-8896 60 Any party hereto may by notice to each other party designate such additional or different addresses as shall be furnished in writing by such party. Any notice or communication to any party hereto shall be deemed to have been given or made as of the date so delivered, if personally delivered; when answered back, if telexed; when receipt is acknowledged, if telecopied; and five calendar days after mailing if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). A copy of any notice given under this Agreement to any party shall also be given to each other party hereto. SECTION 10.3. BINDING AGREEMENT; ASSIGNMENT; OBLIGATIONS SEVERAL. This Agreement shall be binding upon the Grantors and each of their successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, each Representative and each Secured Creditor and each of their respective successors, transferees and assigns; no other Persons (including any other creditor of the Company) shall have any interest herein or any right or benefit with respect hereto. Without limiting the generality of the foregoing clause, the Collateral Agent and any Representative and Secured Creditor may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such party herein or otherwise. Neither this Agreement nor any interest herein or in the Collateral, or any part thereof, except as otherwise permitted herein or in the Debt Instruments or the Security Agreements, may be assigned by any Grantor; PROVIDED, HOWEVER, that this Agreement may be assigned by a Grantor to any person that shall become a successor obligor of such Grantor under the Debt Instruments in compliance with Article 5 of the Indentures and Section 11 of the Letter of Credit Reimbursement Agreement if such person executes and delivers an amendment hereto whereby it expressly assumes all obligations of the Company hereunder as if it were an original party hereto. This Agreement shall be deemed to be automatically assigned by the Collateral Agent to any person who succeeds to the Collateral Agent in accordance with Section 9 hereof, and such assignee shall have all rights and powers of, and act as, the Collateral Agent hereunder, and this Agreement shall be deemed to be automatically assigned by any of the Representatives to those persons who succeed to any of them in accordance with the provisions of the applicable Debt Instrument. Except as otherwise expressly provided herein, the obligations of each of the parties under this Agreement are several and not joint, it being expressly agreed that no Representative shall be 61 liable for the failure of any other Representative to perform its duties or obligations hereunder. SECTION 10.4. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles, except to the extent that the laws of any other jurisdiction may be mandatorily applicable. SECTION 10.5. EFFECTIVENESS; TERMINATION. This Agreement shall become effective on the date on which all of the parties hereto shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Collateral Agent. This Agreement shall remain effective until, and terminate when, all Obligations are indefeasibly satisfied and the Collateral Agent receives written notification from each Representative that the Obligations owed to such Representative have been so satisfied in full. Upon termination of this Agreement, the Collateral Agent shall reassign and redeliver to the Grantors any Collateral which has not been sold, disposed of, retained or applied by the Collateral Agent in accordance with the terms hereof or of any other Security Agreement. Such reassignment and redelivery shall be without warranty by or recourse to the Collateral Agent, and shall be at the expense of the Company. Thereafter, no Security Agreement shall constitute a Lien upon or grant any security interest in any of the Collateral and the Collateral Agent shall, at the Company's expense and pursuant to the Company's written instructions, deliver to the Company written acknowledgment thereof and of cancelation of this Agreement and all other Security Agreements in a form as reasonably requested by the Company and adequate for proper filing or recording in such offices and such jurisdictions as the Company reasonably deems necessary to release the Liens created under the Security Agreements. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must be otherwise returned upon the insolvency, bankruptcy or reorganization of the Company, Holdings, or any Owner or otherwise, all as though such payment had not been made and, if applicable, this Agreement had not been terminated. SECTION 10.6. AMENDMENT. This Agreement may be amended, changed, waived, discharged or terminated with the written consent of the Company and the Applicable Representatives (who shall only grant such consent in accordance with the relevant provisions of the appropriate Debt Instrument). If in the opinion of the Collateral Agent any document required to be executed pursuant to the terms of this Section 10.6 affects any interest or right or duty 62 or immunity or indemnity in favor of the Collateral Agent under this Agreement or any other Security Agreement, the Collateral Agent may in its discretion decline to execute such document. SECTION 10.7. DISCRETION OF THE COLLATERAL AGENT. Any right, power or authority granted hereunder or under any other Security Agreement to the Collateral Agent to be exercised by the Collateral Agent in its discretion, shall be deemed to be duly exercised in accordance with this Agreement upon receipt by the Collateral Agent of written instructions signed by the Senior Representative as to such right, power or authority to be exercised and the exercise by the Collateral Agent in accordance therewith. The Collateral Agent shall not be responsible for exercising any such right, power or authority absent receipt of such instructions unless such failure to so exercise any such right, power or authority would constitute negligence, bad faith or wilful misconduct of the Collateral Agent or result in a violation of the specific requirements of any Security Agreement. Notwithstanding the foregoing, upon the occurrence of an Event of Default, the Collateral Agent's failure to exercise any such right, power or authority absent receipt of such instructions shall not constitute negligence, bad faith or wilful misconduct of the Collateral Agent. SECTION 10.8. INCONSISTENT PROVISIONS. If any provision of this Agreement shall be inconsistent with, or contrary to, any provision in any other Security Agreement, such provision of this Agreement shall be controlling, and shall supersede such inconsistent provision to the extent necessary to give full effect to all provisions contained in this Agreement. If any provision of this Agreement shall be inconsistent with, or contrary to, any provision of any of the Debt Instruments, upon receipt of written notification from the Applicable Representative, such provision of such Debt Instrument shall be controlling, and shall supersede such inconsistent provisions hereof to the extent necessary to give full effect to such provision of such Debt Instrument. SECTION 10.9. SEVERABILITY. In the event that any provision contained in this Agreement shall for any reason be held to be illegal or invalid under the laws of any jurisdiction, such illegality or invalidity shall in no way impair the effectiveness of any other provision hereof or of such provision under the laws of any other jurisdiction; PROVIDED, HOWEVER, that in the construction and enforcement of such provisions under the laws of the jurisdiction in which such holding of illegality or invalidity exists, and to the extent only of such illegality 63 or invalidity, this Agreement shall be construed and enforced as though such illegal or invalid provision had not been contained herein. SECTION 10.10. HEADINGS. Section headings used herein are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. SECTION 10.11. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Collateral Agent and with each Representative. SECTION 10.12. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the execution and delivery of this Agreement, the Company, Holdings and each of the Owners (i) acknowledges that it has, by separate written instrument, irrevocably designated and appointed Cambridge Partners, L.L.C. ("CPLLC"), (and any successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Agreement that may be instituted in any federal or state court in the State of New York, Borough of Manhattan or brought by the Collateral Agent (whether in its individual capacity or in its capacity as Collateral Agent hereunder), the Trustees (whether in their individual capacities or in their capacities as Trustees under the Indentures) or CSFB (whether in its individual capacity or in its capacity as administrating bank and funding bank under the Letter of Credit Reimbursement Agreement) and acknowledges that CPLLC has accepted such designation, (ii) submits to the jurisdiction of any such court in any such suit or proceeding, and (iii) agrees that service of process upon CPLLC and written notice of said service to the Company, Holdings or the applicable Owner, shall be deemed in every respect effective service of process upon the Company, Holdings or such Owner, as the case may be, in any such suit or proceeding. The Company, Holdings and each of the Owners further agree to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CPLLC in full force and effect so long as this Agreement shall be in full force and effect. The Company, Holdings and each of the Owners hereby irrevocably and unconditionally waive, to the fullest extent they may legally effectively do so, any objection which they may now or hereafter have to the laying of venue 64 of any suit, action or proceeding arising out of or relating to this Agreement or the other Security Agreements in any federal or state court in the State of New York, Borough of Manhattan. The Company, Holdings and each of the Owners hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. To the extent either the Company, Holdings or any of the Owners has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in this Agreement and the other Security Agreements, to the extent permitted by law. IN WITNESS WHEREOF, the Collateral Agent, the First Priority Trustee for the benefit of the holders of the First Priority Notes, the Second Priority Trustee for the benefit of the holders of the Second Priority Notes, CSFB for the benefit of the Funding Bank and the Participating Banks party to the Letter of Credit Reimbursement Agreement, the Company, Holdings and the Owners have caused this Agreement to be executed and delivered by their respective 65 officers thereunto duly authorized as of the day and year first above written. UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by /s/ Gerard F. Ganey -------------------------------- Name: Gerard F. Ganey Title: Senior Vice President UNITED STATES TRUST COMPANY OF NEW YORK, not in its individual capacity but solely as First Priority Trustee, by /s/ Gerard F. Ganey -------------------------------- Name: Gerard F. Ganey Title: Senior Vice President THE CHASE MANHATTAN BANK, not in its individual capacity but solely as Second Priority Trustee, by /s/ L.OBrien -------------------------------- Name: L.OBrien Title: Senior Trust Officer CREDIT SUISSE FIRST BOSTON, LONDON BRANCH, not in its individual capacity but as administrating bank for the Funding Bank and the Participating Banks party to the Letter of Credit Reimbursement Agreement, by /s/ Malcolm Price -------------------------------- Name: Malcolm Price Title: Managing Director 66 NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Kaplow -------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR HOLDINGS PLC, as Pledgor, by /s/ Richard Kaplow -------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-A) LIMITED, NAVIGATOR GAS (IOM I-B) LIMITED, NAVIGATOR GAS (IOM I-C) LIMITED, NAVIGATOR GAS (IOM I-D) LIMITED, NAVIGATOR GAS (IOM I-E) LIMITED, each as an Owner, by /s/ Richard Kaplow -------------------------------- Name: Richard Kaplow Title: Director Schedule I to the Collateral Agency and Intercreditor Agreement
CAPITAL STOCK ------------- Issuer Number Of Registered Number And Percentage Of - ------ --------- ---------- ---------- ------------- Certificate Owner Class Of Shares ----------- ----- -------- ------ Shares ------ Navigator Gas 2 Navigator 1 Ordinary 50% Transport PLC Holdings PLC Navigator Gas 1 Navigator Gas 1 Ordinary 100% (IOM I-A) Transport PLC Limited Navigator Gas 1 Navigator Gas 1 Ordinary 100% (IOM I-B) Transport PLC Limited Navigator Gas 1 Navigator Gas 1 Ordinary 100% (IOM I-C) Transport PLC Limited Navigator Gas 1 Navigator Gas 1 Ordinary 100% (IOM I-D) Transport PLC Limited Navigator Gas (IOM I-E) Navigator Gas Limited 1 Transport PLC 1 Ordinary 100% CAPITAL STOCK PLEDGED PURSUANT TO SIDE LETTER Issuer Number Of Registered Number And Percentage Of - ------ --------- ---------- ---------- ------------- Certificate Owner Class Of Shares Shares ----------- ----- --------------- ------ Navigator Gas Transport PLC 1 Edward Cain 1 Ordinary 50%
I-1 DEBT SECURITIES
Issuer Principal Amount Date Of Note Maturity Date - ------ ---------------- ------------ ------------- Navigator Gas (IOM Unspecified August 7, 1997 Unspecified I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, Navigator Gas (IOM I-E) Limited
I-2 Exhibit A [Form of Mortgage] Exhibit B [Form of Assignment of Earnings and Insurances] Exhibit C [Form of Issue of One Debenture] Exhibit D [Form of Opinion of Counsel] This opinion is being delivered pursuant to Section 3.5(a)(vii) of the Collateral Agency and Intercreditor Agreement dated as of August 1, 1997 (the "Intercreditor Agreement"), between the Company, Holdings, the Owners, the Collateral Agent, the First Priority Trustee and the Second Priority Trustee. Capitalized terms used but not defined herein have the meanings given such terms in the Intercreditor Agreement or the Indentures. We are of opinion that: 1. All conditions precedent set forth in Section 3.5(a) of the Intercreditor Agreement to the disbursement of certain funds from the Pre-Funding Account on the date hereof have been satisfied or will be satisfied immediately after such disbursement of funds. 2. Each of the Security Agreements relating to the Vessel ____________ to which the Company or Navigator Gas (IOM I-[ ]) Limited (the "Owner") is a party has been duly authorized, executed and delivered by the Company or the Owners, as the case may be, is a valid and binding agreement of the Company, and the Owners party thereto, enforceable against the Company and the Owners in accordance with its terms under the laws of the Republic of Liberia, in the case of the Mortgage, and the laws of the State of New York, in the case of the Assignments of Earnings and Insurances (the "Assignment"), and the laws of the Isle of Man, in the case of the Issue of One Debenture (the "Debenture"), subject to bankruptcy, insolvency fraudulent transfer, reorganization, moratorium or similar laws affecting creditors' rights and to general equity principles. 3. No authorization, consent, license, permission, permit or approval (including exchange control approval) of or action by, and no notice to or filing with, any governmental authority or regulatory body of the Republic of Liberia or, in the case of the Assignment, of the State of New York or, in the case of the Debenture, the Isle of Man is required for the execution, delivery and performance of any of the Security Agreements by the respective parties thereto and no such authorization, consent, license, permission, permit, approval, action, notice or filing is required for the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Agreements, except for the filing and registration of the Mortgage in the Office of the Deputy Commissioner of Maritime Affairs of the Republic D-1 of Liberia and the Debenture in the applicable government office in the Isle of Man. 4. The security interests created by each Security Agreement (other than the Mortgage) do not require any action to be taken under or pursuant to the laws of the Republic of Liberia or, in the case of the Assignment, of the State of New York, or, in the case of the Debenture, the Isle of Man in order to create or perfect such security interests or to permit the Collateral Agent to enforce its rights under the Security Agreement creating the same, other than (i) due and timely notice of the Assignment to charterers and third parties and (ii) due and timely notice of the Assignment to underwriters and third parties, as well as the consent of such underwriters or such third parties where the terms of insurance policies, other insurance documents or provisions of applicable law so require. 5. Based upon the Certificate of Ownership and Encumbrance issued by the Bureau of Maritime Affairs of the Republic of Liberia, the Vessels are registered under the laws of the Republic of Liberia, solely owned by the Owner, and free of all mortgages, liens and encumbrances of record other than the Mortgage in favor of the Collateral Agent. 6. Based upon the records of the Deputy Commission of Maritime Affairs of the Republic of Liberia maintained in New York, New York, the Mortgage on the Vessel ________ has been duly recorded in the Office of Deputy Commissioner of Maritime Affairs of the Republic of Liberia in New York on _________ in Book PM __ at Page ___ and such Mortgage constitutes a first preferred ship mortgage lien on the Vessel ______, in favor of the Collateral Agent. The Collateral Agent has all the rights of a holder of a first preferred ship mortgage on the Vessel _____ and no further or periodic filing or re-recording is required to protect and preserve the lien on and security interest in the Vessel provided by the Mortgage under the Laws of the Republic of Liberia. This opinion letter is rendered for the sole benefit of the addressee hereof, and no other person or entity is entitled to rely hereon. Copies of this opinion letter may not be furnished to any other party or entity, nor may any portion of this letter be quoted, circulated or referred to in any other document. D-2 Exhibit E [Form of Intercompany Note] EX-4.11 18 LETTER OF CREDIT REIMBURSEMENT AGR. & GRNTY. EXECUTION COPY ================================================================================ LETTER OF CREDIT REIMBURSEMENT AGREEMENT AND GUARANTY Among Navigator Gas Transport PLC, Navigator Holdings PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, Navigator Gas (IOM I-E) Limited, Credit Suisse First Boston, as Administrating Bank and Funding Bank, and the Participating Banks named herein Dated as of August 7, 1997 ================================================================================ [CS&M & Ref. No. 5865-020] TABLE OF CONTENTS Page ---- SECTION 1. Definitions ............................................... 2 SECTION 2. Reimbursement ............................................. 7 SECTION 3. Fees ...................................................... 8 SECTION 4. Change in Circumstances ................................... 9 SECTION 5. Participations ............................................ 12 SECTION 6. Payments .................................................. 17 SECTION 7. Issuance of the Letter of Credit; Conditions Precedent to Issuance ............................................. 18 SECTION 8. Adjustment of Maximum Drawing Amounts and Maximum Available Credit Amounts; Terms of Drawing ..................................... 21 SECTION 9. Obligations Absolute ...................................... 21 SECTION 10. Representations and Warranties ............................ 22 SECTION 11. Covenants ................................................. 25 SECTION 12. Guarantees of the Owners .................................. 25 SECTION 13. Reimbursement Events of Default ........................... 28 SECTION 14. Amendments and Waivers .................................... 31 SECTION 15. Notices ................................................... 32 SECTION 16. No Waiver; Remedies ....................................... 32 SECTION 17. Right of Setoff ........................................... 33 SECTION 18. Continuing Obligation ..................................... 34 SECTION 19. Costs, Expenses and Taxes ................................. 34 SECTION 20. Indemnification ........................................... 35 Contents, P.2 Page ---- SECTION 21. Sales of Participations ................................... 36 SECTION 22. Administrating Bank ....................................... 36 SECTION 23. Termination by the Issuer ................................. 39 SECTION 24. Severability .............................................. 39 SECTION 25. Governing Law ............................................. 39 SECTION 26. Jurisdiction; Consent to Service of Process .............................................. 39 SECTION 27. Waiver of Jury Trial ...................................... 41 SECTION 28. Headings .................................................. 41 SECTION 29. Counterparts .............................................. 41 EXHIBIT A Form of Irrevocable Transferable Letter of Credit Exhibit 1 to Exhibit A Exhibit 2 to Exhibit A Exhibit 3 to Exhibit A Exhibit 4 to Exhibit A Exhibit 5 to Exhibit A Exhibit 6 to Exhibit A Exhibit 7 to Exhibit A Schedule I to Exhibit A Schedule II to Exhibit A Schedule III to Exhibit A EXHIBIT B Form of Notice of Drawing Contents, P.3 EXHIBIT C Form of Assignment and Assumption Agreement SCHEDULE 1 Participating Banks' Participation Percentages EXECUTION COPY LETTER OF CREDIT REIMBURSEMENT AGREEMENT AND GUARANTY dated as of August 7, 1997, among Navigator Gas Transport PLC, an Isle of Man public limited company (the "Issuer"), Navigator Holdings PLC, an Isle of Man public limited company ("Holdings"), Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company (collectively, the "Owners"), CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its London Branch, as the funding bank (in such capacity, the "Funding Bank") and as the administrating bank (in such capacity, the "Administrating Bank") and the financial institutions from time to time party hereto as participating banks (each, a "Participating Bank" and, collectively, the "Participating Banks").WHEREAS the Issuer is offering for sale $217,000,000 aggregate principal amount of its First Priority Notes and $87,000,000 aggregate principal amount of its Second Priority Notes, the proceeds of which will be used, among other things, to fund the costs of construction of five semi- refrigerated gas carriers which are to be built pursuant to certain shipbuilding contracts, as more fully described in the Indentures; WHEREAS it is a condition precedent to the issuance of the Notes that the Funding Bank issue to the Collateral Agent, for the benefit of the Noteholders, an irrevocable standby letter of credit for the account of the Issuer substantially in the form of Exhibit A hereto (the "Letter of Credit"); WHEREAS it is a further condition precedent to the issuance of the Notes that each of the Owners guaranty the reimbursement obligations of the Issuer hereunder; WHEREAS the Funding Bank is willing to issue the Letter of Credit on the terms and subject to the conditions set forth in this Agreement; and WHEREAS it is a condition precedent to the obligation of the Funding Bank to issue the Letter of Credit 2 that the Participating Banks agree to reimburse the Funding Bank as provided herein. NOW, THEREFORE, the Funding Bank, the Administrating Bank, the Participating Banks, the Issuer, Holdings and each of the Owners hereby agree as follows: SECTION 1. DEFINITIONS. (a) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in Appendix A hereto. The following terms, as used herein, have the following respective meanings (such meanings to be applicable to both the singular and plural forms of the terms defined): "Administrating Bank" has the meaning set forth in the preamble hereto. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agreement" means this Letter of Credit Reimbursement Agreement and Guaranty, as the same may from time to time be amended, supplemented or modified. "Applicable Law" means all applicable laws, statutes, treaties, rules, codes, ordinances, regulations, permits, certificates, orders, interpretations, licenses and permits of any Governmental Authority and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other judicial or quasi-judicial tribunal of competent jurisdiction. "Applicable Reimbursement Date" means, with respect to any Date of Drawing, the date that is the 35th day thereafter. "Assignment and Acceptance" mean an assignment and acceptance entered into by a Bank and an assignee and accepted by the Administrating Bank, in the form of Exhibit C or any other form approved by the Administrating Bank. "Bank" means the Funding Bank or any Participating Bank. "Board" means the Board of Governors of the Federal Reserve System of the United States. 3 "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or London, England are authorized or required by law to close. "Code" means the United States Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder, as the same may be amended from time to time. "Collateral" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Collateral Agent" means United States Trust Company of New York, in its capacity as collateral agent under the Intercreditor Agreement, and it successors. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Date of Drawing" has the meaning set forth in the Letter of Credit. "Date of Early Termination" has the meaning set forth in the Letter of Credit. "Date of Issuance" has the meaning set forth in Section 7(a) hereof. "Delivery Date" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Drawing Certificate" means a certificate in the form of Exhibit 3, 4 or 5 to the Letter of Credit. "First Priority Indenture" means the indenture dated as of August 1, 1997 among the Issuer, the Owners, Holdings and the First Priority Trustee, as the same may be amended, supplemented or modified from time to time. "First Priority Notes" means the $217,000,000 10 1/2% First Priority Ship Mortgage Notes Due 2007 issued pursuant to the First Priority Indenture and any registered notes for which such First Priority Notes are exchanged pursuant to the terms of the First Priority Indenture. "First Priority Trustee" means United States Trust 4 Company of New York, as trustee under the First Priority Indenture. "Funding Bank" has the meaning set forth in the preamble hereto. "Governmental Authority" means any Federal, state, county, municipal, foreign, international, regional or other governmental authority, agency, board, body, instrumentality or court. "Governmental Action" has the meaning set forth in Section 10(d) hereof. "Guarantor" means each Owner. "Holdings" has the meaning set forth in the preamble hereto. "Indebtedness" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Indentures" means, collectively, the First Priority Indenture and the Second Priority Indenture. "Intercreditor Agreement" means the Collateral Agency and Intercreditor Agreement dated as of August 1, 1997 among the Issuer, Holdings, the Owners, the Second Priority Trustee, the Administrating Bank and United States Trust Company of New York, as Collateral Agent and as the First Priority Trustee, as the same may be amended, supplemented, modified or waived from time to time. "Interest Draw" has the meaning set forth in the Letter of Credit. "Interest Payment Date" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Interest Portion" means $45,500,000. "Issuer" has the meaning set forth in the preamble hereto. "Issue Date" means the date on which the notes are originally issued. "Letter of Credit" has the meaning set forth in the preamble hereto. 5 "LIBO Rate" means, with respect to any drawing under the Letter of Credit, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) shown as the one month London interbank offered rate for deposits in dollars on the display screen designated "LIBO Page" on the Reuters Monitor Money Rates Service (or such other page as may replace such page on such service for the purpose of displaying comparable rates) as of 11:00 a.m. (London time) on the date that the Drawing Certificate relating to such drawing under the Letter of Credit is presented to the Funding Bank. "Lien" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Maximum Available Credit Amount" has the meaning set forth in the Letter of Credit. "Maximum Credit Amount" means $50,000,000. "Maximum Drawing Amount" has the meaning set forth in the Letter of Credit. "Note Purchase Agreement" means the Purchase Agreement dated as of July 31, 1997 among the Issuer, Holdings, the Owners, Credit Suisse First Boston and Cambridge Partners, L.L.C., as the same may be amended, supplemented or waived from time to time. "Noteholders" means, collectively, the holders of the Notes. "Notes" means, collectively, the First Priority Notes and the Second Priority Notes. "Notice of Drawing" means a notice substantially in the form of Exhibit B hereto. "Participant" has the meaning set forth in Section 21(a) hereof. "Participating Banks" means the Funding Bank and any banks or other entities to whom the Funding Bank has sold a participation in its rights and obligations under this Agreement and their successors and assigns, each being a "Participating Bank". "Participation Percentage" means the percentage set forth opposite such Participating Bank's name in Schedule 1 hereto as modified from time to time by any 6 Assignment and Acceptance delivered to the Administrating Bank pursuant to Section 21(b) hereof. "Permitted Liens" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Person" means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a trust, unincorporated organization or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Reimbursement Default" means any event or condition which constitutes a Reimbursement Event of Default or which with the giving of notice or the lapse of time or both would, unless cured or waived, become a Reimbursement Event of Default. "Reimbursement Event of Default" has the meaning set forth in Section 13 hereof. "Required Banks" means at any time Banks having aggregate Participation Percentages in excess of 50% at such time. "Second Priority Indenture" means the indenture dated as of August 1, 1997 among the Issuer, the Owners, Holdings and the Second Priority Trustee, as the same may be amended, supplemented or modified from time to time. "Second Priority Notes" means the 12% Second Priority Ship Mortgage Notes Due 2007 issued pursuant to the Second Priority Indenture and any registered notes for which such Second Priority Notes are exchanged pursuant to the terms of the Second Priority Indenture. "Second Priority Trustee" means The Chase Manhattan Bank, a New York banking corporation, as trustee under the Second Priority Indenture, and its successors. "Security Agreements" has the meaning specified in the First Priority Indenture. "Subsidiary" means with respect to any Person (herein referred to as the "parent"), any corporation, association, partnership or other business entity (a) of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at the time any determination is being made, owned, controlled or held 7 or (b) which is, at the time any determination is made, otherwise controlled (by contract or agreement or otherwise) by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Tax" and "Taxes" have the meanings set forth in Section 4(c) hereof. "Termination Date" with respect to the Letter of Credit means the earliest of (A) 10:00 a.m. (London time) on the Date of Early Termination, (B) 5:00 p.m. (London time) on the date on which the Collateral Agent surrenders the Letter of Credit for cancelation to the Funding Bank as provided therein, (C) 5:00 p.m. (London time) on the date on which the Funding Bank pays a Final Draw (as defined in the Letter of Credit) and (D) 5:00 p.m. (London time) on the tenth anniversary of the Date of Issuance of the Letter of Credit. "Transaction Documents" means the Note Purchase Agreement, the Intercreditor Agreement, the Indentures, the Notes, the Security Agreements, and the Letter of Credit. "Vessel" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Working Capital Draw" has the meaning set forth in the Letter of Credit. "Working Capital Portion" means $4,500,000. (b) Unless otherwise specified herein, all accounting terms used herein shall be interpreted in accordance with generally accepted accounting principles in the United States, and all accounting determinations with respect to any Person required to be made hereunder shall be made, and all financial statements of any Person required to be delivered hereunder shall be prepared, in accordance with such generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statements of such Person and its Subsidiaries delivered to the Banks. SECTION 2. REIMBURSEMENT. (a) Subject to the provisions of the next sentence, upon payment by the Funding Bank of a drawing under the Letter of Credit, the Issuer agrees absolutely and unconditionally to pay to the Funding Bank not later than 11:00 a.m. (London time) on the Applicable Reimbursement Date a sum equal to the amount so paid under the Letter of Credit. The Issuer agrees to pay 8 the Funding Bank, on the earlier of (i) the date such sum is repaid by the Issuer to the Funding Bank and (ii) the Applicable Reimbursement Date, interest on the unreimbursed amount of such drawing at a rate per annum equal to the LIBO Rate plus 1.25%, for the period from and including the date on which the Funding Bank made such payment to but excluding the date such amount is paid in full; PROVIDED that such rate per annum shall in no event be higher than the maximum rate permitted by Applicable Law. Upon the occurrence of any drawing under the Letter of Credit, the Funding Bank shall promptly deliver a Notice of Drawing to the Issuer and each of the Participating Banks. (b) Any payment by the Issuer pursuant to Section 2(a) hereof of less than all amounts owed to the Funding Bank pursuant to Section 2(a) hereof shall be applied FIRST, to interest owed, SECOND, to the amount of the unreimbursed drawings for Working Capital Draws under the Letter of Credit and THIRD, to the amount of unreimbursed drawings for Interest Draws under the Letter of Credit; PROVIDED, HOWEVER, that if, at the time of any payment made by the Issuer pursuant to Section 2(a) hereof, there shall be amounts due from the Issuer pursuant to Section 2(a) hereof with respect to more than one drawing under the Letter of Credit, such payment shall be applied to all such drawings under the Letter of Credit, FIRST, to interest owned with respect to all drawings under the Letter of Credit, and if such amount is insufficient to pay in full such interest, then pro rata in accordance with the proportion that the amount of such interest owed under each drawing under the Letter of Credit bears to the aggregate amount of such interest owed under all drawings under the Letter of Credit, SECOND, to the amount of unreimbursed drawings under all drawings for Working Capital Draws under the Letter of Credit, and if such amount is insufficient to pay in full such unreimbursed drawings, then pro rata to each such drawing under the Letter of Credit in accordance with the proportion that the aggregate amount due from the Issuer pursuant to Section 2(a) hereof with respect to each such drawing under the Letter of Credit bears to the aggregate amount due from the Issuer pursuant to Section 2(a) hereof with respect to all such drawings under the Letter of Credit and THIRD, to the amount of unreimbursed drawings under all drawings for Interest Draws under the Letter of Credit, and if such amount is insufficient to pay in full such unreimbursed drawings, then pro rata to each such drawing under the Letter of Credit in accordance with the proportion that the aggregate amount due from the Issuer pursuant to Section 2(a) hereof with respect to each such drawing under the Letter of Credit bears to the 9 aggregate amount due from the Issuer pursuant to Section 2(a) hereof with respect to all such drawings under the Letter of Credit. SECTION 3. FEES. The Issuer agrees to pay to the Administrating Bank (a) for the account of the Funding Bank, a fronting fee with respect to the Letter of Credit equal to 1/4 of 1.00% per annum of the Maximum Available Credit Amount applicable to the Letter of Credit, from and including July 1, 1997 to but excluding the Termination Date of the Letter of Credit, payable (i) from the Date of Issuance of the Letter of Credit to but excluding the Delivery Date of the last Vessel to be delivered pursuant to the terms of the Indentures, semi-annually in arrears on each Interest Payment Date and (ii) from such Delivery Date to but excluding the Termination Date of the Letter of Credit, monthly in arrears on the first Business Day of each calendar month, and (iii) on such Termination Date; (b) for the account of the Banks, a participation fee with respect to the Letter of Credit equal to 1.00% per annum of the product of (i) such Bank's Participation Percentage and (ii) the Maximum Available Credit Amount applicable to the Letter of Credit, from and including July 1, 1997 to but excluding the Termination Date of the Letter of Credit, payable (i) from the Date of Issuance of the Letter of Credit to but excluding the Delivery Date of the last Vessel to be delivered pursuant to the terms of the Indentures, semi-annually in arrears on each Interest Payment Date and (ii) from such Delivery Date to but excluding the Termination Date of the Letter of Credit, monthly in arrears on the first Business Day of each calendar month, and (iii) on such Termination Date; and (c) for its own account, fees specified and payable in accordance with the terms of the letter from the Administrating Bank to the Issuer dated August 1, 1997. Upon receipt from the Issuer of fees payable in accordance with the provisions of this Section 3, the Administrating Bank agrees to promptly pay to the account of the Funding Bank and each Participating Bank, as applicable, the fees paid to it for the account of the Funding Bank or such Participating Bank pursuant to this Section 3. SECTION 4. CHANGE IN CIRCUMSTANCES. (a) If any Bank or Participant shall have determined that the adoption after the date hereof of any Applicable Law, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Bank or Participant with any request or directive 10 (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board) against letters of credit issued by or participated in or assets of, or deposits with or for the account of such Bank or Participant or shall impose on such Bank or Participant any other condition regarding this Agreement, the Letter of Credit or any Bank's participation therein and the result of the foregoing shall be to increase the cost to such Bank or Participant of issuing, maintaining or participating, as the case may be, in the Letter of Credit or any drawing thereunder, then, within 15 days after demand by such Bank or Participant, the Issuer agrees to pay to such Bank or Participant all additional amounts that are necessary to compensate such Bank or Participant for such increased cost. (b) If any Bank or Participant shall have determined that the adoption after the date hereof of any Applicable Law or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Bank or Participant (or any lending office thereof) or such Bank's or Participant's holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank's or Participant's capital or on the capital of such Bank's or Participant's holding company, if any, as a consequence of this Agreement or under or in connection with the Letter of Credit to a level below that which such Bank or Participant or such Bank's or Participant's holding company could have achieved but for such adoption, change or compliance (taking into consideration such Bank's or Participant's policies and the policies of such Bank's or Participant's holding company with respect to capital adequacy) by an amount deemed by such Bank or Participant to be material, then, within 15 days after demand by such Bank or Participant, the Issuer shall pay to such Bank or Participant such additional amount or amounts as will compensate such Bank or Participant or such Bank's or Participant's holding company for any such reduction suffered. (c) The Issuer agrees that all payments made by the Issuer hereunder shall be made free and clear of, and 11 without reduction for or on account of, any stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivision or taxing authority thereof or therein), except for franchise taxes and taxes on the overall net income of a Bank (such nonexcluded taxes being called "Tax" or "Taxes"). If any Taxes are required to be withheld from any amounts payable by the Issuer hereunder, the Issuer agrees that the amounts so payable shall be increased to the extent necessary to yield to the Banks (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; PROVIDED that the Issuer shall not be obligated to pay such amounts for the benefit of any Bank with respect to any period in which such Bank has failed (x) to file any form or certificate that it was entitled to file which would have exempted such Bank from such Taxes or (y) to take other action which would entitle such Bank to an exemption from such Taxes, if such action would not, in the reasonable judgment of such Bank, be otherwise disadvantageous to it. Whenever any Tax is paid by the Issuer with respect to payments made to or for the account of any Bank, as promptly as possible thereafter, the Issuer shall send the Administrating Bank and the applicable Bank a receipt or other evidence of payment thereof. (d) A certificate as to the nature of the occurrence giving rise to, and the calculation of, compensation to the Funding Bank, a Participating Bank or a Participant pursuant to paragraphs (a), (b) and (c) of this Section 4 shall be submitted by the Funding Bank, such Participating Bank or such Participant to the Administrating Bank. Such certificate shall be submitted by the Administrating Bank to the Issuer and shall be conclusive evidence (absent demonstrable error) as to the amount thereof. Each such certificate shall provide the identity of the Funding Bank, such Participating Bank or such Participant. (e) In the event any Participating Bank gives a notice with respect to it or any of its Participants pursuant to Section 4(d) hereof, the Issuer may require, at its expense, such Bank to assign all its Participation Percentage of the Letter of Credit and all its rights and obligations hereunder to a financial institution specified by the Issuer (a "Substitute Bank"); PROVIDED that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other governmental 12 agency or instrumentality, (ii) the Issuer shall have received the written consent of the Funding Bank and the Administrating Bank (which shall not unreasonably be withheld), to such assignment and (iii) the Issuer shall have paid to such assignor Bank all moneys accrued and owing hereunder to it. The Substitute Bank shall execute an Assignment and Acceptance and such additional amendments, agreements, instruments and documents as may be reasonably requested by the Administrating Bank. (f) In the event the Funding Bank gives a notice with respect to itself pursuant to Section 4(d) hereof, the Issuer may replace such Funding Bank with a financial institution specified by the Issuer (a "Substitute Funding Bank"); PROVIDED that (i) such replacement shall not conflict with or violate any law, rule or regulation or order of any court or other government agency or instrumentality, (ii) the Issuer shall have received the written consent of the Collateral Agent to such substitution, and the Issuer shall have taken all other actions required under the Transaction Documents to effect such substitution and (iii) the Issuer shall have paid to the Funding Bank all moneys accrued and owing hereunder to it. The Substitute Funding Bank shall execute an Assignment and Acceptance and such additional amendments, agreements, instruments and documents as may be reasonably requested by the Administrating Bank. SECTION 5. PARTICIPATIONS. (a) By the issuance of the Letter of Credit and without any further action on the part of the Funding Bank or any Participating Bank in respect thereof, the Funding Bank shall be deemed to have granted to each Participating Bank, and each Participating Bank shall be deemed to have acquired from the Funding Bank, a participation in the Letter of Credit equal to such Participating Bank's Participation Percentage of the Maximum Credit Amount of the Letter of Credit, effective upon the issuance of the Letter of Credit. In consideration and in furtherance of the foregoing, each Participating Bank hereby absolutely and unconditionally agrees to pay to the Funding Bank, in accordance with this Section 5, such Participating Bank's Participation Percentage of each payment made by the Funding Bank of a draft under the Letter of Credit. Upon payment of a draft under a Letter of Credit, the Funding Bank shall promptly give telephonic notice (to be followed by delivery by telecopy of a Notice of Drawing) to each Participating Bank of the date and amount of such payment. If such Notice of Drawing is received by a Participating Bank after 12:30 p.m. (London time) such notice shall be deemed to have been received on the next Business Day. With 13 respect to each Participating Bank, promptly upon receipt of such Notice of Drawing but in any event no later than 3:00 p.m. (London time) on the date on which such Participating Bank shall have received or shall be deemed to have received such Notice of Drawing from the Funding Bank, such Participating Bank shall pay to the Funding Bank an amount equal to the product of (A) such Participating Bank's Participation Percentage and (B) the amount of the payment made by the Funding Bank on such draft; PROVIDED, HOWEVER, that, with respect to the payment of any draw on the Letter of Credit, the Funding Bank shall not require such Participating Bank to pay (exclusive of interest) an amount greater than the product of (x) such Participating Bank's Participation Percentage and (y) the lesser of (m) the Maximum Available Credit Amount of the Letter of Credit immediately prior to adjustment for payment by the Funding Bank of such draw and (n) the Maximum Drawing Amount of the Letter of Credit immediately prior to adjustment of the Maximum Drawing Amount of the Letter of Credit for payment by the Funding Bank of such draw. If payment of the amount due pursuant to the preceding sentence from a Participating Bank is received by the Funding Bank after 3:00 p.m. (London time) on the date it is due, such Participating Bank agrees to pay to the Funding Bank along with its payment of the amount due pursuant to the preceding sentence, interest on such amount at a rate per annum equal to the LIBO Rate applicable to such drawing under the Letter of Credit. (b) Each Participating Bank acknowledges and agrees that its obligation to make the payments specified in Section 5(a) hereof and the right of the Funding Bank to receive the same, in the manner specified therein, are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including, without limitation (i) the occurrence and continuance of any event of default under any of the Transaction Documents or any terms or provision therein, (ii) any Reimbursement Default hereunder, (iii) any breach or default by the Issuer, the Administrating Bank or any Participating Bank hereunder, (iv) any lack of validity or enforceability of the Letter of Credit, this Agreement or any of the Transaction Documents or any term or provision therein, (v) any amendment or waiver of or any consent to departure from the Letter of Credit, this Agreement or any of the Transaction Documents; and (vi) the existence of any claim, setoff, defense or other right which the Participating Banks may have at any time against the Issuer, Holdings, the Owners, the Collateral Agent (or any persons for whom any of the foregoing may be acting), the Funding 14 Bank, the Administrating Bank, any other Participating Bank, or any other Person, whether in connection with this Agreement, the Transaction Documents or any other documents contemplated hereby or thereby or any unrelated transactions; (vii) any draft or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatever; (viii) payment by the Funding Bank under the Letter of Credit against presentation of a draft or a certificate which does not comply with the terms of the Letter of Credit; or (ix) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, such Participating Bank's obligations hereunder. Neither the Administrating Bank nor the Funding Bank, nor any of their respective directors, officers, employees, agents or advisors, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of the Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to the Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Funding Bank; PROVIDED that the foregoing shall not be construed to excuse the Funding Bank from liability to any Participating Bank to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by each Participating Bank to the extent permitted by applicable law) suffered by such Participating Bank that are caused by the Funding Bank's failure to exercise care when determining whether drafts and other documents presented under the Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Funding Bank (as finally determined by a court of competent jurisdiction), the Funding Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of the Letter of Credit, the Funding Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for 15 further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of the Letter of Credit. (c) Upon receipt of a payment from the Issuer pursuant to Section 2(a) hereof, the Funding Bank shall promptly transfer to each Participating Bank such Participating Bank's pro rata share (determined in accordance with such Participating Bank's Participation Percentage) of such payment based on such Participating Bank's pro rata share (determined as aforesaid) of amounts paid pursuant to Section 5(a) hereof, and not previously reimbursed by the Issuer pursuant to Section 2(a) hereof. All payments due to the Participating Banks from the Funding Bank pursuant to this paragraph (c) shall be made to the Participating Banks if, as, and to the extent possible, when the Funding Bank receives payments in respect of drawings under the Letter of Credit pursuant to Section 2(a) hereof, and in the same funds in which such amounts are received; PROVIDED that if any Participating Bank to whom the Funding Bank is required to transfer any such payment (or any portion thereof) pursuant to this paragraph (c) does not receive such payment (or portion thereof) prior to 3:00 p.m. (London time) on the Business Day on which the Funding Bank received such payment from the Issuer (which payment, if received by the Funding Bank after 2:00 p.m. (London time) on any Business Day, shall be deemed, for the purposes of this proviso, to have been received on the next succeeding Business Day), the Funding Bank agrees to pay to such Participating Bank, along with its payment of the portion of such payment due to such Participating Bank, interest on such amount at a rate per annum equal to, for the period from and including such Business Day to but excluding the date such amount is paid in full, the LIBO Rate applicable to the reimbursed drawing under the Letter of Credit. If, in connection with any case or other proceeding seeking liquidation, reorganization or other relief with respect to the Issuer or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, the Funding Bank shall be required to return to the Issuer or to any trustee, receiver, liquidator, custodian or other similar official all or any portion of such payments or interest, each Participating Bank shall, upon demand of the Funding Bank, forthwith return to the Funding Bank any amounts transferred to such Participating Bank by the Funding Bank in respect thereof pursuant to this paragraph (c). (d) The Funding Bank will exercise and give the same care and attention to the Letter of Credit as it gives 16 to its other letters of credit and similar obligations, and each Participating Bank agrees that the Funding Bank's sole liability to each Participating Bank shall be (i) to distribute promptly, as and when received by the Funding Bank, and in accordance with the provisions of paragraph (c) above, such Participating Bank's pro rata share (determined in accordance with such Participating Bank's Participation Percentage) of any payments to the Funding Bank by the Issuer pursuant to Section 2(a) hereof in respect of drawings under the Letter of Credit, (ii) to exercise or refrain from exercising any right or to take or to refrain from taking any action under this Agreement or the Letter of Credit as may be directed in writing by the Required Banks (or such higher percentage of Banks as may be otherwise expressly required under this Agreement) or the Administrating Bank acting on behalf of such Banks and (iii) as otherwise expressly set forth herein. The Funding Bank shall not be liable for any action taken or omitted at the request or with approval of the Required Banks or of the Administrating Bank acting on behalf of the Required Banks or for the nonperformance of the obligations of any other party under this Agreement, any of the Transaction Documents or any other document contemplated hereby or thereby. Without in any way limiting any of the foregoing, the Funding Bank may rely upon the advice of counsel concerning legal matters and upon any written communication or any telephone conversation which it believes to be genuine or to have been signed, sent or made by the proper person and shall not be required to make any inquiry concerning the performance by the Issuer, the Collateral Agent, Holdings, any Owner or any other Person of any of their respective obligations and liabilities under or in respect of this Agreement, the Transaction Documents or any other documents contemplated hereby or thereby. The Funding Bank shall not have any obligation to make any claim, or assert any Lien, upon any property held by the Funding Bank or assert any offset there against unless expressly directed to do so by the Required Banks or the Administrating Bank acting on behalf of the Required Banks. The Funding Bank and its Affiliates may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of business with the Issuer or any of its Affiliates, or any other Person, and receive payment on such loans or extensions of credit and otherwise act with respect thereto freely and without accountability in the same manner as if this Agreement and the transactions contemplated hereby were not in effect. Without limiting any of the foregoing, the Funding Bank agrees for the exclusive benefit of the Participating Banks that (x) it will not give notice of a Date of Early Termination under the Letter of Credit without 17 a writing executed by the Required Banks or executed by the Administrating Bank on behalf of the Required Banks directing it to give such notice (which writing shall specify the Date of Early Termination to be given in such notice) and (y) if a Reimbursement Event of Default has occurred and is continuing, upon receipt of such a writing, it will give such notice as provided in the Letter of Credit. (e) The Funding Bank makes no representation and shall have no responsibility with respect to: (i) the genuineness, legality, validity, binding effect or enforceability of this Agreement, any of the Transaction Documents or any other documents contemplated hereby or thereby; (ii) the truthfulness or accuracy of any of the representations contained in this Agreement, any of the Transaction Documents or any other documents contemplated hereby or thereby; (iii) the collectibility of any amounts due under this Agreement; (iv) the financial condition of the Issuer, Holdings, any Owner or any other Person; and (v) any act or omission of the Collateral Agent with respect to its use of the Letter of Credit. Each Participating Bank acknowledges and agrees that such Participating Bank has been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into the financial condition, affairs, status and nature of the Issuer, Holdings and the Owners and for making its own credit decision in taking or not taking any action, including without limitation, entering into this Agreement. (f) To the extent that the Funding Bank is not reimbursed and indemnified by the Issuer under Section 19 or Section 20 hereof, each Participating Bank severally agrees to reimburse and indemnify the Funding Bank on demand, pro rata in accordance with such Participating Bank's Participation Percentage, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against, the Funding Bank, in any way relating to or arising out of the Letter of Credit, or any action taken or omitted by the Funding Bank under or in connection with this Agreement or the Letter of Credit; PROVIDED, HOWEVER, that such Participating Bank shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements determined by the final, non-appealable judgment of a court of competent jurisdiction to have resulted from the Funding Bank's gross negligence or wilful misconduct or for the Issuer's failure to pay 18 interest thereon. Each Participating Bank's obligations under this paragraph (f) shall survive the termination of this Agreement and the Letter of Credit. Nothing in this paragraph (f) is intended to limit any Participating Bank's reimbursement obligation contained in paragraph (a) above. (g) Each Participating Bank agrees that if it should receive any amount in respect of its participation other than from the Funding Bank pursuant to paragraph (c) above and other than as contemplated by Section 3, Section 4, Section 17(a), Section 19, or Section 20 hereof, such Participating Bank will remit all of the same to the Administrating Bank to distribute to the Participating Banks pro rata in accordance with their Participation Percentages. SECTION 6. PAYMENTS. (a) All payments by the Issuer or the Participating Banks to the Funding Bank pursuant to this Agreement shall be made in lawful currency of the United States and in immediately available funds to the Funding Bank's account maintained with the Administrating Bank for such purpose, or to such other account as the Funding Bank shall notify the Issuer and each Participating Bank in writing. All payments by the Funding Bank, the Issuer, or the Administrating Bank to a Participating Bank shall be made in lawful currency of the United States and in immediately available funds at the address of such Participating Bank set forth below the name of such Participating Bank on the signature pages hereof, or at such other address as any Participating Bank shall notify each of the Funding Bank, the Issuer, and the Administrating Bank in writing. (b) Whenever any payment under this Agreement shall be due on a day that is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. (c) Interest payable under Sections 2(a), 5(a) and 5(c) hereof and the fees payable under Section 3 hereof shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). (d) Except as otherwise expressly provided in Section 3, 4 or 5 hereof, all payments hereunder from the Issuer to the Participating Banks, from the Funding Bank to the Participating Banks, from the Participating Banks to the Funding Bank and from the Participating Banks to the 19 Administrating Bank shall be made pro rata among the Participating Banks in accordance with the Participation Percentages of such Participating Banks. SECTION 7. ISSUANCE OF THE LETTER OF CREDIT; CONDITIONS PRECEDENT TO ISSUANCE. (a) Subject to satisfaction of the conditions precedent set forth in subsections (b), (c), (d) and (e) of this Section 7, the Funding Bank shall issue the Letter of Credit to the Collateral Agent in the Maximum Credit Amount on the Issue Date (such date or such later date on which the conditions precedent are satisfied and the Letter of Credit is issued being herein called the "Date of Issuance" of the Letter of Credit). The Letter of Credit shall be effective on its Date of Issuance and shall expire on its Termination Date. (b) As a condition precedent to the issuance of the Letter of Credit, the Administrating Bank and each Bank shall have received on or before the Date of Issuance of the Letter of Credit the following, each dated such date, in form and substance satisfactory to each Bank: (i) an opinion of Thacher Proffitt & Wood, as counsel to the Issuer, Holdings and the Owners in form and substance satisfactory to the Administrating Bank; (ii) an opinion of Cains, as special Isle of Man counsel to the Issuer, Holdings and the Owners, in form and substance satisfactory to the Administrating Bank; (iii) copies of the resolutions of the Board of Directors of the Issuer authorizing the execution, delivery and performance by the Issuer of this Agreement and each of the Transaction Documents to which the Issuer is a party, certified by the Secretary or an Assistant Secretary of the Issuer (which certificate shall state that such resolutions are in full force and effect on the Date of Issuance of the Letter of Credit); (iv) copies of the resolutions of the Board of Directors of each of Holdings and each of the Owners authorizing the execution, delivery and performance by such Person of this Agreement and each of the Transaction Documents to which each such Person is a party, certified by the Secretary or an Assistant Secretary of such Person (which certificate shall state that such resolutions are in full force and effect on the Date of Issuance of the Letter of Credit); 20 (v) a copy of the certificate or articles of incorporation, including all amendments thereto, of each of the Issuer, Holdings and each Owner, certified as of a recent date by the appropriate authority of its jurisdiction of its organization, and a certificate as to the good standing of any such Person, as of a recent date, from such authority; (vi) (i) a certificate of the Secretary or Assistant Secretary of each of the Issuer, Holdings and each Owner certifying (A) that attached thereto is a true and complete copy of the Memorandum of Association of such Person as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Person described in subsection (iii) or (iv) above, as applicable, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or equivalent organizational document of such Person has not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to Section 7(b)(v) above, and (D) as to the incumbency of each officer executing this Agreement or any other document or certificate delivered in connection herewith on behalf of such Person; and (ii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (i) above; (vii) an executed copy (or duplicate thereof) of each of the Transactions Documents, each of which shall be in form and substance satisfactory to the Administrating Bank; and (viii) such other documents, instruments, approvals or opinions as any Bank may reasonably request in writing. (c) The following statements shall be true and correct on the Date of Issuance of the Letter of Credit and the Administrating Bank and each Bank shall have received on the Date of Issuance a certificate signed by a duly authorized officer of the Issuer dated such Date of Issuance, stating that: (i) the representations and warranties contained 21 in Section 10 hereof are true and correct on and as of such Date of Issuance as though made on and as of such date; and (ii) no Reimbursement Default shall have occurred and be continuing and no Reimbursement Default shall result from the issuance of the Letter of Credit. (d) On or before the Date of Issuance of the Letter of Credit: (i) each of the Transaction Documents shall be in full force and effect; (ii) all conditions precedent to closing set forth in Section 6 of the Note Purchase Agreement shall have been fulfilled (other than those conditions requiring issuance of the Letter of Credit); (iii) the Notes shall have been duly issued pursuant to the Indentures and shall be in full force and effect; and (iv) the Issuer shall have paid to the Administrating Bank all fees required to be paid on or prior to the Date of Issuance. SECTION 8. ADJUSTMENT OF MAXIMUM DRAWING AMOUNTS AND MAXIMUM AVAILABLE CREDIT AMOUNTS; TERMS OF DRAWING. The Maximum Drawing Amount and Maximum Available Credit Amount applicable to the Letter of Credit shall be subject to modification as specified in the Letter of Credit and drawings under the Letter of Credit shall be subject to the other terms and conditions set forth in the Letter of Credit. SECTION 9. OBLIGATIONS ABSOLUTE. The payment obligations of the Issuer under this Agreement shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, and irrespective of: (a) any lack of validity or enforceability of the Letter of Credit, this Agreement or any of the Transac tion Documents; (b) any amendment or waiver of or any consent to departure from all or any of the provisions of the Letter of Credit, this Agreement or any of the 22 Transaction Documents; (c) the existence of any claim, setoff, defense or other rights which the Issuer, Holdings or any Owner may have at any time against any of the Collateral Agent, the Funding Bank, the Administrating Bank, any Participating Bank, or any other Person or entity, whether in connection with this Agreement, the Trans action Documents or any other documents contemplated hereby or thereby or any unrelated transactions; (d) any draft or other document presented under the Letter of Credit, proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (e) payment by the Funding Bank under the Letter of Credit against presentation of a draft or certifi cate which does not comply with the terms of the Letter of Credit; or (f) any other act or omission to act or delay of any kind of the Funding Bank, the Participating Banks, the Administrating Funding Bank or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Issuer's obligations hereunder. Neither the Administrating Bank, the Participating Banks nor the Funding Bank, nor any of their respective directors, officers, employees, agents or advisors shall have any liability or responsibility by reason of or in connection with the issuance or transfer of the Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to the Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Funding Bank; PROVIDED that the foregoing shall not be construed to excuse the Funding Bank from liability to the Issuer to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Issuer to the extent permitted by applicable law) suffered by the Issuer that are caused by the Funding Bank's failure to 23 exercise care when determining whether drafts and other documents presented under the Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Funding Bank (as finally determined by a court of competent jurisdiction), the Funding Bank shall be deemed to have exercised care on each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of the Letter of Credit, the Funding Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of the Letter of Credit. SECTION 10. REPRESENTATIONS AND WARRANTIES. The Issuer, Holdings and each of the Owners represents and warrants as follows: (a) CORPORATE EXISTENCE AND POWER. (i) The Issuer is a public limited company duly organized, validly existing and in good standing under the laws of the Isle of Man, is duly qualified to do business as a foreign corporation in and is in good standing under the laws of each jurisdiction in which the ownership of its properties or the conduct of its business makes such qualification necessary except where the failure to be so qualified would not have a material adverse effect on its business or financial condition or its ability to perform its obliga tions under this Agreement or the Transaction Documents to which it is a party, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (ii) Holdings is a public limited company duly organized, validly existing and in good standing under the laws of the Isle of Man, is duly qualified to do business as a foreign corporation in and is in good standing under the laws of each jurisdiction in which the ownership of its properties or the conduct of its business makes such qualification necessary except where the failure to be so qualified would not have a material adverse effect on its business or financial condition or its ability to perform its obligations under this Agreement or the Transaction Documents to which it is a party, and has all corporate 24 powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (iii) Each of the Owners is a private limited company duly organized, validly existing and in good standing under the laws of the Isle of Man, is duly qualified to do business as a foreign corporation in and is in good standing under the laws of each jurisdiction in which the ownership of its properties or the conduct of its business makes such qualification necessary except where the failure to be so qualified would not have a material adverse effect on its business or financial condition or its ability to perform its obligations under this Agreement or the Transaction Documents to which it is a party, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) CORPORATE AUTHORIZATION. The execution, delivery and performance by it of this Agreement and each Transaction Document to which it is a party, have been duly authorized by all necessary corporate action on its part and do not, and will not, require the consent or approval of its shareholders, or any trustee or holder of any Indebtedness or other obligation of it. (c) NO VIOLATION, ETC. Neither the execution, delivery or performance by it of this Agreement or any Transaction Document to which it is a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, conflicts or will conflict with, or results or will result in a breach or contravention of any of the provisions of its Certificate of Incorporation or Memorandum of Association or any Applicable Law, or any indenture, mortgage, lease or any other agreement or instrument to which it or any of its Affiliates is a party or by which its property or the property of any of its Affiliates is bound, or results or will result in the creation or imposition of any Lien (other than Liens permitted under the Indentures) upon any of its property or the property of any of its Affiliates. There is no provision of its Certificate of Incorporation or Memorandum of Association, or any Applicable Law, or any such indenture, mortgage, lease or other agreement or instrument which materially adversely affects its business, operations, affairs, condition, properties or assets. There is no provision of its charter or By-laws, or any Applicable Law, or any such indenture, mortgage, lease or other agreement or instrument which 25 materially adversely affects its ability to perform its obligations under this Agreement or any Transaction Document to which it is, or is to become, a party. (d) GOVERNMENTAL ACTIONS. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority (a "Governmental Action") is or will be required in connection with the execution, delivery or performance by it, or the consummation by it of the transactions contemplated by this Agreement or any Transaction Document to which it is, or is to become, a party, except such Governmental Actions as have been duly obtained, given or accomplished. (e) EXECUTION AND DELIVERY. This Agreement and the Transaction Documents to which it is a party have been duly executed and delivered by it, and this Agreement and each such Transaction Document is the legal, valid and binding obligation of it enforceable against it in accordance with its terms. (f) LITIGATION. There is no pending or, to its knowledge, threatened action or proceeding affecting the Issuer, Holdings, any Owner or any Subsidiary thereof before any court, Governmental Authority or arbitrator, as to which there is a reasonable possibility of an adverse determination that could affect the validity of this Agreement or any of the Transaction Documents, or materially and adversely affect any of the related transactions or the financial condition, business, properties, operations or prospects of the Issuer and its Subsidiaries taken as a whole. (g) OTHER REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Issuer, Holdings and the Owners in the Note Purchase Agreement will, when such document is executed and delivered, be true and correct. (h) TAXES. The Issuer, Holdings and each Owner and each respective Subsidiary thereof has filed all tax returns (Federal, state and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, other than such taxes that the Issuer, Holdings, such Owner or such respective Subsidiary is contesting in good faith by appropriate legal proceedings and for the payment of which adequate reserves have been provided. SECTION 11. COVENANTS. Each of the covenants set 26 forth in Articles 4 and 5 of each Indenture as in effect on the date hereof, including the related definitions, is hereby incorporated herein by reference, MUTATIS MUTANDIS. The Issuer agrees to comply with each such covenant for the benefit of the Funding Bank, the Administrating Bank and the Participating Banks as if set forth in full herein, and the Banks shall be entitled to enforce such covenants as if set forth in full herein. SECTION 12. GUARANTEES OF THE OWNERS. (a) GUARANTEES. (i) Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to the Administrating Bank, the Funding Bank, each Participating Bank and their respective successors and assigns (A) the full and punctual payment of principal of and interest on the reimbursement obligations under this Agreement when due, whether at maturity, by acceleration or otherwise, and all other monetary obligations of the Issuer and the Guarantors under this Agreement and (B) the full and punctual performance within applicable grace periods of all other obligations of the Issuer and the Guarantors under this Agreement (all the foregoing being hereinafter collectively called the "Obligations"). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Section 12 notwithstanding any extension or renewal of any Obligation. (ii) Each Guarantor waives presentation to, demand of, payment from and protest to the Issuer of any of the Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under this Agreement or the Obligations. The obligations of each Guarantor hereunder shall not be affected by (A) the failure of the Administrating Bank, the Funding Bank or any Participating Bank to assert any claim or demand or to enforce any right or remedy against the Issuer or any other Person under this Agreement, any Transaction Document or any other agreement or otherwise; (B) any extension or renewal of any thereof; (C) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement, any Transaction Document or any other agreement; (D) the release of any security held by the Administrating Bank, the Funding Bank or any Participating Bank for the Obligations; (E) the failure of the Administrating Bank, the Funding Bank or any Participating Bank to exercise any right or remedy against any other guarantor of the Obligations; or (F) any change in the ownership of such Guarantor. 27 (iii) Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by the Administrating Bank, the Funding Bank or any Participating Bank to any security held for payment of the Obligations. (iv) Except as expressly set forth in Sections 12(b) hereof, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of the Administrating Bank, the Funding Bank or any Participating Bank to assert any claim or demand or to enforce any remedy under this Agreement, any Transaction Document or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity. (v) Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by the Administrating Bank, the Funding Bank or any Participating Bank upon the bankruptcy or reorganization of the Issuer or otherwise. (vi) In furtherance of the foregoing and not in limitation of any other right which the Administrating Bank, the Funding Bank or any Participating Bank has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration or otherwise, or to perform or comply with any other Obligation, each Guarantor hereby promises to and will, upon receipt of written demand by the Administrating Bank, forthwith pay, or cause to be 28 paid, in cash, to the Administrating Bank, the Funding Bank and each Participating Bank, an amount equal to the sum of (i) the unpaid amount of such Obligations, (ii) accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Obligations of the Issuer or the Guarantors to the Administrating Bank, the Funding Bank and each Participating Bank. (vii) Each Guarantor agrees that, as between it, on the one hand, and the Administrating Bank, the Funding Bank or any Participating Bank, on the other hand, (A) the maturity of the Obligations Guaranteed hereby may be accelerated by terminating the Letter of Credit as provided in Section 14 hereof for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (B) in the event of any termination of the Letter of Credit as provided in Section 14 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. (viii) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Administrating Bank, the Funding Bank or any Participating Bank in enforcing any rights under this Section. (b) LIMITATION ON LIABILITY. Any term or provision of this Agreement to the contrary notwithstanding, the maximum aggregate amount of the Obligations guaranteed hereunder by any Owner shall not exceed the maximum amount that can be hereby guaranteed without rendering the guaranty under this Agreement, as it relates to such Owner, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (c) SUCCESSORS AND ASSIGNS. This Section 12 shall be binding upon each Guarantor and its successors and assigns and shall enure to the benefit of the successors and assigns of the Administrating Bank, the Funding Bank and each Participating Bank and, in the event of any transfer or assignment of rights by the Administrating Bank, the Funding Bank or any Participating Bank, the rights and privileges conferred upon that party in this Agreement and in the Transaction Documents shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Agreement. 29 (d) NO WAIVER. Neither a failure nor a delay on the part of any of the Administrating Bank, the Funding Bank or any Participating Bank in exercising any right, power or privilege under this Section 12 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Administrating Bank, the Funding Bank or any Participating Bank herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Section 12 at law, in equity, by statute or otherwise. (e) MODIFICATION. No modification, amendment or waiver of any provision of this Section 12, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrating Bank, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 13. REIMBURSEMENT EVENTS OF DEFAULT. The following events shall be "Reimbursement Events of Default" hereunder unless waived by the Required Banks pursuant to Section 14 hereof: (i) the Issuer shall (a) fail to pay when due any amount payable under Section 2(a) hereof, or (b) fail to pay any amount payable under Section 3 hereof within 5 Business Days after the same shall become due; or (ii) an "Event of Default" (as such term is defined in the First Priority Indenture or the Second Priority Indenture, as the case may be) shall have occurred and be continuing under the First Priority Indenture or the Second Priority Indenture; or (iii) the Issuer shall fail to make any payment in respect of the Notes, or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or (iv) the Issuer, Holdings or any Owner shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clauses (i), (ii) and (iii) above) for 30 days after 30 written notice thereof has been given to the Issuer by the Administrating Bank or any Participating Bank; or (v) any representation, warranty, certification or statement made by the Issuer, Holdings or any Owner in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect or misleading in any material respect when made; or (vi) any material provision of this Agreement shall at any time for any reason cease to be valid and binding upon the Issuer, Holdings or any Owner, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Issuer, Holdings, any Owner or any Governmental Authority, or the Issuer, Holdings or any Owner shall deny that it has any or further liability or obligation under this Agreement; or (vii) the Issuer, Holdings or any Owner shall fail to make any payment of any amount in respect of any Indebtedness, or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in such agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to enable the holder of such Indebtedness to accelerate the maturity of any Indebtedness if the total of all such Indebtedness which has been accelerated and any additional Indebtedness which has become due and not been paid shall exceed $5,000,000 or any Indebtedness the aggregate principal amount of which is greater than $5,000,000 shall be declared due and payable, or required to be prepaid prior to the stated maturity thereof; or (viii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Issuer, Holdings, any Owner or of a substantial part of its or their property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal 31 or state bankruptcy, insolvency, receivership or similar law or the applicable bankruptcy laws of any other jurisdiction, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Person, or for a substantial part of its property or assets, or (iii) the winding-up or liquidation of the Issuer, Holdings or any Owner; and such proceeding or petition shall continue undismissed for 60 days, or an order or decree approving or ordering any of the foregoing shall be entered; or (ix) the Issuer, Holdings or any Owner shall (A) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law or the applicable bankruptcy laws of any other jurisdiction, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (vii) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Person, or for a substantial part of its property or assets, (D) file an answer admitting the material allegations of a petition filed against it or them in any such proceeding, (E) make a general assignment for the benefit of creditors, (F) become unable, admit in writing its or their inability or fail generally to pay its or their debts as they become due or (G) take any action for the purpose of effecting any of the foregoing; or (x) any judgment or decree for the payment of money exceeding $5,000,000 shall be rendered against the Issuer, Holdings or any Owner and shall remain outstanding for a period of 60 days following the entry of such judgment or decree and shall not have been discharged, waived or stayed within ten days after written notice thereof has been given to the Issuer; or (xi) this Agreement or any Security Agreement shall for any reason cease to be, or be asserted by any of the Issuer, Holdings or any Owner not to be, a legal, valid and binding obligation of the Issuer, Holdings or the Owners, enforceable in accordance with its terms, or the security interest or lien purported to be created by any Security Agreement shall for any reason cease to be, or be asserted by the Issuer, 32 Holdings or any Owner not to be, a valid, first priority perfected security interest (subject to no liens, except Permitted Liens) in the Collateral as defined under each such agreement. If a Reimbursement Event of Default occurs and is continuing, the Required Banks may, in their sole discretion, by notice to the Issuer and the Collateral Agent cause the Funding Bank to terminate the Letter of Credit as provided therein. SECTION 14. AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision hereof (including, without limitation, the Letter of Credit) may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Issuer and the Required Banks; PROVIDED, HOWEVER, that no such agreement shall (i) change the Maximum Credit Amount, or extend or advance the maturity of the Letter of Credit or the dates for the reimbursement of drawings under the Letter of Credit or the payment of interest thereon or reduce the rate of interest on any unreimbursed drawings, (ii) change the Participation Percentage of any Participating Bank or the fees provided for in Section 3 hereof or (iii) amend or modify the provisions of this Section 14, Section 2 hereof, Section 6(d) hereof or Section 9 hereof, the proviso in Section 18 or the definition of "Required Banks", in each case without the prior written consent of each Participating Bank and the Funding Bank; PROVIDED, FURTHER that no such agreement shall (I) modify or otherwise affect the rights or duties of the Funding Bank hereunder, (II) amend or modify the provisions of Sections 5 hereof or (III) change the fees provided for in Section 3(a) hereof, without the written consent of the Funding Bank or amend, modify or otherwise affect the rights or duties of the Administrating Bank hereunder, without the written consent of the Administrating Bank; and PROVIDED, FURTHER that no such agreement shall amend or modify the provisions of Section 12 hereof without the written consent of each of the Owners. The Administrating Bank and each Bank shall be bound by any modification or amendment authorized by this Section 14, and any consent by any Participating Bank pursuant to this Section 14 shall bind any successor Participating Bank acquiring a participation from it whether or not such successor Participating Bank has received actual notice thereof. SECTION 15. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or other facsimile transmission) 33 and shall be given to such party, addressed to it, at its address or facsimile number set forth below the name of such party on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for that purpose by notice to the other parties. Each such notice, request or communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified above, (ii) if given by mail upon receipt but not later than 5 days after such communication is deposited in the mails with first-class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address for notices described above. SECTION 16. NO WAIVER; REMEDIES. No failure on the part of the Administrating Bank or any Bank to exercise, and no delay in exercising, any power or right hereunder for any period of time shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided to the Administrating Bank and the Banks are cumulative and not exclusive of any other rights or remedies which the Administrating Bank or any Bank may otherwise have. No waiver of any provision of this Agreement nor consent to any departure by the Issuer therefrom shall in any event be effective unless the same shall be authorized as provided in Section 14 above, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Issuer, Holdings or any Owner in any case shall entitle the Issuer, Holdings or any Owner to any other or further notice or demand in similar or other circumstances. SECTION 17. RIGHT OF SETOFF. (a) If a Reim- bursement Event of Default shall have occurred and be continuing, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of the Issuer, Holdings or any Owner against any of and all the obligations of the Issuer, Holdings or any Owner now and hereafter existing under this Agreement, irrespective of whether or not such Bank shall have made any demand under this Agreement and although such obligations may be unmatured. Each Bank agrees promptly to notify the Issuer after any such setoff and application made by such Bank, but the failure to give such notice shall not affect the validity of such setoff and 34 application. The rights of each Bank under this Section are in addition to other rights and remedies (including, without limitation, other rights of setoff) which such Bank may have. (b) Each Participating Bank agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against the Issuer, including, but not limited to, a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Participating Bank under any applicable bankruptcy, insolvency or other similar law or otherwise, obtain payment (voluntary or involuntary) in respect of amounts paid by it pursuant to Section 5(a) as a result of which the unreimbursed portion of Section 5(a) payments made by it shall be proportionately less (determined in accordance with each Participating Bank's Participation Percentage) than the unreimbursed portion of Section 5(a) payments made by any other Participating Bank, it shall be deemed to have simultaneously purchased from such other Participating Bank a participation in the unreimbursed portion of Section 5(a) payments made by such other Participating Bank, so that the aggregate unreimbursed portion of Section 5(a) payments made by it and participations in the unreimbursed portion of Section 5(a) payments made by each other Participating Bank and held by it shall be in the same proportion (determined in accordance with each Participating Bank's Participation percentage) to the aggregate unreimbursed portion of Section 5(a) payments made by all Participating Banks as the principal amount of the unreimbursed portion of Section 5(a) payments made by it prior to such exercise of banker's lien, setoff or counterclaim was to the unreimbursed portion of all Section 5(a) payments made by all Participating Banks prior to such exercise of banker's lien, setoff or counterclaim; PROVIDED, HOWEVER, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 17(b) and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Issuer expressly consents to the foregoing arrangements and agrees that any Participating Bank holding a participation in an unreimbursed portion of Section 5(a) payment deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by it to such Participating Bank as fully as if such Participating Bank held an unreimbursed portion of Section 5(a) payment in the amount of such 35 participation. SECTION 18. CONTINUING OBLIGATION. Except with respect to Sections 19, and 20, the obligations of the Issuer, Holdings and each of the Owners under this Agreement shall continue until the later of (i) the Termination Date of the Letter of Credit or (ii) the date upon which all amounts due and owing to the Administrating Bank and the Banks hereunder shall have been paid in full and shall (a) be binding upon the Issuer, Holdings and each of the Owners and their respective successors and assigns and (b) inure to the benefit of and be enforceable by the Banks and their successors, transferees and assigns; PROVIDED, HOWEVER, that the Issuer may not assign all or any part of this Agreement without the prior written consent of the Funding Bank and the Participating Banks. SECTION 19. COSTS, EXPENSES AND TAXES. The Issuer agrees to pay upon demand therefor, whether or not the transactions contemplated herein are consummated, all reasonable costs and expenses of the Administrating Bank in connection with the preparation, execution, delivery, filing and administration of this Agreement and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees, disbursements and other charges of special counsel for the Administrating Bank and the Funding Bank with respect thereto and with respect to advising the Administrating Bank and the Funding Bank as to their rights and responsibilities under this Agreement and to pay all reasonable counsel fees and expenses that may be incurred by the Administrating Bank and each of the Banks in connection with any Reimbursement Event of Default or the enforcement of this Agreement and such other documents which may be delivered in connection with this Agreement or, in the case of Administrative Bank and the Funding Bank, any waiver or amendment of this Agreement. In addition, the Issuer agrees to pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement and such other documents and agree to hold the Administrating Bank and the Banks harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. Without prejudice to the survival of any other obligation of the Issuer hereunder, the obligations of the Issuer contained in this Section 19 shall survive the payment in full of amounts payable by the Issuer under Section 2(a) hereof and the termination of the Letter of Credit and this Agreement. 36 SECTION 20. INDEMNIFICATION. The Issuer hereby agrees to indemnify and hold harmless the Administrating Bank and each Bank and their respective officers, directors, affiliates, employees and agents (each, an "indemnitee") from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever which an indemnitee may incur (or which may be claimed against an indemnitee by any Person or entity whatsoever) (i) by reason of any inaccuracy in any material respect, or untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any offering document distributed by or on behalf of the Issuer in connection with the issuance of the Notes or in any supplement or amendment thereto, or the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they are or were made, not misleading; (ii) by reason of or in connection with the execution, delivery and performance of this Agreement and the Transaction Documents; or (iii) by reason of or in connection with the execution and delivery or transfer of, or payment or failure to make lawful payment under, the Letter of Credit; PROVIDED that the Issuer shall not be required to indemnify an indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent determined by the final, non-appealable judgment of a court of competent jurisdiction to have resulted from the wilful misconduct or gross negligence of such indemnitee. Without prejudice to the survival of any other obligation of the Issuer hereunder, the indemnities and obligations of the Issuer contained in this Section 20 shall survive the payment in full of amounts payable by the Issuer under Section 2(a) hereof and the termination of the Letter of Credit and this Agreement or the substitution of any of the Banks pursuant to Sections 4(e) or (f) hereof. SECTION 21. SALES OF PARTICIPATIONS. (a) With- out the consent of the Funding Bank, the Administrating Bank, the Issuer, Holdings, any Owner or any other Participating Bank, each Participating Bank may grant participations in its participation in the Letter of Credit (each Person to which a participation is granted being called a "Participant") and in such event such Participating Bank will, in its own name and as agent for any such Participant, enforce all rights and interests of any Participant under this Agreement, and accept all performances required of the Issuer under this Agreement; PROVIDED, HOWEVER, that such Participating Bank shall remain entitled to exercise any right, remedy and power hereunder (other than with respect to (i) the Maximum Credit Amount or 37 the effective Participation Percentage of such Participant, (ii) the maturity of the Letter of Credit or the dates for the reimbursement of drawings under the Letter of Credit or the payment of interest thereon, (iii) the rate of interest on unreimbursed drawings, or (iv) the fees to be paid hereunder), and shall remain fully obligated to the Funding Bank as provided herein. If, at the time of a grant of a participation pursuant to this Section 21(a), such grant would result in a claim for compensation pursuant to Sections 4(a), (b), or (c) hereof materially greater than that to which the Participating Bank granting such participation is entitled, such grant shall be subject to the consent of the Issuer (which consent shall not be unreasonably withheld). (b) With the prior written consent of the Administrating Bank and the Funding Bank (which consent shall not be unreasonably withheld), any Participating Bank may cause all or a portion of its obligations hereunder to be assumed by another financial institution, and upon the execution of an Assignment and Acceptance, such financial institution shall become a "Participating Bank" for purposes of this Agreement and shall be entitled to the rights, privileges and obligations of a Participating Bank hereunder and such transferring Bank shall be released from its obligations with respect to the portion of its participation so assumed. SECTION 22. ADMINISTRATING BANK. (a) In order to expedite the various transactions contemplated by this Agreement, Credit Suisse First Boston, acting through its London branch, is hereby appointed to act as Administrating Bank on behalf of the Participating Banks. Each of the Participating Banks hereby authorizes and directs the Administrating Bank to take such action on behalf of such Participating Bank under the terms and provisions of this Agreement and to exercise such powers hereunder as are specifically delegated to or required of the Administrating Bank by the terms and provisions hereof, together with such powers as are reasonably incidental thereto. The Administrating Bank is hereby expressly authorized on behalf of the Participating Banks, without hereby limiting any implied authority, (i) to receive on behalf of each of the Participating Banks any payment of fees due to the Participating Banks hereunder and all other amounts accrued hereunder paid to the Administrating Bank for the accounts of the Participating Banks, and promptly to distribute to each Participating Bank its proper share of all payments so received; (ii) to give notice within a reasonable time on behalf of each of the Participating Banks to the Issuer of 38 any Reimbursement Event of Default specified in this Agreement of which the Administrating Bank has actual knowledge acquired in connection with its capacity as Administrating Bank hereunder; and (iii) to distribute to the Funding Bank and each Participating Bank copies of all notices, agreements and other material as provided for in this Agreement as received by the Administrating Bank. (b) Neither the Administrating Bank nor any of its directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them hereunder except for its or his own gross negligence or wilful misconduct, nor be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith nor be required to ascertain or to make any inquiry concerning the performance or observance by the Issuer, Holdings or the Owners of any of the terms, conditions, covenants or agreements of this Agreement. The Administrating Bank shall not be responsible to the Participating Banks for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement, the Letter of Credit or any other instrument to which reference is made herein. The Administrating Bank shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Banks, and, except as otherwise specifically provided herein, such instructions and any action taken or failure to act pursuant thereto shall be binding on all the Participating Banks. The Administrating Bank shall, in the absence of knowledge to the contrary, be entitled to rely on any paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Neither the Administrating Bank nor any of its directors, officers, employees or agents shall have any responsibility to the Issuer or the Funding Bank on account of the failure or delay in performance or breach by any Participating Bank or the Funding Bank of any of its obligations hereunder or to any Participating Bank on account of the failure of or delay in performance or breach by any other Participating Bank, the Funding Bank or the Issuer of any of their respective obligations hereunder or in connection herewith. The Administrating Bank may execute any and all duties hereunder by or through agents or employees and shall be entitled to advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. (c) With respect to the Participation Percentage 39 of it hereunder, the Administrating Bank, in its individual capacity and not as the Administrating Bank, shall have the same rights and powers hereunder and under any other agree ment executed in connection herewith as any other Partici pating Bank and may exercise the same as though it were not the Administrating Bank, and the Administrating Bank and its affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Issuer, Holdings or the Owners, any Subsidiary or any other affiliate thereof as if it were not the Administrating Bank. (d) Each Participating Bank agrees (i) to reim burse the Administrating Bank in the amount of such Partici pating Bank's pro rata share (determined in accordance with such Participating Bank's Participation Percentage) of any expenses incurred for the benefit of the Participating Banks by the Administrating Bank, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Participating Banks, not reim bursed by the Issuer and (ii) to indemnify and hold harmless the Administrating Bank and any of its directors, officers, employees or agents, on demand, in the amount of its pro rata share (determined as aforesaid), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Administrating Bank or against any of its directors, officers, employees or agents in any way relating to or arising out of this Agreement or any action taken or omitted by it or any of them under this Agreement, to the extent not reimbursed by the Issuer; PROVIDED that no Participating Bank shall be liable to the Administrating Bank for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements determined by the final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or wilful misconduct of the Administrating Bank or any of its directors, officers, employees or agents. (e) Each Participating Bank acknowledges that it has, independently and without reliance upon the Adminis trating Bank or any other Participating Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Participating Bank also acknowledges that it will, independently and without reliance upon the Admin istrating Bank or any other Participating Bank and based on such documents and information as it shall deem appropriate 40 at the time, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder. SECTION 23. TERMINATION BY THE ISSUER. The Issuer may, upon 30 days' written notice to the Administrating Bank, terminate this Agreement; PROVIDED, HOWEVER, that any such proposed termination shall not be effective until (i) the Collateral Agent shall have delivered its Letter of Credit to the Funding Bank for cancelation together with a duly executed request for cancelation in the form of Exhibit 7 to Exhibit A hereto, and (ii) the Issuer has paid all fees, expenses and interest accrued hereunder. SECTION 24. SEVERABILITY. Any provision of this Agreement which is prohibited, unenforceable or not author ized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 25. GOVERNING LAW. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. SECTION 26. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of the Issuer, Holdings and each Owner hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement 41 shall affect any right that the Administrating Bank, the Funding Bank or any Participating Bank may otherwise have to bring any action or proceeding relating to this Agreement against the Issuer, Holdings or any Owner or their respective properties in the courts of any jurisdiction. (b) Each of the Issuer, Holdings and each Owner hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 15 at the addresses set forth in paragraph (d) of this Section. Nothing in this Agreement will affect the right of any party to this Agreement to service process in any other manner permitted by law. (d) (i) The Issuer, Holdings and each of the Owners hereby irrevocably designate and appoint Cambridge Partners, L.L.C. and any successor entity, having an address at 535 Madison Avenue, 39th Floor, New York, New York 10022, as its authorized agent upon which process may be served in any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section. The Company, Holdings and each of the Owners further agree to take any and all action, including the execution and filing of any and all documents and instruments, as may be necessary to continue such designation and appointment of such agent in full force and effect for so long as this Agreement shall be in full force and effect. If such agent shall cease to so act, each of the Issuer, Holdings and each Owner shall immediately designate and appoint another such agent satisfactory to the Administrating Bank and shall promptly deliver to the Administrating Bank evidence in writing of such other agent's acceptance of such appointment. (ii) The Administrating Bank and the Funding Bank hereby irrevocably designate and appoint the New York branch of Credit Suisse First Boston, having an address at 11 Madison Avenue, New York, New York 10010, as its authorized agent upon which process may be served in any suit, action or proceeding arising out of or relating to this Agreement 42 in any court referred to in paragraph (a) of this Section. The Administrating Bank and the Funding Bank agree to take any and all action, including the execution and filing of any and all documents and instruments, as may be necessary to continue such designation and appointment in full force and effect for so long as this Agreement shall be in full force and effect. SECTION 27. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 28. HEADINGS. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. SECTION 29. COUNTERPARTS. This Agreement may be signed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute, but one contract, and shall become effective when it shall have been executed by all parties hereto and when the Administrating Bank shall have received copies hereof which, when taken together, bear signatures of all parties hereto. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. NAVIGATOR GAS TRANSPORT PLC, as Issuer by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 NAVIGATOR HOLDINGS PLC by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 43 NAVIGATOR GAS (IOM I-A) LIMITED, as Guarantor by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 NAVIGATOR GAS (IOM I-B) LIMITED, as Guarantor by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 NAVIGATOR GAS (IOM I-C) LIMITED, as Guarantor by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 44 NAVIGATOR GAS (IOM I-D) LIMITED, as Guarantor by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 NAVIGATOR GAS (IOM I-E) LIMITED, as Guarantor by /s/ Richard Klapow ------------------------------- Name: Richard Klapow Title: Director Address for Notice: 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Facsimile: 44-1624-638-333 CREDIT SUISSE FIRST BOSTON, London Branch, as Funding Bank and Administrating Bank by /s/ Malcolm Price ------------------------------- Name: Malcolm Price Title: Managing Director Address for Notice: Five Cabot Square London E14 4QR ENGLAND Facsimile: 011-44-171-888-8896 46 Accepted this 7th day of August, 1997 UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by /s/ Gerard F. Ganey ----------------------- Name: Gerard F. Ganey Title: Senior Vice President EXHIBIT A IRREVOCABLE STANDBY LETTER OF CREDIT No. [ ] August 7, 1997 United States Trust Company of New York, as Collateral Agent 114 West 47th Street New York, NY 10036-1532 (the "Collateral Agent") Attn: Corporate Trust Administration Ladies and Gentlemen: 1. We hereby establish, at the request of Navigator Gas Transport PLC (the "Issuer"), in your favor, our Irrevocable Standby Letter of Credit No. [ ] (the "Letter of Credit"), in an amount not to exceed $50,000,000 (the "Maximum Credit Amount"), effective immediately and expiring on the Termination Date (such term and each other capitalized term used herein and in Schedules II and III and Exhibits 1, 2, 3, 4, 5, 6, and 7 hereto shall have the meanings set forth in Schedule I hereto). Of the Maximum Credit Amount, (a) an amount not to exceed $45,500,000 (such amount, as reduced from time to time in accordance with the terms hereof, being called the "Interest Portion") may be drawn on the terms set forth herein to pay (i) accrued interest on the Notes at the actual rate of interest borne by the Notes (less any Additional Interest), whether on a scheduled interest payment date or upon the maturity, redemption or acceleration of the Notes, (ii) unpaid principal and accrued and unpaid interest on Interest Draws under this Letter of Credit and (iii) fees due under the Reimbursement Agreement and (b) an amount not to exceed $4,500,000 (such amount, as reduced from time to time in accordance with the terms hereof, being called the "Working Capital Portion") may be drawn on the terms set forth herein to pay (i) certain working capital expenses of the Owners, (ii) Additional Interest and (iii) unpaid principal and accrued and unpaid interest on Working Capital Draws under this Letter of Credit. This Letter of Credit is issued in connection with the issuance by the Issuer of the Notes pursuant to the First Priority Indenture and the Second Priority Indenture and is being issued pursuant to the Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 among the Issuer, Credit Suisse First Boston, acting 2 through its London Branch, as funding bank and administrating bank, the participating banks from time to time party thereto, Holdings and the Owners (as the same may be amended, supplemented or modified from time to time, the "Reimbursement Agreement"). This Letter of Credit is effective immediately and will expire on the Termination Date. 2. The Maximum Available Credit Amount may be reduced at any time and from time to time upon receipt by us at the address for presentation of documents set forth below of a copy of the instrument effecting such reduction, signed by you in the form of Exhibit 1 hereto (a "Reduction Certificate"). Upon receipt of a Reduction Certificate, the Maximum Available Credit Amount shall be automatically and permanently reduced by the amount specified as the Reduction Amount in such certificate (the "Reduction Amount") and the Maximum Drawing Amounts shall be automatically and permanently reduced as provided in Section 4(e) hereof. 3. We hereby irrevocably authorize you to draw on us, in accordance with the terms and conditions hereinafter set forth, an amount not in excess of the lesser of (x) the Maximum Available Credit Amount applicable to the date of such drawing (the "Date of Drawing") and (y)(i) in the case of an Interest Draw, the Maximum Drawing Amount of the Interest portion applicable to the Date of Drawing and (ii) in the case of a Working Capital Draw, the Maximum Drawing Amount of the Working Capital Portion applicable to the Date of Drawing, in each case as modified in accordance with the next paragraph; PROVIDED, HOWEVER, that at no time shall we be required to pay any drawing under this Letter of Credit in excess of the lesser of the Maximum Available Credit Amount and the Maximum Drawing Amount, in each case as in effect on the applicable Date of Drawing. Multiple drawings may be made hereunder, provided, that each drawing honored by us hereunder shall PRO TANTO reduce both (a) the Maximum Available Credit Amount and (b) the Maximum Drawing Amount of either (i) the Working Capital Portion or (ii) the Interest Portion, as the case may be, available under this Letter of Credit. Notwithstanding any other provision of this Letter of Credit, on the date of each reduction, if any, (a) in the outstanding principal amount of the Notes or (b) in the stated interest rate of the Notes (other than any reduction with respect to Additional Interest) the Maximum Drawing Amounts of the Interest Portion shall be automatically reduced by such amounts as shall be necessary such that the Interest Portion shall not exceed, at any date of determination, the Pro Forma Interest Accrual. 3 4. The Maximum Drawing Amounts and the Maximum Available Credit Amount shall be modified from time to time as follows: (a) upon payment by us of each Working Capital Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Working Capital Portion applicable to each Date of Drawing subsequent to such payment shall be automatically reduced by an amount equal to the amount of the drawing so paid; (b) upon payment by us of each Interest Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Interest Portion applicable to each Date of Drawing subsequent to such payment shall be automatically reduced by an amount equal to the amount of the drawing so paid; (c) upon the application by us of amounts paid by the Issuer pursuant to Section 2(a) of the Reimbursement Agreement to reimburse any Interest Draw or Working Capital Draw hereunder (as such application is allocated in accordance with Section 2(b) of the Reimbursement Agreement), each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Portion to which such reimbursement is applied applicable to each Date of Drawing subsequent to such application shall be automatically increased by the amount of such payment(s) allocated as a reimbursement of drawings hereunder; PROVIDED, however, that the Maximum Available Credit Amount shall never exceed the Maximum Credit Amount; (d) upon the payment by us of any Final Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount applicable to each Date of Drawing subsequent to such payment shall be automatically reduced to zero; and (e) if the Maximum Available Credit Amount is reduced pursuant to a Reduction Certificate, a corresponding reduction shall be made (effective automatically upon receipt by us of a Reduction Certificate) to the Maximum Drawing Amounts shown in Schedule II (as theretofore reduced pursuant to clause (b) above and, if applicable, reinstated pursuant to clause (c) above) pro rata in accordance with the proportion that the Reduction Amount bears to the 4 Maximum Available Credit Amount prior to such reduction; PROVIDED that such adjustments shall in no event cause the Maximum Drawing Amount to exceed the Maximum Available Credit Amount. 5. Upon return of this Letter of Credit together with a notice in the form of Exhibit 1 hereto, we will promptly initial and attach to this Letter of Credit a revised Schedule II reflecting the adjustments contained in such notice and return this Letter of Credit to you with such revised Schedule attached. 6. Upon the application by us of amounts paid by the Issuer pursuant to Section 2(a) of the Reimbursement Agreement to reimburse any Interest Draw or Working Capital Draw hereunder, we will give you prompt (and in any event within three Business Days of such application) written notice of such application and the amount thereof. Such notice shall be given in accordance with the provisions set forth in the eighth paragraph of this Letter of Credit. 7. Funds under this Letter of Credit are available to you on or prior to the Termination Date either (a) against presentation of (i) your draft in the form of Exhibit 2 attached hereto and (ii)(A) a completed certificate signed by you in the form of Exhibit 3 attached hereto (an "Interest Draw") or (B) a completed certificate signed by you in the form of Exhibit 4 attached hereto (a "Working Capital Draw") or (b) against presentation of (i) your draft in the form of Exhibit 2 attached hereto and (ii) a completed certificate signed by you in the form of Exhibit 5 attached hereto (a "Final Draw"). Each of an Interest Draw, a Working Capital Draw and a Final Draw are sometimes referred to herein as a "Draw". Each such draft and certificate shall be dated the date of presentation and shall be presented at our office located at Five Cabot Square, London, E14 4QR, England, Attention: Trade Finance Operations (or at any other office in London, England which may be designated by us by written notice (given in the manner set forth in the next paragraph) delivered to you at least 15 days prior to the applicable Date of Drawing). We agree that, so long as this Letter of Credit is in effect, we will maintain an office in London, England where such presentation may be made. If we receive such draft and certificate at such office, all in strict conformity with the terms and conditions of this 5 Letter of Credit, prior to 10:00 a.m. (London time) on any Business Day, we will honor the draft in immediately available funds not later than 4:00 p.m. (London time) on the same Business Day. If we receive such draft and certificate at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or after 10:00 a.m. (London time) on any Business Day, we will honor the draft in immediately available funds not later than 4:00 p.m. (London time) on the next Business Day. Payment under this Letter of Credit shall be made by wire transfer of immediately available funds to you at your account no. 920-1-073195 at The Chase Manhattan Bank, 270 Park Avenue, New York, New York, ABA # 02100021, Reference: U.S Trust Co. NY, for further credit to account no. 04741200 re: Navigator Gas Transport Ltr. Cr. If requested in writing by you, payment under this Letter of Credit may be made by wire transfer of immediately available funds to a different account with any bank. Upon receipt of a draft and certificate which are not in strict conformity with the terms and conditions of this Letter of Credit, we will promptly (and in any event within three Business Days of such receipt) notify you of such nonconformity and the reason therefor; PROVIDED that our failure to so notify you of such nonconformity or the reason therefor shall not amend, modify, extend or otherwise affect your rights hereunder and shall not create any additional rights hereunder; PROVIDED FURTHER that, notwithstanding the generality of the foregoing, any such failure shall not have the effect of extending the time during which you may draw hereunder or converting such nonconforming draft and certificate into a draft and certificate in strict conformity with the terms and conditions of this Letter of Credit. This Letter of Credit shall automatically terminate on the Termination Date. 8. Notwithstanding any other provision of this Letter of Credit, we shall have the right, upon the occurrence of any of the events listed in Schedule III hereto, to terminate this Letter of Credit by delivering to you a written notice indicating the date of such termination (the "Date of Early Termination"); PROVIDED that on or before the Date of Early Termination you will have the right to draw once as a Final Draw an amount not in excess of the lesser of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Interest Portion, in each case as in effect on such date in accordance with the procedures described herein; PROVIDED FURTHER that upon delivery of such written notice to you indicating the Date of Early Termination, your right to make an Interest Draw or a Working Capital Draw hereunder shall automatically terminate. The written notice referred to in the preceding sentence shall be given by facsimile transmission addressed to you at United States Trust Company of New York, 114 West 47th Street, New York, New York 10036-1532, Facsimile: (212) 852-1626, Attention: Corporate Trust Administration, Telephone: (212) 852-1676 (or to such other address or facsimile number designated by you by written 6 notice delivered to us at least 15 days prior to the notice of early termination) and shall be effective upon receipt of the appropriate confirmation by you of your receipt of the facsimile transmission or, if no such confirmation is given, the end of the Business Day on which actual transmission is made to the address above. We will also forward copies of such notice by overnight delivery service (with a request to such delivery service that they obtain a receipt from such addressee (to the extent that such a receipt service is then available, it being understood that the failure of such delivery service to actually obtain such a receipt shall not be the responsibility of the Funding Bank and the Funding Bank shall bear no liability for such failure)) and registered mail (return receipt requested) to the address set forth above. The Date of Early Termination specified in such written notice shall be not earlier than five days after such notice is effective, or, if the fifth day is not a Business Day, the next following Business Day. You have no obligation upon the receipt of such written notice indicating the Date of Early Termination to investigate or otherwise question whether any of the events specified in Schedule III has occurred and the fact that such an event shall not have occurred shall not in any way affect your right to draw hereunder upon the receipt of such written notice. 9. Except as set forth below, this Letter of Credit shall be governed by the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or by subsequent revisions thereto dictated by members of the International Chamber of Commerce and, as to matters not covered therein, be governed by the laws of the State of New York, including without limitation Article 5 of the Uniform Commercial Code as in effect in such State. Unless you are otherwise notified in writing, communications to us with respect to this Letter of Credit shall be in writing and shall be addressed to us at Five Cabot Square, London, E14 4QR, England, Facsimile: 011-44-171-888-8896 Attention: Trade Finance Operations, and shall specifically refer to the number of this Letter of Credit. 10. Notwithstanding Article 48 of the Uniform Customs and Practice for Documentary Credits referred to above, this Letter of Credit may be transferred and assigned in its entirety more than once. Upon receipt by us at the address for presentation of documents set forth above of a copy of the instrument effecting such transfer and assignment, signed by you and by the transferee, in the form of Exhibit 6 hereto then, in such case, we will, upon 7 surrender of this Letter of Credit, issue an irrevocable standby letter of credit in the name of the transferee and providing for notices to be sent to the transferee at the address set forth therein and in all other respects identical to this Letter of Credit and the transferee, instead of the transferor, shall, without necessity of further act, be entitled to all the benefits of, and rights under, this Letter of Credit in the transferor's place. 11. Any drawing under this Letter of Credit will be paid from our general funds and not directly or indirectly from funds or collateral deposited with or for our account by the Issuer, Holdings or any of the Owners, or pledged with or for our account by the Issuer, Holdings or any of the Owners and we will seek reimbursement for payments made pursuant to a drawing under this Letter of Credit only after such payments have been made. 12. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except only Schedules I (including the definitions incorporated by reference therein), II and III and Exhibits 1, 2, 3, 4, 5, 6 and 7 hereto and the notices referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except as set forth above. Very truly yours, CREDIT SUISSE FIRST BOSTON, London Branch by_____________________________ Name: Title: by_____________________________ Name: Title: EXHIBIT 1 to Exhibit A [Date] Credit Suisse First Boston London Branch Five Cabot Square London E14 4QR ENGLAND Attention: Ladies and Gentlemen: Reference is made to that certain Irrevocable Standby Letter of Credit bearing Letter of Credit No. dated August 7, 1997 (the "Letter of Credit"), which has been established by you in favor of United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"). The undersigned, a duly authorized representative of the Collateral Agent, hereby certifies that $ in aggregate principal amount of [First Priority][Second Priority] Notes have been redeemed, repurchased or defeased pursuant to the terms of the [First Priority][Second Priority] Indenture and as a result the Maximum Available Credit Amount should be reduced by $ (the "Reduction Amount") and the Maximum Drawing Amounts should be reduced (and the amounts shown on Schedule II to the Letter of Credit should be modified) on a PRO RATA basis in accordance with the provisions of clause (e) of the fourth paragraph of the Letter of Credit, to the amounts shown in Appendix A hereto. The Letter of Credit is returned herewith and we request that you initial and return the Letter of Credit with the revised Schedule II attached. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent by_____________________________ [Name and Title of Authorized Representative of Collateral Agent] EXHIBIT 2 to Exhibit A DRAFT [Date] On [Business Day of presentation if presented before [10:00 a.m.] (London time); next Business Day if presented at or after 10:00 a.m.] Pay To [Name of beneficiary] U.S. $_______________ [Insert wire instructions](1) FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF LETTER OF CREDIT No._______________ To: Credit Suisse First Boston London Branch Five Cabot Square London E14 4QR England UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by_______________________________ [Name and Title of Authorized Representative of Collateral Agent] - -------- (1) Draws made to pay outstanding principal and interest on Draws or fees owing under the Reimbursement Agreement shall be credited by the Funding Bank to the payment of such principal and interest and fees by book entry. EXHIBIT 3 to Exhibit A CERTIFICATE FOR A PARTIAL INTEREST DRAW The undersigned, a duly authorized representative of United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"), as beneficiary under that certain Irrevocable Standby Letter of Credit No. ________ dated August 7, 1997 (the "Letter of Credit"), established by Credit Suisse First Boston, London Branch (the "Funding Bank"), and issued pursuant to that certain Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 (as the same may be amended, modified or supplemented from time to time, the "Reimbursement Agreement"), among the Issuer, Holdings, the Owners, the Funding Bank and the banks named therein as participating banks, hereby certifies as follows: [Select Appropriate Alternative] A. PAYMENT OF INTEREST ON THE FIRST PRIORITY NOTES 1. The Collateral Agent is the Trustee under the First Priority Indenture. 2. Interest on the First Priority Notes in the aggregate amount of $_______ is due and payable on the Interest Payment Date that will occur on ____________, 19__ (which is not more than three Business Days after the date hereof). $_____ of this amount constitutes Additional Interest that cannot be paid with proceeds of an Interest Draw. 3. $__________ from the Revenue Account will be applied to pay interest on the First Priority Notes on the Interest Payment Date. There are no other funds available in the Revenue Account for payment of interest. 4. The Collateral Agent requests an Interest Draw in the amount of the accompanying draft to pay a First Priority Note Interest Shortfall of $_______ that is not attributable to Additional Interest. B. PAYMENT OF INTEREST ON THE SECOND PRIORITY NOTES 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement and has been directed by the Trustee under the Second Priority Indenture to request this Interest Draw. 2 2. Interest on the Second Priority Notes in the aggregate amount of $_______ is due and payable on the Interest Payment Date that will occur on ________, 19__ (which is not more than three Business Days after the date hereof). $_______ of this amount constitutes Additional Interest that cannot be paid with the proceeds of an Interest Draw. 3. $__________ will be applied from the Revenue Account to pay interest on the Second Priority Notes on the Interest Payment Date. There are no other funds available in the Revenue Account for the payment of interest. 4. The Second Priority Trustee has certified that the Issuer has, on or prior to the date hereof, issued additional Second Priority Notes in an aggregate principal amount of $20,900,000 to pay interest on the Second Priority Notes. 5. The Collateral Agent requests an Interest Draw in the amount of the accompanying draft to pay a Second Priority Note Interest Shortfall of $________ that is not attributable to Additional Interest. C. PAYMENT OF PRINCIPAL AND INTEREST ON INTEREST DRAWS OWING UNDER THE REIMBURSEMENT AGREEMENT 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement. 2. There are currently outstanding Interest Draws and accrued interest thereon in the amount of $__________ that have not been repaid within 35 days from the date of such Draw. 3. $_________ from the Revenue Account was applied to repay outstanding Interest Draws and interest accrued thereon on the first Business Day of this calendar month. There are no other funds available in the Revenue Account for the repayment of Interest Draws and interest accrued thereon. 4. The Collateral Agent requests an Interest Draw in the amount of the accompanying draft to repay the outstanding Interest Draws and accrued interest thereon. 3 D. PAYMENT OF FEES OWING UNDER THE REIMBURSEMENT AGREEMENT 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement. 2. There are currently outstanding fees in the amount of $________ that have not been paid in accordance with the terms of the Reimbursement Agreement. 3. $ from the Revenue Account was applied to pay outstanding fees under the Reimbursement Agreement on the first Business Day of this calendar month. There are no other funds available in the Revenue Account for the payment of fees under the Reimbursement Agreement. 4. The Collateral Agent requests an Interest Draw in the amount of the accompanying draft to pay the fees due and payable under the Reimbursement Agreement. [THE FOLLOWING STATEMENTS SHOULD BE INCLUDED IN ALL CERTIFICATES FOR INTEREST DRAWS] __. One or more Vessels has been Delivered to the Owners on or prior to the date hereof and the Collateral Agent is entitled to make an Interest Draw under the Letter of Credit pursuant to the terms of the Intercreditor Agreement, the First Priority Indenture and the Second Priority Indenture. __. The amount of this Interest Draw was computed in accordance with the terms and conditions of the Notes and the [First][Second] Priority Indenture and is demanded in accordance with Section ___ of the [First][Second] Priority Indenture. __. Upon receipt by the Collateral Agent of the amount demanded hereby, (a) the Collateral Agent will apply the same directly to the payment when due of the appropriate amounts owing [on account of interest on the Notes pursuant to the [First][Second] Priority Indenture] [under the Reimbursement Agreement], (b) no portion of said amount shall be applied by the Collateral Agent for any other purpose, and (c) no portion of said amount shall be commingled with other funds held by the Collateral Agent. __. The Collateral Agent has not heretofore made a Final Draw under the Letter of Credit. The 4 Collateral Agent has not heretofore received notice of Date of Early Termination. __. The amount of the accompanying draft does not exceed the lesser of (i) the Maximum Available Credit Amount on the date hereof, as determined in accordance with the terms of the Letter of Credit, and (ii) the Maximum Drawing Amount applicable to the Interest Portion available under the Letter of Credit on the date hereof, as determined in accordance with the terms of the Letter of Credit. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of , 19 . UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by___________________________ [Name and Title of Authorized Representative of Collateral Agent] EXHIBIT 4 to Exhibit A CERTIFICATE FOR A PARTIAL WORKING CAPITAL DRAW The undersigned, a duly authorized representative of United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"), as beneficiary under that certain Irrevocable Standby Letter of Credit No. dated August 7, 1997 (the "Letter of Credit"), established by Credit Suisse First Boston, London Branch (the "Funding Bank"), and issued pursuant to that certain Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 (as the same may be amended, supplemented or modified from time to time, the "Reimbursement Agreement"), among the Issuer, Holdings, the Owners, the Funding Bank and the banks named therein as participating banks, hereby certifies as follows: [Select Appropriate Alternative] A. PAYMENT OF WORKING CAPITAL EXPENSES 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement. 2. The Collateral Agent has received written notice from the Manager (as such term is defined in First Priority Indenture) that there are $________ of actual operating expenses for which the Manager has received an invoice that have not been paid from funds available in the Operating Account. 3. There are no other funds available in the Operating Account or the Revenue Account for payment of the operating expenses. 4. The Collateral Agent requests a Working Capital Draw in the amount of the accompanying draft to pay such operating expenses. B. PAYMENT OF PRINCIPAL AND INTEREST ON WORKING CAPITAL DRAWS OWING UNDER THE REIMBURSEMENT AGREEMENT 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement. 2. There are currently outstanding Working Capital Draws and accrued interest thereon in the amount of $__________ that have not been repaid within 35 days from the date of such Draw. 3. $______ from the Revenue Account was applied to repay outstanding Working Capital Draws on the first 2 Business Day of this calendar month. There are no other funds available in the Revenue Account for the repayment of Working Capital Draws and interest accrued thereon. 4. The Collateral Agent requests a Working Capital Draw in the amount of the accompanying draft to repay the outstanding Working Capital Draws and accrued interest thereon. C. PAYMENT OF ADDITIONAL INTEREST 1. The Collateral Agent is the Collateral Agent under the Intercreditor Agreement and the Trustee under the First Priority Indenture. 2. Additional Interest in the amount of $________ on the First Priority Notes and $_______ on the Second Priority Notes is due and payable on the Interest Payment Date that will occur on ___________, 19__ (which is not more than three Business Days after the date hereof). 3. $_______ from the Capitalized Interest Account will be applied to pay the Additional Interest on the First Priority Notes and the Second Priority Notes on the Interest Payment Date. There are no other funds available in the Capitalized Interest Account for the payment of Additional Interest. 4. The Trustee under the Second Priority Indenture has directed the Collateral Agent to request this Working Capital Draw with respect to Additional Interest due on the Second Priority Notes. 5. The Collateral Agent requests a Working Capital Draw in the amount of the accompanying draft to pay Additional Interest due on the First Priority Notes and the Second Priority Notes. [THE FOLLOWING STATEMENTS SHOULD BE INCLUDED IN ALL CERTIFICATES FOR WORKING CAPITAL DRAWS] __. The Collateral Agent is entitled to make a Working Capital Draw under the Letter of Credit pursuant to the terms of the Intercreditor Agreement, the First Priority Indenture and the Second Priority Indenture because [the Collateral Agent has received an officer's certificate from the Issuer certifying that it expects the Delivery Date of the first Vessel to occur within ninety days of the date of such officer's 3 certificate] [the Delivery Date for one or more Vessels has occurred on or prior to the date hereof]. __. The amount of this Working Capital Draw was computed in accordance with the terms and conditions of the Notes and the [First] [Second] Priority Indenture and is demanded in accordance with Section of the [First Priority] [Second Priority] Indenture. __. This Working Capital Draw is being made with respect to the Vessel identified as . __. Upon receipt by the Collateral Agent of the amount demanded hereby, (a) the Collateral Agent will [apply the same directly to the payment when due of the appropriate amount of Additional Interest pursuant to the [First] [Second] Priority Indenture][deposit the same in the Operating Account] [apply the same directly to payment when due of the appropriate amounts owing under the Reimbursement Agreement], (b) no portion of said amount shall be applied by the Collateral Agent for any other purpose, and (c) no portion of said amount shall be commingled with other funds held by the Collateral Agent. __. The Collateral Agent has not heretofore made a Final Draw under the Letter of Credit. The Collateral Agent has not heretofore received notice of Date of Early Termination. __. The amount of the accompanying draft does not exceed the lesser of (i) the Maximum Available Credit Amount on the date hereof, as determined in accordance with the terms of the Letter of Credit, and (ii) the Maximum Drawing Amount applicable to the Working Capital Portion available under the Letter of Credit on the date hereof, as determined in accordance with the terms of the Letter of Credit. 4 Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of , 19 . UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by____________________________ [Name and Title of Authorized Representative of Collateral Agent] EXHIBIT 5 to Exhibit A CERTIFICATE FOR A FINAL DRAW The undersigned, a duly authorized representative of United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"), as beneficiary under that certain Irrevocable Standby Letter of Credit No. _____________ dated August 7, 1997 (the "Letter of Credit"), established by Credit Suisse First Boston, London Branch (the "Funding Bank"), and issued pursuant to that certain Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 (as the same may be amended, supplemented or modified from time to time, the "Reimbursement Agreement"), among the Issuer, Holdings, the Owners, the Funding Bank and the banks named therein as participating banks, hereby certifies as follows: 1. [Insert one of the following: A Reimbursement Event of Default (as defined in Schedule I to the Letter of Credit) has occurred and is continuing. Notice has been given by the Funding Bank of a Date of Early Termination and such Date of Early Termination is on or after the date hereof.] 2. The Collateral Agent has not heretofore made a Final Draw under the Letter of Credit. 3. The amount of the accompanying draft does not exceed the lesser of (i) the Maximum Available Credit Amount on the date hereof and (ii) the Maximum Drawing Amount applicable to the Interest Portion available under the Letter of Credit on the date hereof, each as determined in accordance with the terms of the Letter of Credit. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of , 19 . UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent by_____________________________ [Name and Title of Authorized Representative of Collateral Agent] EXHIBIT 6 to Exhibit A Credit Suisse First Boston London Branch Five Cabot Square London E14 4QR England Ladies and Gentlemen: Reference is made to the certain Irrevocable Standby Letter of Credit bearing Letter of Credit No. dated August 7, 1997 (the "Letter of Credit"), which has been established by you in favor of United States Trust Company of New York, as Collateral Agent (the "Transferor"). The Transferor has transferred and assigned (and hereby confirms to you said transfer and assignment) all of its rights in and under the Letter of Credit to [name of Transferee] (the "Transferee") and confirms that the Transferor no longer has any rights under or interest in the Letter of Credit. The Letter of Credit is returned herewith and we request that you issue an irrevocable standby letter of credit in the name of the Transferee and providing for notices to be sent to the Transferee at the address set forth below and in all other respects identical to the Letter of Credit. Transferee hereby certifies that it has succeeded to the rights and obligations of Transferor as Collateral Agent under the Indentures and the Intercreditor Agreement and is accordingly entitled, upon presentation of the drafts and certificates called for therein, to receive payment thereunder. Notices under the Letter of Credit should be sent to Transferee as follows: [Name], [Address], [Facsimile Number], Attention: [Telephone]. UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent by____________________________ [Name and Title of Authorized Representative of Collateral Agent] 2 [NAME OF TRANSFEREE], by____________________________ [Name and Title of Authorized Representative of Transferee] EXHIBIT 7 to Exhibit A CERTIFICATE FOR CANCELATION OF LETTER OF CREDIT The undersigned, a duly authorized representative of United States Trust Company of New York, as Collateral Agent (the "Collateral Agent"), as beneficiary under that certain Irrevocable Standby Letter of Credit No. _________ dated August 7, 1997 (the "Letter of Credit"), established by Credit Suisse First Boston, London Branch (the "Funding Bank"), and issued pursuant to that certain Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 (as the same may be amended, supplemented or modified from time to time, the "Reimbursement Agreement"), among the Issuer, Holdings, the Owners, the Funding Bank and the banks named therein as participating banks, hereby certifies as follows: 1. The undersigned is the Collateral Agent under the Intercreditor Agreement. 2. [Select Appropriate Alternative] [A substitute or alternate letter of credit is effective pursuant to the terms of the Indentures and no further drawing under the Letter of Credit is required on the date hereof. The Letter of Credit, which accompanies this Certificate, is hereby surrendered for cancelation.] [All Notes have been redeemed, repurchased or defeased at least Business Days prior to the date hereof. The Letter of Credit, which accompanies this Certificate, is hereby surrendered for cancelation.] The Letter of Credit is returned herewith and we request that you cancel the Letter of Credit as of the date hereof. 2 Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of _____________, 19__. UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent, by_________________________ Name: Title: SCHEDULE I to Exhibit A The following terms shall have the following meanings for purposes of the Letter of Credit and the Schedules and Exhibits thereto. Terms defined in the Letter of Credit shall have the meanings given to them therein. Terms defined by reference to the Reimbursement Agreement and the First Priority Indenture shall have the meanings assigned to them therein from time to time. "Additional Interest" means additional interest payable on the Notes in the event of a Registration Default. "Administrating Bank" means Credit Suisse First Boston, a bank organized under the laws of Switzerland, acting through its London branch. "Applicable Law" has the meaning set forth in the Reimbursement Agreement. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or London, England are authorized or required by law to close. "Capitalized Interest Account" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Collateral" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Code" means the United States Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder, as the same may be amended from time to time. "Date of Issuance" means August 7, 1997. "Date of Early Termination" has the meaning set forth in the eighth paragraph of the Letter of Credit. "Delivery Date" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "First Priority Indenture" means the indenture dated as of August 1, 1997 among the Issuer, the Owners, Holdings and United States Trust Company of New York, as trustee. "Funding Bank" means Credit Suisse First Boston, a bank organized under the laws of Switzerland, acting through its London Branch. 2 "Governmental Authority" has the meaning set forth in the Reimbursement Agreement. "Holdings" means Navigator Holdings PLC, an Isle of Man public limited company. "Indebtedness" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Interest Draw" has the meaning set forth in the seventh paragraph of the Letter of Credit. "Lien" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Maximum Available Credit Amount" means an amount equal to the Maximum Credit Amount, as such amount may be modified from time to time in accordance with the fourth paragraph of the Letter of Credit. "Maximum Drawing Amount" means, with respect to a Date of Drawing, the sum of the amounts set forth with respect to the Interest Portion and the Working Capital Portion for such Date of Drawing in the Schedule of Maximum Drawing Amounts attached as Schedule II to the Letter of Credit, as such amounts may be modified from time to time in accordance with the fourth paragraph of the Letter of Credit. "Notes" has the meaning set forth in the Reimbursement Agreement. "Owners" means, collectively, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited, each an Isle of Man private limited company. "Operating Account" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Participating Banks" means the banks whose names are listed on the signature pages of the Reimbursement Agreement under the heading "Participating Banks" and their successors and assigns, each being a "Participating Bank." "Permitted Liens" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. 3 "Person" has the meaning set forth in the Reimbursement Agreement. "Portion" means any Interest Portion or Working Capital Portion. "Pro Forma Interest Accrual" means, at any date of determination, the aggregate amount of interest (excluding Additional Interest) that would be paid on the Notes on the four succeeding Interest Payment Dates with respect thereto, assuming that the aggregate principal amount of the Notes outstanding on such date of determination and the interest rates borne by the Notes on such date do not change during such period. "Reimbursement Agreement" has the meaning set forth in the first paragraph of the Letter of Credit. "Reimbursement Event of Default" has the meaning set forth in the Reimbursement Agreement. "Registration Default" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Required Banks" means at any time Participating Banks having aggregate Participation Percentages in excess of 50% at such time. "Revenue Account" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Second Priority Indenture" means the indenture dated as of August 1, 1997 among the Issuer, the Owners, Holdings and The Chase Manhattan Bank, as trustee. "Subsidiary" means with respect to any Person (herein referred to as the "parent"), any corporation, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at the time any determination is being made, owned, controlled or held or (b) which is, at the time any determination is made, otherwise controlled (by contract or agreement or otherwise) by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Termination Date" means the earliest of (i) 10:00 a.m., London time, on the Date of Early Termination, (ii) 5:00 p.m. (London time) on the date on which the Collateral Agent surrenders the Letter of Credit 3 for cancelation to the Funding Bank with a notice in the form of Exhibit 7 to the Letter of Credit, (iii) 5:00 p.m. (London time) on the date on which the Funding Bank pays a Final Draw, and (iv) 5:00 p.m. (London time) on the tenth anniversary of the Date of Issuance of the Letter of Credit. "Transaction Documents" means the Note Purchase Agreement, the Intercreditor Agreement, the Indentures, the Notes, the Security Agreements, the Reimbursement Agreement and the Letter of Credit. "Vessel" has the meaning set forth in the First Priority Indenture, as in effect on the date hereof. "Working Capital Draw" has the meaning set forth in the seventh paragraph of the Letter of Credit. SCHEDULE II to Exhibit A SCHEDULE OF MAXIMUM DRAWING AMOUNTS Working Applicable Period Interest Portion Capital Portion - ----------------- ---------------- --------------- From Issue Date to and $0 $0 including the date 91 days prior to Delivery Date of the first Vessel to be delivered From date 90 days prior to $0 $900,000 Delivery Date of the first Vessel to be delivered to and including date one day prior to Delivery Date of the first Vessel to be delivered From Delivery Date of $9,100,000 $900,000 first Vessel delivered to and including date 91 days prior to Delivery Date of the second Vessel to be delivered From date 90 days prior to $9,100,000 $1,800,000 Delivery Date of the second Vessel to be delivered to and including date one day prior to Delivery date of second Vessel to be delivered (1) From Delivery Date of $18,200,000 $1,800,000 second Vessel delivered to and including date 91 days prior to Delivery Date of the third Vessel to be delivered (1) - -------- (1) assumes delivery of first Vessel 2 Working Applicable Period Interest Portion Capital Portion - ----------------- ---------------- --------------- From date 90 days prior to $18,200,000 $2,700,000 Delivery Date of the third Vessel to be delivered to and including date one day prior to Delivery Date of the third Vessel to be delivered (2) From Delivery Date of $27,300,000 $2,700,000 third Vessel delivered to and including date 91 days prior to Delivery Date of the fourth Vessel to be delivered (2) From date 90 days prior to $27,300,000 $3,600,000 Delivery Date of the fourth Vessel to be delivered to and including date one day prior to Delivery Date of the fourth Vessel to be delivered (3) From Delivery Date of $36,400,000 $3,600,000 fourth Vessel delivered to and including date 91 days prior to Delivery Date of the fifth Vessel to be delivered (3) From date 90 days prior to $36,400,000 $4,500,000 Delivery Date of the fifth Vessel to be delivered to and including date one day prior to Delivery Date of the fifth Vessel to be delivered (4) - -------- (2) assumes delivery of first and second Vessels (3) assumes delivered of first, second and third Vessels (4) assumes delivery of first, second, third and fourth Vessels 3 From Delivery Date of the $45,500,000 $4,500,000 fifth Vessel delivered to the Termination Date (4) SCHEDULE III to Exhibit A The Funding Bank shall have the right upon the occurrence of any of the events listed below to terminate the Letter of Credit in accordance with the terms of the Letter of Credit. (i) the Issuer shall (a) fail to pay when due any amount payable under Section 2(a) of the Reimbursement Agreement, or (b) fail to pay any amount payable under Section 3 of the Reimbursement Agreement within 5 Business Days after the same shall become due; or (ii) an "Event of Default" (as such term is defined in the First Priority Indenture or the Second Priority Indenture, as the case may be) shall have occurred and be continuing under the First Priority Indenture or the Second Priority Indenture; or (iii) the Issuer shall fail to make any payment in respect of the Notes, or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or (iv) the Issuer, Holdings or any Owner shall fail to observe or perform any covenant or agreement contained in the Reimbursement Agreement (other than those covered by clauses (i), (ii) and (iii) above) for 30 days after written notice thereof has been given to the Issuer by the Administrating Bank, the Funding Bank or any Participating Bank; or (v) any representation, warranty, certification or statement made by the Issuer, Holdings or any Owner in the Reimbursement Agreement or in any certificate, financial statement or other document delivered pursuant to the Reimbursement Agreement shall prove to have been incorrect or misleading in any material respect when made; or (vi) any material provision of the Reimbursement Agreement shall at any time for any reason cease to be valid and binding upon the Issuer, Holdings or any Owner, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Issuer, Holdings, any Owner or any Governmental Authority, or the Issuer, Holdings or any Owner shall deny that it has any or further liability or obligation under the Reimbursement Agreement; or (vii) the Issuer, Holdings or any Owner shall fail to make any payment of any amount in respect of any Indebtedness, or to make any payment of any interest or 2 premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in such agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to enable the holder of such Indebtedness to accelerate the maturity of any Indebtedness if the total of all such Indebtedness which has been accelerated and any additional Indebtedness which has become due and not been paid shall exceed $5,000,000 or any Indebtedness the aggregate principal amount of which is greater than $5,000,000 shall be declared due and payable, or required to be prepaid prior to the stated maturity thereof; or (viii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Issuer, Holdings, any Owner or of a substantial part of its or their property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law or the applicable bankruptcy laws of any other jurisdiction, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Person, or for a substantial part of its property or assets, or (iii) the winding-up or liquidation of the Issuer, Holdings or any Owner; and such proceeding or petition shall continue undismissed for 60 days, or an order or decree approving or ordering any of the foregoing shall be entered; or (ix) the Issuer, Holdings or any Owner shall (A) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law or the applicable bankruptcy laws of any other jurisdiction, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (vii) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar 3 official for such Person, or for a substantial part of its property or assets, (D) file an answer admitting the material allegations of a petition filed against it or them in any such proceeding, (E) make a general assignment for the benefit of creditors, (F) become unable, admit in writing its or their inability or fail generally to pay its or their debts as they become due or (G) take any action for the purpose of effecting any of the foregoing; or (x) any judgment or decree for the payment of money exceeding $5,000,000 shall be rendered against the Issuer, Holdings or any Owner and shall remain outstanding for a period of 60 days following the entry of such judgment or decree and shall not have been discharged, waived or stayed within ten days after written notice thereof has been given to the Issuer; or (xi) the Reimbursement Agreement or any Security Agreement shall for any reason cease to be, or be asserted by any of the Issuer, Holdings or any Owner not to be, a legal, valid and binding obligation of the Issuer, Holdings or the Owners, enforceable in accordance with its terms, or the security interest or lien purported to be created by any Security Agreement shall for any reason cease to be, or be asserted by the Issuer, Holdings or any Owner not to be, a valid, first priority perfected security interest (subject to no liens, except Permitted Liens) in the Collateral as defined under each such agreement. EXHIBIT B FORM OF NOTICE OF DRAWING [Issuer/Participating Bank] [Address) Ladies and Gentlemen: Reference is made to that certain Irrevocable Standby Letter of Credit bearing Letter of Credit No. __________ dated August 7, 1997, which has been established by us in favor of United States Trust Company of New York, as Collateral Agent. We have received (i) a draft for payment of U.S. $___________ on [insert date to be paid] and (ii) a Certificate for [an Interest Draw/a Working Capital Draw/ a Final Draw] from the Collateral Agent. On [insert date of payment], we paid such draft in the amount of U.S. $__________. [Insert the following in the case of notice to a Participating Bank: Your pro rata share of such drawing (based upon your Participation Percentage) is $ __________.] Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit. CREDIT SUISSE FIRST BOSTON, as Funding Bank and Administrating Bank, by_________________________ Name: Title: EXHIBIT C [Form of] ASSIGNMENT AND ACCEPTANCE Reference is made to the Letter of Credit and Reimbursement Agreement and Guaranty dated as of August 7, 1997, as amended, supplemented or otherwise modified from time to time (the "REIMBURSEMENT AGREEMENT"), among Navigator Gas Transport PLC, an Isle of Man public limited company (the "ISSUER"), Holdings, the Owners, Credit Suisse First Boston, acting through its London Branch, as funding bank and administrating bank and the participating banks from time to time party thereto. Terms defined in the Reimbursement Agreement are used herein with the same meanings. 1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below, the interests set forth below (the "ASSIGNED INTEREST") in the Assignor's rights and obligations under the Reimbursement Agreement and the other Transaction Documents, including, without limitation, the Participation Percentage set forth below of participation in the Letter of Credit held by the Assignor on the Effective Date, but excluding accrued interest and fees to and excluding the Effective Date. The Assignee hereby acknowledges receipt of a copy of the Reimbursement Agreement. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Reimbursement Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Participating Bank thereunder and under the Transaction Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Reimbursement Agreement. 2. The Assignor (i) represents and warrants that as of the date hereof its Participation Percentage (without giving effect to assignments thereof which have not yet become effective) is %; (ii) represents and warrants that it has legal and beneficial title to the interests being assigned by it hereunder free and clear of any claim adverse to such title; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Reimbursement Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of the 2 Reimbursement Agreement, the Letter of Credit or any of the other Transactions Documents, or any other instrument or document furnished pursuant thereto or executed and delivered in connection therewith and (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Issuer, Holdings or any of the Owners or any of their respective Subsidiaries or the performance or observance by any such Person with their respective obligations under the Reimbursement Agreement, the Letter of Credit or any other Transaction Document or any instrument or document furnished pursuant thereto. 3. The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Reimbursement Agreement, together with copies of such other Transaction Documents, information, exhibits, reports, projections and forecasts which the Assignee has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii) agrees that it shall have no recourse against the Assignor with respect to any matters relating to the Reimbursement Agreement, the Letter of Credit, any other Transaction Document or this Assignment and Acceptance (except with respect to the representations and warranties made by the Assignor in CLAUSES (I) and (II) of PARAGRAPH 2 above); (iv) agrees that it will, independently and without reliance upon the Administrating Bank, the Funding Bank, the Assignor or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Reimbursement Agreement, the Letter of Credit and the other Transaction Documents; and (v) agrees that it will perform in accordance with their terms all for the obligations which by the terms of the Reimbursement Agreement are required to be performed by it as a Participating Bank. 4. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York. Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee's Address for Notices: 3 Effective Date of Assignment: Participation Percentage Assigned (set forth as a percentage of the aggregate Participation Percentages of all Banks): New Participation Percentage of Assignor from and after the Effective Date: The terms set forth above are hereby agreed to: Accepted _________________, as Assignor CREDIT SUISSE FIRST BOSTON, London Branch, as Funding Bank and Administrating Bank by:___________________________ by:__________________________ Name: Name: Title: Title: _________________, as Assignee by:___________________________ Name: Title: SCHEDULE 1 PARTICIPATING BANKS' PARTICIPATION PERCENTAGES Bank Participation Percentage ---- ------------------------ Credit Suisse First Boston, London Branch 100% EX-4.12 19 INTERCOMPANY NOTE INTERCOMPANY NOTE August 7, 1997 Each of Navigator Gas (IOM I-A) Limited, an Isle of Man private limited company, Navigator Gas (IOM I-B) Limited, an Isle of Man private limited company, Navigator Gas (IOM I-C) Limited, an Isle of Man private limited company, Navigator Gas (IOM I-D) Limited, an Isle of Man private limited company and Navigator Gas (IOM I-E) Limited, an Isle of Man private limited company (each, a "Payor" and, collectively, the "Payors"), hereby promises, jointly and severally, to pay to the order of Navigator Gas Transport PLC, an Isle of Man public limited company (the "Payee"), the principal amount of all payments made by the Payee to the Payors and such interest on the unpaid principal amount therefor from the date of the making thereof until paid at such rate per annum (which rate may be zero) as may be agreed upon from time to time by the Payors and the Payee. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Collateral Agency and Intercreditor Agreement dated as of August 1, 1997 (the "Intercreditor Agreement"), among the Payors, the Payee, Navigator Holdings PLC, Credit Suisse First Boston, as Administrating Bank and Funding Bank, the United States Trust Company of New York (the "Collateral Agent"), as Collateral Agent and First Priority Trustee, and The Chase Manhattan Bank, as Second Priority Trustee. Upon the commencement of any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar proceeding of any jurisdiction relating to the Payors, the unpaid principal amount hereof shall become immediately due and payable without presentment, demand, protest or notice of any kind in connection with this Note. All principal and accrued interest on this Note shall be due and payable on demand. Payments of principal of and interest on this Note shall be made by wire transfer of immediately available funds to such account of the Payee as the Payee may designate in writing and shall be payable in the same currency as the related loans and advances. This Note shall be hypothecated and delivered by the Payee to the Collateral Agent, for the benefit of the secured creditors, pursuant to the Intercreditor Agreement. The Payee hereby acknowledges and agrees that the Collateral Agent, pursuant to the Intercreditor Agreement as in effect from time to time, may exercise all rights provided therein with respect to this Note. The Payee is hereby authorized to record all loans and advances made by it to the Payors (all of which shall be evidenced by this Note), and all repayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein. All payments under this Note shall be made without offset, counterclaim or deduction of any kind. Each Payor hereby waives diligence, presentment, demand, protests and notice of any kind whatsoever. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. Until all of the Obligations under the Intercreditor Agreement shall have been paid in full, no provision of this instrument may be amended or otherwise modified without the prior written consent of the Collateral Agent. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Navigator Gas (IOM I-A) Limited, by /s/ Richard Klapow ------------------------ Name: Richard Klapow Title: Director Navigator Gas (IOM I-B) Limited, by /s/ Richard Klapow ------------------------ Name: Richard Klapow Title: Director Navigator Gas (IOM I-C) Limited, by ------------------------- Name: Richard Klapow Title: Director Navigator Gas (IOM I-D) Limited, by /s/ Richard Klapow ------------------------- Name: Richard Klapow Title: Director Navigator Gas (IOM I-E) Limited, by /s/ Richard Klapow ------------------------- Name: Richard Klapow Title: Director NOTE POWER FOR VALUE RECEIVED, Navigator Gas Transport PLC, an Isle of Man public limited company, hereby sells, assigns and transfers unto _____________________________________ that certain Note dated August 7, 1997 (the "Note"), of the Payors (as defined in the Note), and does hereby irrevocably constitute and appoint ___________________________________ attorney to transfer the Note with full power of substitution in the premises. Dated ____________ Navigator Gas Transport PLC by /s/ Richard Klapow --------------------------- Name: Richard Klapow Title: Director EX-4.13 20 IRREVOCABLE STANDBY LETTER OF CREDIT IRREVOCABLE STANDBY LETTER OF CREDIT NO. CSL 600207 7 August 1997 United States Trust Company of New York as Collateral Agent 114 West 47th Street New York, NY 10036-1532 (the "Collateral Agent") ATTENTION: CORPORATE TRUST ADMINISTRATION Dear Sirs 1. We hereby establish, at the request of Navigator Gas Transport PLC (the "Issuer"), in your favor, our Irrevocable Standby Letter of Credit No. CSL 600207 (the "Letter of Credit"), in an amount not to exceed USD50,000,000.00 (US Dollar fifty million only) (the "Maximum Credit Amount"), effective immediately and expiring on the Termination Date (such term and each other capitalized term used herein and in Schedules II and III and Exhibits 1, 2, 3, 4, 5, 6 and 7 hereto shall have the meanings set forth in Schedule I hereto). Of the Maximum Credit Amount, (a) an amount not to exceed USD45,500,000.00 (US Dollar forty five million five hundred thousand only) (such amount, as reduced from time to time in accordance with the terms hereof, being called the "Interest Portion") may be drawn on the terms set forth herein to pay (i) accrued interest on the Notes at the actual rate of interest borne by the Notes (less any Additional Interest), whether on a scheduled interest payment date or upon the maturity, redemption or acceleration of the Notes, (ii) unpaid principal and accrued and unpaid interest on Interest Draws under this Letter of Credit and (iii) fees due under the Reimbursement Agreement and (b) an amount not to exceed USD4,500,000.00 (US Dollar four million five hundred thousand) (such amount, as reduced from time to time in accordance with the terms hereof, being called the "Working Capital Portion") may be drawn on the terms set forth herein to pay (i) certain working capital expenses of the Owners, (ii) Additional Interest and (iii) unpaid principal and accrued and unpaid interest on Working Capital Draws under this Letter of Credit. This Letter of Credit is issued in connection with the issuance by the Issuer of the Notes pursuant to the First Priority Indenture and the Second Priority Indenture and is being issued pursuant to the Letter of Credit Reimbursement Agreement and Guarantee dated as of 7 August 1997, among the Issuer, Credit Suisse First Boston, acting through its London Branch, as funding bank and administrating bank, the participating banks from time to time party thereto, Holdings and the Owners (as the same may be amended, supplemented or modified from time to time, the "Reimbursement Agreement"). This Letter of Credit is effective immediately and will expire on the Termination Date. 1 2. The Maximum Available Credit Amount may be reduced at any time and from time to time upon receipt by us at the address for presentation of documents set forth below of a copy of the instrument effecting such reduction, signed by you in the form of Exhibit 1 hereto (a "Reduction Certificate"). Upon receipt of a Reduction Certificate, the Maximum Available Credit Amount shall be automatically and permanently reduced by the amount specified as the Reduction Amount in such certificate (the "Reduction Amount") and the Maximum Drawing Amounts shall be automatically and permanently reduced as provided in Section 4 (e) hereof. 3. We hereby irrevocably authorize you to draw on us, in accordance with the terms and conditions hereinafter set forth, an amount not in excess of the lesser of (x) the Maximum Available Credit Amount applicable to the date of such drawing (the "Date of Drawing") and (y) (i) in the case of an Interest Draw, the Maximum Drawing Amount of the Interest portion applicable to the Date of Drawing and (ii) in the case of a Working Capital Draw, the Maximum Drawing Amount of the Working Capital Portion applicable to the Date of Drawing, in each case as modified in accordance with the next paragraph; PROVIDED, -------- HOWEVER, that at no time shall we be required to pay any drawing under this Letter of Credit ------- in excess of the lesser of the Maximum Available Credit Amount and the Maximum Drawing Amount, in each case as in effect on the applicable Date of Drawing. Multiple drawings may be made hereunder, provided, that each drawing honored by us hereunder shall PRO TANTO reduce both (a) the Maximum Available Credit Amount and (b) the Maximum --------- Drawing Amount of either (i) the Working Capital Portion or (ii) the Interest Portion, as the case may be, available under this Letter of Credit. Notwithstanding any other provision of this Letter of Credit, on the date of each reduction, if any, (a) in the outstanding principal amount of the Notes or (b) in the stated interest rate of the Notes (other than any reduction with respect to Additional Interest) the Maximum Drawing Amounts of the Interest Portion shall be automatically reduced by such amounts as shall be necessary such that the Interest Portion shall not exceed, at any date of determination, the Pro Forma Interest Accrual. 4. The Maximum Drawing Amounts and the Maximum Available Credit Amount shall be modified from time to time as follows: (a) upon payment by us of each Working Capital Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Working Capital Portion applicable to each Date of Drawing subsequent to such payment shall be automatically reduced by an amount equal to the amount of the drawing so paid; (b) upon payment by us of each Interest Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Interest Portion applicable to each Date of Drawing subsequent to such payment shall be automatically reduced by an amount equal to the amount of the drawing so paid; 2 (c) upon the application by us of amounts paid by the Issuer pursuant to Section 2 (a) of the Reimbursement Agreement to reimburse any Interest Draw or Working Capital Draw hereunder (as such application is allocated in accordance with Section 2 (b) of the Reimbursement Agreement), each of (i) the maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Portion to which such reimbursement is applied applicable to each Date of Drawing subsequent to such application shall be automatically increased by the amount of such payment(s) allocated as a reimbursement of drawings hereunder; PROVIDED, HOWEVER, that the Maximum -------- ------- Available Credit Amount shall never exceed the Maximum Credit Amount; (d) upon the payment by us of any Final Draw under the Letter of Credit, each of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount applicable to each Date of Drawing subsequent to such payment shall be automatically reduced to zero; and (e) if the Maximum Available Credit Amount is reduced pursuant to a Reduction Certificate, a corresponding reduction shall be made (effective automatically upon receipt by us of a Reduction Certificate) to the Maximum Drawing Amounts shown in Schedule II (as theretofore reduced pursuant to clause (b) above and, if applicable, reinstated pursuant to clause (c) above) pro rata in accordance with the proportion that the Reduction Amount bears to the Maximum Available Credit Amount prior to such reduction; PROVIDED that such adjustments shall in no event cause the Maximum --------- Drawing Amount to exceed the Maximum Available Credit Amount. 5. Upon return of this Letter of Credit together with a notice in the form of Exhibit 1 hereto, we will promptly initial and attach to this Letter of Credit a revised Schedule II reflecting the adjustments contained in such notice and return this Letter of Credit to you with such revised Schedule attached. 6. Upon the application by us of amounts paid by the Issuer pursuant to Section 2 (a) of the Reimbursement Agreement to reimburse any Interest Draw or Working Capital Draw hereunder, we will give you prompt (and in any event within three Business Days of such application) written notice of such application and the amount thereof. Such notice shall be given in accordance with the provisions set forth in the eighth paragraph of this Letter of Credit. 7. Funds under this Letter of Credit are available to you on or prior lo the Terminations Date either (a) against presentation of (i) your draft in the form of Exhibit 2 attached hereto and (ii) (A) a completed certificate signed by you in the form of Exhibit 3 attached hereto (an "Interest Draw") or (B) a completed certificate signed by you in the form of Exhibit 4 attached hereto (a "Working Capital Draw") or (b) against presentation of (i) your draft in the form of Exhibit 2 attached hereto and (ii) a completed certificate signed by you in the form of Exhibit 5 attached hereto (a "Final Drawn"). Each of an Interest Draw, a Working 3 Capital Draw and a Final Draw are sometimes referred to herein as a "Draw". Each such draft and certificate shall be dated the date of presentation and shall be presented at our office located at Five Cabot Square, London, E14 4QR, England, Attention: Trade Finance Operations (or at any other office in London, England which may be designated by us by written notice (given in the manner set forth in the next paragraph) delivered to you at least 15 days prior to the applicable Date of Drawing). We agree that, so long as this Letter of Credit is in effect, we will maintain an office in London, England where such presentation may be made. If we receive such draft and certificate at such office, all in strict conformity with the terms and conditions of this Letter of Credit prior to 10.00 am (London time) on any Business Day, we will honor the draft in immediately available funds not later than 4.00 pm (London time) on the same Business Day. If we receive such draft and certificate at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or after 10.00 am (London time) on any Business Day, we will honor the draft in immediately available funds not later than 4.00 pm (London time) on the next Business Day. Payment under this Letter of Credit shall be made by wire transfer of immediately available funds to you at your account no. 920-1-073195 at The Chase Manhattan Bank, 270 Park Avenue, New York, New York ABA # 02100021, Reference: US Trust Co. NY, for further credit to account no. 04741200 re: Navigator Gas Transport Ltr. Cr. If requested in writing by you, payment under this Letter of Credit may be made by wire transfer of immediately available funds to a different account with any bank. Upon receipt of a draft and certificate which are not in strict conformity with the terms and conditions of this Letter of Credit, we will promptly (and in any event within three Business Days of such receipt) notify you of such nonconformity and the reason therefor; PROVIDED that our failure to so notify you of such nonconformity or the reason therefor shall not amend, modify, extend or otherwise affect your rights hereunder and shall not create any additional rights hereunder; PROVIDED FURTHER that, notwithstanding the generality of the foregoing, any such failure shall not have the effect of extending the time during which you may draw hereunder or converting such nonconforming draft and certificate into a draft and certificate in strict conformity with the terms and conditions of this Letter of Credit. This Letter of Credit shall automatically terminate on the Termination Date. 8. Notwithstanding any other provision of this Letter of Credit, we shall have the right, upon the occurrence of any of the events listed in Schedule II hereto, to terminate this Letter of Credit by delivering to you a written notice indicating the date of such termination (the "Date of Early Termination"); PROVIDED that on or before the Date of Early Termination you will -------- have the right to draw once as a Final Draw an amount not in excess of the lesser of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount of the Interest Portion, in each case as in effect on such date in accordance with the procedures described herein; PROVIDED FURTHER that upon delivery of such written notice to you indicating the Date ---------------- of Early Termination, your right to make an Interest Draw or a Working Capital Draw hereunder shall automatically terminate. The written notice referred to in the preceding sentence shall be given by facsimile transmission addressed to you at United States Trust Company of New York, 114 West 47th Street, New York, New York 10036-1532, Facsimile: 4 (212) 852-1626, Attention: Corporate Trust Administration, Telephone: (212) 852-1676 (or to such other address or facsimile number designated by you by written notice delivered to us at least 15 days prior to the notice of early termination) and shall be effective upon receipt of the appropriate confirmation by you of your receipt of the facsimile transmission or, if no such confirmation is given, the end of the Business Day on which actual transmission is made to the address above. We will also forward copies of such notice by overnight delivery service (with a request to such delivery service that they obtain a receipt from such addressee (to the extent that such a receipt service is then available, it being understood that the failure of such delivery service to actually obtain such a receipt shall not be the responsibility of the Funding Bank and the Funding Bank shall bear no liability for such failure)) and registered mail (return receipt requested) to the address set forth above. The Date of Early Termination specified in such written notice shall be not earlier than five days after such notice is effective, or, if the fifth day is not a Business Day, the next following Business Day. You have no obligation upon the receipt of such written notice indicating the Date of Early Termination to investigate or otherwise question whether any of the events specified in Schedule III has occurred and the fact that such an event shall not have occurred shall not in any way affect your right to draw hereunder upon the receipt of such written notice. 9. Except as set forth below, this Letter of Credit shall be governed by the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or by subsequent revisions thereto dictated by members of the International Chamber of Commerce and, as to matters not covered therein, be governed by the laws of the State of New York, including without limitation Article 5 of the Uniform Commercial Code as in effect in such State. Unless you are otherwise notified in writing, communications to us with respect to this Letter of Credit shall be in writing and shall be addressed to us at Five Cabot Square, London, E14 4QR, England, facsimile: 011 -44-171- 888-8896, Attention: Trade Finance Operations and shall specifically refer to the number of this Letter of Credit. 10. Notwithstanding, Article 48 of the Uniform Customs and Practice for Documentary Credits referred to above, this Letter of Credit may be transferred and assigned in its entirety more than once. Upon receipt by us at the address for presentation of documents set forth above of a copy of the instrument effecting such transfer and assignment, signed by you and by the transferee, in the form of Exhibit 6 hereto then, in such case, we will, upon surrender of this Letter of Credit, issue an irrevocable standby letter of credit in the name of the transferee and providing for notices to be sent to the transferee at the address set forth therein and in all other respects identical to this Letter of Credit and the transferee, instead of the transferor, shall, without necessity of further act, be entitled to all the benefits of, and rights under, this Letter of Credit in the transferor's place. 11. Any drawing under this Letter of Credit will be paid from our general funds and not directly or indirectly from funds or collateral deposited with or for our account by the Issuer, 5 Holdings or any of the Owners, or pledged with or for our account by the Issuer, Holdings or any of the Owners and we will seek reimbursement for payments made pursuant to a drawing under this Letter of Credit only after such payments have been made. 12. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except only Schedules I (including the definitions incorporated by reference therein), II and III and Exhibits 1, 2, 3, 4, 5, 6, and 7 hereto and the notices referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document. instrument or agreement except as set forth above. Yours faithfully CREDIT SUISSE FIRST BOSTON LONDON BRANCH L.H. Arduino A Ahsan Director Vice President - -------- -------------- 6 EX-4.14 21 TRIPARTY AGR./DELIVERY OF PERF. BOND & ACCEPT. VES TRIPARTY AGREEMENT FOR DELIVERY OF PERFORMANCE BOND AND ACCEPTANCE OF VESSEL This Agreement entered into as of this 1st day of August, 1997 by and among NAVIGATOR HOLDINGS PLC, ("Navigator" as the "Owner"), CHINA SHIPBUILDING TRADING COMPANY LIMITED ("CSTC") and JIANGNAN SHIPYARD (collectively with CSTC as the "Builder") and TRACTEBEL GAS ENGINEERING GMBH ("Tractebel" as the Main Supplier) This Agreement is being delivered in connection with five (5) Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997 by and between Navigator and Builder (collectively, "Shipbuilding Contract") as to the construction of five (5) 22,000 Cubic Meters Liquefied Ethylene Gas Carriers bearing Hull Nos. 2245, 2246, 2247, 2248 and 2249 (each a "Vessel"). W I T N E S S E T H NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreement and conditions contained herein, and after good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. FINANCIAL GUARANTEES. (a) The Builder hereby agrees to deliver to Navigator an Irrevocable Performance Bond which shall guarantee the performances of the Builder under the Shipbuilding Contract, provided, however the maximum amount to be drawn under such Performance Bond shall not exceed US$32,474,600 and shall be substantially in the form attached as Exhibit A to this Agreement which shall become Exhibit B to the Shipbuilding Contract. The Performance Bond ("Builder Performance Bond") shall be issued by Export-Import Bank of China, and the cost of issuance of such Builder Performance Bond shall be borne equally by the Builder and Navigator, by an adjustment of the Contract Price as to each Vessel. (b) Tractebel as the Main Supplier agrees to deliver to Navigator an Irrevocable Performance Bond issued by an Generale de Banque S.A., which shall guarantee the performance of the Builder under the Shipbuilding Contract, provided, however, the maximum amount to be drawn under such Performance Bond shall not exceed US$16,237,300; provided further, however, Navigator (or its assignee) shall only be permitted to demand payments under such Performance Bond after the amounts paid under the Builder Performance Bond equal to US$32,474,600. The Performance Bond (the "Tractebel Performance Bond") shall be substantially in the form of Exhibit B to this Agreement which shall become Exhibit C to the Shipbuilding Contract (as amended to reflect the obligation of US$16,237,300 and the requirement that a payment in full under the Builder Performance Bond has been made). Prior to delivery of the Tractebel Performance Bond, the Builder shall deliver to Tractebel the Payment Guarantees as set forth in paragraph (c) below. The cost of issuance of the Tractebel Performance Bond shall be borne equally by Tractebel and Navigator. (c) The Builder agrees to deliver to Tractebel Payment Guarantees covering 95% of the cost of equipment and services to be provided by Tractebel under the Supply Contract dated February 3, 1997 between the Builder and Tractebel for supply of the gas plant to be incorporated into the Vessel. The Payment Guarantee shall be issued by a financial institution acceptable to Tractebel substantially in the form of Appendix V and Appendix VI set forth in the Supply Contract. The execution and delivery of the Tractebel Payment Guarantees by the parties thereto and the payment of the initial installments due under the Supply Contract by Builder to Tractebel shall be a pre-condition to Tractebel's obligation to deliver the Tractebel Performance Bond. 2. (a) Article III(1)(a)(iii) of the Shipbuilding Contracts has been modified and provides that: "If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone the delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. "Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period (as such terms are defined in the Shipbuilding Contracts)." (b) It is agreed between the Builder and Tractebel that the liquidated damages to be paid to the Buyer (if any) under Article III, Section 1(a)(iii) of the Shipbuilding Contract shall be shared between the Builder and Tractebel in the proportion of 2/3 for the Builder and 1/3 for Tractebel except if the delays causing the liquidated damages are due to force majeure taking place either in China or in Germany or due to the willful acts of either the Builder or Tractebel. In case damages resulted from delays caused by force majeure taking place in Germany or through willful acts by Tractebel, Tractebel will bear the entire cost of damages. In case the damages result from delays caused by force majeure in China or through willful acts by the Builder, the Builder will bear the entire cost of damages. If the Tractebel Performance Bond is called in part - 2 - or in full, Tractebel shall have the right to obtain from the Builder reimbursement of the amount paid under the Tractebel Performance Bond that it is excess of Tractebel's liabilities to the Builder under the contracts between the Builder and Tractebel and the sharing of liability between the parties shall be in the proportions set forth above. If the Builder Performance Bond is called in part or in full, the Builder shall have the right to obtain from Tractebel reimbursement of the amount paid under the Builder Performance Bond to the extent such amount is payable under Tractebel liabilities to the Builder under the contracts between the Builder and Tractebel and the sharing of liability between the parties shall be in the proportions set forth above. (c) The Refund Guarantee, Builder Performance Bond and Tractebel Performance Bond shall expire on May 1, 2001. The Builder hereby commits itself not to undertake any new building orders from other shipowner which would interfere with the delivery schedule of the five (5) Vessels. (d) The Builder hereby agrees to instruct the United States Trust Company of New York as Collateral Agent (the "Collateral Agent") under the Collateral Agency and Intercreditor Agreement to pay a portion of the initial installment due under the Shipbuilding Contracts for Vessels bearing Hull Nos. 2245 and 2246 directly to Tractebel in an amount equal to US$697,500 for Hull No. 2245 and US$697,500 for Hull No. 2246; which in each case represents 5.0% of the contract price payable under the purchase contracts between the Builder and Tractebel for the respective Vessels. The aforementioned payment shall be made by the Collateral Agent on the Issue Date as defined in the Collateral Agency and Intercreditor Agreement. 3. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Triparty Agreement and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 4. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties hereto. In addition the parties hereto further agree that no changes, amendments or modifications shall be made to the Shipbuilding Contracts unless such agreement is reduced to writing, signed by the Builder and the Owner (or its assigns), and consented to by Tractebel. 5. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. - 3 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written. The Owner The Builder NAVIGATOR HOLDINGS PLC CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Richard Kaplow By: /s/ Shen Yiping --------------------------- ------------------------------- Name: Richard Kaplow Name: Shen Yiping ------------------------ ----------------------------- Title: Director Title: Vice President ----------------------- ---------------------------- JIANGNAN SHIPYARD By: /s/ Gong Jingen ------------------------------- Name: Gong Jingen ----------------------------- Title: Vice President ---------------------------- The Main Supplier TRACTEBEL GAS ENGINEERING GMBH By: /s/ Vladimir Puklavec ------------------------------- Name: Vladimir Puklavec ------------------------------- Title: CEO ------------------------------- - 4 - EX-5.1 22 OPINION OF THACHER PROFFITT & WOOD September 22, 1997 Navigator Gas Transport PLC Navigator Gas (IOM I-A) Limited Navigator Gas (IOM I-B) Limited Navigator Gas (IOM I-C) Limited Navigator Gas (IOM I-D) Limited Navigator Gas (IOM I-E) Limited 15-19 Athol Street Douglas, Isle of Man 1M1 1LB Navigator Gas Transport PLC 10 1/2 % First Priority Exchange Ship Mortgage Notes Due 2007 12% Second Priority Exchange Ship Mortgage Notes Due 2007 Registration Statement on Form F-4 ---------------------------------- Ladies and Gentlemen: We are counsel to Navigator Gas Transport PLC ("Navigator Gas Transport"), Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited (the "Owners," and together with Navigator Gas Transport, the "Registrants") in connection with the registration under the Securities Act of 1933, as amended (the "Act"), of Navigator Gas Transport First Priority Exchange Ship Mortgage Notes Due 2007 (the "First Priority Exchange Notes"), and the Second Priority Exchange Ship Mortgage Notes Due 2007 (the "Second Priority Exchange Notes", together with the First Priority Exchange Notes, the "Notes"), and the related preparation and filing of a Registration Statement on Form F-4 (the "Registration Statement"). The First Priority Exchange Notes are issuable under the Indenture, dated as of August 1, 1997 (the "First Priority Indenture"), between the Registrants and United States Trust Company of New York as indenture trustee. The Second Priority Exchange Notes are issuable under the Indenture, dated as of August 1, 1997 (the "Second Priority Indenture," together with the First Priority Indenture, the "Indentures"), between the Registrants and The Chase Manhattan Bank Company of New York as indenture trustee. The Indentures are substantially in the form filed as an Exhibit to the Registration Statement. This opinion is rendered pursuant to Items 601(5) and (8) of Regulation S-K promulgated by the Securities and Exchange Commission. In connection with rendering this opinion letter, we have examined the Indenture contained as an Exhibit to the Registration Statement, the Registration Statement and such other documents as we have deemed necessary. As to matters of fact, we have examined and relied upon representations or certifications of officers of the Registrant or public officials. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies. We have assumed that all parties, other than the Registrants, had the corporate power and authority to enter into and perform all obligations thereunder. As to such parties, we have also assumed the due authorization by all requisite corporate action, the due execution and delivery and the validity, binding effect and enforceability of such documents. In rendering this opinion letter, we express no opinion as to the laws of any jurisdiction other than the federal laws of the United States and the laws of the State of New York, nor do we express any opinion on any issue not expressly addressed below. Based on the foregoing, we are of the opinion that: 1. The Indentures have been duly authorized by the Registrants and are legal and valid obligations of the Registrants, enforceable in accordance with their terms, except as enforceability may be limited by (a) bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or other similar laws affecting the enforcement of the rights of creditors and (b) general principles of equity, whether enforcement is sought in a proceeding in equity or at law. 2. When the Notes have been duly executed and authenticated in accordance with the provisions of the Indentures, and issued as contemplated in the Registration Statement and the prospectus delivered in connection therewith, such Notes will be legally and validly issued and outstanding and the holders of such Notes will be entitled to the benefits of the Indenture. 3. The description of federal income tax consequences appearing under the heading "Material United States Federal Income Tax Consequences" in the prospectus contained in the Registration Statement, is our opinion as to material federal income tax consequences of the Exchange Offer. We hereby consent to the filing of this opinion letter as an Exhibit to the Registration Statement, and to the use of our name in the prospectus included in the Registration Statement under the heading "Legal Matters" and "Material United States Federal Income Tax Consequences", without admitting that we are "experts" within the meaning of the Act and the rules and regulations thereunder with respect to any part of the Registration Statement including this Exhibit. Very truly yours, THACHER PROFFITT & WOOD By: /s/ Lauris G.L. Rall EX-8.2 23 CAINS OPINION [LETTERHEAD OF CAINS]
7 August 1997 Credit Suisse First Boston Corporation and Eleven Madison Avenue United States Trust Company of New York New York, New York 10010 as Indenture Trustee, Collateral Agent and USA Warrant Agent and 114 West 47th Street Cambridge Partners, L.L.C. New York, New York 10036 c.o Credit Suisse First Boston Corporation USA Eleven Madison Avenue and New York, New York 10010 The Chase Manhattan Bank USA as Indenture Trustee and 450 West 33rd Street Duff & Phelps Credit Rating Co. New York, New York 10001 17 State Street USA New York, New York 10004 and USA Standard & Poor's Rating Group, a division and of The McGraw Hill Companies Credit Suisse First Boston 25 Broadway as Administrating Bank and Funding Bank New York, New York 10004 Five Cabot Square USA London E14 4QR and England Moody's Investors Service, Inc and 99 Church Street Each of the Participating Banks which is New York, New York USA 10007 a party to the Letter of Credit Reimbursement and Guaranty Agreement
Dear Sirs: We have acted as legal advisers in the Isle of Man to Navigator Holdings PLC ("Holdings"), Navigator Gas Transport PLC (the "Issuer"), Navigator Gas Management Limited (the "Manager") and Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited (the "Owners") in connection with the issuance of US$217,000,000 aggregate principal amount of 10.5% First Priority Ship Mortgage Notes Due 2007 (the "First Priority Notes") issued by the Issuer and 87,000 Units consisting of US$87,000,000 aggregate principal amount of 12% Second Priority Ship Mortgage Notes Due 2007 (the "Second Priority Notes") issued by the Issuer and Warrants (the "Warrants") to purchase 666,420 shares of common stock (being ordinary shares) issued by Holdings (the "Units") We have examined the following documents: 1
1. Copy draft (dated 6 August 1997) Indenture among the Issuer, Holdings, the Owners and United States Trust Company of New York, as Indenture Trustee; 2. Copy draft (dated 6 August 1997) Indenture among the Issuer, Holdings, the Owners and Chase Manhattan Bank, as Indenture Trustee; 3. Copy draft (dated 6 August 1991) Collateral Agency and Intercreditor Agreement among the Issuer, the Owners, Holdings, United States Trust Company of New York, as First Priority Trustee and Collateral Agent, The Chase Manhattan Bank, as Second Priority Trustee, and Credit Suisse First Boston; 4. Copy executed Purchase Agreement dated 31 July 1997 among Credit Suisse First Boston Corporation, Cambridge Partners, L.L.C., the Issuer, Holdings and the Owners; 5. Copy executed Registration Rights Agreement dated 31 July 1997 among the Issuer, the Owners, Holdings, Credit Suisse First Boston Corporation and Cambridge Partners, L.L.C.; 6. Copy draft (dated 6 August 1997) Warrant Agreement among Holdings and United States Trust Company of New York, as Warrant Agent; 7. Copy draft (dated 6 August 1997) Letter of Credit Reimbursement Agreement and Guaranty among the Issuer, Holdings, the Owners, Credit Suisse First Boston acting through its London Branch as Administrating Bank and Funding Bank and the Participating Banks named therein, 8. Copy executed First Priority Notes dated 7 August 1997: 9. Copy executed Second Priority Notes dated 7 August 1997; 10. Copy executed Warrant dated 7 August 1997; 11. Copy draft (dated l August 1997) Inter-Company Note from the Owners to the Issuer, 12. Copy draft (dated 1 August 1997) Management Agreement between Holdings, the Issuer, the Owners and the Manager; 13. Copy Agreement on Contract for Technical Matters between the Manager, on behalf of the Owners, Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH ("GEBAB"), China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard ("Jiangnan"), signed on behalf of CSTC and Jiangnan;
2
14. Copy draft (dated 4 August 1997) Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement between the Manager on behalf of the Owners and GEBAB; 15. Copy draft (dated 4 August 1997) Master Commercial Marketing and Services Agreement between the Manager, on behalf of the Owners, and GEBAB; 16. Copy drafts (dated 1 August 1997) of Issue of One Debenture between each of the Owners and United States Trust Company of New York, as Collateral Agent; 17. Copy Tri-Party Agreement among the Owners, Jiangnan, CSTC and Tractebel Gas Engineering GmbH, signed on behalf of CSTC and Jiangnan: 18. Copies Amended and Restated Shipbuilding Contract among each of the Owners (as designee of Navigator Holdings PLC), CSTC and Jiangnan, signed on behalf of Holdings and Jiangnan; 19. Copy drafts (dated 4 August 1997) Amendment No.1 to Shipbuilding Contract among each of the Owners, CSTC and Jiangnan; 20. Copy drafts (dated 24 July 1997) of Assignment and Assumption Agreement between Holdings and each of the Owners; 21. Copy draft (dated 4 August 1997) Assignment and Assumption Agreement between Holdings and the Manager on behalf of the Owners; 22. Copy Offering Circular dated 31 July 1997 in respect of the issuance of the First Priority Notes and the Units; 23. The Memorandum and Articles of Association of each of Holdings, the Issuer, the Manager and the Owners; 24. Copy written resolutions of the board of directors of each of Holdings, the Issuer, the Manager and the Owners dated 6 August 1997.
In this opinion, the "Documents" means the documents referred to at paragraphs 1 to 24 inclusive and the "Security Documents" means the documents referred to at paragraphs 3, 16, 20 and 21. In arriving at the opinion expressed below, in addition to examining the Documents, we have examined such other documents as have been revealed by searches of the Isle of Man Companies Registry and Rolls Office undertaken on 1 August 1997 and updated on 6 August 1997, in respect of each of Holdings, the Issuer, the Manager and the Owners. 3 In arriving, at our opinion we have assumed: (A) the genuineness of all signatures on original documents, the correctness of all facts stated in and representations made in the documents which we have examined (except as otherwise opined upon herein) and the conformity to original documents of all copy documents; (B) that each of the parties to the Documents (other than each of Holdings, the Issuer, the Manager and the Owners) is duly incorporated, validly existing and fully authorised, qualified and empowered under their respective constitutions and any applicable laws to carry on business and to enter into and perform their respective obligations and exercise their respective rights under each of the Documents; (C) that each of the parties to the Documents (other than each of Holdings, the Issuer, the Manager and the Owners) has taken all corporate and other action required to authorise the execution of the Documents and the performance of their respective obligations thereunder; (D) that there are no provisions of the laws of any jurisdiction outside the Isle of Man or any agreement to which any of the parties to the Documents is a party which would be contravened by such execution or delivery and that, insofar as any obligation under the Documents falls to be performed in any jurisdiction outside the Isle of Man, its performance will not be unlawful by virtue of the laws of that jurisdiction; (E) that the Documents, once they have been validly executed and delivered, will not differ to any material extent from the copy drafts thereof which have been submitted to us and which we have examined in giving our opinion; (F) that the Documents (with the exception of each Issue of One Debenture which is subject to Isle of Man law) will, when validly executed and delivered, be valid and legally binding in accordance with their terms under the laws by which they are expressed to be governed; (G) the accuracy and currency of the records and filing systems maintained at the public offices where we have searched or inquired or have caused searches or inquiries to be conducted; (H) that all necessary consents or approvals of, and all necessary registrations or other action by or with, any regulatory authority or any other person or entity outside the Isle of Man have been or will be obtained, performed or taken in relation to the execution, delivery and performance of each of the Documents by each of the parties thereto; (I) that all appropriate notices of and consents to assignment required to be given or which it is desirable to be given in connection with any of the Documents are, in fact given in timely fashion; 4 (J) that entering into the Documents and performing the obligations which each of Holdings, the Issuer, the Manager and the Owners undertakes is to its respective commercial benefit; (K) that each of Holdings, the Issuer and the Owners has acquired tax exempt status in terms of the Income Tax (Exempt Companies) Act 1984 (an Act of Tynwald) and will maintain such tax status and will not do anything to prejudice such tax status during the currency of the transaction envisaged by the Documents. We confirm that appropriate steps have been taken to obtain such tax status and that we have no reason to believe that such tax status will not be granted; the process of obtaining such tax status is administrative and not one subject to the exercise of discretion; (L) that the Manager is not and will not be resident in the Isle of Man for tax purposes during the currency of the transaction envisaged by the Documents. Based on and subject to the foregoing and subject to the further reservations and qualifications set out below, we are of the opinion that: (i) each of Holdings, the Issuer, the Manager and the Owners is duly incorporated in the Isle of Man, is validly existing as a company in good standing under the laws of the Isle of Man and has the corporate power and authority to own its property and to conduct its business as described in the Offering Circular; (ii) each of Holdings, the Issuer, the Manager and the Owners has taken all corporate and other action required to authorise the execution of the Documents and the performance of their respective obligations thereunder (as applicable) to the extent a party thereto; (iii) shares in Holdings conform to the description thereof in the Offering Circular and have been duly authorised and validly allotted to such persons and for such consideration as is described in the Offering Circular; (iv) all the shares issued by the Issuer and the Owners have respectively been duly authorised and validly issued as fully paid up. To our knowledge, the issued shares of the Issuer and the Owners are legally owned by Holdings or the Issuer, as the case may be, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, except for one ordinary share in the Issuer which is beneficially owned by Holdings but which is legally owned by Mr. Edward Cain of 1519 Athol Street, Douglas, Isle of Man, IM1 1LB, and except for the security interests created by or pursuant to the Security Documents, and subject thereto, there are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, shares in the Issuer or any of the Owners; (v) the First Priority Notes, and the Second Priority Notes and the Warrants comprising the Units have been duly authorised for issue, execution and delivery by the Issuer and Holdings, (as applicable), and conform to the descriptions thereof contained in the Offering Circular; 5 (vi) each of the Documents has been duly authorised, executed and delivered by Holdings, the Issuer, the Manager and each of the Owners (as applicable) to the extent a party thereto, and the Documents constitute valid and legally binding obligations of Holdings, the Issuer, the Manager or each of the Owners to the extent a party thereto, enforceable against such of Holdings, the Issuer, the Manager or such Owner in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganisation, moratorium or similar laws of general applicability affecting creditors' rights and to general equity principles; (vii) the information disclosed in the Offering Circular, so far as it relates to matters of Isle of Man law, fairly summarises the said matters of Isle of Man law as at the date of the said Offering Circular; (viii) no withholding taxes will be imposed on payments of principal, interest or premium (if any) thereon with respect to the First Priority Notes or the Second Priority Notes and the holders of First Priority Notes or Second Priority Notes will not be subject to any income taxes imposed by the Isle of Man solely as a result of owning the First Priority Notes or the Second Priority Notes. In addition, the holders of the Warrants will not be subject to any income or withholding taxes imposed by the Isle of Man solely as a result of owning the Warrants, exercising the Warrants to purchase ordinary shares in the share capital of Holdings or owning ordinary shares in the share capital of Holdings; (ix) no consent, approval, authorisation, permission or other order of any court, regulatory body, administrative agency or other governmental body of the Isle of Man is required for the offering and sale of the First Priority Notes and the Units or for the execution, delivery and performance of any of the Documents (including the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Documents, subject to the filing requirements pursuant to paragraph (xvi) below) by the respective parties thereto, other than the permission of the Treasury of the Isle of Man Government pursuant to Section 2(2)(d) of the Prevention of Fraud (Investments) Act 1968 (an Act of Tynwald); (x) the security interests created by the Collateral Agency and Intercreditor Agreement (being a document governed by the laws of the State of New York) do not require any action to be taken under or pursuant to the laws of the Isle of Man in order to create or perfect such security interests or to permit the Collateral Agent to enforce its rights under the Collateral Agency and Intercreditor Agreement creating the same, other than (i) the delivery by Holdings of the share certificates of the Issuer to the Collateral Agent on the Closing Date, (ii) the delivery by the Issuer of the share certificates of the Owners to the Collateral Agent on the Closing Date, (iii) the delivery by the Owners of an Inter-Company Note to the Issuer and (iv) the making of filings referred to in paragraph (xvi) below; (xi) the choice of the law of the State of New York to govern the Documents governed by New York law, constitutes a valid choice of law insofar as the law of the Isle of Man is concerned. The submission by Holdings, the Issuer and the Owners to the nonexclusive jurisdiction of 6 any Federal or State court in the Borough of Manhattan, The City of New York in respect of any of the Documents governed by New York law to which they are respectively a party is a valid submission insofar as the law of the Isle of Man is concerned; in this regard we note that Cambridge Partners, L.L.C. has accepted its appointment by Holdings, the Issuer and the Owners as their agent to accept service of process in the United States of America under the Documents (as applicable); (xii) the issue of One Debenture to which each of the Owners is a party creates, for the benefit of the Collateral Agent as secured party, a valid security interest in assets of such owner and the proceeds thereof, which security interest will, upon registration in accordance with paragraph (j) of the reservations section of this letter below rank in priority to other charges created by such Owner of which we are aware, except for those interests which by operation of law, will take priority; (xiii) security interests created by the Security Documents (with the exception of floating charge elements of the Issue of One Debenture and any other Security Document) are specific and therefore upon registration in accordance with paragraph (j) of the reservations section of this letter below will rank in priority to other security interests created over the assets which are the substance of those Security Documents except for those interests which, by operation of law, will take priority; (xiv) the Issue of One Debenture and other Security Documents (as applicable) constitute, in respect of floating charge elements thereof, a first ranking perfected floating charge (but not a fixed charge); recoveries under the floating charge element may be subject to certain preferential creditors; (xv) in a suit on the merits brought before an isle of Man court, an Isle of Man court may, if so requested and at its discretion, give effect to an agreement between the parties as to a judgment currency other than pounds sterling; (xvi) no filing with any governmental authority or regulatory body of the Is1e of Man is required for the offering and sale of the First Priority Notes and the Units or for the execution, delivery and performance of any of the Documents, except as stipulated at paragraphs (j) and (k) of the reservations section of this letter below; (xvii) any final and conclusive money judgment (whether in sterling, or otherwise) obtained in a properly constituted court of the United States of America will be recognized and enforceable in any proceedings before the courts of the Isle of Man without reexamination or re-litigation on any matter which shall be the subject of that judgment; (xviii) none of Holdings, the Issuer, the Manager or the Owners nor any of their respective properties has any immunity from jurisdiction of any court or from any legal process under the laws of the Isle of Man; 7 (xix) the execution, delivery and performance by Holdings, the Issuer, the Manager and the Owners of the Documents (to the extent a party thereto), does not conflict with their respective memorandum and articles of association; (xx) on the principle laid down in Saloman v. A Saloman and Co. Limited [1897] AC22, as applied in the recent case of Poly Peck International Finance Limited [1996] BCC486, it is our opinion that, if any of Holdings, the Issuer or the Owners was wound up, the courts of the Isle of Man would not order substantive consolidation of the assets and liabilities of the relevant company with those of third parties or with those of its shareholders The courts may, however, lift the corporate veil where a company is a facade as an unconscionable attempt to avoid existing obligations or to practice some deception; and (xxi) the granting of the security interests by the Owners and Holdings would not be subject to review under relevant fraudulent conveyance statutes and other applicable insolvency laws of the Isle of Man in a bankruptcy or other proceeding involving one or more of the Owners and Holdings. Under the said fraudulent conveyance statutes and other applicable insolvency laws of the Isle of Man, if a court were to find that, with respect to any Owner or Holdings, at the time the security interests were granted (the "Transfer"), it (a) made such Transfer with actual intent to prefer or defraud any present or future creditor, (b) received less than reasonably equivalent value of fair consideration for the Transfer or (c) intended to incur, or believed that it would incur, debts beyond its ability to pay as they matured (as the foregoing terms are defined in or interpreted under the relevant laws) such court could avoid the Transfer in whole or in part. To the extent that a Transfer by any Owner or Holdings exceeds the consideration received by it, the determination of whether the Transfer in question is a fraudulent conveyance depends on (1) whether the Transfer so exceeds the value and benefit received by such Owner or Holdings that, at least to the extent of such excess, the Owner of Holdings did not receive reasonably equivalent value or fair consideration for the Transfer, and, if so, then (2) whether following the valuation of the assets and liabilities of such Owner or Holdings, it is determined that such Owner or Holdings is or has been rendered insolvent. The opinions expressed above are given subject to the following reservations and qualifications: (a) except as otherwise set forth in paragraph (xxi) above, enforcement of any of the Documents may be limited by bankruptcy, insolvency, liquidation, reorganisation, court schemes, moratoriums, the doctrine of frustration and laws relating to or affecting the rights of creditors generally; (b) enforcement of any of the Documents may be limited by general principles of equity and, in particular, equitable remedies are available only at the discretion of the Isle of Man courts and are not available where damages are considered to be an adequate remedy; (c) claims may be or become time barred in the Isle of Man under the Limitation Acts 1984 and 1988 (Acts of Tynwald) or become subject to a defense of set-off or counterclaim, 8 (d) under Isle of Man law the terms of an agreement under hand may be varied by oral or written agreement of the parties; (e) a foreign judgment would not be enforced by an Isle of Man court without a re-trial or re-examination of the matters thereby adjudicated upon if a judgment were obtained by fraud or in a manner contrary to natural justice or if the enforcement thereof were contrary to Isle of Man public policy and such enforcement may also be withheld if the relevant judgment were not a final and conclusive money judgment being both unrelated to taxation and free of conflict with any other judgment in the same cause of action; (f) The Protection of Trading Interests Act 1980 (an Act of Parliament extended to the Isle of Man by Order in Council) prohibits the enforcement in the Isle of Man of any judgment for multiple damages that is to say a judgment for an amount arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damage sustained by the judgment creditor; (g) provisions relating to set-off contained in any of the Documents will only be enforceable in a liquidation of a company insofar as they do not purport to contract out of the mandatory set-off rules imposed by the Bankruptcy Code 1892; (h) if proceedings are commenced in the Isle of Man courts any provision in any of the Documents to the effect that calculations and/or certifications will be conclusive and binding will not be effective in Isle of Man law if such calculations and/or certifications are fraudulent or erroneous on their face and will not necessarily prevent judicial inquiry into the merits of any claim respecting any such calculation or certification; (i) if proceedings are commenced in the Isle of Man courts, where in any of the Documents a party is vested with a discretion or may determine a matter in its opinion, the law of the Isle of Man may require that such discretion is exercised reasonably or that such opinion is based on reasonable grounds; (j) the Security Documents should be lodged for filing at the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act 1931 (as amended) within one month from their respective dates of creation. Failure to do so will, in the event that any of the Security Documents are of a type referred to in Section 79 of that Act, render them void against a liquidator or creditor of the relevant company and priority over other creditors will be lost. We confirm that we have been instructed to attend to the said filing of the Security Documents; (k) copies of the Offering Circular, together with copies of certain other documents, must be registered with the Registrar of Companies in the Isle of Man pursuant to Section 38 of the Companies Act 1931 (as amended) (an Act of Tynwald) before the Offering Circular is issued by Holdings and the Issuer; 9 (l) provisions as to severability in any of the Documents may not be binding and the question of whether or not provisions relating to invalidity may be severed from other provisions in order to save such other provisions would be determined by the Isle of Man courts at their discretion: (m) no opinion is expressed as to whether the Isle of Man courts would give effect to any currency indemnities contained in the Documents; (n) the validity under Isle of Man law of any provision which purports to impose an obligation on one party to meet the costs of another on a full indemnity basis will be subject to the right of the Isle of Man courts to override such provision and award costs on a less than full indemnity basis; (o) we express no opinion as to the validity or the binding effect of any provision which provides for the payment of interest on overdue amounts. An Isle of Man court would not give effect to such provisions if it could be established that the amount expressed as being payable was such that the provision was in the nature of a penalty; that is to say a requirement for a stipulated sum to be paid irrespective of; or necessarily greater than, the loss likely to be sustained: (p) the Isle of Man courts may stay proceedings if concurrent proceedings are being brought elsewhere; (q) in proceedings before the Isle of Man courts any indemnities and provisions to pay increased costs contained in the Documents may not be enforced to the extent that such indemnities and provisions would amount to compensation for any economic loss which was outside the reasonable contemplation of the parties at the time of execution of the Documents and to the extent that the clauses purport to oust the jurisdiction of the Isle of Man court; (r) any provisions of the Documents which purport to permit retention of security after discharge of the liabilities secured thereby may not be effective as a matter of Isle of Man law; (s) the stock pledge as an equitable charge is a weaker form of security than a legal charge; we have assumed (with your agreement) that you are aware of this fact and the facts giving rise to it; (t) no opinion is expressed (i) as to whether the Isle of Man courts would construe any of the Documents without giving effect to principles of conflict of laws; or (ii) as to whether the obligations of each Owner under the Issue of One Debenture may be discharged, released, prejudiced or otherwise affected by any act, omission or circumstance which, but for provisions contained in the Issue of One Debenture, might so operate or otherwise release or discharge such Owner from the obligations set out herein; and 10 (u) this opinion addresses matters of law not fact and is confined entirely to Isle of Man law. This opinion may only be relied upon by you and may not be disclosed or relied upon by any other person without our prior written consent. Notwithstanding the foregoing, this opinion may be relied upon by Thacher Proffitt & Wood and Cravath, Swaine & Moore, in connection with the delivery of their opinions to you pursuant to the Documents. Yours faithfully CAINS - ----- 11 EX-10.1 24 AMEND. & RESTATED SHIPBLDG. CONT. (HULL NO. 2245) AMENDED AND RESTATED SHIPBUILDING CONTRACT for CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2245) Date: June 26, 1997 between NAVIGATOR HOLDINGS PLC as BUYER and CHINA SHIPBUILDING TRADING COMPANY, LIMITED and JIANGNAN SHIPYARD Collectively as SELLER Amended and Restated Shipbuilding Contract H2245 AMENDED AND RESTATED SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2245) This AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "Contract"), entered into this 26th day of June, 1997 by and between Navigator Holdings PLC (formerly named Navigator Holdings, Ltd.), a company organized and existing under the laws of the Isle of Man, having its registered office at 15-19 Athol Street, Douglas, Isle of Man, (hereinafter called the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 10 Yue Tan Bei Xiao Jie, Beijing 100861, the People's Republic of China (hereinafter called "CSTC"), and JIANGNAN SHIPYARD, a corporation organized and existing under the laws of the People's Republic Of China, having its registered office at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "BUILDER" and collectively with CSTC, the "SELLER") on the other part. The BUYER and SELLER are parties to the SHIPBUILDING CONTRACT for the construction of one (1) 22,000 cubic meter liquified ethylene gas carrier (Hull No. 2245), dated February 4th, 1997, and desire to amend and restate the terms thereof in accordance with the terms and provisions of this AMENDED AND RESTATED SHIPBUILDING CONTRACT. This AMENDED AND RESTATED SHIPBUILDING CONTRACT is being executed and delivered simultaneously with the execution and delivery of four separate and individual Shipbuilding Contracts as restated and amended (the "Related Contracts") between the SELLER and the BUYER each dated as of the date hereof with respect to the construction of four sister vessels which will have the BUILDER's Hull designation numbers 2246, 2247, 2248 and 2249 (collectively, the "SISTER VESSELS"). -1- Amended and Restated Shipbuilding Contract H2245 WITNESSETH In consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at the BUILDER's Shipyard and to sell and deliver to the BUYER after completion and successful trial one (1) 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (hereinafter called the "VESSEL") as more fully described in Article I hereof to be registered under the flag of Liberia and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same all in accordance with the terms and subject to the conditions hereinafter set forth. ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION The BUILDER shall, at its Jiangnan Shipyard, located at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "Shipyard"), construct, launch, equip, supply, and in all respects complete so as to be ready for immediate operation (subject to the gas trials as set forth in Article VII, Section 7), and deliver to the BUYER a 22,000 cubic meter liquefied ethylene gas carrier with 22,800 deadweight tons of carrying VCM on scantling draft of 10.90 meters and the class described below in Article I, Section 2 (hereinafter called the "VESSEL"), to be designated as Hull No. 2245, together with all machinery, materials, parts, supplies, equipment, appurtenances, and all other items necessary to and for the said construction, completion, delivery, and operation of the VESSEL. The VESSEL shall be built and completed in accordance with the following: (1) Specifications (Drawing No. 2LG970104) (2) General Arrangement (Drawing No. 2LG970102) (preliminary) (3) Maker List (Drawing No. 2LG970105) attached hereto and made a part hereof and signed by each of the parties to this Contract (items 1 through 3 of this Article, Section 1 are collectively referred to herein as the "Specifications"). Should there be any discrepancy between this Contract and the Specifications, the provisions in this Contract shall prevail. When there is no specific description in the Specifications a standard of workmanship and practices -2- Amended and Restated Shipbuilding Contract H2245 equivalent to the BUILDER's shipbuilding standards as practicable, generally applicable to the construction of similar size and types of vessels, shall be applicable to the construction of the VESSEL. The BUILDER, at its expense, shall, unless otherwise specifically provided herein, procure and furnish all items and permissions necessary to perform its obligations hereunder including, but not limited to, (i) plans and specifications (in addition to the Specifications), labor, machinery, materials, parts, supplies, equipment, appurtenances, and (ii) licenses, permits, inspections, surveys and approvals. 2. CLASS AND RULES The VESSEL, including its machinery and equipment, shall be constructed in accordance with the rules and regulations of Germanischer Lloyd (hereinafter called the "Classification Society") shall be distinguished in the record by the symbol of +100 A5 E "Liquefied Gas Carrier Type 2G" +MC E, AUT INERT and shall also comply with the rules and regulations as fully described in the Specifications. The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include the rules or circulars issued and becoming effective as at the date this Contract is executed and delivered (the "Effective Date"). The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for supervision of the construction of the VESSEL. All fees and charges incidental to Classification and to comply with the rules, regulations issued and becoming effective as of the Effective Date as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto. -3- Amended and Restated Shipbuilding Contract H2245 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) The basic dimensions of the VESSEL shall be Length Overall: abt. 171.50m Length between perpendiculars: 160.50m Breadth moulded: 24.20m Depth moulded: 16.70m Scantling Draft moulded (VCM): 10.90m Deadweight (VCM): 22,800mt Draught moulded (Ammonia): 9.35m Deadweight (Ammonia): 17,150mt Design Draught moulded (Ethylene): 8.80m Deadweight (Ethylene): 15,100mt Cargo Tanks Volume: 22,000cbm The above mentioned dimensions may be changed, if calculations of intact stability and damage stability show necessity and/or possibility during development of the design. But the guaranteed performance of the vessel such as speed, fuel consumption, deadweight and cargo tank volume as stipulated in following Clause 4, 5, 6 and 7 shall remain unchanged. (b) Propelling Machinery: The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN B&W 6S50MC or Sulzer 6RTA52 type Main Engine. (c) Gas Plant The VESSEL shall be equipped with a complete set of gas plant including four (4) cargo tanks of a total volume of 22,000 cubic meters (hereinafter called the "GAS PLANT") as fully described in the Specifications. 4. GUARANTEED SPEED The SELLER guarantees that the service speed of the VESSEL on ethylene condition with draft of 8.80 meters as stipulated in the Specifications at 90% MCR of main engine with 15% sea margin is to be not less than 16.5 nautical miles per hour. -4- Amended and Restated Shipbuilding Contract H2245 The above guaranteed speed shall be deemed having been achieved if the speed in sea trial condition as determined by the trial run is reached after correction according to the Specifications. The speed in sea trial condition, i.e. calm weather with wind not exceeding 6 knots (two degrees Beaufort scale) and sea state maximum 2 with clean bottom and running in deep smooth water, shall be determined as per the result of model test at ballast condition (about 20% deadweight at design draft (ethylene) of 8.8 m). The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 128 grams/brake horse power/hour at MCR of main engine at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram according to the Specifications. 6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 22,800 metric tons at the scantling draft of carrying VCM of 10.90 meters in sea water of 1.025 specific gravity. The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER's supervisor(s) or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final. 7. GUARANTEED CARGO TANK CAPACITY -5- Amended and Restated Shipbuilding Contract H2245 The SELLER guarantees that the VESSEL is to have a total cargo tank capacity of not less than 22,000 cubic meters geometric including the volume of tank domes with ambient temperature as described in the Specifications. 8. SUBCONTRACTING The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain primarily responsible for such subcontracted work. 9. REGISTRATION The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of Liberia at the time of delivery and acceptance thereof. ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE The net purchase price of the VESSEL is United States Dollars Forty Nine Million, Nine Hundred Thirty Seven Thousand (US$49,937,000) (hereinafter called the "Contract Price"), to be paid by the BUYER to SELLER for the construction and completion of the VESSEL which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof. The Contract Price shall be fixed, with no escalation and subject to upward or downward adjustment, if any, as expressly set forth in this Contract and in Schedule 1 attached hereto. To the extent that the SELLER may, under applicable law, regulation or decree (including those of the People's Republic of China), have any right(s) to escalate or change the Contract Price, such right(s) are hereby waived. The Contract Price includes all costs and expenses incurred by SELLER performing engineering calculations for designing and supplying all necessary drawings for the VESSEL, in accordance with the Specifications. 2. CURRENCY Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars ("US$"). 3. TERMS OF PAYMENT -6- Amended and Restated Shipbuilding Contract H2245 The Contract Price shall be paid by the BUYER to the SELLER in installments as indicated on Schedule 1 attached hereto. 4. METHOD OF PAYMENT (a) First Installment: On or prior to July 21, 1997 (except as may be provided in Schedule 1), the BUYER shall remit by telegraphic transfer the first installment in the amount set forth on Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER. (b) Each subsequent Installment: Except as may be provided in Schedule 1, the BUYER shall remit by telegraphic transfer each subsequent installment on the date and in the amount set forth in Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 banking days prior to the due date for payment ("SELLER's Bank"). Upon receipt of a facsimile or telex notice from the SELLER not less than six (6) banking days in New York prior to the scheduled Delivery Date, notifying the BUYER of such date, the BUYER shall deposit the amount payable upon Delivery of the VESSEL by telegraphic transfer to account of the SELLER's Bank at least three (3) banking days in the People's Republic of China prior to the scheduled Delivery of the VESSEL, with irrevocable instructions to be confirmed by the SELLER's Bank that the said deposit shall be payable to the -7- Amended and Restated Shipbuilding Contract H2245 SELLER against presentation by the SELLER of either (i) a duplicate original copy of the Protocol of Delivery and Acceptance of the VESSEL signed by the SELLER and the BUYER or (ii) a Certificate of Completion (in the form of Exhibit D hereto) signed by the SELLER, the Classification Society and Tractebel Gas Engineering GmBH (the "Certificate of Completion"), and that, in the event that the actual delivery and acceptance of the VESSEL shall not take place within seven (7) banking days following such scheduled Delivery, the said deposit shall be returned to the BUYER's bank, together with interest thereon. The SELLER's Bank shall hold the deposit in an interest bearing account and the BUYER shall be entitled to receive interest thereon. 5. PREPAYMENT The BUYER shall have the right to make prepayment of any and all installments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment. 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY The BUYER shall, concurrently with the payment of the first installment of the Contract Price, deliver to the SELLER a Trustee's Commitment Letter executed by a bank organized under the laws of the United States or any State thereof (the "Trustee Bank"), in the form annexed hereto as Exhibit "E" (the "Trustee's Commitment Letter") which shall indicate the amounts held by the Trustee Bank for the payment of the first through fifth installments of the Contract Price. Such Trustee Bank shall be an international banking institution acceptable to the SELLER. 7. REFUNDS (a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: -8- Amended and Restated Shipbuilding Contract H2245 (i) the amounts set forth on Schedules 2 and 3 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 3 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 3 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of ten percent (10%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party. (b) Upon the payment of the first installment and the delivery of the Trustee's Commitment Letter in the form of Exhibit E hereto, the SELLER shall, at its cost, furnish the BUYER with (i) an Irrevocable Letter of Guarantee given by a bank acceptable to the -9- Amended and Restated Shipbuilding Contract H2245 BUYER (hereinafter referred to as "Guarantor"), substantially in the form of Exhibit A attached hereto as to the amounts set forth in Schedule 2 hereto, together with an acknowledgement of assignment to the Trustee Bank by the Guarantor and (ii) Irrevocable Performance Bonds given by The Export Import Bank of China and Generale de Banque (hereinafter collectively referred to as "Performance Guarantor"), substantially in the form of Exhibit B and Exhibit C, respectively, attached hereto which in the aggregate are equal to the aggregate amount set forth in Schedule 3 hereto and each Schedule 3 attached to the Related Contracts as to the Sister Vessels, together with an acknowledgement of assignment to the Trustee Bank by each Performance Guarantor. The Irrevocable Letters of Guarantee and the Irrevocable Performance Bonds shall guarantee payment to the BUYER of an amount in United States Dollars, at such place as the BUYER or its assignee may designate, which is sufficient to cover all sums payable or repayable by the SELLER to the BUYER under this Contract with interest thereon as provided in Article II, Section 7(a) above, upon receipt by said Guarantor and each Performance Guarantor, respectively, from the BUYER of a written claim that it is entitled to such payment or repayment and that the SELLER has failed to make same. ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL as provided for in Schedule 1 shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty. 1. DELIVERY (a) Delayed Delivery Price Adjustment: (i) For purposes of this Contract the Original Delivery Date for the Vessel shall mean the date set forth in Article VII, Section (1) below. (ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $10,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $13,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay -10- Amended and Restated Shipbuilding Contract H2245 Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages. (iii) If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period. (iv) In the event that the BUYER elects to reject the VESSEL as allowed under this Article III, Section 1(a), the SELLER shall immediately repay to the BUYER the amounts set forth in Article II, Section 7, whereupon this Contract shall terminate and such payment shall forthwith discharge all obligations, duties and liabilities of each party hereto to the other under this Contract. -11- Amended and Restated Shipbuilding Contract H2245 (v) For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Original Delivery Date of the VESSEL is extended by reason of a Permissible Delay. For purposes of this Article a Permissible Delay means a delay caused by reason of causes and provisions of (1) Section 2 of Article V (but only as to days of extension beyond 12 days), (2) Article VIII, and (3) any delay caused by any action or inaction on the part of SELLER; provided such Permissible Delay shall be subject to the following provisions: (A) The maximum Permissible Delay for the Vessel and each Sister Vessel shall be as follows: (i) Hull No. 2245 - 60 days (ii) Hull No. 2246 - 45 days (iii) Hull No. 2247 - 30 days (iv) Hull No. 2248 - 30 days (v) Hull No. 2249 - 30 days (B) For purposes of this Contract the Extended Delivery Date for a Vessel shall mean the Original Delivery Date plus the Permissible Delay for such Vessel, (C) The aggregated Permissible Delay for the Vessel and the Sister Vessels shall not exceed 150 days, and (D) Subject to the limitations set forth in (A) above, SELLER shall have the right in its sole discretion to designate either the Vessel or any Sister Vessel as to which Vessel will be subject to a Permissible Delay. (b) Early Delivery Price Adjustment: If the SELLER notifies the BUYER by facsimile that the delivery of the VESSEL shall be made earlier than the Original Delivery Date and such notification is given not less than two (2) months prior to the newly planned delivery date, a certain amount of bonus shall be given by the BUYER to the SELLER as follows: -12- Amended and Restated Shipbuilding Contract H2245 In the event that the delivery shall be made earlier than the Original Delivery Date and notice is properly given, then a bonus shall be added to the Contract Price at a rate of United States Dollars Thirteen Thousand (US$13,000) per day for each full day earlier than the Original Delivery Date. The total increase of the Contract Price for the earlier delivery shall be added to the fifth installment of the Contract Price. 2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being equal to or less than three-tenths (3/10) of one knot below the guaranteed speed as specified in Section 4 of Article I of this Contract. (b) However, commencing with a deficiency of three-tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Section 4, Article I of this Contract, the Contract Price shall be reduced as follows: IN CASE OF DEFICIENCY: LIQUIDATED DAMAGE above 0.3 but below or at 0.40 knot US$100,000 above 0.40 but below or at 0.50 knot US$200,000 above 0.50 but below or at 0.60 knot US$600,000 above 0.60 but below or at 0.70 knot US$1,000,000 above 0.70 but below or at 0.80 knot US$1,400,000 above 0.80 but below or at 0.90 knot US$1,800,000 above 0.90 but below or at 0.99 knot US$2,200,000 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications ) of the VESSEL upon the Trial Run, is one (1) knot or more below the guaranteed speed of sixteen and half (16.5) knots, then the BUYER may at its option reject the VESSEL, rescind this Contract in accordance with provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any increase in the speed of the VESSEL. -13- Amended and Restated Shipbuilding Contract H2245 3. EXCESSIVE FUEL CONSUMPTION (a) The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than three percent (3%). (b) However, if the actual fuel consumption as determined by shop trial is greater than three percent (3%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars Seventy-Five Thousand (US$75,000 ) for each full one percent (1%) increase in fuel consumption in excess of the above said three percent (3%) (fractions of one percent to be prorated). (c) If as determined by shop trial such actual fuel consumption of the Main Engine is eight percent (8%) or more in excess of the guaranteed fuel consumption set forth in the Specifications the BUYER may, at its option, reject the VESSEL, rescind this Contract, in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any improvements in fuel consumption less than that specified and required under the provisions of this Contract and the Specifications. 4. INSUFFICIENT DEADWEIGHT (a) In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Four Hundred (400) metric tons or less below the guaranteed deadweight of 22,800 metric tons at draft moulded. (b) However, the Contract Price shall be decreased by the sum of United States Dollars One Thousand (US$1,000) for each full metric ton of such deficiency being more than Four Hundred (400) metric tons. (c) In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Eight Hundred (800) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL, rescind this Contract -14- Amended and Restated Shipbuilding Contract H2245 in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. 5. INSUFFICIENT CARGO TANK CAPACITY ( a) In the event there is a deficiency in the actual capacity of the cargo tanks determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is One Hundred (100) cubic meters or less below the guaranteed cargo tank capacity. (b) However, the Contract Price shall be decreased by the sum of United States Dollars Three Thousand Five Hundred (US$3,500) for each full cubic meter of such deficiency being more than One Hundred (100) cubic meters but equal to or less than Four Hundred (400) cubic meters. (c) In the event that there should be a deficiency in the VESSEL's actual cargo tank capacity which exceeds Four Hundred (400) cubic meters below the guaranteed cargo tank capacity the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made if the actual capacity of the cargo tanks determined as provided in the Specifications exceeds the cargo tank capacity set forth in the Specifications. 6. EFFECT OF RESCISSION It is hereby expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, the BUYER, saving its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage set forth in this Article, other than liquidated damages payable pursuant to Article III Section 1(a)(iii) above. 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS All adjustments in the Contract Price, if any, pursuant to this Article III shall be applied against the Fifth Installment of the Contract Price payable to SELLER on Delivery as defined in Article VII, Section 1. -15- Amended and Restated Shipbuilding Contract H2245 ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall in good time send to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary visa for the Supervisor to enter China will be issued in order on demand and without delay provided that the Supervisor meets with the rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of visa. 2. APPROVAL OF PLANS AND DRAWINGS The parties hereto shall, within a reasonable period of time after signing of this Contract, mutually agree upon a list of all the plans and drawings, which are to be sent to the BUYER for approval (hereinbelow called "the LIST"). Before the arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with approval or remarks, if any. Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER, in writing, of the authority the Supervisor shall have with regard to the approval or modification of plans and drawings (that is, which of the drawing and plans specified in the LIST but not yet sent to the BUYER can be submitted to and approved by the Supervisor). Nevertheless in line with the Supervisor's authority, the Supervisor shall, within five (5) days after receipt thereof, return those submitted plans and drawings with approval or remarks, if any. Unless notification is given to the BUILDER by the Supervisor or the BUYER of approval or disapproval of any plans and drawings within the above designated period of time for each case, the said plans and drawings shall be deemed to have been automatically approved. -16- Amended and Restated Shipbuilding Contract H2245 The plans and drawings approved by the BUYER or Supervisor shall be final, and any alteration thereof shall be regarded as modification specified in Article V of this Contract. 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications. The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. However the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with the agreed inspection procedure and Schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. The BUILDER agrees to furnish, free of charge, the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of the BUILDER's Shipyard, but the fees for the international communication like telephone and telefax, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation within Shanghai shall be provided to the Supervisor by the SELLER. -17- Amended and Restated Shipbuilding Contract H2245 4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employment of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage, loss or destruction was caused by negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. -18- Amended and Restated Shipbuilding Contract H2245 5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account. 6. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's yard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangable. ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, telex and telefaxes, manifesting such agreement. The letters, telexes as well as telefaxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, telexes and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and -19- Amended and Restated Shipbuilding Contract H2245 made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER's request for any modification and/or changes. 2. CHANGES IN RULES AND REGULATIONS (a) If, after the Effective Date, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree: (i) As to any increase or decrease in the guaranteed deadweight and/or cargo tank capacity and for speed of the VESSEL, if such compliance results in increased or reduced deadweight and/or cargo tank capacity and speed; and/or (ii) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans. (b) If, due to whatever reasons, the parties shall fail to agree on the increase or decrease of the guaranteed speed, deadweight and cargo tank capacity, -20- Amended and Restated Shipbuilding Contract H2245 or any alteration of the terms of this Contract, if any, then the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes. (c) The BUYER and the SELLER hereby agree to make best efforts to avoid the application and/or minimize the effect of any change in the rules and regulations of the Classification Society as to the Specifications. If the BUYER and the SELLER are unsuccessful in avoiding the application of such change in rules and regulations, then the SELLER shall effect any modifications and/or changes in Specifications without adjustment to the Contract Price and the BUYER shall grant to the SELLER the right to extend the Delivery Date (if necessary) for a maximum period of up to twelve (12) days. 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. 4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply for its own account (the "BUYER's Supplies") by the time designated by the SELLER. The delay in the delivery or the failure to deliver by the BUYER of any BUYER's Supplies within the time specified shall not extend the Delivery Date. However, if the delay in delivery of the BUYER's Supplies should exceed fifteen (15) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL and the BUYER shall accept the VESSEL so completed. -21- Amended and Restated Shipbuilding Contract H2245 The BUILDER shall be responsible for storing and handling of the BUYER's Supplies as specified in the Specifications after delivery to the BUILDER and shall install them on board the VESSEL at the BUILDER's expenses. Upon arrival of such shipment of the BUYER's Supplies, both parties shall undertake an joint unpacking inspection. If any damaged BUYER's supplies are found to be unsuitable for installation, the BUILDER shall be entitled to refuse to accept the BUYER's Supplies. ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least thirty (30) days notice in advance and seven (7) days definite notice in advance in writing by telex or telefax, of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shall promptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than five (5) days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above (other than due to the failure by the BUYER's representative to obtain a visa to enter China), then in such event, the BUYER shall be deemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER's representatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications and is satisfactory in all respects. The SELLER hereby warrants that the necessary visa for the BUYER's representatives to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until the BUYER's representatives have arrived at the BUILDER's Shipyard. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance with its best understanding of the relevant -22- Amended and Restated Shipbuilding Contract H2245 rules, regulations and/or Laws of the People's Republic of China then prevailing, then the SELLER shall so notify the BUYER and the BUYER shall endeavor to effect the replacement of all or any of such representatives. The Delivery Date as stipulated in Article VII hereof shall not be extended by any delays caused by the BUYER's replacement of its representatives pursuant to the SELLER's request. In the event of unfavorable weather on the date scheduled for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER assents in writing by telex or telefax of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, the Delivery Date shall not be extended other than pursuant to Article VIII hereof. 2. HOW CONDUCTED (a) All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications and shall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications. The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial waters equipped with speed measuring facilities. (b) The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, hydraulic oil and greases which shall be supplied by the BUYER according to the BUILDER's schedule which shall be forwarded to the BUYER by the BUILDER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, hydraulic oil and greases supplied by the BUYER shall be in accordance with the applicable engine Specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER. -23- Amended and Restated Shipbuilding Contract H2245 3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Section 2 of this Article VI, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh water, sea water or any other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account. 4. METHOD OF ACCEPTANCE OR REJECTION (a) Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL attached with the trial result, the BUYER or the BUYER's Supervisor shall within six (6) business days thereafter, notify the BUILDER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor. (b) However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications the BUILDER shall investigate with the Supervisor the cause of failure and shall take proper steps to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Trial Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) business days thereafter, notify the SELLER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-Trial Run or re-Trial Runs by the BUILDER. (c) In the event that the BUYER fails to notify the SELLER in writing by telex or telefax of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) business days period as provided for in the above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d) Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case, may be, of the VESSEL shall be referred to the Classification Society as provided in Article XIII Section 2 hereof. (e) Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as -24- Amended and Restated Shipbuilding Contract H2245 aforesaid and the SELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time before effecting delivery of the VESSEL to the BUYER under this Contract. 5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the purchasing price at the port of delivery thereof, and payment by the BUYER shall be effected, together with the payment of the fifth installment, as provided in Article II, Section 4 of this Contract. The BUYER shall supply lubricating oil, hydraulic oil and greases for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil, hydraulic oil and greases actually consumed for the said Trial Run or Trial Runs at the purchasing price incurred by the BUYER and payment by the SELLER shall be effected by deducting from the fifth installment the amount of such payment as provided in Article II, Section 4 of this Contract. 6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL in writing by telex or telefax notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing Delivery (as defined below) by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth. ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER (the "Delivery") at the BUILDER's Shipyard, in accordance with this Contract and the Specifications and with all Classification and statutory certificates (as required by Section 3 below) on or before August 1, 1999, as may be extended pursuant to Schedule 1 (the "Original Delivery Date"). -25- Amended and Restated Shipbuilding Contract H2245 2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, Delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of either (i) the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol of Delivery and Acceptance shall be prepared in triplicate and executed by each of the parties hereto or (ii) a Certificate of Completion executed by the Seller, Tractebel Gas Engineering GmbH and the Classification Society, which Certificate of Completion shall be prepared in multiple copies (5) and executed by the parties thereto. It is mutually understood and agreed that the Gas Plant of the VESSEL (the "GAS PLANT") shall be mechanically completed by the SELLER and that a running test for the equipment of the Gas Plant and a function test of its system shall be made by the SELLER prior to Delivery of the VESSEL as per clause 7 (a) of this Article whilst the full gas trial shall be made after Delivery of the VESSEL as more fully described in Section 7 of this Article. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents which shall accompany the aforementioned Protocol of Delivery and Acceptance or Certificate of Completion: (a) PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b) PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts and the like, all as specified in the Specifications, made by the BUILDER. (c) PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Section 5 of Article VI hereof. (d) FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. -26- Amended and Restated Shipbuilding Contract H2245 (e) PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER. (f) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications. It is agreed that if formal certificates are not available at the time of delivery of the VESSEL, provisional certificates issued by Classification Society or other relevant authorities shall be accepted by the BUYER, provided that the SELLER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued. (g) DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, rights in rem or other encumbrances of any nature upon the VESSEL and the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to Delivery. (h) COMMERCIAL INVOICE made by the SELLER. (i) BILL OF SALE made by the SELLER. (j) BUILDER's CERTIFICATE. 4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon Delivery thereof to and acceptance thereof by the BUYER as stated above, it being expressly understood that, until such Delivery is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER. 5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after Delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid -27- Amended and Restated Shipbuilding Contract H2245 seven (7) days, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL. 6. TENDER OF THE VESSEL If the BUYER fails to take Delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for Delivery after compliance with all procedural requirements as above provided. 7. GAS TRIAL (a) Prior to delivery of the VESSEL a running test of the equipment of the Gas Plant and a function test of its system shall be carried out utilizing either inert gas or dry air. These tests shall be repeated until its results are deemed by the Classification Society and any other relevant authority to be in conformity with this Contract and the Specifications, and the VESSEL shall not be deemed ready for Delivery by the SELLER to the BUYER pursuant to the terms of the Contract unless until the results of the aforesaid tests shall have been certified by the Classification Society. (b) After Delivery of the VESSEL at the Shipyard quay, the BUYER shall arrange at its own cost and expense to proceed the VESSEL to either Jin Shan Terminal, Shanghai or to the first load port, in the BUYER's option, in order to carry out the gas trial in accordance with the trial program furnished by the BUILDER's gas plant supplier (the "Supplier") under the supervision of the Supplier. The Supplier shall give qualified guidance, instruction and consultations with regard to the gas trial, all of which shall be arranged by the SELLER under the terms of its contract with the Supplier. The SELLER shall at its own expense dispatch its representative(s) to attend such gas trial as witness. The BUYER shall give the SELLER twenty (20) days advance notice in connection with the time and place for such trial. The gas trial shall be made latest forty-five (45) days after delivery of the VESSEL (unless the trial must be postponed until a later date not to exceed 90 days after Delivery for reasons beyond the BUYER's control) and shall be witnessed and certified by the Classification Society. -28- Amended and Restated Shipbuilding Contract H2245 (c) The SELLER shall pay all costs and charges of its own representative(s) and of the Classification Society and shall arrange at their expense for the Supplier to send at least one representative to the gas trial. (d) The BUYER shall at its own cost and expense provide suitable product in sufficient and satisfactory quantity and quality as well as utilities and consumables for operation. (e) Should the Gas Plant not be in conformity with this Contract and the Specifications, the SELLER shall remedy any such non-conformity to the satisfaction of the BUYER, the Classification Society and any other relevant authority. After the remedial works are completed the SELLER shall arrange to re-run the gas trial to the extent which will be necessary to demonstrate that the rectified part of the Gas Plant is then in conformity with this contract and the Specifications and the proper functioning of the Gas Plant as a whole is secured. (f) All direct costs and expenses of remedying the non-conformity and re-running the gas trial (including provision of suitable product, utilities and consumables) shall be for the account of the SELLER. (g) If delays are incurred relating to the use of the VESSEL, caused by an unsuccessful gas trial, remedial works and retrials for which the SELLER is responsible, with the consequence that the classification certificate has not been issued, will exceed more than twenty (20) days as from the commencement of the Gas Trials, the SELLER shall, notwithstanding the provisions contained in Article IX Section 2 and Section 4, pay to the BUYER as liquidated damages United States Dollars Ten Thousand (US$10,000) for each day of such excess delay up to a maximum amount of United States Dollars Two Hundred Thousand (US$200,000). ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual Delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the public enemy, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if -29- Amended and Restated Shipbuilding Contract H2245 any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors, as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or its sub-contractors, or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors as the case may be, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price subject nevertheless to (i) the provisions of Section 1(a) of Article III as to reduction in Contract Price, (ii) the BUYER's right of termination under Section 1(a) of Article III and (iii) all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL. 2. NOTICE OF DELAY Within fourteen (14) days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay commenced, and reasons therefor. Likewise within fourteen (14) days after such delay ends, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay ended, and also shall specify the maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification of any claim for extension of the Delivery Date within fourteen (14 ) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension. ARTICLE IX WARRANTY OF QUALITY 1. GUARANTEE OF MATERIAL AND WORKMANSHIP The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by or on behalf of the BUYER) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. -30- Amended and Restated Shipbuilding Contract H2245 2. NOTICE OF DEFECTS The BUYER shall notify the SELLER in writing by telex or telefax, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER's written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the SELLER not later than thirty (30) days after such expiry date. Telexed or telefaxed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient to comply with the requirements as to time. 3. REMEDY OF DEFECTS The SELLER shall remedy at its expense any defect, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement part, and materials cannot be accomplished without impairing or delaying the operation of the VESSEL, then, in any such event, the BUYER shall cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall, as soon as possible, give the SELLER notice in writing by telex or telefax of the time and place such repairs will be made, provided always that the burden of proof as to the necessity for such repairs and replacements shall rest with the BUYER, and a written confirmation for such repairs or replacement shall be obtained from the SELLER. Defects that affect the safety of the VESSEL or her crew and/or constitute an emergency shall be repaired either by the crew or a BUYER selected contractor in a manner reasonable under the circumstances without the SELLER's prior approval and the SELLER shall be notified as to the nature and extent of repairs as soon as possible after the repairs are undertaken and such repair work will be subject to the mutual agreement between the parties. If the VESSEL is not thereby delayed or her operation is not thereby delayed or impaired, the SELLER shall have the right to verify the nature and extent of the defects complained of by its own representative(s) or that of Classification Society. The SELLER shall, in such cases, promptly advise the BUYER, by telex or telefax, after such examination has been completed, of its acceptance or rejection of the defects as ones justifying the -31- Amended and Restated Shipbuilding Contract H2245 remedy under this Article. In all minor cases, the Guarantee Engineer, as hereinafter provided for, will act for and on behalf of the SELLER. In any circumstances, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, Singapore, Korea and Spain, whichever is lower: (a) upon the SELLER's acceptance of the defects as justifying remedy under this Article, or (b) If the SELLER neither accepts nor rejects the defects as above provided, nor requests arbitration within thirty (30) days after its receipt of the BUYER's notice of defects. Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof. 4. EXTENT OF THE SELLER'S LIABILITY The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee specified above. The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Section 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects other than those specified in Paragraph 1 above, nor shall there be any SELLER's liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL's officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors, employees or agents. -32- Amended and Restated Shipbuilding Contract H2245 Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. Neither CSTC nor the BUILDER shall, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL other than pursuant to the express terms of this Contract. The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties,guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER's negligence. This guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER. 5. GUARANTEE ENGINEER The BUILDER shall appoint one guarantee engineer (the "Guarantee Engineer") to serve the VESSEL as the BUILDER's representative for a period of six (6) months from the delivery of the VESSEL. The BUYER and its employees shall give such Guarantee Engineer full co-operation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s) the treatment comparable to the VESSEL's Chief Engineer, and shall provide him/them with accommodation and subsistence at no cost to the BUILDER and/or the Guarantee Engineer. The BUYER shall pay to the Guarantee Engineer the sum of United States Dollars Three Thousand Five Hundred only (US$3,500 ) per month/per person to cover his wages and miscellaneous expenses. The BUYER shall also pay the expense of his repatriation to Shanghai, the People's Republic of China by air upon termination of his service, the expense of his communications with the BUILDER when made in performance of his duties as the Guarantee Engineer and the expenses, if any, of his medical and hospital care. The BUYER, its successor(s) and/or assignee(s), shall be -33- Amended and Restated Shipbuilding Contract H2245 liable to and indemnify the BUILDER and/or the Guarantee Engineer for personal injuries, including death and damages to, or loss or destruction of property of the Guarantee Engineer, if such death, injuries, damages, loss and/or destruction were caused by gross negligence or willful misconduct of the BUYER, its successor(s) and/or assignee(s) or its employees and/or agents. Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL. ARTICLE X CANCELLATION BY THE BUYER All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the SELLER. In the event the BUYER shall exercise its right of rejection, cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing by telex or telefax, and such rejection, cancellation and/or rescission shall be effective as of the date the notice thereof is delivered by the BUYER. BUYER shall be entitled to receive from SELLER the amounts provided for in Article II, Section 7(a) above. In addition to Buyer's Right of Rejection, cancellation and/or rescission set forth in the preceding paragraph, Buyer shall cancel this Contract and Receive from the Seller the amounts provided for in Article II, Section 7(a) above, if any of the Related Contracts have been cancelled, rescinded or terminated pursuant to the Terms of such Related Contracts. ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under this Contract if any of the following events occurs: (a) The BUYER fails to pay any one of the first, second, third and fourth installments to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof; or -34- Amended and Restated Shipbuilding Contract H2245 (b) The BUYER fails to pay the fifth installment to the SELLER in accordance with Article II hereof, provided the BUYER shall have received the SELLER's notification in accordance with Article II hereof; or (c) The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under and pursuant to the provisions of this Contract. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telex or telefax after the date of occurrence of the default as per Section 1 of this Article and the BUYER shall forthwith acknowledge by telex to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telex or telefax acknowledgment to the SELLER within five (5) banking days it shall be deemed that such notification has been duly received by the BUYER. 3. INTEREST AND CHARGE (a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of ten (10%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof. (b) In any event of default by the BUYER under Section 1 (a), (b) or (c) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default. 4. DEFAULT BEFORE DELIVERY OF THE VESSEL (a) If any default by the BUYER occurs as defined in Section 1 (a), (b) or (c) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a period of continuance of such default by the BUYER. -35- Amended and Restated Shipbuilding Contract H2245 (b) If any such default as defined in Section 1 (a), (b) or (c) of this Article committed by the BUYER continues for a period of fifteen (15) banking days, then, the SELLER shall have all following rights and remedies: (i) The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Section 2 of this Article, by giving notice of such effect to the BUYER in writing by telex or telefax. Upon receipt by the BUYER of such telex or telefax notice of cancellation or rescission, all of the BUYER's Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and (ii) In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any installment or installments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and (iii) With respect to any default defined in Section 1(a) of this Article, without prejudice to the SELLER's right to recover from the BUYER the Fifth installment, interest, costs and/or expenses by applying the proceeds to be obtained from the sale of the VESSEL in accordance with the provisions set out in this Contract, the SELLER shall have the right to declare all unpaid second, third and fourth installments to be forthwith due and payable. -36- Amended and Restated Shipbuilding Contract H2245 5. SALE OF THE VESSEL (a) In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit and to sell the VESSEL at the best price available at a public or private sale advertised internationally. Such sale may include an invitation to the BUYER to participate, but will be otherwise on such terms and conditions as the SELLER may determine. In the case of sale of the VESSEL, the SELLER shall give telex or telefax or written notice to the BUYER. (b) In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the same interest rate as specified in Section 3 of this Article from the respective due dates thereof to the date of application. (c) In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labor and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract. (d) In either of the above events of sale, if the proceeds of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excess to the BUYER, provided, however that the amount of such payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER's supplies, if any, without interest. -37- Amended and Restated Shipbuilding Contract H2245 (e) If the proceeds of the sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request. ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel-laying of the first section or block of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER's Supplies, fully insured with first class Chinese insurance companies for BUILDER's risk. The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of the BUYER's Supplies. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER. 2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss: In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Section 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER. (b) Total Loss: However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either: -38- Amended and Restated Shipbuilding Contract H2245 (i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's supplies without additional expenses to the BUYER, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (ii) If due to whatever reasons the parties fail to agree on the above, then the BUYER shall deliver a written notice of rejection to SELLER and the SELLER shall refund immediately to the BUYER the amount described in Article II, Section 7, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith. (iii) Notwithstanding the provisions of (i) and (ii) above, Seller may elect to postpone delivery of the Vessel subject to the provisions of Article III, Section (1)(a). Within thirty (30) days after receiving telex or telefax notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telex of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the BUYER shall receive the refund as hereinabove provided and the provisions hereof shall apply. 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon Delivery thereof to and acceptance by the BUYER. ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS -39- Amended and Restated Shipbuilding Contract H2245 Should any dispute of any nature arise in respect of this Contract, its performance or interpretation which is not decided in accordance with Article XIII, Section 2 below, such dispute shall be settled by arbitration in London, England in accordance with the rules of the London Maritime Arbitrators Association Inc. and otherwise in accordance with the provisions of the Laws of England. The party who desires arbitration of any such dispute shall give written notice to the other party. The notice shall state the name and address of the arbitrator whom it appoints and describe the specific nature of the particular dispute. Such notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, and the other party shall, within thirty (30) days following the receipt of said notice, give written notice to the party requesting the arbitration as to the name and address of the arbitrator whom it appoints, which notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, provided that if the other party should fail to so appoint its arbitrator, the arbitrator appointed by the party desiring the arbitration may proceed with the arbitration hearing and issue an award. Otherwise the two arbitrators so chosen shall select a third arbitrator. The applicable law of England on all matters at issue shall apply. A judgement based upon the decision of the majority of the arbitrators or the sole arbitrator, as the case may be, may be entered in the appropriate court of any country having jurisdiction of either party. The arbitrators shall also decide which party, or the extent to which each party, shall pay costs of arbitration. Unless and to the extent otherwise determined by the arbitrator(s), reference to arbitration shall not relieve the BUILDER of its obligation diligently to proceed with the construction, completion and delivery of the VESSEL, but the majority of the arbitrators or the sole arbitrator, as the case may be, shall decide the extent to which the Delivery Date shall be extended by virtue of the dispute having been referred to arbitration. 2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto. 3. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by telex confirmed in writing to the SELLER and the BUYER. -40- Amended and Restated Shipbuilding Contract H2245 ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior consent of the other party is given in writing; provided, however, the BUYER may assign this Contract to one of its affiliates and the BUYER and its assignee may assign this Contract to the Trustee Bank providing the Trustee's Commitment Letter described in Article II, Section 6. In the event of an assignment of the BUYER's rights and obligations hereunder with respect to the VESSEL said assignee or the substitute party shall have all the rights and assume all the obligations of the BUYER hereunder with respect to said VESSEL and the responsibility of the BUYER hereunder, with respect to such VESSEL, shall terminate. The BUYER shall deliver to the SELLER an agreement which will guarantee performance by any assignee of this Contract. The BUYER shall deliver to the SELLER a Notice of Assignment and Acknowledgement as to any assignment of this Contract to the Trustee Bank. ARTICLE XV TAXES AND DUTIES 1. TAXES The SELLER shall be responsible for and pay, without recourse to the BUYER, any and all taxes, assessments, duties or other similar levies or charges, imposed by the Chinese authorities, whether national, municipal or local, with respect to the period up to and including Delivery (even though assessed, determined or imposed thereafter), on or in respect of (i) this Contract or any act or transaction hereunder, (ii) the VESSEL or any part thereof, or (iii) any imports of material or equipment, and including without limitation, any tax imposed with respect to the sale or Delivery to the BUYER or the VESSEL's export from China. Should the BUYER, at any time before or after Delivery, be assessed or required to pay any such taxes, assessments, duties or other similar levies or charges imposed by the Chinese authorities, the SELLER shall reimburse the BUYER therefor. 2. DUTIES The SELLER shall indemnify the BUYER for, and hold it harmless against, any duties imposed in the People's Republic of China upon materials and equipment which under the terms of this Contract and/or the Specifications will, or may be, supplied by the BUYER from the abroad for installation in the VESSEL as well as any duties -41- Amended and Restated Shipbuilding Contract H2245 imposed in the People's Republic of China upon running stores, provisions and supplies furnished by the BUYER from abroad to be stocked on board the VESSEL and also from the payment of export duties, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS GOVERNMENTAL APPROVALS AND LICENSES (a) To the extent there is a change in the laws now in effect in the People's Republic of China, the SELLER shall obtain necessary Chinese Government approvals and licenses, if any, required for the SELLER's performance under this Contract. The SELLER shall assist the BUYER in obtaining any licenses, permits, or other authorizations, or waivers, necessary for the BUYER to enter and/or reside in China to perform his functions as set forth herein or attend the Trial Runs. (b) The SELLER shall proceed as soon as possible to obtain from the Chinese Government the aforementioned licenses and permits (if any) for the VESSEL to be constructed, delivered and be exported from China, as provided herein and shall notify the BUYER as to the issuance thereof by facsimile or cable, subsequently confirmed in writing accompanied by copies of the said licenses and permits. In the event that the said licenses and permits for the VESSEL shall not have been granted by the Chinese authorities within thirty (30) days following the attempted Delivery, unless otherwise mutually agreed to by the SELLER and the BUYER, the SELLER shall be required to refund within twenty (20) days thereafter, to the BUYER the amounts set forth in Article II, Section 7 and upon payment of such amounts by Seller this Contract shall thereupon automatically become null and void and each of the parties hereto shall be forthwith and completely discharged from all of its obligations to the other or the SELLER elects to postpone the DELIVERY of the VESSEL in accordance with the provisions of Article III, Section 1(a). Notwithstanding the provisions of this paragraph (b), Delivery of the Vessel is not made on or before April 1, 2001, SELLER shall refund to the Buyer the amounts set forth in Article II Section 7(a) and April 1 shall be deemed the Date of Rejection. (c) In case the VESSEL, during construction or prior to Delivery, should be requisitioned or seized by the Chinese Government, the SELLER shall forthwith pay to -42- Amended and Restated Shipbuilding Contract H2245 the BUYER the amounts set forth in Article II, Section 7 hereof, and the payment of such refund by the Seller shall forthwith release both parties from all obligations under this Contract; provided, Seller may elect to postpone the delivery of the Vessel in accordance with the provisions of Article III, Section 1(a). ARTICLE XVII LAWS AND PERMITS The SELLER shall exercise due diligence to ensure that the SELLER, its employees and representatives, shall at all times comply with all applicable laws, ordinances, statutes, rules, and regulations, including those relating to wages, hours and working conditions and insurance, adopted by any governmental authority within the People's Republic of China. The SELLER, at its expense, shall procure all priorities, permits, licenses, inspections, approvals and certificates required in connection with the construction and completion of the VESSEL and Delivery in its Jiangnan Shipyard. If required to permit performance of the work, the SELLER shall furnish any bond, security or deposits so required for its employees and representatives. ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and save harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any. Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated by the passage of any specified period of time. The SELLER indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. ARTICLE XIX NOTICE -43- Amended and Restated Shipbuilding Contract H2245 Any and all notices and communications in connection with this Contract shall be addressed as follows: To the BUYER: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue 19th Floor New York, New York 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 To CSTC: China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 To the BUILDER: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 Any notices and communications sent by CSTC and the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER. Any change of address shall be communicated in writing by registered mail by the party making such change to the other party and in the event of failure to give such notice of change communications addressed to the party at their last known address shall be deemed sufficient. Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be -44- Amended and Restated Shipbuilding Contract H2245 delivered five (5) days after the date of dispatch, and telex or telefax acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language. ARTICLE XX EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon the execution and delivery of this Contract and the Specifications. -45- Amended and Restated Shipbuilding Contract H2245 ARTICLE XXI INTERPRETATION; MISCELLANEOUS 1. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern. However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern. 3. DEFINITION In absence of stipulation of "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days". 4. ENTIRE AGREEMENT This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract after signing of the Contract. -46- Amended and Restated Shipbuilding Contract H2245 5. REGISTRATION OF VESSEL The BUYER intends to register the VESSEL under Liberian flag but may elect an alternate registry within a reasonable time prior to Delivery (subject to mutual agreement on necessary modifications as provided for in Article V, Section 1. 6. LANGUAGE This Contract and the Plan and Specifications have been prepared in the English language, which shall control. The Contract has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. The Plan and Specifications have been signed in duplicate, one counterpart being retained by the BUILDER and one by the BUYER. 7. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. -47- Amended and Restated Shipbuilding Contract H2245 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Kaplow -------------------------- Name: Richard Kaplow Title: President CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping -------------------------- Name: Shen Yiping Title: Vice President JIANGNAN SHIPYARD By: /s/ Gong Jingen -------------------------- Name: Gong Jingen Title: Vice President -48- Amended and Restated Shipbuilding Contract H2245 Schedule 1 Contract Price Installment Schedule -49- Amended and Restated Shipbuilding Contract H2245 Schedule 2 Refund Amount Schedule (Letter of Guarantee) -50- Amended and Restated Shipbuilding Contract H2245 Schedule 3 Refund Amount Schedule (Performance Bond) -51- Amended and Restated Shipbuilding Contract H2245 EXHIBIT "A": IRREVOCABLE LETTER OF REFUNDMENT GUARANTEE [STATIONERY OF GUARANTOR BANK] [Date] Navigator Holdings PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and, together with CSTC, the "SELLER") and in consideration of Navigator Holdings PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contract dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") made by and between the BUYER and the SELLER for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2245 (hereinafter called the "VESSEL"), The Export Import Bank of China the "Bank") the undersigned, do guarantee the payment (and not merely the collectability of the same) to the BUYER by the SELLER immediately upon demand of an amount up to but not exceeding a total amount as set forth in Schedule 1 hereto (calculated in accordance with the immediately following paragraph), together with simple interest thereon calculated at the rate of ten percent (10.0%) per annum on the basis of a 360 day year from and including the date of receipt of demand to but not including the date of remittance by telegraphic transfer of such refund. Subject to BUYER making installment payments in accordance with Article II of the Contract, the amount of this Guarantee will be automatically increased during the term of this Guarantee and shall be equal to the sum of: (i) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month in which the Date A-1 Amended and Restated Shipbuilding Contract H2245 of Rejection occurs; and (ii) an amount equal to the product of (X) the difference between (1) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 1 hereto as of the first day of the month in which the Date of Rejection of the vessel under the Contract occurs and (y) a fraction the numerator of which is numeric day of the month of the date on which the Refund Amount (as hereinafter defined) is actually paid and the denominator of which is 30 (collectively, the "Refund Amount"). BUYER's right to demand payment under this Guarantee shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contract, (iii) upon the cancellation, termination or rescission of the Contract by the BUYER in accordance with the terms of Contract as set forth in Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b), or Article XVI (b) or (c), or (iv) the insolvency or bankruptcy of BUILDER. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to us by the BUYER. Payment under this Guarantee is available at the counters of ______________ Bank against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within eleven (11) banking days. This Guarantee is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. In the event that the BUYER's demand is for a lesser amount than the amount of this Guarantee, the interest payable will be calculated on the amount of the BUYER's demand and not on the amount of this Guarantee. We agree that this Guarantee shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; A-2 Amended and Restated Shipbuilding Contract H2245 and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Guarantee shall become effective from the time of the actual receipt of the first installment by the SELLER from the BUYER under the Contract and the Refund Amount payable under this Guarantee shall correspond to the total installment payments actually made by the BUYER to the SELLER from time to time under the Contract prior to the delivery of the VESSEL including applicable interest. This Guarantee shall expire and become null and void on the earlier to occur of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by the Bank of either a copy of the Protocol of Delivery and Acceptance of the VESSEL, purportedly signed by the BUYER and the SELLER and issued in the form attached hereto as Appendix B or a copy of the Certificate of Completion of the Vessel signed by the respective parties thereto in the form attached hereto as Appendix C; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Guarantee shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contract or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Guarantee shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Guarantee shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law; provided the Refund Amount shall be adjusted to reflect the delay resulting from such arbitration and shall be calculated in accordance with Schedule 1 hereto to the date payment is actually made. A-3 Amended and Restated Shipbuilding Contract H2245 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Guarantor] By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- A-4 Amended and Restated Shipbuilding Contract H2245 SCHEDULE 1 TO EXHIBIT A REFUND AMOUNT Net Date Amount ---- ------ A-5 Amended and Restated Shipbuilding Contract H2245 Appendix A to Exhibit A - --------------------- Bank - --------------------- - --------------------- Re: Irrevocable Letter of Refundment Guarantee No. __ (the "Guarantee") The undersigned hereby certifies to [Name of Guarantor] with reference to Guarantee No.______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Guarantee for payment of US$ _________, plus simple interest thereon calculated at the rate of percent per annum on the basis of a 360 day year from __________ to the date payment is effected by [Name of Guarantor] to the BUYER in accordance with the payment instructions provided below. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contract dated the ___ day of _____________, 1997, made by and among Navigator Holdings PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2245, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ------------------------ By:--------------------- Date:------------------- A-6 Amended and Restated Shipbuilding Contract H2245 Appendix B to Exhibit A PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL:---------------------------- SELLER's Hull No. 2245 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------ Name:---------------------- Title:--------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------ Name:---------------------- Title:--------------------- JIANGNAN SHIPYARD By:------------------------ Name:---------------------- Title:--------------------- A-7 Amended and Restated Shipbuilding Contract H2245 Appendix C to Exhibit A CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings PLC (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ----------------------------- Seller's Hull No.: ----------------------------- Type of Vessel: ----------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- A-8 Amended and Restated Shipbuilding Contract H2245 EXHIBIT "B": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and together with CSTC collectively called the "SELLER") and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers respectively having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Export-Import Bank of China (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Twenty Six Million Seven Hundred Thousand (US$26,700,000) (the "Payment Amount"), if and when the same or any part thereof becomes payable to BUYER from the SELLER under any Contract or Contracts if any such Contract or Contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI (b) and (c)) of such Contract or Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon actual receipt in full by the SELLER of the initial installment due under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. B-1 Amended and Restated Shipbuilding Contract H2245 Payment under this Performance Bond is available at the counters of Export-Import Bank of China in __________________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented under the column heading specified in the Notice of Demand. If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within eleven (11) banking days. The right of the BUYER to demand payment under this Performance Bond by presentation of a Notice of Demand shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery or Certificates of Completion for each of the five (5) VESSELS in the form of Appendix B or Appendix C to this Performance Bond; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. B-2 Amended and Restated Shipbuilding Contract H2245 Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contracts, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. B-3 Amended and Restated Shipbuilding Contract H2245 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Performance Guarantor] By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- B-4 Amended and Restated Shipbuilding Contract H2245 SCHEDULE 1 REFUND AMOUNT Net Date Amount ---- ------ B-5 Appendix A to Exhibit B - ---------------------Bank - --------------------- - --------------------- Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to The Export Import Bank of China with reference to Performance Bond No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Notice of Demand, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date). 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ----------------------------- By:-------------------------- Date:------------------------ B-5 Amended and Restated Shipbuilding Contract H2245 B-6 Appendix B to Exhibit B PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL:------------------ SELLER's Hull No. 2245 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------ Name:---------------------- Title:--------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------ Name:---------------------- Title:--------------------- JIANGNAN SHIPYARD By:------------------------ Name:---------------------- Title:--------------------- B-7 Appendix C to Exhibit B CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: -------------------------- Seller's Hull No.: -------------------------- Type of Vessel: -------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- B-8 EXHIBIT "C": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of Tractebel Gas Engineering GmBH and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" together with CSTC collectively called the "SELLER") the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Generale de Banque (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Thirteen Million Three Hundred Thousand (US$13,300,000) (the "Payment Amount"), if and when the same or any part thereof become payable to BUYER from the SELLER under any Contract or Contracts if any such contract or contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI(b) and (c)) of the Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon payment of the initial installment under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. Payment under this Performance Bond is available at the counters of _______________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the C-1 BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented and under the column heading specified in the Notice of Demand less the amount paid by the Export-Import Bank of China under such Bank's Irrevocable Performance Bond dated _______, 1997 (the "Ex-Im Performance Bond"). In addition, the BUYER's right to demand payment as provided above is subject to delivery by BUYER to the Bank of a copy of the notice of demand presented to the Export-Import Bank of China under the Ex-Im Performance Bond in the amount of US$26,700,000 and evidence that such amount has been paid. If the Notice of Demand is received by the Bank by 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the same business day. If the Notice of Demand is received by the Bank after 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the next succeeding business day. The right of the BUYER to demand payment under this Performance Bond shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery and/or Certificates of Completion for each of the five (5) VESSELs in the form of Appendix B or Appendix C to this Performance Bond; and (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. C-2 Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. This Performance Bond is governed by and enforced and construed in accordance with the laws of England. For: Generale de Banque By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- C-3 Appendix A to Exhibit C Notice of Demand Generale de Banque - ---------------------- - ---------------------- Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to Generale de Banque with reference to Guarantee No.______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Certificate, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date), less $26,700,000, the amount paid by the Export Import Bank of China pursuant to the attached Notice of Demand presented by the undersigned on _________________. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ---------------------------- By:------------------------- Date:----------------------- C-4 Appendix B to Exhibit C PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL:------------------------- SELLER's Hull No. 2245 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------ Name:---------------------- Title:--------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------ Name:---------------------- Title:--------------------- JIANGNAN SHIPYARD By:------------------------ Name:---------------------- Title:--------------------- C-1 Appendix C to Exhibit C CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: Seller's Hull No.: Type of Vessel: That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- C-1 EXHIBIT "D" CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ----------------------------- Seller's Hull No.: ----------------------------- Type of Vessel: ----------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------ By:------------------------ Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- C-2 C-3 EXHIBIT "D-1" PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL:------------------------ SELLER's Hull No. 2245 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------ Name:---------------------- Title:--------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------ Name:---------------------- Title:--------------------- JIANGNAN SHIPYARD By:------------------------ Name:---------------------- Title:--------------------- D-1-1 EXHIBIT "E": TRUSTEE'S COMMITMENT LETTER JIANGNAN SHIPYARD c/o China Shipbuilding Trading Company, Limited and CHINA SHIPBUILDING TRADING COMPANY, LIMITED 10 Yue Tan Bei Xiao Jie Beijing 100861 The People's Republic Bank of China Re: Shipbuilding Contract for Construction of 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (the "Contract") Ladies and Gentlemen: This is to confirm that the undersigned as indenture trustee under the Indenture (the "Indenture") dated as of _____________, 1997, among the undersigned, as trustee (the "Indenture Trustee"), _________________, ________________, __________________, _______________, __________________, (collectively, the "Owners") and ________________, as agent for the Owners, is holding in Account No. ______, the Pre-Funding Account established under and pursuant to the terms of Indenture, an amount equal to US$_________. 1. Pursuant to the terms of the Indenture, the undersigned shall automatically disburse from amounts held in the Pre-Funding Account the first through fourth installments of the Contract Price (as defined in the Amended and Restated Shipbuilding Contract dated June 26, 1997 with respect to Hull No. 2245 (the "Vessel")) on the dates and in the manner set forth in Schedule 1 of the Contract and in accordance with Section 4 of Article II of the Contract and Schedule 1 hereto. 2. The Fourth Installment shall be payable to the Seller only after the Trustee has received a duplicate original, or facsimile copy of such original, of either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to each Vessel having an Original Delivery Date prior to that of the Vessel. 3. The fifth installment shall be paid in accordance with the provisions of Article II, Section (4) upon receipt by the Indenture Trustee of a Protocol of Delivery and Acceptance signed by both the SELLER and the BUYER or a Certificate of Completion signed by the SELLER, Germanischer Lloyd and Tractebel Gas Engineering GmBH. E-1 4. Any payment by us shall be made in United States Dollars by telegraphic transfer to Bank of China New York Branch, 410 Madison Avenue, New York New York 10017 U.S.A. as receiving bank nominated by you for credit to the account of China Shipbuilding Trading Company, Limited with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advise from Bank of China, New York Branch to Bank of China, Head Office, Banking Department, or through other receiving bank to be nominated by you from time to time, in favor of China Shipbuilding Trading Company Limited or your assignee. We hereby agree to make all payments as aforesaid unless directed by you in writing. 5. Our obligation to make the first through fourth installments due under the Contract shall not be affected or prejudiced by any dispute between the SELLER and the BUYER under the Contract or by the BUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of the terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under the Commitment. 6. This Trustee's Commitment Letter shall come into full force and effect upon delivery to you of this Trustee's Commitment Letter and shall continue in force and effect until the full payment of the second, third, fourth and fifth installments or the termination of the Contract in accordance with the terms thereof. 7. All payments by us under this Trustee's Commitment Letter shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal to the amount which would have been received had no such deduction or withholding been required to be made. 8. This Trustee's Commitment Letter shall be construed in accordance with and governed by the Laws of New York. 9. Upon expiration of this Trustee's Commitment Letter, you shall return the same to us without any request or demand from us. For the avoidance of doubt, this Trustee's Commitment Letter shall have no further force and effect upon its expiration pursuant to Clause 6 hereof, notwithstanding that the same may not have been returned to us pursuant to the Clause 8. IN WITNESS WHEREOF, we have caused this Trustee's Commitment Letter to be executed and delivered by our duly authorized representative the day and year above written. E-2 [Name of Trustee Bank] By:---------------------- Name:-------------------- Title:------------------- E-3
TABLE OF CONTENTS Page ARTICLE I DESCRIPTION AND CLASS........................................................................................... 2 1. DESCRIPTION................................................................................... 2 2. CLASS AND RULES............................................................................... 3 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL............................................ 4 4. GUARANTEED SPEED.............................................................................. 4 5. GUARANTEED FUEL CONSUMPTION................................................................... 5 6. GUARANTEED DEADWEIGHT......................................................................... 5 7. GUARANTEED CARGO TANK CAPACITY................................................................ 5 8. SUBCONTRACTING................................................................................ 6 9. REGISTRATION.................................................................................. 6 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT............................................................................... 6 1. CONTRACT PRICE................................................................................ 6 2. CURRENCY...................................................................................... 6 3. TERMS OF PAYMENT.............................................................................. 6 4. METHOD OF PAYMENT............................................................................. 7 5. PREPAYMENT.................................................................................... 8 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY ............................................................................................. 8 7. REFUNDS....................................................................................... 8 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE................................................................................ 10 1. DELIVERY...................................................................................... 10 2. INSUFFICIENT SPEED............................................................................ 12 3. EXCESSIVE FUEL CONSUMPTION.................................................................... 13 4. INSUFFICIENT DEADWEIGHT....................................................................... 14 5. INSUFFICIENT CARGO TANK CAPACITY.............................................................. 14 6. EFFECT OF RESCISSION.......................................................................... 15 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS................................................. 15 ARTICLE IV SUPERVISION AND INSPECTION.......................................... 15 1. APPOINTMENT OF THE BUYER'S SUPERVISOR......................................................... 15 2. APPROVAL OF PLANS AND DRAWINGS................................................................ 15 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR.................................................. 16
(i)
4. LIABILITY OF THE SELLER....................................................................... 17 5. SALARIES AND EXPENSES......................................................................... 18 6. REPLACEMENT OF SUPERVISOR..................................................................... 18 ARTICLE V MODIFICATION, CHANGES AND EXTRAS....................................... 18 1. HOW EFFECTED.................................................................................. 18 2. CHANGES IN RULES AND REGULATIONS.............................................................. 19 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT.................................................... 20 4. BUYER'S SUPPLIED ITEMS........................................................................ 20 ARTICLE VI TRIALS........................................................................................................ 21 1. NOTICE........................................................................................ 21 2. HOW CONDUCTED................................................................................. 22 3. TRIAL LOAD DRAFT.............................................................................. 22 4. METHOD OF ACCEPTANCE OR REJECTION............................................................. 23 5. DISPOSITION OF SURPLUS CONSUMABLE STORES...................................................... 24 6. EFFECT OF ACCEPTANCE.......................................................................... 24 ARTICLE VII DELIVERY........................................................................................................ 24 1. TIME AND PLACE................................................................................ 24 2. WHEN AND HOW EFFECTED......................................................................... 24 3. DOCUMENTS TO BE DELIVERED TO THE BUYER........................................................ 25 4. TITLE AND RISK................................................................................ 26 5. REMOVAL OF VESSEL............................................................................. 26 6. TENDER OF THE VESSEL.......................................................................... 26 7. GAS TRIAL..................................................................................... 27 ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY....................................................................... 28 1. CAUSE OF DELAY................................................................................ 28 2. NOTICE OF DELAY............................................................................... 29 ARTICLE IX WARRANTY OF QUALITY............................................................................................. 29 1. GUARANTEE OF MATERIAL AND WORKMANSHIP......................................................... 29 2. NOTICE OF DEFECTS............................................................................. 29 3. REMEDY OF DEFECTS............................................................................. 30 4. EXTENT OF THE SELLER'S LIABILITY.............................................................. 31 5. GUARANTEE ENGINEER............................................................................ 32
(ii)
ARTICLE X CANCELLATION BY THE BUYER...................................................................................... 32 ARTICLE XI BUYER'S DEFAULT................................................................................................. 33 1. DEFINITION OF DEFAULT......................................................................... 33 2. NOTICE OF DEFAULT............................................................................. 33 3. INTEREST AND CHARGE........................................................................... 33 4. DEFAULT BEFORE DELIVERY OF THE VESSEL......................................................... 34 5. SALE OF THE VESSEL............................................................................ 35 ARTICLE XII INSURANCE...................................................................................................... 36 1. EXTENT OF INSURANCE COVERAGE.................................................................. 36 2. APPLICATION OF RECOVERED AMOUNT............................................................... 36 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE.............................................. 37 ARTICLE XIII DISPUTES AND ARBITRATION........................................................................................ 37 1. PROCEEDINGS.................................................................................. 37 2. ALTERNATIVE ARBITRATION BY AGREEMENT.......................................................... 38 3. NOTICE OF AWARD............................................................................... 38 ARTICLE XIV RIGHT OF ASSIGNMENT............................................................................................. 39 ARTICLE XV TAXES AND DUTIES................................................................................................ 39 1. TAXES......................................................................................... 39 2. DUTIES........................................................................................ 39 ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS.............................. 40 GOVERNMENTAL APPROVALS AND LICENSES.................................................................... 40 ARTICLE XVII LAWS AND PERMITS ................................................................................................................ 41 ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS.............................................................................. 41 ARTICLE XIX
(iii)
NOTICE.......................................................................................................... 41 ARTICLE XX EFFECTIVE DATE OF CONTRACT...................................................................................... 43 ARTICLE XXI INTERPRETATION.................................................................................................. 44 1. LAW APPLICABLE................................................................................ 44 2. DISCREPANCIES................................................................................. 44 3. DEFINITION.................................................................................... 44 4. ENTIRE AGREEMENT.............................................................................. 44 5. REGISTRATION OF VESSEL........................................................................ 45 6. LANGUAGE...................................................................................... 45 7. AMENDMENTS.................................................................................... 45
(iv) Schedule 1 Contract Price Installment Schedule Schedule 2 Refund Amount Schedule (Letter of Guarantee) Schedule 3 Refund Amount Schedule (Performance Bond) Exhibit A Irrevocable Letter of Refundment yGuarantee Exhibit B Irrevocable Performance Bond from the Export Import Bank of China Exhibit C Irrevocable Performance Bond from Generale de Banque Exhibit D Certificate of Completion Exhibit D-1 Protocol of Acceptance and Delivery Exhibit E Trustee's Commitment letter (v) EX-10.2 25 AMEND. & RESTATED SHIPBLDNG CONT. (HULL NO. 2246) AMENDED AND RESTATED SHIPBUILDING CONTRACT for CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2246) Date: June 26, 1997 between NAVIGATOR HOLDINGS PLC as BUYER and CHINA SHIPBUILDING TRADING COMPANY, LIMITED and JIANGNAN SHIPYARD Collectively as SELLER Amended and Restated Shipbuilding Contract H2246 AMENDED AND RESTATED SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2246) This AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "Contract"), entered into this 26th day of June, 1997 by and between Navigator Holdings PLC (formerly named Navigator Holdings, Ltd.), a company organized and existing under the laws of the Isle of Man, having its registered office at 15-19 Athol Street, Douglas, Isle of Man, (hereinafter called the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 10 Yue Tan Bei Xiao Jie, Beijing 100861, the People's Republic of China (hereinafter called "CSTC"), and JIANGNAN SHIPYARD, a corporation organized and existing under the laws of the People's Republic Of China, having its registered office at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "BUILDER" and collectively with CSTC, the "SELLER") on the other part. The BUYER and SELLER are parties to the SHIPBUILDING CONTRACT for the construction of one (1) 22,000 cubic meter liquified ethylene gas carrier (Hull No. 2246), dated February 4th, 1997, and desire to amend and restate the terms thereof in accordance with the terms and provisions of this AMENDED AND RESTATED SHIPBUILDING CONTRACT. This AMENDED AND RESTATED SHIPBUILDING CONTRACT is being executed and delivered simultaneously with the execution and delivery of four separate and individual Shipbuilding Contracts as restated and amended (the "Related Contracts") between the SELLER and the BUYER each dated as of the date hereof with respect to the construction of four sister vessels which will have the BUILDER's Hull designation numbers 2245, 2247, 2248 and 2249 (collectively, the "SISTER VESSELS"). -1- Amended and Restated Shipbuilding Contract H2246 WITNESSETH In consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at the BUILDER's Shipyard and to sell and deliver to the BUYER after completion and successful trial one (1) 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (hereinafter called the "VESSEL") as more fully described in Article I hereof to be registered under the flag of Liberia and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same all in accordance with the terms and subject to the conditions hereinafter set forth. ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION The BUILDER shall, at its Jiangnan Shipyard, located at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "Shipyard"), construct, launch, equip, supply, and in all respects complete so as to be ready for immediate operation (subject to the gas trials as set forth in Article VII, Section 7), and deliver to the BUYER a 22,000 cubic meter liquefied ethylene gas carrier with 22,800 deadweight tons of carrying VCM on scantling draft of 10.90 meters and the class described below in Article I, Section 2 (hereinafter called the "VESSEL"), to be designated as Hull No. 2246, together with all machinery, materials, parts, supplies, equipment, appurtenances, and all other items necessary to and for the said construction, completion, delivery, and operation of the VESSEL. The VESSEL shall be built and completed in accordance with the following: (1) Specifications (Drawing No. 2LG970104) (2) General Arrangement (Drawing No. 2LG970102) (preliminary) (3) Maker List (Drawing No. 2LG970105) attached hereto and made a part hereof and signed by each of the parties to this Contract (items 1 through 3 of this Article, Section 1 are collectively referred to herein as the "Specifications"). Should there be any discrepancy between this Contract and the Specifications, the provisions in this Contract shall prevail. When there is no specific description in the Specifications a standard of workmanship and practices -2- Amended and Restated Shipbuilding Contract H2246 equivalent to the BUILDER's shipbuilding standards as practicable, generally applicable to the construction of similar size and types of vessels, shall be applicable to the construction of the VESSEL. The BUILDER, at its expense, shall, unless otherwise specifically provided herein, procure and furnish all items and permissions necessary to perform its obligations hereunder including, but not limited to, (i) plans and specifications (in addition to the Specifications), labor, machinery, materials, parts, supplies, equipment, appurtenances, and (ii) licenses, permits, inspections, surveys and approvals. 2. CLASS AND RULES The VESSEL, including its machinery and equipment, shall be constructed in accordance with the rules and regulations of Germanischer Lloyd (hereinafter called the "Classification Society") shall be distinguished in the record by the symbol of +100 A5 E "Liquefied Gas Carrier Type 2G" +MC E, AUT INERT and shall also comply with the rules and regulations as fully described in the Specifications. The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include the rules or circulars issued and becoming effective as at the date this Contract is executed and delivered (the "Effective Date"). The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for supervision of the construction of the VESSEL. All fees and charges incidental to Classification and to comply with the rules, regulations issued and becoming effective as of the Effective Date as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto. -3- Amended and Restated Shipbuilding Contract H2246 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) The basic dimensions of the VESSEL shall be Length Overall: abt. 171.50m Length between perpendiculars: 160.50m Breadth moulded: 24.20m Depth moulded: 16.70m Scantling Draft moulded (VCM): 10.90m Deadweight (VCM): 22,800mt Draught moulded (Ammonia): 9.35m Deadweight (Ammonia): 17,150mt Design Draught moulded (Ethylene): 8.80m Deadweight (Ethylene): 15,100mt Cargo Tanks Volume: 22,000cbm The above mentioned dimensions may be changed, if calculations of intact stability and damage stability show necessity and/or possibility during development of the design. But the guaranteed performance of the vessel such as speed, fuel consumption, deadweight and cargo tank volume as stipulated in following Clause 4, 5, 6 and 7 shall remain unchanged. (b) Propelling Machinery: The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN B&W 6S50MC or Sulzer 6RTA52 type Main Engine. (c) Gas Plant The VESSEL shall be equipped with a complete set of gas plant including four (4) cargo tanks of a total volume of 22,000 cubic meters (hereinafter called the "GAS PLANT") as fully described in the Specifications. 4. GUARANTEED SPEED The SELLER guarantees that the service speed of the VESSEL on ethylene condition with draft of 8.80 meters as stipulated in the Specifications at 90% MCR of main engine with 15% sea margin is to be not less than 16.5 nautical miles per hour. -4- Amended and Restated Shipbuilding Contract H2246 The above guaranteed speed shall be deemed having been achieved if the speed in sea trial condition as determined by the trial run is reached after correction according to the Specifications. The speed in sea trial condition, i.e. calm weather with wind not exceeding 6 knots (two degrees Beaufort scale) and sea state maximum 2 with clean bottom and running in deep smooth water, shall be determined as per the result of model test at ballast condition (about 20% deadweight at design draft (ethylene) of 8.8 m). The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 128 grams/brake horse power/hour at MCR of main engine at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram according to the Specifications. 6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 22,800 metric tons at the scantling draft of carrying VCM of 10.90 meters in sea water of 1.025 specific gravity. The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER's supervisor(s) or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final. 7. GUARANTEED CARGO TANK CAPACITY -5- Amended and Restated Shipbuilding Contract H2246 The SELLER guarantees that the VESSEL is to have a total cargo tank capacity of not less than 22,000 cubic meters geometric including the volume of tank domes with ambient temperature as described in the Specifications. 8. SUBCONTRACTING The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain primarily responsible for such subcontracted work. 9. REGISTRATION The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of Liberia at the time of delivery and acceptance thereof. ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE The net purchase price of the VESSEL is United States Dollars Forty Nine Million, Nine Hundred Thirty Seven Thousand (US$49,937,000) (hereinafter called the "Contract Price"), to be paid by the BUYER to SELLER for the construction and completion of the VESSEL which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof. The Contract Price shall be fixed, with no escalation and subject to upward or downward adjustment, if any, as expressly set forth in this Contract and in Schedule 1 attached hereto. To the extent that the SELLER may, under applicable law, regulation or decree (including those of the People's Republic of China), have any right(s) to escalate or change the Contract Price, such right(s) are hereby waived. The Contract Price includes all costs and expenses incurred by SELLER performing engineering calculations for designing and supplying all necessary drawings for the VESSEL, in accordance with the Specifications. 2. CURRENCY Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars ("US$"). -6- Amended and Restated Shipbuilding Contract H2246 3. TERMS OF PAYMENT The Contract Price shall be paid by the BUYER to the SELLER in installments as indicated on Schedule 1 attached hereto. 4. METHOD OF PAYMENT (a) First Installment: On or prior to July 21, 1997 (except as may be provided in Schedule 1), the BUYER shall remit by telegraphic transfer the first installment in the amount set forth on Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER. (b) Each subsequent Installment: Except as may be provided in Schedule 1, the BUYER shall remit by telegraphic transfer each subsequent installment on the date and in the amount set forth in Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 banking days prior to the due date for payment ("SELLER's Bank"). Upon receipt of a facsimile or telex notice from the SELLER not less than six (6) banking days in New York prior to the scheduled Delivery Date, notifying the BUYER of such date, the BUYER shall deposit the amount payable upon Delivery of the VESSEL by telegraphic transfer to account of the SELLER's Bank at least three (3) -7- Amended and Restated Shipbuilding Contract H2246 banking days in the People's Republic of China prior to the scheduled Delivery of the VESSEL, with irrevocable instructions to be confirmed by the SELLER's Bank that the said deposit shall be payable to the SELLER against presentation by the SELLER of either (i) a duplicate original copy of the Protocol of Delivery and Acceptance of the VESSEL signed by the SELLER and the BUYER or (ii) a Certificate of Completion (in the form of Exhibit D hereto) signed by the SELLER, the Classification Society and Tractebel Gas Engineering GmBH (the "Certificate of Completion"), and that, in the event that the actual delivery and acceptance of the VESSEL shall not take place within seven (7) banking days following such scheduled Delivery, the said deposit shall be returned to the BUYER's bank, together with interest thereon. The SELLER's Bank shall hold the deposit in an interest bearing account and the BUYER shall be entitled to receive interest thereon. 5. PREPAYMENT The BUYER shall have the right to make prepayment of any and all installments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment. 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY The BUYER shall, concurrently with the payment of the first installment of the Contract Price, deliver to the SELLER a Trustee's Commitment Letter executed by a bank organized under the laws of the United States or any State thereof (the "Trustee Bank"), in the form annexed hereto as Exhibit "E" (the "Trustee's Commitment Letter") which shall indicate the amounts held by the Trustee Bank for the payment of the first through fifth installments of the Contract Price. Such Trustee Bank shall be an international banking institution acceptable to the SELLER. 7. REFUNDS (a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, -8- Amended and Restated Shipbuilding Contract H2246 and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth on Schedules 2 and 3 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 3 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 3 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of ten percent (10%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party. -9- Amended and Restated Shipbuilding Contract H2246 (b) Upon the payment of the first installment and the delivery of the Trustee's Commitment Letter in the form of Exhibit E hereto, the SELLER shall, at its cost, furnish the BUYER with (i) an Irrevocable Letter of Guarantee given by a bank acceptable to the BUYER (hereinafter referred to as "Guarantor"), substantially in the form of Exhibit A attached hereto as to the amounts set forth in Schedule 2 hereto, together with an acknowledgement of assignment to the Trustee Bank by the Guarantor and (ii) Irrevocable Performance Bonds given by The Export Import Bank of China and Generale de Banque (hereinafter collectively referred to as "Performance Guarantor"), substantially in the form of Exhibit B and Exhibit C, respectively, attached hereto which in the aggregate are equal to the aggregate amount set forth in Schedule 3 hereto and each Schedule 3 attached to the Related Contracts as to the Sister Vessels, together with an acknowledgement of assignment to the Trustee Bank by each Performance Guarantor. The Irrevocable Letters of Guarantee and the Irrevocable Performance Bonds shall guarantee payment to the BUYER of an amount in United States Dollars, at such place as the BUYER or its assignee may designate, which is sufficient to cover all sums payable or repayable by the SELLER to the BUYER under this Contract with interest thereon as provided in Article II, Section 7(a) above, upon receipt by said Guarantor and each Performance Guarantor, respectively, from the BUYER of a written claim that it is entitled to such payment or repayment and that the SELLER has failed to make same. ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL as provided for in Schedule 1 shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty. 1. DELIVERY (a) Delayed Delivery Price Adjustment: (i) For purposes of this Contract the Original Delivery Date for the Vessel shall mean the date set forth in Article VII, Section (1) below. (ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $10,000 for each calendar day for the first ninety (90) calendar days of -10- Amended and Restated Shipbuilding Contract H2246 delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $13,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages. (iii) If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period. (iv) In the event that the BUYER elects to reject the VESSEL as allowed under this Article III, Section 1(a), the SELLER shall immediately repay to the BUYER the amounts set forth in Article II, Section 7, whereupon this Contract shall terminate and such payment shall -11- Amended and Restated Shipbuilding Contract H2246 forthwith discharge all obligations, duties and liabilities of each party hereto to the other under this Contract. (v) For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Original Delivery Date of the VESSEL is extended by reason of a Permissible Delay. For purposes of this Article a Permissible Delay means a delay caused by reason of causes and provisions of (1) Section 2 of Article V (but only as to days of extension beyond 12 days), (2) Article VIII, and (3) any delay caused by any action or inaction on the part of SELLER; provided such Permissible Delay shall be subject to the following provisions: (A) The maximum Permissible Delay for the Vessel and each Sister Vessel shall be as follows: (i) Hull No. 2245 - 60 days (ii) Hull No. 2246 - 45 days (iii) Hull No. 2247 - 30 days (iv) Hull No. 2248 - 30 days (v) Hull No. 2249 - 30 days (B) For purposes of this Contract the Extended Delivery Date for a Vessel shall mean the Original Delivery Date plus the Permissible Delay for such Vessel, (C) The aggregated Permissible Delay for the Vessel and the Sister Vessels shall not exceed 150 days, and (D) Subject to the limitations set forth in (A) above, SELLER shall have the right in its sole discretion to designate either the Vessel or any Sister Vessel as to which Vessel will be subject to a Permissible Delay. (b) Early Delivery Price Adjustment: If the SELLER notifies the BUYER by facsimile that the delivery of the VESSEL shall be made earlier than the Original Delivery Date and such notification is given not less than two (2) months prior to the newly -12- Amended and Restated Shipbuilding Contract H2246 planned delivery date, a certain amount of bonus shall be given by the BUYER to the SELLER as follows: In the event that the delivery shall be made earlier than the Original Delivery Date and notice is properly given, then a bonus shall be added to the Contract Price at a rate of United States Dollars Thirteen Thousand (US$13,000) per day for each full day earlier than the Original Delivery Date. The total increase of the Contract Price for the earlier delivery shall be added to the fifth installment of the Contract Price. 2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being equal to or less than three-tenths (3/10) of one knot below the guaranteed speed as specified in Section 4 of Article I of this Contract. (b) However, commencing with a deficiency of three-tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Section 4, Article I of this Contract, the Contract Price shall be reduced as follows: IN CASE OF DEFICIENCY: LIQUIDATED DAMAGE above 0.3 but below or at 0.40 knot US$100,000 above 0.40 but below or at 0.50 knot US$200,000 above 0.50 but below or at 0.60 knot US$600,000 above 0.60 but below or at 0.70 knot US$1,000,000 above 0.70 but below or at 0.80 knot US$1,400,000 above 0.80 but below or at 0.90 knot US$1,800,000 above 0.90 but below or at 0.99 knot US$2,200,000 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications ) of the VESSEL upon the Trial Run, is one (1) knot or more below the guaranteed speed of sixteen and half (16.5) knots, then the BUYER may at its option reject the VESSEL, rescind this Contract in accordance with provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. -13- Amended and Restated Shipbuilding Contract H2246 (d) No payment shall be made for any increase in the speed of the VESSEL. 3. EXCESSIVE FUEL CONSUMPTION (a) The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than three percent (3%). (b) However, if the actual fuel consumption as determined by shop trial is greater than three percent (3%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars Seventy-Five Thousand (US$75,000 ) for each full one percent (1%) increase in fuel consumption in excess of the above said three percent (3%) (fractions of one percent to be prorated). (c) If as determined by shop trial such actual fuel consumption of the Main Engine is eight percent (8%) or more in excess of the guaranteed fuel consumption set forth in the Specifications the BUYER may, at its option, reject the VESSEL, rescind this Contract, in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any improvements in fuel consumption less than that specified and required under the provisions of this Contract and the Specifications. 4. INSUFFICIENT DEADWEIGHT (a) In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Four Hundred (400) metric tons or less below the guaranteed deadweight of 22,800 metric tons at draft moulded. (b) However, the Contract Price shall be decreased by the sum of United States Dollars One Thousand (US$1,000) for each full metric ton of such deficiency being more than Four Hundred (400) metric tons. -14- Amended and Restated Shipbuilding Contract H2246 (c) In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Eight Hundred (800) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. 5. INSUFFICIENT CARGO TANK CAPACITY (a) In the event there is a deficiency in the actual capacity of the cargo tanks determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is One Hundred (100) cubic meters or less below the guaranteed cargo tank capacity. (b) However, the Contract Price shall be decreased by the sum of United States Dollars Three Thousand Five Hundred (US$3,500) for each full cubic meter of such deficiency being more than One Hundred (100) cubic meters but equal to or less than Four Hundred (400) cubic meters. (c) In the event that there should be a deficiency in the VESSEL's actual cargo tank capacity which exceeds Four Hundred (400) cubic meters below the guaranteed cargo tank capacity the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made if the actual capacity of the cargo tanks determined as provided in the Specifications exceeds the cargo tank capacity set forth in the Specifications. 6. EFFECT OF RESCISSION It is hereby expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, the BUYER, saving its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage set forth in this Article, other than liquidated damages payable pursuant to Article III Section 1(a)(iii) above. -15- Amended and Restated Shipbuilding Contract H2246 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS All adjustments in the Contract Price, if any, pursuant to this Article III shall be applied against the Fifth Installment of the Contract Price payable to SELLER on Delivery as defined in Article VII, Section 1. ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall in good time send to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary visa for the Supervisor to enter China will be issued in order on demand and without delay provided that the Supervisor meets with the rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of visa. 2. APPROVAL OF PLANS AND DRAWINGS The parties hereto shall, within a reasonable period of time after signing of this Contract, mutually agree upon a list of all the plans and drawings, which are to be sent to the BUYER for approval (hereinbelow called "the LIST"). Before the arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with approval or remarks, if any. Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER, in writing, of the authority the Supervisor shall have with regard to the approval or modification of plans and drawings (that is, which of the drawing and plans specified in the LIST but not yet sent to the BUYER can be submitted to and approved by the Supervisor). Nevertheless in line with the Supervisor's authority, the Supervisor shall, within five (5) days after receipt thereof, return those submitted plans and drawings with approval or remarks, if any. -16- Amended and Restated Shipbuilding Contract H2246 Unless notification is given to the BUILDER by the Supervisor or the BUYER of approval or disapproval of any plans and drawings within the above designated period of time for each case, the said plans and drawings shall be deemed to have been automatically approved. The plans and drawings approved by the BUYER or Supervisor shall be final, and any alteration thereof shall be regarded as modification specified in Article V of this Contract. 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications. The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. However the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with the agreed inspection procedure and Schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. The BUILDER agrees to furnish, free of charge, the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of the BUILDER's Shipyard, but the fees for the international communication like telephone and telefax, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are -17- Amended and Restated Shipbuilding Contract H2246 doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation within Shanghai shall be provided to the Supervisor by the SELLER. 4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employment of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage, loss or destruction was caused by negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. -18- Amended and Restated Shipbuilding Contract H2246 5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account. 6. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's yard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangable. ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, telex and telefaxes, manifesting such agreement. -19- Amended and Restated Shipbuilding Contract H2246 The letters, telexes as well as telefaxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, telexes and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference andmade a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER's request for any modification and/or changes. 2. CHANGES IN RULES AND REGULATIONS (a) If, after the Effective Date, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree: (i) As to any increase or decrease in the guaranteed deadweight and/or cargo tank capacity and for speed of the VESSEL, if such compliance results in increased or reduced deadweight and/or cargo tank capacity and speed; and/or (ii) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans. (b) If, due to whatever reasons, the parties shall fail to agree on the increase or decrease of the guaranteed speed, deadweight and cargo tank capacity, -20- Amended and Restated Shipbuilding Contract H2246 or any alteration of the terms of this Contract, if any, then the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes. (c) The BUYER and the SELLER hereby agree to make best efforts to avoid the application and/or minimize the effect of any change in the rules and regulations of the Classification Society as to the Specifications. If the BUYER and the SELLER are unsuccessful in avoiding the application of such change in rules and regulations, then the SELLER shall effect any modifications and/or changes in Specifications without adjustment to the Contract Price and the BUYER shall grant to the SELLER the right to extend the Delivery Date (if necessary) for a maximum period of up to twelve (12) days. 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. 4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply for its own account (the "BUYER's Supplies") by the time designated by the SELLER. The delay in the delivery or the failure to deliver by the BUYER of any BUYER's Supplies within the time specified shall not extend the Delivery Date. However, if the delay in delivery of the BUYER's Supplies should exceed fifteen (15) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL and the BUYER shall accept the VESSEL so completed. -21- Amended and Restated Shipbuilding Contract H2246 The BUILDER shall be responsible for storing and handling of the BUYER's Supplies as specified in the Specifications after delivery to the BUILDER and shall install them on board the VESSEL at the BUILDER's expenses. Upon arrival of such shipment of the BUYER's Supplies, both parties shall undertake an joint unpacking inspection. If any damaged BUYER's supplies are found to be unsuitable for installation, the BUILDER shall be entitled to refuse to accept the BUYER's Supplies. ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least thirty (30) days notice in advance and seven (7) days definite notice in advance in writing by telex or telefax, of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shall promptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than five (5) days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above (other than due to the failure by the BUYER's representative to obtain a visa to enter China), then in such event, the BUYER shall be deemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER's representatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications and is satisfactory in all respects. The SELLER hereby warrants that the necessary visa for the BUYER's representatives to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until the BUYER's representatives have arrived at the BUILDER's Shipyard. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance with its best -22- Amended and Restated Shipbuilding Contract H2246 understanding of the relevant rules, regulations and/or Laws of the People's Republic of China then prevailing, then the SELLER shall so notify the BUYER and the BUYER shall endeavor to effect the replacement of all or any of such representatives. The Delivery Date as stipulated in Article VII hereof shall not be extended by any delays caused by the BUYER's replacement of its representatives pursuant to the SELLER's request. In the event of unfavorable weather on the date scheduled for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER assents in writing by telex or telefax of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, the Delivery Date shall not be extended other than pursuant to Article VIII hereof. 2. HOW CONDUCTED (a) All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications and shall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications. The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial waters equipped with speed measuring facilities. (b) The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, hydraulic oil and greases which shall be supplied by the BUYER according to the BUILDER's schedule which shall be forwarded to the BUYER by the BUILDER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, hydraulic oil and greases supplied by the BUYER shall be in accordance with the applicable engine Specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER. -23- Amended and Restated Shipbuilding Contract H2246 3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Section 2 of this Article VI, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh water, sea water or any other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account. 4. METHOD OF ACCEPTANCE OR REJECTION (a) Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL attached with the trial result, the BUYER or the BUYER's Supervisor shall within six (6) business days thereafter, notify the BUILDER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor. (b) However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications the BUILDER shall investigate with the Supervisor the cause of failure and shall take proper steps to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Trial Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) business days thereafter, notify the SELLER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-Trial Run or re-Trial Runs by the BUILDER. (c) In the event that the BUYER fails to notify the SELLER in writing by telex or telefax of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) business days period as provided for in the above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d) Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case, may be, of the VESSEL shall be referred to the Classification Society as provided in Article XIII Section 2 hereof. (e) Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as -24- Amended and Restated Shipbuilding Contract H2246 aforesaid and the SELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time before effecting delivery of the VESSEL to the BUYER under this Contract. 5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the purchasing price at the port of delivery thereof, and payment by the BUYER shall be effected, together with the payment of the fifth installment, as provided in Article II, Section 4 of this Contract. The BUYER shall supply lubricating oil, hydraulic oil and greases for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil, hydraulic oil and greases actually consumed for the said Trial Run or Trial Runs at the purchasing price incurred by the BUYER and payment by the SELLER shall be effected by deducting from the fifth installment the amount of such payment as provided in Article II, Section 4 of this Contract. 6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL in writing by telex or telefax notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing Delivery (as defined below) by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth. ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER (the "Delivery") at the BUILDER's Shipyard, in accordance with this Contract and the Specifications and with all Classification and statutory certificates (as required by Section 3 below) on or before November 1, 1999, as may be extended pursuant to Schedule 1 (the "Original Delivery Date"). -25- Amended and Restated Shipbuilding Contract H2246 2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, Delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of either (i) the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol of Delivery and Acceptance shall be prepared in triplicate and executed by each of the parties hereto or (ii) a Certificate of Completion executed by the Seller, Tractebel Gas Engineering GmbH and the Classification Society, which Certificate of Completion shall be prepared in multiple copies (5) and executed by the parties thereto. It is mutually understood and agreed that the Gas Plant of the VESSEL (the "GAS PLANT") shall be mechanically completed by the SELLER and that a running test for the equipment of the Gas Plant and a function test of its system shall be made by the SELLER prior to Delivery of the VESSEL as per clause 7 (a) of this Article whilst the full gas trial shall be made after Delivery of the VESSEL as more fully described in Section 7 of this Article. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents which shall accompany the aforementioned Protocol of Delivery and Acceptance or Certificate of Completion: (a) PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b) PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts and the like, all as specified in the Specifications, made by the BUILDER. (c) PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Section 5 of Article VI hereof. (d) FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. -26- Amended and Restated Shipbuilding Contract H2246 (e) PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER. (f) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications. It is agreed that if formal certificates are not available at the time of delivery of the VESSEL, provisional certificates issued by Classification Society or other relevant authorities shall be accepted by the BUYER, provided that the SELLER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued. (g) DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, rights in rem or other encumbrances of any nature upon the VESSEL and the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to Delivery. (h) COMMERCIAL INVOICE made by the SELLER. (i) BILL OF SALE made by the SELLER. (j) BUILDER's CERTIFICATE. 4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon Delivery thereof to and acceptance thereof by the BUYER as stated above, it being expressly understood that, until such Delivery is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER. 5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after Delivery and acceptance thereof is effected. If the BUYER -27- Amended and Restated Shipbuilding Contract H2246 shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL. 6. TENDER OF THE VESSEL If the BUYER fails to take Delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for Delivery after compliance with all procedural requirements as above provided. 7. GAS TRIAL (a) Prior to delivery of the VESSEL a running test of the equipment of the Gas Plant and a function test of its system shall be carried out utilizing either inert gas or dry air. These tests shall be repeated until its results are deemed by the Classification Society and any other relevant authority to be in conformity with this Contract and the Specifications, and the VESSEL shall not be deemed ready for Delivery by the SELLER to the BUYER pursuant to the terms of the Contract unless until the results of the aforesaid tests shall have been certified by the Classification Society. (b) After Delivery of the VESSEL at the Shipyard quay, the BUYER shall arrange at its own cost and expense to proceed the VESSEL to either Jin Shan Terminal, Shanghai or to the first load port, in the BUYER's option, in order to carry out the gas trial in accordance with the trial program furnished by the BUILDER's gas plant supplier (the "Supplier") under the supervision of the Supplier. The Supplier shall give qualified guidance, instruction and consultations with regard to the gas trial, all of which shall be arranged by the SELLER under the terms of its contract with the Supplier. The SELLER shall at its own expense dispatch its representative(s) to attend such gas trial as witness. The BUYER shall give the SELLER twenty (20) days advance notice in connection with the time and place for such trial. The gas trial shall be made latest forty-five (45) days after delivery of the VESSEL (unless the trial must be postponed until a later date not to exceed 90 days after Delivery for reasons beyond the BUYER's control) and shall be witnessed and certified by the Classification Society. -28- Amended and Restated Shipbuilding Contract H2246 (c) The SELLER shall pay all costs and charges of its own representative(s) and of the Classification Society and shall arrange at their expense for the Supplier to send at least one representative to the gas trial. (d) The BUYER shall at its own cost and expense provide suitable product in sufficient and satisfactory quantity and quality as well as utilities and consumables for operation. (e) Should the Gas Plant not be in conformity with this Contract and the Specifications, the SELLER shall remedy any such non-conformity to the satisfaction of the BUYER, the Classification Society and any other relevant authority. After the remedial works are completed the SELLER shall arrange to re-run the gas trial to the extent which will be necessary to demonstrate that the rectified part of the Gas Plant is then in conformity with this contract and the Specifications and the proper functioning of the Gas Plant as a whole is secured. (f) All direct costs and expenses of remedying the non-conformity and re-running the gas trial (including provision of suitable product, utilities and consumables) shall be for the account of the SELLER. (g) If delays are incurred relating to the use of the VESSEL, caused by an unsuccessful gas trial, remedial works and retrials for which the SELLER is responsible, with the consequence that the classification certificate has not been issued, will exceed more than twenty (20) days as from the commencement of the Gas Trials, the SELLER shall, notwithstanding the provisions contained in Article IX Section 2 and Section 4, pay to the BUYER as liquidated damages United States Dollars Ten Thousand (US$10,000) for each day of such excess delay up to a maximum amount of United States Dollars Two Hundred Thousand (US$200,000). ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual Delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the public enemy, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if -29- Amended and Restated Shipbuilding Contract H2246 any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors, as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or its sub-contractors, or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors as the case may be, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price subject nevertheless to (i) the provisions of Section 1(a) of Article III as to reduction in Contract Price, (ii) the BUYER's right of termination under Section 1(a) of Article III and (iii) all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL. 2. NOTICE OF DELAY Within fourteen (14) days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay commenced, and reasons therefor. Likewise within fourteen (14) days after such delay ends, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay ended, and also shall specify the maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification of any claim for extension of the Delivery Date within fourteen (14 ) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension. ARTICLE IX WARRANTY OF QUALITY 1. GUARANTEE OF MATERIAL AND WORKMANSHIP The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by or on behalf of the -30- Amended and Restated Shipbuilding Contract H2246 BUYER) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. 2. NOTICE OF DEFECTS The BUYER shall notify the SELLER in writing by telex or telefax, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER's written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the SELLER not later than thirty (30) days after such expiry date. Telexed or telefaxed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient to comply with the requirements as to time. 3. REMEDY OF DEFECTS The SELLER shall remedy at its expense any defect, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement part, and materials cannot be accomplished without impairing or delaying the operation of the VESSEL, then, in any such event, the BUYER shall cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall, as soon as possible, give the SELLER notice in writing by telex or telefax of the time and place such repairs will be made, provided always that the burden of proof as to the necessity for such repairs and replacements shall rest with the BUYER, and a written confirmation for such repairs or replacement shall be obtained from the SELLER. Defects that affect the safety of the VESSEL or her crew and/or constitute an emergency shall be repaired either by the crew or a BUYER selected contractor in a manner reasonable under the circumstances without the SELLER's prior approval and the SELLER shall be notified as to the nature and extent of repairs as soon as possible after the repairs are undertaken and such repair work will be subject to the mutual agreement between the parties. If the VESSEL is not thereby delayed or her operation is not thereby delayed or impaired, the SELLER shall have the right to verify the nature and extent of the defects complained of by its own representative(s) or that of Classification Society. -31- Amended and Restated Shipbuilding Contract H2246 The SELLER shall, in such cases, promptly advise the BUYER, by telex or telefax, after such examination has been completed, of its acceptance or rejection of the defects as ones justifying the remedy under this Article. In all minor cases, the Guarantee Engineer, as hereinafter provided for, will act for and on behalf of the SELLER. In any circumstances, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, Singapore, Korea and Spain, whichever is lower: (a) upon the SELLER's acceptance of the defects as justifying remedy under this Article, or (b) If the SELLER neither accepts nor rejects the defects as above provided, nor requests arbitration within thirty (30) days after its receipt of the BUYER's notice of defects. Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof. 4. EXTENT OF THE SELLER'S LIABILITY The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee specified above. The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Section 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects other than those specified in Paragraph 1 above, nor shall there be any SELLER's liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL's officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which -32- Amended and Restated Shipbuilding Contract H2246 were made by those other than the SELLER and/or their sub-contractors, employees or agents. Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. Neither CSTC nor the BUILDER shall, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL other than pursuant to the express terms of this Contract. The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties,guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER's negligence. This guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER. 5. GUARANTEE ENGINEER The BUILDER shall appoint one guarantee engineer (the "Guarantee Engineer") to serve the VESSEL as the BUILDER's representative for a period of six (6) months from the delivery of the VESSEL. The BUYER and its employees shall give such Guarantee Engineer full co-operation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s) the treatment comparable to the VESSEL's Chief Engineer, and shall provide him/them with accommodation and subsistence at no cost to the BUILDER and/or the Guarantee Engineer. The BUYER shall pay to the Guarantee Engineer the sum of United States Dollars Three Thousand Five Hundred only (US$3,500 ) per month/per person to cover his wages and miscellaneous expenses. The BUYER shall also pay the expense of his repatriation to Shanghai, the People's Republic of China by air upon termination of his -33- Amended and Restated Shipbuilding Contract H2246 service, the expense of his communications with the BUILDER when made in performance of his duties as the Guarantee Engineer and the expenses, if any, of his medical and hospital care. The BUYER, its successor(s) and/or assignee(s), shall be liable to and indemnify the BUILDER and/or the Guarantee Engineer for personal injuries, including death and damages to, or loss or destruction of property of the Guarantee Engineer, if such death, injuries, damages, loss and/or destruction were caused by gross negligence or willful misconduct of the BUYER, its successor(s) and/or assignee(s) or its employees and/or agents. Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL. ARTICLE X CANCELLATION BY THE BUYER All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the SELLER. In the event the BUYER shall exercise its right of rejection, cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing by telex or telefax, and such rejection, cancellation and/or rescission shall be effective as of the date the notice thereof is delivered by the BUYER. BUYER shall be entitled to receive from SELLER the amounts provided for in Article II, Section 7(a) above. In addition to Buyer's Right of Rejection, cancellation and/or rescission set forth in the preceding paragraph, Buyer shall cancel this Contract and Receive from the Seller the amounts provided for in Article II, Section 7(a) above, if any of the Related Contracts have been cancelled, rescinded or terminated pursuant to the Terms of such Related Contracts. ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under this Contract if any of the following events occurs: -34- Amended and Restated Shipbuilding Contract H2246 (a) The BUYER fails to pay any one of the first, second, third and fourth installments to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof; or (b) The BUYER fails to pay the fifth installment to the SELLER in accordance with Article II hereof, provided the BUYER shall have received the SELLER's notification in accordance with Article II hereof; or (c) The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under and pursuant to the provisions of this Contract. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telex or telefax after the date of occurrence of the default as per Section 1 of this Article and the BUYER shall forthwith acknowledge by telex to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telex or telefax acknowledgment to the SELLER within five (5) banking days it shall be deemed that such notification has been duly received by the BUYER. 3. INTEREST AND CHARGE (a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of ten (10%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof. (b) In any event of default by the BUYER under Section 1 (a), (b) or (c) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default. 4. DEFAULT BEFORE DELIVERY OF THE VESSEL -35- Amended and Restated Shipbuilding Contract H2246 (a) If any default by the BUYER occurs as defined in Section 1 (a), (b) or (c) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a period of continuance of such default by the BUYER. (b) If any such default as defined in Section 1 (a), (b) or (c) of this Article committed by the BUYER continues for a period of fifteen (15) banking days, then, the SELLER shall have all following rights and remedies: (i) The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Section 2 of this Article, by giving notice of such effect to the BUYER in writing by telex or telefax. Upon receipt by the BUYER of such telex or telefax notice of cancellation or rescission, all of the BUYER's Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and (ii) In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any installment or installments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and (iii) With respect to any default defined in Section 1(a) of this Article, without prejudice to the SELLER's right to recover from the BUYER the Fifth installment, interest, costs and/or expenses by applying the proceeds to be obtained from the sale of the VESSEL in accordance with the provisions set out in this Contract, the SELLER shall have the right to declare all unpaid second, third and fourth installments to be forthwith due and payable. -36- Amended and Restated Shipbuilding Contract H2246 5. SALE OF THE VESSEL (a) In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit and to sell the VESSEL at the best price available at a public or private sale advertised internationally. Such sale may include an invitation to the BUYER to participate, but will be otherwise on such terms and conditions as the SELLER may determine. In the case of sale of the VESSEL, the SELLER shall give telex or telefax or written notice to the BUYER. (b) In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the same interest rate as specified in Section 3 of this Article from the respective due dates thereof to the date of application. (c) In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labor and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract. (d) In either of the above events of sale, if the proceeds of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excess to the BUYER, provided, however that the amount of such payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER's supplies, if any, without interest. -37- Amended and Restated Shipbuilding Contract H2246 (e) If the proceeds of the sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request. ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel-laying of the first section or block of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER's Supplies, fully insured with first class Chinese insurance companies for BUILDER's risk. The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of the BUYER's Supplies. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER. 2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss: In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Section 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER. (b) Total Loss: However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either: -38- Amended and Restated Shipbuilding Contract H2246 (i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's supplies without additional expenses to the BUYER, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (ii) If due to whatever reasons the parties fail to agree on the above, then the BUYER shall deliver a written notice of rejection to SELLER and the SELLER shall refund immediately to the BUYER the amount described in Article II, Section 7, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith. (iii) Notwithstanding the provisions of (i) and (ii) above, Seller may elect to postpone delivery of the Vessel subject to the provisions of Article III, Section (1)(a). Within thirty (30) days after receiving telex or telefax notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telex of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the BUYER shall receive the refund as hereinabove provided and the provisions hereof shall apply. 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon Delivery thereof to and acceptance by the BUYER. ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS -39- Amended and Restated Shipbuilding Contract H2246 Should any dispute of any nature arise in respect of this Contract, its performance or interpretation which is not decided in accordance with Article XIII, Section 2 below, such dispute shall be settled by arbitration in London, England in accordance with the rules of the London Maritime Arbitrators Association Inc. and otherwise in accordance with the provisions of the Laws of England. The party who desires arbitration of any such dispute shall give written notice to the other party. The notice shall state the name and address of the arbitrator whom it appoints and describe the specific nature of the particular dispute. Such notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, and the other party shall, within thirty (30) days following the receipt of said notice, give written notice to the party requesting the arbitration as to the name and address of the arbitrator whom it appoints, which notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, provided that if the other party should fail to so appoint its arbitrator, the arbitrator appointed by the party desiring the arbitration may proceed with the arbitration hearing and issue an award. Otherwise the two arbitrators so chosen shall select a third arbitrator. The applicable law of England on all matters at issue shall apply. A judgement based upon the decision of the majority of the arbitrators or the sole arbitrator, as the case may be, may be entered in the appropriate court of any country having jurisdiction of either party. The arbitrators shall also decide which party, or the extent to which each party, shall pay costs of arbitration. Unless and to the extent otherwise determined by the arbitrator(s), reference to arbitration shall not relieve the BUILDER of its obligation diligently to proceed with the construction, completion and delivery of the VESSEL, but the majority of the arbitrators or the sole arbitrator, as the case may be, shall decide the extent to which the Delivery Date shall be extended by virtue of the dispute having been referred to arbitration. 2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto. 3. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by telex confirmed in writing to the SELLER and the BUYER. -40- Amended and Restated Shipbuilding Contract H2246 ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior consent of the other party is given in writing; provided, however, the BUYER may assign this Contract to one of its affiliates and the BUYER and its assignee may assign this Contract to the Trustee Bank providing the Trustee's Commitment Letter described in Article II, Section 6. In the event of an assignment of the BUYER's rights and obligations hereunder with respect to the VESSEL said assignee or the substitute party shall have all the rights and assume all the obligations of the BUYER hereunder with respect to said VESSEL and the responsibility of the BUYER hereunder, with respect to such VESSEL, shall terminate. The BUYER shall deliver to the SELLER an agreement which will guarantee performance by any assignee of this Contract. The BUYER shall deliver to the SELLER a Notice of Assignment and Acknowledgement as to any assignment of this Contract to the Trustee Bank. ARTICLE XV TAXES AND DUTIES 1. TAXES The SELLER shall be responsible for and pay, without recourse to the BUYER, any and all taxes, assessments, duties or other similar levies or charges, imposed by the Chinese authorities, whether national, municipal or local, with respect to the period up to and including Delivery (even though assessed, determined or imposed thereafter), on or in respect of (i) this Contract or any act or transaction hereunder, (ii) the VESSEL or any part thereof, or (iii) any imports of material or equipment, and including without limitation, any tax imposed with respect to the sale or Delivery to the BUYER or the VESSEL's export from China. Should the BUYER, at any time before or after Delivery, be assessed or required to pay any such taxes, assessments, duties or other similar levies or charges imposed by the Chinese authorities, the SELLER shall reimburse the BUYER therefor. 2. DUTIES The SELLER shall indemnify the BUYER for, and hold it harmless against, any duties imposed in the People's Republic of China upon materials and equipment which under the terms of this Contract and/or the Specifications will, or may be, supplied by -41- Amended and Restated Shipbuilding Contract H2246 the BUYER from the abroad for installation in the VESSEL as well as any duties imposed in the People's Republic of China upon running stores, provisions and supplies furnished by the BUYER from abroad to be stocked on board the VESSEL and also from the payment of export duties, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS GOVERNMENTAL APPROVALS AND LICENSES (a) To the extent there is a change in the laws now in effect in the People's Republic of China, the SELLER shall obtain necessary Chinese Government approvals and licenses, if any, required for the SELLER's performance under this Contract. The SELLER shall assist the BUYER in obtaining any licenses, permits, or other authorizations, or waivers, necessary for the BUYER to enter and/or reside in China to perform his functions as set forth herein or attend the Trial Runs. (b) The SELLER shall proceed as soon as possible to obtain from the Chinese Government the aforementioned licenses and permits (if any) for the VESSEL to be constructed, delivered and be exported from China, as provided herein and shall notify the BUYER as to the issuance thereof by facsimile or cable, subsequently confirmed in writing accompanied by copies of the said licenses and permits. In the event that the said licenses and permits for the VESSEL shall not have been granted by the Chinese authorities within thirty (30) days following the attempted Delivery, unless otherwise mutually agreed to by the SELLER and the BUYER, the SELLER shall be required to refund within twenty (20) days thereafter, to the BUYER the amounts set forth in Article II, Section 7 and upon payment of such amounts by Seller this Contract shall thereupon automatically become null and void and each of the parties hereto shall be forthwith and completely discharged from all of its obligations to the other or the SELLER elects to postpone the DELIVERY of the VESSEL in accordance with the provisions of Article III, Section 1(a). Notwithstanding the provisions of this paragraph (b), Delivery of the Vessel is not made on or before April 1, 2001, SELLER shall refund to the Buyer the amounts set forth in Article II Section 7(a) and April 1 shall be deemed the Date of Rejection. -42- Amended and Restated Shipbuilding Contract H2246 (c) In case the VESSEL, during construction or prior to Delivery, should be requisitioned or seized by the Chinese Government, the SELLER shall forthwith pay to the BUYER the amounts set forth in Article II, Section 7 hereof, and the payment of such refund by the Seller shall forthwith release both parties from all obligations under this Contract; provided, Seller may elect to postpone the delivery of the Vessel in accordance with the provisions of Article III, Section 1(a). ARTICLE XVII LAWS AND PERMITS The SELLER shall exercise due diligence to ensure that the SELLER, its employees and representatives, shall at all times comply with all applicable laws, ordinances, statutes, rules, and regulations, including those relating to wages, hours and working conditions and insurance, adopted by any governmental authority within the People's Republic of China. The SELLER, at its expense, shall procure all priorities, permits, licenses, inspections, approvals and certificates required in connection with the construction and completion of the VESSEL and Delivery in its Jiangnan Shipyard. If required to permit performance of the work, the SELLER shall furnish any bond, security or deposits so required for its employees and representatives. ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and save harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any. Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated by the passage of any specified period of time. The SELLER indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. -43- Amended and Restated Shipbuilding Contract H2246 ARTICLE XIX NOTICE Any and all notices and communications in connection with this Contract shall be addressed as follows: To the BUYER: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue 19th Floor New York, New York 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 To CSTC: China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 To the BUILDER: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 Any notices and communications sent by CSTC and the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER. Any change of address shall be communicated in writing by registered mail by the party making such change to the other party and in the event of failure to give such notice of change communications addressed to the party at their last known address shall be deemed sufficient. Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be -44- Amended and Restated Shipbuilding Contract H2246 delivered five (5) days after the date of dispatch, and telex or telefax acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language. ARTICLE XX EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon the execution and delivery of this Contract and the Specifications. -45- Amended and Restated Shipbuilding Contract H2246 ARTICLE XXI INTERPRETATION; MISCELLANEOUS 1. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern. However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern. 3. DEFINITION In absence of stipulation of "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days". 4. ENTIRE AGREEMENT This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract after signing of the Contract. -46- Amended and Restated Shipbuilding Contract H2246 5. REGISTRATION OF VESSEL The BUYER intends to register the VESSEL under Liberian flag but may elect an alternate registry within a reasonable time prior to Delivery (subject to mutual agreement on necessary modifications as provided for in Article V, Section 1. 6. LANGUAGE This Contract and the Plan and Specifications have been prepared in the English language, which shall control. The Contract has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. The Plan and Specifications have been signed in duplicate, one counterpart being retained by the BUILDER and one by the BUYER. 7. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. -47- Amended and Restated Shipbuilding Contract H2246 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Kaplow -------------------------- Name: Richard Kaplow Title: President CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping -------------------------- Name: Shen Yiping Title: Vice President JIANGNAN SHIPYARD By: /s/ Gong Jingen -------------------------- Name: Gong Jingen Title: Vice President -48- Amended and Restated Shipbuilding Contract H2246 Schedule 1 Contract Price Installment Schedule -49- Amended and Restated Shipbuilding Contract H2246 Schedule 2 Refund Amount Schedule (Letter of Guarantee) -50- Amended and Restated Shipbuilding Contract H2246 Schedule 3 Refund Amount Schedule (Performance Bond) -51- Amended and Restated Shipbuilding Contract H2246 EXHIBIT "A": IRREVOCABLE LETTER OF REFUNDMENT GUARANTEE [STATIONERY OF GUARANTOR BANK] [Date] Navigator Holdings PLC 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and, together with CSTC, the "SELLER") and in consideration of Navigator Holdings PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contract dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") made by and between the BUYER and the SELLER for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2246 (hereinafter called the "VESSEL"), The Export Import Bank of China the "Bank") the undersigned, do guarantee the payment (and not merely the collectability of the same) to the BUYER by the SELLER immediately upon demand of an amount up to but not exceeding a total amount as set forth in Schedule 1 hereto (calculated in accordance with the immediately following paragraph), together with simple interest thereon calculated at the rate of ten percent (10.0%) per annum on the basis of a 360 day year from and including the date of receipt of demand to but not including the date of remittance by telegraphic transfer of such refund. Subject to BUYER making installment payments in accordance with Article II of the Contract, the amount of this Guarantee will be automatically increased during the term of this Guarantee and shall be equal to the sum of: (i) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month in which the A-1 Amended and Restated Shipbuilding Contract H2246 Date of Rejection occurs; and (ii) an amount equal to the product of (X) the difference between (1) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 1 hereto as of the first day of the month in which the Date of Rejection of the vessel under the Contract occurs and (y) a fraction the numerator of which is numeric day of the month of the date on which the Refund Amount (as hereinafter defined) is actually paid and the denominator of which is 30 (collectively, the "Refund Amount"). BUYER's right to demand payment under this Guarantee shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contract, (iii) upon the cancellation, termination or rescission of the Contract by the BUYER in accordance with the terms of Contract as set forth in Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b), or Article XVI (b) or (c), or (iv) the insolvency or bankruptcy of BUILDER. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to us by the BUYER. Payment under this Guarantee is available at the counters of ______________ Bank against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within eleven (11) banking days. This Guarantee is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. In the event that the BUYER's demand is for a lesser amount than the amount of this Guarantee, the interest payable will be calculated on the amount of the BUYER's demand and not on the amount of this Guarantee. We agree that this Guarantee shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; A-2 Amended and Restated Shipbuilding Contract H2246 and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Guarantee shall become effective from the time of the actual receipt of the first installment by the SELLER from the BUYER under the Contract and the Refund Amount payable under this Guarantee shall correspond to the total installment payments actually made by the BUYER to the SELLER from time to time under the Contract prior to the delivery of the VESSEL including applicable interest. This Guarantee shall expire and become null and void on the earlier to occur of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by the Bank of either a copy of the Protocol of Delivery and Acceptance of the VESSEL, purportedly signed by the BUYER and the SELLER and issued in the form attached hereto as Appendix B or a copy of the Certificate of Completion of the Vessel signed by the respective parties thereto in the form attached hereto as Appendix C; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Guarantee shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contract or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Guarantee shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Guarantee shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law; provided the Refund Amount shall be adjusted to reflect the delay resulting from such arbitration and shall be calculated in accordance with Schedule 1 hereto to the date payment is actually made. A-3 Amended and Restated Shipbuilding Contract H2246 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Guarantor] By: ---------------------- By: ---------------------- Name:---------------------- Name:---------------------- Title:--------------------- Title:--------------------- A-4 Amended and Restated Shipbuilding Contract H2246 SCHEDULE 1 TO EXHIBIT A REFUND AMOUNT Net Date Amount ---- ------ A-5 Amended and Restated Shipbuilding Contract H2246 Appendix A to Exhibit A - ----------------------Bank - ---------------------- - ---------------------- Re: Irrevocable Letter of Refundment Guarantee No. __ (the "Guarantee") The undersigned hereby certifies to [Name of Guarantor] with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Guarantee for payment of US$ _________, plus simple interest thereon calculated at the rate of percent per annum on the basis of a 360 day year from __________ to the date payment is effected by [Name of Guarantor] to the BUYER in accordance with the payment instructions provided below. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contract dated the ___ day of _____________, 1997, made by and among Navigator Holdings PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2246, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ------------------------- By:---------------------- Date:-------------------- A-6 Amended and Restated Shipbuilding Contract H2246 Appendix B to Exhibit A PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL:---------------------- SELLER's Hull No. 2246 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:----------------------- Name:--------------------- Title:-------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:----------------------- Name:--------------------- Title:-------------------- JIANGNAN SHIPYARD By:----------------------- Name:--------------------- Title:-------------------- A-7 Amended and Restated Shipbuilding Contract H2246 Appendix C to Exhibit A CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings PLC (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: -------------------------------- Seller's Hull No.: -------------------------------- Type of Vessel: -------------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- A-8 Amended and Restated Shipbuilding Contract H2246 EXHIBIT "B": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and together with CSTC collectively called the "SELLER") and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers respectively having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Export-Import Bank of China (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Twenty Six Million Seven Hundred Thousand (US$26,700,000) (the "Payment Amount"), if and when the same or any part thereof becomes payable to BUYER from the SELLER under any Contract or Contracts if any such Contract or Contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI (b) and (c)) of such Contract or Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon actual receipt in full by the SELLER of the initial installment due under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. B-1 Amended and Restated Shipbuilding Contract H2246 Payment under this Performance Bond is available at the counters of Export-Import Bank of China in __________________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented under the column heading specified in the Notice of Demand. If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within eleven (11) banking days. The right of the BUYER to demand payment under this Performance Bond by presentation of a Notice of Demand shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery or Certificates of Completion for each of the five (5) VESSELS in the form of Appendix B or Appendix C to this Performance Bond; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is B-2 Amended and Restated Shipbuilding Contract H2246 rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contracts, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. B-3 Amended and Restated Shipbuilding Contract H2246 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Performance Guarantor] By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- B-4 Amended and Restated Shipbuilding Contract H2246 SCHEDULE 1 REFUND AMOUNT Net Date Amount ---- ------ B-5 Appendix A to Exhibit B - --------------------- Bank - --------------------- - --------------------- Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to The Export Import Bank of China with reference to Performance Bond No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Notice of Demand, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date). 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ---------------------- By:------------------- B-6 Date:----------------- Amended and Restated Shipbuilding Contract H2246 Appendix B to Exhibit B PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL:------------- SELLER's Hull No. 2246 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:----------------------- Name:--------------------- Title:-------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:----------------------- Name:--------------------- Title:-------------------- JIANGNAN SHIPYARD By:----------------------- Name:--------------------- Title:-------------------- B-7 Appendix C to Exhibit B CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ------------------------- Seller's Hull No.: ------------------------- Type of Vessel: ------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- B-8 EXHIBIT "C": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of Tractebel Gas Engineering GmBH and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" together with CSTC collectively called the "SELLER") the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Generale de Banque (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Thirteen Million Three Hundred Thousand (US$13,300,000) (the "Payment Amount"), if and when the same or any part thereof become payable to BUYER from the SELLER under any Contract or Contracts if any such contract or contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI(b) and (c)) of the Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon payment of the initial installment under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. Payment under this Performance Bond is available at the counters of _______________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the C-1 BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented and under the column heading specified in the Notice of Demand less the amount paid by the Export-Import Bank of China under such Bank's Irrevocable Performance Bond dated _______, 1997 (the "Ex-Im Performance Bond"). In addition, the BUYER's right to demand payment as provided above is subject to delivery by BUYER to the Bank of a copy of the notice of demand presented to the Export-Import Bank of China under the Ex-Im Performance Bond in the amount of US$26,700,000 and evidence that such amount has been paid. If the Notice of Demand is received by the Bank by 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the same business day. If the Notice of Demand is received by the Bank after 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the next succeeding business day. The right of the BUYER to demand payment under this Performance Bond shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery and/or Certificates of Completion for each of the five (5) VESSELs in the form of Appendix B or Appendix C to this Performance Bond; and (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. This Performance Bond is governed by and enforced and construed in accordance with the laws of England. - -------------------------------- For: Generale de Banque By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- C-2 Appendix A to Exhibit C Notice of Demand Generale de Banque - -------------------- - -------------------- - -------------------- Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to Generale de Banque with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Certificate, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date), less $26,700,000, the amount paid by the Export Import Bank of China pursuant to the attached Notice of Demand presented by the undersigned on -----------------. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ----------------------- By:-------------------- Date:------------------ C-3 Appendix B to Exhibit C PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL:-------------------- SELLER's Hull No. 2246 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:----------------------- Name:--------------------- Title:-------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:----------------------- Name:--------------------- Title:-------------------- JIANGNAN SHIPYARD By:----------------------- Name:--------------------- Title:-------------------- C-1 Appendix C to Exhibit C CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: -------------------- Seller's Hull No.: -------------------- Type of Vessel: -------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- C-1 EXHIBIT "D" CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: -------------------- Seller's Hull No.: -------------------- Type of Vessel: -------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:----------------------- By:----------------------- Name:--------------------- Name:--------------------- Title:-------------------- Title:-------------------- D-1 EXHIBIT "D-1" PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: ------------------------ SELLER's Hull No. 2246 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:----------------------- Name:--------------------- Title:-------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:----------------------- Name:--------------------- Title:-------------------- JIANGNAN SHIPYARD By:----------------------- Name:--------------------- Title:-------------------- D-1-1 EXHIBIT "E": TRUSTEE'S COMMITMENT LETTER JIANGNAN SHIPYARD c/o China Shipbuilding Trading Company, Limited and CHINA SHIPBUILDING TRADING COMPANY, LIMITED 10 Yue Tan Bei Xiao Jie Beijing 100861 The People's Republic Bank of China Re: Shipbuilding Contract for Construction of 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (the "Contract") Ladies and Gentlemen: This is to confirm that the undersigned as indenture trustee under the Indenture (the "Indenture") dated as of _____________, 1997, among the undersigned, as trustee (the "Indenture Trustee"), _________________, ________________, __________________, _______________, __________________, (collectively, the "Owners") and ________________, as agent for the Owners, is holding in Account No. ______, the Pre-Funding Account established under and pursuant to the terms of Indenture, an amount equal to US$_________. 1. Pursuant to the terms of the Indenture, the undersigned shall automatically disburse from amounts held in the Pre-Funding Account the first through fourth installments of the Contract Price (as defined in the Amended and Restated Shipbuilding Contract dated June 26, 1997 with respect to Hull No. 2246 (the "Vessel")) on the dates and in the manner set forth in Schedule 1 of the Contract and in accordance with Section 4 of Article II of the Contract and Schedule 1 hereto. 2. The Fourth Installment shall be payable to the Seller only after the Trustee has received a duplicate original, or facsimile copy of such original, of either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to each Vessel having an Original Delivery Date prior to that of the Vessel. 3. The fifth installment shall be paid in accordance with the provisions of Article II, Section (4) upon receipt by the Indenture Trustee of a Protocol of Delivery and Acceptance signed by both the SELLER and the BUYER or a Certificate of Completion signed by the SELLER, Germanischer Lloyd and Tractebel Gas Engineering GmBH. E-1 4. Any payment by us shall be made in United States Dollars by telegraphic transfer to Bank of China New York Branch, 410 Madison Avenue, New York New York 10017 U.S.A. as receiving bank nominated by you for credit to the account of China Shipbuilding Trading Company, Limited with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advise from Bank of China, New York Branch to Bank of China, Head Office, Banking Department, or through other receiving bank to be nominated by you from time to time, in favor of China Shipbuilding Trading Company Limited or your assignee. We hereby agree to make all payments as aforesaid unless directed by you in writing. 5. Our obligation to make the first through fourth installments due under the Contract shall not be affected or prejudiced by any dispute between the SELLER and the BUYER under the Contract or by the BUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of the terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under the Commitment. 6. This Trustee's Commitment Letter shall come into full force and effect upon delivery to you of this Trustee's Commitment Letter and shall continue in force and effect until the full payment of the second, third, fourth and fifth installments or the termination of the Contract in accordance with the terms thereof. 7. All payments by us under this Trustee's Commitment Letter shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal to the amount which would have been received had no such deduction or withholding been required to be made. 8. This Trustee's Commitment Letter shall be construed in accordance with and governed by the Laws of New York. 9. Upon expiration of this Trustee's Commitment Letter, you shall return the same to us without any request or demand from us. For the avoidance of doubt, this Trustee's Commitment Letter shall have no further force and effect upon its expiration pursuant to Clause 6 hereof, notwithstanding that the same may not have been returned to us pursuant to the Clause 8. IN WITNESS WHEREOF, we have caused this Trustee's Commitment Letter to be executed and delivered by our duly authorized representative the day and year above written. E-2 [Name of Trustee Bank] By: --------------------- Name:--------------------- Title:-------------------- E-3
TABLE OF CONTENTS Page ARTICLE I DESCRIPTION AND CLASS........................................................................................... 2 1. DESCRIPTION................................................................................... 2 2. CLASS AND RULES............................................................................... 3 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL............................................ 4 4. GUARANTEED SPEED.............................................................................. 4 5. GUARANTEED FUEL CONSUMPTION................................................................... 5 6. GUARANTEED DEADWEIGHT......................................................................... 5 7. GUARANTEED CARGO TANK CAPACITY................................................................ 5 8. SUBCONTRACTING................................................................................ 6 9. REGISTRATION.................................................................................. 6 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT............................................................................... 6 1. CONTRACT PRICE................................................................................ 6 2. CURRENCY...................................................................................... 6 3. TERMS OF PAYMENT.............................................................................. 6 4. METHOD OF PAYMENT............................................................................. 7 5. PREPAYMENT.................................................................................... 8 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY...................................................................................... 8 7. REFUNDS....................................................................................... 8 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE................................................................................ 10 1. DELIVERY...................................................................................... 10 2. INSUFFICIENT SPEED............................................................................ 12 3. EXCESSIVE FUEL CONSUMPTION.................................................................... 13 4. INSUFFICIENT DEADWEIGHT....................................................................... 14 5. INSUFFICIENT CARGO TANK CAPACITY.............................................................. 14 6. EFFECT OF RESCISSION.......................................................................... 15 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS................................................. 15 ARTICLE IV SUPERVISION AND INSPECTION.......................................... 15 1. APPOINTMENT OF THE BUYER'S SUPERVISOR......................................................... 15 2. APPROVAL OF PLANS AND DRAWINGS................................................................ 15 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR.................................................. 16
(i)
4. LIABILITY OF THE SELLER....................................................................... 17 5. SALARIES AND EXPENSES......................................................................... 18 6. REPLACEMENT OF SUPERVISOR..................................................................... 18 ARTICLE V MODIFICATION, CHANGES AND EXTRAS....................................... 18 1. HOW EFFECTED.................................................................................. 18 2. CHANGES IN RULES AND REGULATIONS.............................................................. 19 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT.................................................... 20 4. BUYER'S SUPPLIED ITEMS........................................................................ 20 ARTICLE VI TRIALS........................................................................................................ 21 1. NOTICE........................................................................................ 21 2. HOW CONDUCTED................................................................................. 22 3. TRIAL LOAD DRAFT.............................................................................. 22 4. METHOD OF ACCEPTANCE OR REJECTION............................................................. 23 5. DISPOSITION OF SURPLUS CONSUMABLE STORES...................................................... 24 6. EFFECT OF ACCEPTANCE.......................................................................... 24 ARTICLE VII DELIVERY........................................................................................................ 24 1. TIME AND PLACE................................................................................ 24 2. WHEN AND HOW EFFECTED......................................................................... 24 3. DOCUMENTS TO BE DELIVERED TO THE BUYER........................................................ 25 4. TITLE AND RISK................................................................................ 26 5. REMOVAL OF VESSEL............................................................................. 26 6. TENDER OF THE VESSEL.......................................................................... 26 7. GAS TRIAL..................................................................................... 27 ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY....................................................................... 28 1. CAUSE OF DELAY................................................................................ 28 2. NOTICE OF DELAY............................................................................... 29 ARTICLE IX WARRANTY OF QUALITY............................................................................................. 29 1. GUARANTEE OF MATERIAL AND WORKMANSHIP......................................................... 29 2. NOTICE OF DEFECTS............................................................................. 29 3. REMEDY OF DEFECTS............................................................................. 30 4. EXTENT OF THE SELLER'S LIABILITY.............................................................. 31 5. GUARANTEE ENGINEER............................................................................ 32
(ii)
ARTICLE X CANCELLATION BY THE BUYER...................................................................................... 32 ARTICLE XI BUYER'S DEFAULT................................................................................................. 33 1. DEFINITION OF DEFAULT......................................................................... 33 2. NOTICE OF DEFAULT............................................................................. 33 3. INTEREST AND CHARGE........................................................................... 33 4. DEFAULT BEFORE DELIVERY OF THE VESSEL......................................................... 34 5. SALE OF THE VESSEL............................................................................ 35 ARTICLE XII INSURANCE...................................................................................................... 36 1. EXTENT OF INSURANCE COVERAGE.................................................................. 36 2. APPLICATION OF RECOVERED AMOUNT............................................................... 36 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE.............................................. 37 ARTICLE XIII DISPUTES AND ARBITRATION........................................................................................ 37 1. PROCEEDINGS.................................................................................. 37 2. ALTERNATIVE ARBITRATION BY AGREEMENT.......................................................... 38 3. NOTICE OF AWARD............................................................................... 38 ARTICLE XIV RIGHT OF ASSIGNMENT............................................................................................. 39 ARTICLE XV TAXES AND DUTIES................................................................................................ 39 1. TAXES......................................................................................... 39 2. DUTIES........................................................................................ 39 ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS.............................. 40 GOVERNMENTAL APPROVALS AND LICENSES.................................................................... 40 ARTICLE XVII LAWS AND PERMITS ................................................................................................................ 41 ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS.............................................................................. 41 ARTICLE XIX
(iii)
NOTICE.......................................................................................................... 41 ARTICLE XX EFFECTIVE DATE OF CONTRACT...................................................................................... 43 ARTICLE XXI INTERPRETATION.................................................................................................. 44 1. LAW APPLICABLE................................................................................ 44 2. DISCREPANCIES................................................................................. 44 3. DEFINITION.................................................................................... 44 4. ENTIRE AGREEMENT.............................................................................. 44 5. REGISTRATION OF VESSEL........................................................................ 45 6. LANGUAGE...................................................................................... 45 7. AMENDMENTS.................................................................................... 45
(iv) Schedule 1 Contract Price Installment Schedule Schedule 2 Refund Amount Schedule (Letter of Guarantee) Schedule 3 Refund Amount Schedule (Performance Bond) Exhibit A Irrevocable Installment Payment Letter of Guarantee Exhibit B Irrevocable Performance Bond from the Export Import Bank of China Exhibit C Irrevocable Performance Bond from Generale de Banque Exhibit D Certificate of Completion Exhibit D-1 Protocol of Acceptance and Delivery Exhibit E Trustee's Commitment letter (ii) EX-10.3 26 AMEND. & RESTATED SHIPBLDNG CONT. (HULL NO. 2247) AMENDED AND RESTATED SHIPBUILDING CONTRACT for CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2247) Date: June 26, 1997 between NAVIGATOR HOLDINGS PLC as BUYER and CHINA SHIPBUILDING TRADING COMPANY, LIMITED and JIANGNAN SHIPYARD Collectively as SELLER Amended and Restated Shipbuilding Contract H2247 AMENDED AND RESTATED SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2247) This AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "Contract"), entered into this 26th day of June, 1997 by and between Navigator Holdings PLC (formerly named Navigator Holdings, Ltd.), a company organized and existing under the laws of the Isle of Man, having its registered office at 15-19 Athol Street, Douglas, Isle of Man, (hereinafter called the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 10 Yue Tan Bei Xiao Jie, Beijing 100861, the People's Republic of China (hereinafter called "CSTC"), and JIANGNAN SHIPYARD, a corporation organized and existing under the laws of the People's Republic Of China, having its registered office at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "BUILDER" and collectively with CSTC, the "SELLER") on the other part. The BUYER and SELLER are parties to the SHIPBUILDING CONTRACT for the construction of one (1) 22,000 cubic meter liquified ethylene gas carrier (Hull No. 2247), dated February 4th, 1997, and desire to amend and restate the terms thereof in accordance with the terms and provisions of this AMENDED AND RESTATED SHIPBUILDING CONTRACT. This AMENDED AND RESTATED SHIPBUILDING CONTRACT is being executed and delivered simultaneously with the execution and delivery of four separate and individual Shipbuilding Contracts as restated and amended (the "Related Contracts") between the SELLER and the BUYER each dated as of the date hereof with respect to the construction of four sister vessels which will have the BUILDER's Hull designation numbers 2245, 2246, 2248 and 2249 (collectively, the "SISTER VESSELS"). Amended and Restated Shipbuilding Contract H2247 WITNESSETH In consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at the BUILDER's Shipyard and to sell and deliver to the BUYER after completion and successful trial one (1) 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (hereinafter called the "VESSEL") as more fully described in Article I hereof to be registered under the flag of Liberia and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same all in accordance with the terms and subject to the conditions hereinafter set forth. ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION The BUILDER shall, at its Jiangnan Shipyard, located at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "Shipyard"), construct, launch, equip, supply, and in all respects complete so as to be ready for immediate operation (subject to the gas trials as set forth in Article VII, Section 7), and deliver to the BUYER a 22,000 cubic meter liquefied ethylene gas carrier with 22,800 deadweight tons of carrying VCM on scantling draft of 10.90 meters and the class described below in Article I, Section 2 (hereinafter called the "VESSEL"), to be designated as Hull No. 2247, together with all machinery, materials, parts, supplies, equipment, appurtenances, and all other items necessary to and for the said construction, completion, delivery, and operation of the VESSEL. The VESSEL shall be built and completed in accordance with the following: (1) Specifications (Drawing No. 2LG970104) (2) General Arrangement (Drawing No. 2LG970102) (preliminary) (3) Maker List (Drawing No. 2LG970105) attached hereto and made a part hereof and signed by each of the parties to this Contract (items 1 through 3 of this Article, Section 1 are collectively referred to herein as the "Specifications"). Should there be any discrepancy between this Contract and the Specifications, the provisions in this Contract shall prevail. When there is no specific description in the Specifications a standard of workmanship and practices -2- Amended and Restated Shipbuilding Contract H2247 equivalent to the BUILDER's shipbuilding standards as practicable, generally applicable to the construction of similar size and types of vessels, shall be applicable to the construction of the VESSEL. The BUILDER, at its expense, shall, unless otherwise specifically provided herein, procure and furnish all items and permissions necessary to perform its obligations hereunder including, but not limited to, (i) plans and specifications (in addition to the Specifications), labor, machinery, materials, parts, supplies, equipment, appurtenances, and (ii) licenses, permits, inspections, surveys and approvals. 2. CLASS AND RULES The VESSEL, including its machinery and equipment, shall be constructed in accordance with the rules and regulations of Germanischer Lloyd (hereinafter called the "Classification Society") shall be distinguished in the record by the symbol of +100 A5 E "Liquefied Gas Carrier Type 2G" +MC E, AUT INERT and shall also comply with the rules and regulations as fully described in the Specifications. The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include the rules or circulars issued and becoming effective as at the date this Contract is executed and delivered (the "Effective Date"). The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for supervision of the construction of the VESSEL. All fees and charges incidental to Classification and to comply with the rules, regulations issued and becoming effective as of the Effective Date as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto. -3- Amended and Restated Shipbuilding Contract H2247 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) The basic dimensions of the VESSEL shall be Length Overall: abt. 171.50m Length between perpendiculars: 160.50m Breadth moulded: 24.20m Depth moulded: 16.70m Scantling Draft moulded (VCM): 10.90m Deadweight (VCM): 22,800mt Draught moulded (Ammonia): 9.35m Deadweight (Ammonia): 17,150mt Design Draught moulded (Ethylene): 8.80m Deadweight (Ethylene): 15,100mt Cargo Tanks Volume: 22,000cbm The above mentioned dimensions may be changed, if calculations of intact stability and damage stability show necessity and/or possibility during development of the design. But the guaranteed performance of the vessel such as speed, fuel consumption, deadweight and cargo tank volume as stipulated in following Clause 4, 5, 6 and 7 shall remain unchanged. (b) Propelling Machinery: The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN B&W 6S50MC or Sulzer 6RTA52 type Main Engine. (c) Gas Plant The VESSEL shall be equipped with a complete set of gas plant including four (4) cargo tanks of a total volume of 22,000 cubic meters (hereinafter called the "GAS PLANT") as fully described in the Specifications. 4. GUARANTEED SPEED The SELLER guarantees that the service speed of the VESSEL on ethylene condition with draft of 8.80 meters as stipulated in the Specifications at 90% MCR of main engine with 15% sea margin is to be not less than 16.5 nautical miles per hour. -4- Amended and Restated Shipbuilding Contract H2247 The above guaranteed speed shall be deemed having been achieved if the speed in sea trial condition as determined by the trial run is reached after correction according to the Specifications. The speed in sea trial condition, i.e. calm weather with wind not exceeding 6 knots (two degrees Beaufort scale) and sea state maximum 2 with clean bottom and running in deep smooth water, shall be determined as per the result of model test at ballast condition (about 20% deadweight at design draft (ethylene) of 8.8 m). The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 128 grams/brake horse power/hour at MCR of main engine at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram according to the Specifications. 6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 22,800 metric tons at the scantling draft of carrying VCM of 10.90 meters in sea water of 1.025 specific gravity. The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER's supervisor(s) or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final. 7. GUARANTEED CARGO TANK CAPACITY -5- Amended and Restated Shipbuilding Contract H2247 The SELLER guarantees that the VESSEL is to have a total cargo tank capacity of not less than 22,000 cubic meters geometric including the volume of tank domes with ambient temperature as described in the Specifications. 8. SUBCONTRACTING The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain primarily responsible for such subcontracted work. 9. REGISTRATION The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of Liberia at the time of delivery and acceptance thereof. ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE The net purchase price of the VESSEL is United States Dollars Forty Nine Million, Nine Hundred Thirty Seven Thousand (US$49,937,000) (hereinafter called the "Contract Price"), to be paid by the BUYER to SELLER for the construction and completion of the VESSEL which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof. The Contract Price shall be fixed, with no escalation and subject to upward or downward adjustment, if any, as expressly set forth in this Contract and in Schedule 1 attached hereto. To the extent that the SELLER may, under applicable law, regulation or decree (including those of the People's Republic of China), have any right(s) to escalate or change the Contract Price, such right(s) are hereby waived. The Contract Price includes all costs and expenses incurred by SELLER performing engineering calculations for designing and supplying all necessary drawings for the VESSEL, in accordance with the Specifications. 2. CURRENCY Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars ("US$"). -6- Amended and Restated Shipbuilding Contract H2247 3. TERMS OF PAYMENT The Contract Price shall be paid by the BUYER to the SELLER in installments as indicated on Schedule 1 attached hereto. 4. METHOD OF PAYMENT (a) First Installment: On or prior to July 21, 1997 (except as may be provided in Schedule 1), the BUYER shall remit by telegraphic transfer the first installment in the amount set forth on Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER. (b) Each subsequent Installment: Except as may be provided in Schedule 1, the BUYER shall remit by telegraphic transfer each subsequent installment on the date and in the amount set forth in Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 banking days prior to the due date for payment ("SELLER's Bank"). Upon receipt of a facsimile or telex notice from the SELLER not less than six (6) banking days in New York prior to the scheduled Delivery Date, notifying the BUYER of such date, the BUYER shall deposit the amount payable upon Delivery of the VESSEL by telegraphic transfer to account of the SELLER's Bank at least three (3) -7- Amended and Restated Shipbuilding Contract H2247 banking days in the People's Republic of China prior to the scheduled Delivery of the VESSEL, with irrevocable instructions to be confirmed by the SELLER's Bank that the said deposit shall be payable to the SELLER against presentation by the SELLER of either (i) a duplicate original copy of the Protocol of Delivery and Acceptance of the VESSEL signed by the SELLER and the BUYER or (ii) a Certificate of Completion (in the form of Exhibit D hereto) signed by the SELLER, the Classification Society and Tractebel Gas Engineering GmBH (the "Certificate of Completion"), and that, in the event that the actual delivery and acceptance of the VESSEL shall not take place within seven (7) banking days following such scheduled Delivery, the said deposit shall be returned to the BUYER's bank, together with interest thereon. The SELLER's Bank shall hold the deposit in an interest bearing account and the BUYER shall be entitled to receive interest thereon. 5. PREPAYMENT The BUYER shall have the right to make prepayment of any and all installments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment. 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY The BUYER shall, concurrently with the payment of the first installment of the Contract Price, deliver to the SELLER a Trustee's Commitment Letter executed by a bank organized under the laws of the United States or any State thereof (the "Trustee Bank"), in the form annexed hereto as Exhibit "E" (the "Trustee's Commitment Letter") which shall indicate the amounts held by the Trustee Bank for the payment of the first through fifth installments of the Contract Price. Such Trustee Bank shall be an international banking institution acceptable to the SELLER. 7. REFUNDS (a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, -8- Amended and Restated Shipbuilding Contract H2247 and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth on Schedules 2 and 3 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 3 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 3 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of ten percent (10%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party. -9- Amended and Restated Shipbuilding Contract H2247 (b) Upon the payment of the first installment and the delivery of the Trustee's Commitment Letter in the form of Exhibit E hereto, the SELLER shall, at its cost, furnish the BUYER with (i) an Irrevocable Letter of Guarantee given by a bank acceptable to the BUYER (hereinafter referred to as "Guarantor"), substantially in the form of Exhibit A attached hereto as to the amounts set forth in Schedule 2 hereto, together with an acknowledgement of assignment to the Trustee Bank by the Guarantor and (ii) Irrevocable Performance Bonds given by The Export Import Bank of China and Generale de Banque (hereinafter collectively referred to as "Performance Guarantor"), substantially in the form of Exhibit B and Exhibit C, respectively, attached hereto which in the aggregate are equal to the aggregate amount set forth in Schedule 3 hereto and each Schedule 3 attached to the Related Contracts as to the Sister Vessels, together with an acknowledgement of assignment to the Trustee Bank by each Performance Guarantor. The Irrevocable Letters of Guarantee and the Irrevocable Performance Bonds shall guarantee payment to the BUYER of an amount in United States Dollars, at such place as the BUYER or its assignee may designate, which is sufficient to cover all sums payable or repayable by the SELLER to the BUYER under this Contract with interest thereon as provided in Article II, Section 7(a) above, upon receipt by said Guarantor and each Performance Guarantor, respectively, from the BUYER of a written claim that it is entitled to such payment or repayment and that the SELLER has failed to make same. ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL as provided for in Schedule 1 shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty. 1. DELIVERY (a) Delayed Delivery Price Adjustment: (i) For purposes of this Contract the Original Delivery Date for the Vessel shall mean the date set forth in Article VII, Section (1) below. (ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $10,000 for each calendar day for the first ninety (90) calendar days of -10- Amended and Restated Shipbuilding Contract H2247 delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $13,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages. (iii) If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period. (iv) In the event that the BUYER elects to reject the VESSEL as allowed under this Article III, Section 1(a), the SELLER shall immediately repay to the BUYER the amounts set forth in Article II, Section 7, whereupon this Contract shall terminate and such payment shall -11- Amended and Restated Shipbuilding Contract H2247 forthwith discharge all obligations, duties and liabilities of each party hereto to the other under this Contract. (v) For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Original Delivery Date of the VESSEL is extended by reason of a Permissible Delay. For purposes of this Article a Permissible Delay means a delay caused by reason of causes and provisions of (1) Section 2 of Article V (but only as to days of extension beyond 12 days), (2) Article VIII, and (3) any delay caused by any action or inaction on the part of SELLER; provided such Permissible Delay shall be subject to the following provisions: (A) The maximum Permissible Delay for the Vessel and each Sister Vessel shall be as follows: (i) Hull No. 2245 - 60 days (ii) Hull No. 2246 - 45 days (iii) Hull No. 2247 - 30 days (iv) Hull No. 2248 - 30 days (v) Hull No. 2249 - 30 days (B) For purposes of this Contract the Extended Delivery Date for a Vessel shall mean the Original Delivery Date plus the Permissible Delay for such Vessel, (C) The aggregated Permissible Delay for the Vessel and the Sister Vessels shall not exceed 150 days, and (D) Subject to the limitations set forth in (A) above, SELLER shall have the right in its sole discretion to designate either the Vessel or any Sister Vessel as to which Vessel will be subject to a Permissible Delay. (b) Early Delivery Price Adjustment: If the SELLER notifies the BUYER by facsimile that the delivery of the VESSEL shall be made earlier than the Original Delivery Date and such notification is given not less than two (2) months prior to the newly -12- Amended and Restated Shipbuilding Contract H2247 planned delivery date, a certain amount of bonus shall be given by the BUYER to the SELLER as follows: In the event that the delivery shall be made earlier than the Original Delivery Date and notice is properly given, then a bonus shall be added to the Contract Price at a rate of United States Dollars Thirteen Thousand (US$13,000) per day for each full day earlier than the Original Delivery Date. The total increase of the Contract Price for the earlier delivery shall be added to the fifth installment of the Contract Price. 2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being equal to or less than three-tenths (3/10) of one knot below the guaranteed speed as specified in Section 4 of Article I of this Contract. (b) However, commencing with a deficiency of three-tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Section 4, Article I of this Contract, the Contract Price shall be reduced as follows: IN CASE OF DEFICIENCY: LIQUIDATED DAMAGE above 0.3 but below or at 0.40 knot US$100,000 above 0.40 but below or at 0.50 knot US$200,000 above 0.50 but below or at 0.60 knot US$600,000 above 0.60 but below or at 0.70 knot US$1,000,000 above 0.70 but below or at 0.80 knot US$1,400,000 above 0.80 but below or at 0.90 knot US$1,800,000 above 0.90 but below or at 0.99 knot US$2,200,000 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications ) of the VESSEL upon the Trial Run, is one (1) knot or more below the guaranteed speed of sixteen and half (16.5) knots, then the BUYER may at its option reject the VESSEL, rescind this Contract in accordance with provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. -13- Amended and Restated Shipbuilding Contract H2247 (d) No payment shall be made for any increase in the speed of the VESSEL. 3. EXCESSIVE FUEL CONSUMPTION (a) The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than three percent (3%). (b) However, if the actual fuel consumption as determined by shop trial is greater than three percent (3%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars Seventy-Five Thousand (US$75,000 ) for each full one percent (1%) increase in fuel consumption in excess of the above said three percent (3%) (fractions of one percent to be prorated). (c) If as determined by shop trial such actual fuel consumption of the Main Engine is eight percent (8%) or more in excess of the guaranteed fuel consumption set forth in the Specifications the BUYER may, at its option, reject the VESSEL, rescind this Contract, in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any improvements in fuel consumption less than that specified and required under the provisions of this Contract and the Specifications. 4. INSUFFICIENT DEADWEIGHT (a) In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Four Hundred (400) metric tons or less below the guaranteed deadweight of 22,800 metric tons at draft moulded. (b) However, the Contract Price shall be decreased by the sum of United States Dollars One Thousand (US$1,000) for each full metric ton of such deficiency being more than Four Hundred (400) metric tons. -14- Amended and Restated Shipbuilding Contract H2247 (c) In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Eight Hundred (800) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. 5. INSUFFICIENT CARGO TANK CAPACITY (a) In the event there is a deficiency in the actual capacity of the cargo tanks determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is One Hundred (100) cubic meters or less below the guaranteed cargo tank capacity. (b) However, the Contract Price shall be decreased by the sum of United States Dollars Three Thousand Five Hundred (US$3,500) for each full cubic meter of such deficiency being more than One Hundred (100) cubic meters but equal to or less than Four Hundred (400) cubic meters. (c) In the event that there should be a deficiency in the VESSEL's actual cargo tank capacity which exceeds Four Hundred (400) cubic meters below the guaranteed cargo tank capacity the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made if the actual capacity of the cargo tanks determined as provided in the Specifications exceeds the cargo tank capacity set forth in the Specifications. 6. EFFECT OF RESCISSION It is hereby expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, the BUYER, saving its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage set forth in this Article, other than liquidated damages payable pursuant to Article III Section 1(a)(iii) above. -15- Amended and Restated Shipbuilding Contract H2247 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS All adjustments in the Contract Price, if any, pursuant to this Article III shall be applied against the Fifth Installment of the Contract Price payable to SELLER on Delivery as defined in Article VII, Section 1. ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall in good time send to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary visa for the Supervisor to enter China will be issued in order on demand and without delay provided that the Supervisor meets with the rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of visa. 2. APPROVAL OF PLANS AND DRAWINGS The parties hereto shall, within a reasonable period of time after signing of this Contract, mutually agree upon a list of all the plans and drawings, which are to be sent to the BUYER for approval (hereinbelow called "the LIST"). Before the arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with approval or remarks, if any. Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER, in writing, of the authority the Supervisor shall have with regard to the approval or modification of plans and drawings (that is, which of the drawing and plans specified in the LIST but not yet sent to the BUYER can be submitted to and approved by the Supervisor). Nevertheless in line with the Supervisor's authority, the Supervisor shall, within five (5) days after receipt thereof, return those submitted plans and drawings with approval or remarks, if any. -16- Amended and Restated Shipbuilding Contract H2247 Unless notification is given to the BUILDER by the Supervisor or the BUYER of approval or disapproval of any plans and drawings within the above designated period of time for each case, the said plans and drawings shall be deemed to have been automatically approved. The plans and drawings approved by the BUYER or Supervisor shall be final, and any alteration thereof shall be regarded as modification specified in Article V of this Contract. 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications. The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. However the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with the agreed inspection procedure and Schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. The BUILDER agrees to furnish, free of charge, the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of the BUILDER's Shipyard, but the fees for the international communication like telephone and telefax, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are -17- Amended and Restated Shipbuilding Contract H2247 doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation within Shanghai shall be provided to the Supervisor by the SELLER. 4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employment of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage, loss or destruction was caused by negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. -18- Amended and Restated Shipbuilding Contract H2247 5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account. 6. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's yard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangable. ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, telex and telefaxes, manifesting such agreement. The letters, telexes as well as telefaxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, telexes and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and -19- Amended and Restated Shipbuilding Contract H2247 made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER's request for any modification and/or changes. 2. CHANGES IN RULES AND REGULATIONS (a) If, after the Effective Date, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree: (i) As to any increase or decrease in the guaranteed deadweight and/or cargo tank capacity and for speed of the VESSEL, if such compliance results in increased or reduced deadweight and/or cargo tank capacity and speed; and/or (ii) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans. (b) If, due to whatever reasons, the parties shall fail to agree on the increase or decrease of the guaranteed speed, deadweight and cargo tank capacity, -20- Amended and Restated Shipbuilding Contract H2247 or any alteration of the terms of this Contract, if any, then the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes. (c) The BUYER and the SELLER hereby agree to make best efforts to avoid the application and/or minimize the effect of any change in the rules and regulations of the Classification Society as to the Specifications. If the BUYER and the SELLER are unsuccessful in avoiding the application of such change in rules and regulations, then the SELLER shall effect any modifications and/or changes in Specifications without adjustment to the Contract Price and the BUYER shall grant to the SELLER the right to extend the Delivery Date (if necessary) for a maximum period of up to twelve (12) days. 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. 4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply for its own account (the "BUYER's Supplies") by the time designated by the SELLER. The delay in the delivery or the failure to deliver by the BUYER of any BUYER's Supplies within the time specified shall not extend the Delivery Date. However, if the delay in delivery of the BUYER's Supplies should exceed fifteen (15) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL and the BUYER shall accept the VESSEL so completed. -21- Amended and Restated Shipbuilding Contract H2247 The BUILDER shall be responsible for storing and handling of the BUYER's Supplies as specified in the Specifications after delivery to the BUILDER and shall install them on board the VESSEL at the BUILDER's expenses. Upon arrival of such shipment of the BUYER's Supplies, both parties shall undertake an joint unpacking inspection. If any damaged BUYER's supplies are found to be unsuitable for installation, the BUILDER shall be entitled to refuse to accept the BUYER's Supplies. ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least thirty (30) days notice in advance and seven (7) days definite notice in advance in writing by telex or telefax, of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shall promptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than five (5) days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above (other than due to the failure by the BUYER's representative to obtain a visa to enter China), then in such event, the BUYER shall be deemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER's representatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications and is satisfactory in all respects. The SELLER hereby warrants that the necessary visa for the BUYER's representatives to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until the BUYER's representatives have arrived at the BUILDER's Shipyard. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance with its best -22- Amended and Restated Shipbuilding Contract H2247 understanding of the relevant rules, regulations and/or Laws of the People's Republic of China then prevailing, then the SELLER shall so notify the BUYER and the BUYER shall endeavor to effect the replacement of all or any of such representatives. The Delivery Date as stipulated in Article VII hereof shall not be extended by any delays caused by the BUYER's replacement of its representatives pursuant to the SELLER's request. In the event of unfavorable weather on the date scheduled for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER assents in writing by telex or telefax of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, the Delivery Date shall not be extended other than pursuant to Article VIII hereof. 2. HOW CONDUCTED (a) All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications and shall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications. The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial waters equipped with speed measuring facilities. (b) The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, hydraulic oil and greases which shall be supplied by the BUYER according to the BUILDER's schedule which shall be forwarded to the BUYER by the BUILDER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, hydraulic oil and greases supplied by the BUYER shall be in accordance with the applicable engine Specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER. -23- Amended and Restated Shipbuilding Contract H2247 3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Section 2 of this Article VI, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh water, sea water or any other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account. 4. METHOD OF ACCEPTANCE OR REJECTION (a) Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL attached with the trial result, the BUYER or the BUYER's Supervisor shall within six (6) business days thereafter, notify the BUILDER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor. (b) However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications the BUILDER shall investigate with the Supervisor the cause of failure and shall take proper steps to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Trial Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) business days thereafter, notify the SELLER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-Trial Run or re-Trial Runs by the BUILDER. (c) In the event that the BUYER fails to notify the SELLER in writing by telex or telefax of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) business days period as provided for in the above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d) Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case, may be, of the VESSEL shall be referred to the Classification Society as provided in Article XIII Section 2 hereof. (e) Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as -24- Amended and Restated Shipbuilding Contract H2247 aforesaid and the SELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time before effecting delivery of the VESSEL to the BUYER under this Contract. 5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the purchasing price at the port of delivery thereof, and payment by the BUYER shall be effected, together with the payment of the fifth installment, as provided in Article II, Section 4 of this Contract. The BUYER shall supply lubricating oil, hydraulic oil and greases for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil, hydraulic oil and greases actually consumed for the said Trial Run or Trial Runs at the purchasing price incurred by the BUYER and payment by the SELLER shall be effected by deducting from the fifth installment the amount of such payment as provided in Article II, Section 4 of this Contract. 6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL in writing by telex or telefax notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing Delivery (as defined below) by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth. ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER (the "Delivery") at the BUILDER's Shipyard, in accordance with this Contract and the Specifications and with all Classification and statutory certificates (as required by Section 3 below) on or before March 1, 2000, as may be extended pursuant to Schedule 1 (the "Original Delivery Date"). -25- Amended and Restated Shipbuilding Contract H2247 2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, Delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of either (i) the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol of Delivery and Acceptance shall be prepared in triplicate and executed by each of the parties hereto or (ii) a Certificate of Completion executed by the Seller, Tractebel Gas Engineering GmbH and the Classification Society, which Certificate of Completion shall be prepared in multiple copies (5) and executed by the parties thereto. It is mutually understood and agreed that the Gas Plant of the VESSEL (the "GAS PLANT") shall be mechanically completed by the SELLER and that a running test for the equipment of the Gas Plant and a function test of its system shall be made by the SELLER prior to Delivery of the VESSEL as per clause 7 (a) of this Article whilst the full gas trial shall be made after Delivery of the VESSEL as more fully described in Section 7 of this Article. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents which shall accompany the aforementioned Protocol of Delivery and Acceptance or Certificate of Completion: (a) PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b) PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts and the like, all as specified in the Specifications, made by the BUILDER. (c) PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Section 5 of Article VI hereof. (d) FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. -26- Amended and Restated Shipbuilding Contract H2247 (e) PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER. (f) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications. It is agreed that if formal certificates are not available at the time of delivery of the VESSEL, provisional certificates issued by Classification Society or other relevant authorities shall be accepted by the BUYER, provided that the SELLER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued. (g) DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, rights in rem or other encumbrances of any nature upon the VESSEL and the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to Delivery. (h) COMMERCIAL INVOICE made by the SELLER. (i) BILL OF SALE made by the SELLER. (j) BUILDER's CERTIFICATE. 4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon Delivery thereof to and acceptance thereof by the BUYER as stated above, it being expressly understood that, until such Delivery is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER. 5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after Delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid -27- Amended and Restated Shipbuilding Contract H2247 seven (7) days, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL. 6. TENDER OF THE VESSEL If the BUYER fails to take Delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for Delivery after compliance with all procedural requirements as above provided. 7. GAS TRIAL (a) Prior to delivery of the VESSEL a running test of the equipment of the Gas Plant and a function test of its system shall be carried out utilizing either inert gas or dry air. These tests shall be repeated until its results are deemed by the Classification Society and any other relevant authority to be in conformity with this Contract and the Specifications, and the VESSEL shall not be deemed ready for Delivery by the SELLER to the BUYER pursuant to the terms of the Contract unless until the results of the aforesaid tests shall have been certified by the Classification Society. (b) After Delivery of the VESSEL at the Shipyard quay, the BUYER shall arrange at its own cost and expense to proceed the VESSEL to either Jin Shan Terminal, Shanghai or to the first load port, in the BUYER's option, in order to carry out the gas trial in accordance with the trial program furnished by the BUILDER's gas plant supplier (the "Supplier") under the supervision of the Supplier. The Supplier shall give qualified guidance, instruction and consultations with regard to the gas trial, all of which shall be arranged by the SELLER under the terms of its contract with the Supplier. The SELLER shall at its own expense dispatch its representative(s) to attend such gas trial as witness. The BUYER shall give the SELLER twenty (20) days advance notice in connection with the time and place for such trial. The gas trial shall be made latest forty-five (45) days after delivery of the VESSEL (unless the trial must be postponed until a later date not to exceed 90 days after Delivery for reasons beyond the BUYER's control) and shall be witnessed and certified by the Classification Society. -28- Amended and Restated Shipbuilding Contract H2247 (c) The SELLER shall pay all costs and charges of its own representative(s) and of the Classification Society and shall arrange at their expense for the Supplier to send at least one representative to the gas trial. (d) The BUYER shall at its own cost and expense provide suitable product in sufficient and satisfactory quantity and quality as well as utilities and consumables for operation. (e) Should the Gas Plant not be in conformity with this Contract and the Specifications, the SELLER shall remedy any such non-conformity to the satisfaction of the BUYER, the Classification Society and any other relevant authority. After the remedial works are completed the SELLER shall arrange to re-run the gas trial to the extent which will be necessary to demonstrate that the rectified part of the Gas Plant is then in conformity with this contract and the Specifications and the proper functioning of the Gas Plant as a whole is secured. (f) All direct costs and expenses of remedying the non-conformity and re-running the gas trial (including provision of suitable product, utilities and consumables) shall be for the account of the SELLER. (g) If delays are incurred relating to the use of the VESSEL, caused by an unsuccessful gas trial, remedial works and retrials for which the SELLER is responsible, with the consequence that the classification certificate has not been issued, will exceed more than twenty (20) days as from the commencement of the Gas Trials, the SELLER shall, notwithstanding the provisions contained in Article IX Section 2 and Section 4, pay to the BUYER as liquidated damages United States Dollars Ten Thousand (US$10,000) for each day of such excess delay up to a maximum amount of United States Dollars Two Hundred Thousand (US$200,000). ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual Delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the public enemy, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if -29- Amended and Restated Shipbuilding Contract H2247 any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors, as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or its sub-contractors, or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors as the case may be, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price subject nevertheless to (i) the provisions of Section 1(a) of Article III as to reduction in Contract Price, (ii) the BUYER's right of termination under Section 1(a) of Article III and (iii) all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL. 2. NOTICE OF DELAY Within fourteen (14) days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay commenced, and reasons therefor. Likewise within fourteen (14) days after such delay ends, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay ended, and also shall specify the maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification of any claim for extension of the Delivery Date within fourteen (14 ) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension. ARTICLE IX WARRANTY OF QUALITY 1. GUARANTEE OF MATERIAL AND WORKMANSHIP The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by or on behalf of the -30- Amended and Restated Shipbuilding Contract H2247 BUYER) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. 2. NOTICE OF DEFECTS The BUYER shall notify the SELLER in writing by telex or telefax, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER's written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the SELLER not later than thirty (30) days after such expiry date. Telexed or telefaxed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient to comply with the requirements as to time. 3. REMEDY OF DEFECTS The SELLER shall remedy at its expense any defect, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement part, and materials cannot be accomplished without impairing or delaying the operation of the VESSEL, then, in any such event, the BUYER shall cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall, as soon as possible, give the SELLER notice in writing by telex or telefax of the time and place such repairs will be made, provided always that the burden of proof as to the necessity for such repairs and replacements shall rest with the BUYER, and a written confirmation for such repairs or replacement shall be obtained from the SELLER. Defects that affect the safety of the VESSEL or her crew and/or constitute an emergency shall be repaired either by the crew or a BUYER selected contractor in a manner reasonable under the circumstances without the SELLER's prior approval and the SELLER shall be notified as to the nature and extent of repairs as soon as possible after the repairs are undertaken and such repair work will be subject to the mutual agreement between the parties. If the VESSEL is not thereby delayed or her operation is not thereby delayed or impaired, the SELLER shall have the right to verify the nature and extent of the defects complained of by its own representative(s) or that of Classification Society. -31- Amended and Restated Shipbuilding Contract H2247 The SELLER shall, in such cases, promptly advise the BUYER, by telex or telefax, after such examination has been completed, of its acceptance or rejection of the defects as ones justifying theremedy under this Article. In all minor cases, the Guarantee Engineer, as hereinafter provided for, will act for and on behalf of the SELLER. In any circumstances, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, Singapore, Korea and Spain, whichever is lower: (a) upon the SELLER's acceptance of the defects as justifying remedy under this Article, or (b) If the SELLER neither accepts nor rejects the defects as above provided, nor requests arbitration within thirty (30) days after its receipt of the BUYER's notice of defects. Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof. 4. EXTENT OF THE SELLER'S LIABILITY The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee specified above. The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Section 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects other than those specified in Paragraph 1 above, nor shall there be any SELLER's liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL's officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which -32- Amended and Restated Shipbuilding Contract H2247 were made by those other than the SELLER and/or their sub-contractors, employees or agents. Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. Neither CSTC nor the BUILDER shall, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL other than pursuant to the express terms of this Contract. The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties,guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER's negligence. This guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER. 5. GUARANTEE ENGINEER The BUILDER shall appoint one guarantee engineer (the "Guarantee Engineer") to serve the VESSEL as the BUILDER's representative for a period of six (6) months from the delivery of the VESSEL. The BUYER and its employees shall give such Guarantee Engineer full co-operation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s) the treatment comparable to the VESSEL's Chief Engineer, and shall provide him/them with accommodation and subsistence at no cost to the BUILDER and/or the Guarantee Engineer. The BUYER shall pay to the Guarantee Engineer the sum of United States Dollars Three Thousand Five Hundred only (US$3,500 ) per month/per person to cover his wages and miscellaneous expenses. The BUYER shall also pay the expense of his repatriation to Shanghai, the People's Republic of China by air upon termination of his -33- Amended and Restated Shipbuilding Contract H2247 service, the expense of his communications with the BUILDER when made in performance of his duties as the Guarantee Engineer and the expenses, if any, of his medical and hospital care. The BUYER, its successor(s) and/or assignee(s), shall be liable to and indemnify the BUILDER and/or the Guarantee Engineer for personal injuries, including death and damages to, or loss or destruction of property of the Guarantee Engineer, if such death, injuries, damages, loss and/or destruction were caused by gross negligence or willful misconduct of the BUYER, its successor(s) and/or assignee(s) or its employees and/or agents. Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL. ARTICLE X CANCELLATION BY THE BUYER All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the SELLER. In the event the BUYER shall exercise its right of rejection, cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing by telex or telefax, and such rejection, cancellation and/or rescission shall be effective as of the date the notice thereof is delivered by the BUYER. BUYER shall be entitled to receive from SELLER the amounts provided for in Article II, Section 7(a) above. In addition to Buyer's Right of Rejection, cancellation and/or rescission set forth in the preceding paragraph, Buyer shall cancel this Contract and Receive from the Seller the amounts provided for in Article II, Section 7(a) above, if any of the Related Contracts have been cancelled, rescinded or terminated pursuant to the Terms of such Related Contracts. ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under this Contract if any of the following events occurs: -34- Amended and Restated Shipbuilding Contract H2247 (a) The BUYER fails to pay any one of the first, second, third and fourth installments to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof; or (b) The BUYER fails to pay the fifth installment to the SELLER in accordance with Article II hereof, provided the BUYER shall have received the SELLER's notification in accordance with Article II hereof; or (c) The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under and pursuant to the provisions of this Contract. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telex or telefax after the date of occurrence of the default as per Section 1 of this Article and the BUYER shall forthwith acknowledge by telex to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telex or telefax acknowledgment to the SELLER within five (5) banking days it shall be deemed that such notification has been duly received by the BUYER. 3. INTEREST AND CHARGE (a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of ten (10%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof. (b) In any event of default by the BUYER under Section 1 (a), (b) or (c) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default. 4. DEFAULT BEFORE DELIVERY OF THE VESSEL -35- Amended and Restated Shipbuilding Contract H2247 (a) If any default by the BUYER occurs as defined in Section 1 (a), (b) or (c) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a period of continuance of such default by the BUYER. (b) If any such default as defined in Section 1 (a), (b) or (c) of this Article committed by the BUYER continues for a period of fifteen (15) banking days, then, the SELLER shall have all following rights and remedies: (i) The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Section 2 of this Article, by giving notice of such effect to the BUYER in writing by telex or telefax. Upon receipt by the BUYER of such telex or telefax notice of cancellation or rescission, all of the BUYER's Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and (ii) In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any installment or installments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and (iii) With respect to any default defined in Section 1(a) of this Article, without prejudice to the SELLER's right to recover from the BUYER the Fifth installment, interest, costs and/or expenses by applying the proceeds to be obtained from the sale of the VESSEL in accordance with the provisions set out in this Contract, the SELLER shall have the right to declare all unpaid second, third and fourth installments to be forthwith due and payable. -36- Amended and Restated Shipbuilding Contract H2247 5. SALE OF THE VESSEL (a) In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit and to sell the VESSEL at the best price available at a public or private sale advertised internationally. Such sale may include an invitation to the BUYER to participate, but will be otherwise on such terms and conditions as the SELLER may determine. In the case of sale of the VESSEL, the SELLER shall give telex or telefax or written notice to the BUYER. (b) In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the same interest rate as specified in Section 3 of this Article from the respective due dates thereof to the date of application. (c) In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labor and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract. (d) In either of the above events of sale, if the proceeds of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excess to the BUYER, provided, however that the amount of such payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER's supplies, if any, without interest. -37- Amended and Restated Shipbuilding Contract H2247 (e) If the proceeds of the sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request. ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel-laying of the first section or block of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER's Supplies, fully insured with first class Chinese insurance companies for BUILDER's risk. The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of the BUYER's Supplies. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER. 2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss: In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Section 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER. (b) Total Loss: However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either: -38- Amended and Restated Shipbuilding Contract H2247 (i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's supplies without additional expenses to the BUYER, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (ii) If due to whatever reasons the parties fail to agree on the above, then the BUYER shall deliver a written notice of rejection to SELLER and the SELLER shall refund immediately to the BUYER the amount described in Article II, Section 7, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith. (iii) Notwithstanding the provisions of (i) and (ii) above, Seller may elect to postpone delivery of the Vessel subject to the provisions of Article III, Section (1)(a). Within thirty (30) days after receiving telex or telefax notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telex of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the BUYER shall receive the refund as hereinabove provided and the provisions hereof shall apply. 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon Delivery thereof to and acceptance by the BUYER. ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS -39- Amended and Restated Shipbuilding Contract H2247 Should any dispute of any nature arise in respect of this Contract, its performance or interpretation which is not decided in accordance with Article XIII, Section 2 below, such dispute shall be settled by arbitration in London, England in accordance with the rules of the London Maritime Arbitrators Association Inc. and otherwise in accordance with the provisions of the Laws of England. The party who desires arbitration of any such dispute shall give written notice to the other party. The notice shall state the name and address of the arbitrator whom it appoints and describe the specific nature of the particular dispute. Such notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, and the other party shall, within thirty (30) days following the receipt of said notice, give written notice to the party requesting the arbitration as to the name and address of the arbitrator whom it appoints, which notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, provided that if the other party should fail to so appoint its arbitrator, the arbitrator appointed by the party desiring the arbitration may proceed with the arbitration hearing and issue an award. Otherwise the two arbitrators so chosen shall select a third arbitrator. The applicable law of England on all matters at issue shall apply. A judgement based upon the decision of the majority of the arbitrators or the sole arbitrator, as the case may be, may be entered in the appropriate court of any country having jurisdiction of either party. The arbitrators shall also decide which party, or the extent to which each party, shall pay costs of arbitration. Unless and to the extent otherwise determined by the arbitrator(s), reference to arbitration shall not relieve the BUILDER of its obligation diligently to proceed with the construction, completion and delivery of the VESSEL, but the majority of the arbitrators or the sole arbitrator, as the case may be, shall decide the extent to which the Delivery Date shall be extended by virtue of the dispute having been referred to arbitration. 2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto. 3. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by telex confirmed in writing to the SELLER and the BUYER. -40- Amended and Restated Shipbuilding Contract H2247 ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior consent of the other party is given in writing; provided, however, the BUYER may assign this Contract to one of its affiliates and the BUYER and its assignee may assign this Contract to the Trustee Bank providing the Trustee's Commitment Letter described in Article II, Section 6. In the event of an assignment of the BUYER's rights and obligations hereunder with respect to the VESSEL said assignee or the substitute party shall have all the rights and assume all the obligations of the BUYER hereunder with respect to said VESSEL and the responsibility of the BUYER hereunder, with respect to such VESSEL, shall terminate. The BUYER shall deliver to the SELLER an agreement which will guarantee performance by any assignee of this Contract. The BUYER shall deliver to the SELLER a Notice of Assignment and Acknowledgement as to any assignment of this Contract to the Trustee Bank. ARTICLE XV TAXES AND DUTIES 1. TAXES The SELLER shall be responsible for and pay, without recourse to the BUYER, any and all taxes, assessments, duties or other similar levies or charges, imposed by the Chinese authorities, whether national, municipal or local, with respect to the period up to and including Delivery (even though assessed, determined or imposed thereafter), on or in respect of (i) this Contract or any act or transaction hereunder, (ii) the VESSEL or any part thereof, or (iii) any imports of material or equipment, and including without limitation, any tax imposed with respect to the sale or Delivery to the BUYER or the VESSEL's export from China. Should the BUYER, at any time before or after Delivery, be assessed or required to pay any such taxes, assessments, duties or other similar levies or charges imposed by the Chinese authorities, the SELLER shall reimburse the BUYER therefor. 2. DUTIES The SELLER shall indemnify the BUYER for, and hold it harmless against, any duties imposed in the People's Republic of China upon materials and equipment which under the terms of this Contract and/or the Specifications will, or may be, supplied by -41- Amended and Restated Shipbuilding Contract H2247 the BUYER from the abroad for installation in the VESSEL as well as any duties imposed in the People's Republic of China upon running stores, provisions and supplies furnished by the BUYER from abroad to be stocked on board the VESSEL and also from the payment of export duties, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS GOVERNMENTAL APPROVALS AND LICENSES (a) To the extent there is a change in the laws now in effect in the People's Republic of China, the SELLER shall obtain necessary Chinese Government approvals and licenses, if any, required for the SELLER's performance under this Contract. The SELLER shall assist the BUYER in obtaining any licenses, permits, or other authorizations, or waivers, necessary for the BUYER to enter and/or reside in China to perform his functions as set forth herein or attend the Trial Runs. (b) The SELLER shall proceed as soon as possible to obtain from the Chinese Government the aforementioned licenses and permits (if any) for the VESSEL to be constructed, delivered and be exported from China, as provided herein and shall notify the BUYER as to the issuance thereof by facsimile or cable, subsequently confirmed in writing accompanied by copies of the said licenses and permits. In the event that the said licenses and permits for the VESSEL shall not have been granted by the Chinese authorities within thirty (30) days following the attempted Delivery, unless otherwise mutually agreed to by the SELLER and the BUYER, the SELLER shall be required to refund within twenty (20) days thereafter, to the BUYER the amounts set forth in Article II, Section 7 and upon payment of such amounts by Seller this Contract shall thereupon automatically become null and void and each of the parties hereto shall be forthwith and completely discharged from all of its obligations to the other or the SELLER elects to postpone the DELIVERY of the VESSEL in accordance with the provisions of Article III, Section 1(a). Notwithstanding the provisions of this paragraph (b), Delivery of the Vessel is not made on or before April 1, 2001, SELLER shall refund to the Buyer the amounts set forth in Article II Section 7(a) and April 1 shall be deemed the Date of Rejection. -42- Amended and Restated Shipbuilding Contract H2247 (c) In case the VESSEL, during construction or prior to Delivery, should be requisitioned or seized by the Chinese Government, the SELLER shall forthwith pay to the BUYER the amounts set forth in Article II, Section 7 hereof, and the payment of such refund by the Seller shall forthwith release both parties from all obligations under this Contract; provided, Seller may elect to postpone the delivery of the Vessel in accordance with the provisions of Article III, Section 1(a). ARTICLE XVII LAWS AND PERMITS The SELLER shall exercise due diligence to ensure that the SELLER, its employees and representatives, shall at all times comply with all applicable laws, ordinances, statutes, rules, and regulations, including those relating to wages, hours and working conditions and insurance, adopted by any governmental authority within the People's Republic of China. The SELLER, at its expense, shall procure all priorities, permits, licenses, inspections, approvals and certificates required in connection with the construction and completion of the VESSEL and Delivery in its Jiangnan Shipyard. If required to permit performance of the work, the SELLER shall furnish any bond, security or deposits so required for its employees and representatives. ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and save harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any. Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated by the passage of any specified period of time. The SELLER indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. -43- Amended and Restated Shipbuilding Contract H2247 ARTICLE XIX NOTICE Any and all notices and communications in connection with this Contract shall be addressed as follows: To the BUYER: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue 19th Floor New York, New York 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 To CSTC: China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 To the BUILDER: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 Any notices and communications sent by CSTC and the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER. Any change of address shall be communicated in writing by registered mail by the party making such change to the other party and in the event of failure to give such notice of change communications addressed to the party at their last known address shall be deemed sufficient. Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten -44- Amended and Restated Shipbuilding Contract H2247 (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telex or telefax acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language. ARTICLE XX EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon the execution and delivery of this Contract and the Specifications. -45- Amended and Restated Shipbuilding Contract H2247 ARTICLE XXI INTERPRETATION; MISCELLANEOUS 1. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern. However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern. 3. DEFINITION In absence of stipulation of "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days". 4. ENTIRE AGREEMENT This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract after signing of the Contract. -46- Amended and Restated Shipbuilding Contract H2247 5. REGISTRATION OF VESSEL The BUYER intends to register the VESSEL under Liberian flag but may elect an alternate registry within a reasonable time prior to Delivery (subject to mutual agreement on necessary modifications as provided for in Article V, Section 1. 6. LANGUAGE This Contract and the Plan and Specifications have been prepared in the English language, which shall control. The Contract has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. The Plan and Specifications have been signed in duplicate, one counterpart being retained by the BUILDER and one by the BUYER. 7. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. -47- Amended and Restated Shipbuilding Contract H2247 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Kaplow -------------------------- Name: Richard Kaplow Title: President CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping -------------------------- Name: Shen Yiping Title: Vice President JIANGNAN SHIPYARD By: /s/ Gong Jingen -------------------------- Name: Gong Jingen Title: Vice President -48- Amended and Restated Shipbuilding Contract H2247 Schedule 1 Contract Price Installment Schedule -49- Amended and Restated Shipbuilding Contract H2247 Schedule 2 Refund Amount Schedule (Letter of Guarantee) -50- Amended and Restated Shipbuilding Contract H2247 Schedule 3 Refund Amount Schedule (Performance Bond) -51- Amended and Restated Shipbuilding Contract H2247 EXHIBIT "A": IRREVOCABLE LETTER OF REFUNDMENT GUARANTEE [STATIONERY OF GUARANTOR BANK] [Date] Navigator Holdings PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and, together with CSTC, the "SELLER") and in consideration of Navigator Holdings PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contract dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") made by and between the BUYER and the SELLER for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2247 (hereinafter called the "VESSEL"), The Export Import Bank of China the "Bank") the undersigned, do guarantee the payment (and not merely the collectability of the same) to the BUYER by the SELLER immediately upon demand of an amount up to but not exceeding a total amount as set forth in Schedule 1 hereto (calculated in accordance with the immediately following paragraph), together with simple interest thereon calculated at the rate of ten percent (10.0%) per annum on the basis of a 360 day year from and including the date of receipt of demand to but not including the date of remittance by telegraphic transfer of such refund. Subject to BUYER making installment payments in accordance with Article II of the Contract, the amount of this Guarantee will be automatically increased during the term of this Guarantee and shall be equal to the sum of: (i) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month in which the A-1 Amended and Restated Shipbuilding Contract H2247 Date of Rejection occurs; and (ii) an amount equal to the product of (X) the difference between (1) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 1 hereto as of the first day of the month in which the Date of Rejection of the vessel under the Contract occurs and (y) a fraction the numerator of which is numeric day of the month of the date on which the Refund Amount (as hereinafter defined) is actually paid and the denominator of which is 30 (collectively, the "Refund Amount"). BUYER's right to demand payment under this Guarantee shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contract, (iii) upon the cancellation, termination or rescission of the Contract by the BUYER in accordance with the terms of Contract as set forth in Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b), or Article XVI (b) or (c), or (iv) the insolvency or bankruptcy of BUILDER. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to us by the BUYER. Payment under this Guarantee is available at the counters of ______________ Bank against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within eleven (11) banking days. This Guarantee is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. In the event that the BUYER's demand is for a lesser amount than the amount of this Guarantee, the interest payable will be calculated on the amount of the BUYER's demand and not on the amount of this Guarantee. We agree that this Guarantee shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; A-2 Amended and Restated Shipbuilding Contract H2247 and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Guarantee shall become effective from the time of the actual receipt of the first installment by the SELLER from the BUYER under the Contract and the Refund Amount payable under this Guarantee shall correspond to the total installment payments actually made by the BUYER to the SELLER from time to time under the Contract prior to the delivery of the VESSEL including applicable interest. This Guarantee shall expire and become null and void on the earlier to occur of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by the Bank of either a copy of the Protocol of Delivery and Acceptance of the VESSEL, purportedly signed by the BUYER and the SELLER and issued in the form attached hereto as Appendix B or a copy of the Certificate of Completion of the Vessel signed by the respective parties thereto in the form attached hereto as Appendix C; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Guarantee shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contract or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Guarantee shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Guarantee shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law; provided the Refund Amount shall be adjusted to reflect the delay resulting from such arbitration and shall be calculated in accordance with Schedule 1 hereto to the date payment is actually made. A-3 Amended and Restated Shipbuilding Contract H2247 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Guarantor] By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- A-4 Amended and Restated Shipbuilding Contract H2247 SCHEDULE 1 TO EXHIBIT A REFUND AMOUNT Net Date Amount ---- ------ A-5 Amended and Restated Shipbuilding Contract H2247 Appendix A to Exhibit A - ---------------------- Bank - ---------------------- - ---------------------- Re: Irrevocable Letter of Refundment Guarantee No. __ (the "Guarantee") The undersigned hereby certifies to [Name of Guarantor] with reference to Guarantee No.______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Guarantee for payment of US$ _________, plus simple interest thereon calculated at the rate of percent per annum on the basis of a 360 day year from __________ to the date payment is effected by [Name of Guarantor] to the BUYER in accordance with the payment instructions provided below. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contract dated the ___ day of _____________, 1997, made by and among Navigator Holdings PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2247, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ---------------------------- By:------------------------- Date:----------------------- A-6 Amended and Restated Shipbuilding Contract H2247 Appendix B to Exhibit A PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: SELLER's Hull No. 2247 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------- Name:----------------------- Title:---------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------- Name:----------------------- Title:---------------------- JIANGNAN SHIPYARD By:------------------------- Name:----------------------- Title:---------------------- A-7 Amended and Restated Shipbuilding Contract H2247 Appendix C to Exhibit A CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings PLC (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: Seller's Hull No.: Type of Vessel: That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- A-8 Amended and Restated Shipbuilding Contract H2247 EXHIBIT "B": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and together with CSTC collectively called the "SELLER") and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers respectively having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Export-Import Bank of China (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Twenty Six Million Seven Hundred Thousand (US$26,700,000) (the "Payment Amount"), if and when the same or any part thereof becomes payable to BUYER from the SELLER under any Contract or Contracts if any such Contract or Contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI (b) and (c)) of such Contract or Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon actual receipt in full by the SELLER of the initial installment due under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. B-1 Amended and Restated Shipbuilding Contract H2247 Payment under this Performance Bond is available at the counters of Export-Import Bank of China in __________________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented under the column heading specified in the Notice of Demand. If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within eleven (11) banking days. The right of the BUYER to demand payment under this Performance Bond by presentation of a Notice of Demand shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery or Certificates of Completion for each of the five (5) VESSELS in the form of Appendix B or Appendix C to this Performance Bond; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is B-2 Amended and Restated Shipbuilding Contract H2247 rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contracts, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. B-3 Amended and Restated Shipbuilding Contract H2247 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Performance Guarantor] By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- B-4 Amended and Restated Shipbuilding Contract H2247 SCHEDULE 1 REFUND AMOUNT Net Date Amount ---- ------ B-5 Appendix A to Exhibit B - ---------------------- Bank - ---------------------- - ---------------------- Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to The Export Import Bank of China with reference to Performance Bond No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Notice of Demand, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date). 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ----------------------- By:-------------------- Date:------------------ B-6 Appendix B to Exhibit B PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: --------------------- SELLER's Hull No. 2247 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------- Name:----------------------- Title:---------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------- Name:----------------------- Title:---------------------- JIANGNAN SHIPYARD By:------------------------- Name:----------------------- Title:---------------------- B-7 Appendix C to Exhibit B CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ---------------------- Seller's Hull No.:---------------------- Type of Vessel: ---------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- B-8 EXHIBIT "C": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of Tractebel Gas Engineering GmBH and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" together with CSTC collectively called the "SELLER") the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Generale de Banque (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Thirteen Million Three Hundred Thousand (US$13,300,000) (the "Payment Amount"), if and when the same or any part thereof become payable to BUYER from the SELLER under any Contract or Contracts if any such contract or contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI(b) and (c)) of the Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon payment of the initial installment under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. Payment under this Performance Bond is available at the counters of _______________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the C-1 BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented and under the column heading specified in the Notice of Demand less the amount paid by the Export-Import Bank of China under such Bank's Irrevocable Performance Bond dated _______, 1997 (the "Ex-Im Performance Bond"). In addition, the BUYER's right to demand payment as provided above is subject to delivery by BUYER to the Bank of a copy of the notice of demand presented to the Export-Import Bank of China under the Ex-Im Performance Bond in the amount of US$26,700,000 and evidence that such amount has been paid. If the Notice of Demand is received by the Bank by 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the same business day. If the Notice of Demand is received by the Bank after 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the next succeeding business day. The right of the BUYER to demand payment under this Performance Bond shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery and/or Certificates of Completion for each of the five (5) VESSELs in the form of Appendix B or Appendix C to this Performance Bond; and (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. C-2 Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. This Performance Bond is governed by and enforced and construed in accordance with the laws of England. For: Generale de Banque By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- C-3 Appendix A to Exhibit C Notice of Demand Generale de Banque - ------------------------ - ------------------------ Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to Generale de Banque with reference to Guarantee No.______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Certificate, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date), less $26,700,000, the amount paid by the Export Import Bank of China pursuant to the attached Notice of Demand presented by the undersigned on _________________. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ------------------------ By:--------------------- Date:------------------- C-4 Appendix B to Exhibit C PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: --------------------- SELLER's Hull No. 2247 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------- Name:----------------------- Title:---------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------- Name:----------------------- Title:---------------------- JIANGNAN SHIPYARD By:------------------------- Name:----------------------- Title:---------------------- C-1 Appendix C to Exhibit C CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ---------------------- Seller's Hull No.: ---------------------- Type of Vessel: ---------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- C-1 EXHIBIT "D" CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ----------------------------- Seller's Hull No.:---------------------------- Type of Vessel:------------------------------- That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:------------------------- By:------------------------- Name:----------------------- Name:----------------------- Title:---------------------- Title:---------------------- D-1 EXHIBIT "D-1" PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: SELLER's Hull No. 2247 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:------------------------- Name:----------------------- Title:---------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:------------------------- Name:----------------------- Title:---------------------- JIANGNAN SHIPYARD By:------------------------- Name:----------------------- Title:---------------------- D-1-1 EXHIBIT "E": TRUSTEE'S COMMITMENT LETTER JIANGNAN SHIPYARD c/o China Shipbuilding Trading Company, Limited and CHINA SHIPBUILDING TRADING COMPANY, LIMITED 10 Yue Tan Bei Xiao Jie Beijing 100861 The People's Republic Bank of China Re: Shipbuilding Contract for Construction of 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (the "Contract") Ladies and Gentlemen: This is to confirm that the undersigned as indenture trustee under the Indenture (the "Indenture") dated as of _____________, 1997, among the undersigned, as trustee (the "Indenture Trustee"), _________________, ________________, __________________, _______________, __________________, (collectively, the "Owners") and ________________, as agent for the Owners, is holding in Account No. ______, the Pre-Funding Account established under and pursuant to the terms of Indenture, an amount equal to US$_________. 1. Pursuant to the terms of the Indenture, the undersigned shall automatically disburse from amounts held in the Pre-Funding Account the first through fourth installments of the Contract Price (as defined in the Amended and Restated Shipbuilding Contract dated June 26, 1997 with respect to Hull No. 2247 (the "Vessel")) on the dates and in the manner set forth in Schedule 1 of the Contract and in accordance with Section 4 of Article II of the Contract and Schedule 1 hereto. 2. The Fourth Installment shall be payable to the Seller only after the Trustee has received a duplicate original, or facsimile copy of such original, of either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to each Vessel having an Original Delivery Date prior to that of the Vessel. 3. The fifth installment shall be paid in accordance with the provisions of Article II, Section (4) upon receipt by the Indenture Trustee of a Protocol of Delivery and Acceptance signed by both the SELLER and the BUYER or a Certificate of Completion signed by the SELLER, Germanischer Lloyd and Tractebel Gas Engineering GmBH. E-1 4. Any payment by us shall be made in United States Dollars by telegraphic transfer to Bank of China New York Branch, 410 Madison Avenue, New York New York 10017 U.S.A. as receiving bank nominated by you for credit to the account of China Shipbuilding Trading Company, Limited with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advise from Bank of China, New York Branch to Bank of China, Head Office, Banking Department, or through other receiving bank to be nominated by you from time to time, in favor of China Shipbuilding Trading Company Limited or your assignee. We hereby agree to make all payments as aforesaid unless directed by you in writing. 5. Our obligation to make the first through fourth installments due under the Contract shall not be affected or prejudiced by any dispute between the SELLER and the BUYER under the Contract or by the BUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of the terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under the Commitment. 6. This Trustee's Commitment Letter shall come into full force and effect upon delivery to you of this Trustee's Commitment Letter and shall continue in force and effect until the full payment of the second, third, fourth and fifth installments or the termination of the Contract in accordance with the terms thereof. 7. All payments by us under this Trustee's Commitment Letter shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal to the amount which would have been received had no such deduction or withholding been required to be made. 8. This Trustee's Commitment Letter shall be construed in accordance with and governed by the Laws of New York. 9. Upon expiration of this Trustee's Commitment Letter, you shall return the same to us without any request or demand from us. For the avoidance of doubt, this Trustee's Commitment Letter shall have no further force and effect upon its expiration pursuant to Clause 6 hereof, notwithstanding that the same may not have been returned to us pursuant to the Clause 8. IN WITNESS WHEREOF, we have caused this Trustee's Commitment Letter to be executed and delivered by our duly authorized representative the day and year above written. E-2 [Name of Trustee Bank] By:------------------------- Name:----------------------- Title:---------------------- E-3 TABLE OF CONTENTS Page ARTICLE I DESCRIPTION AND CLASS....................................................... 2 1. DESCRIPTION............................................... 2 2. CLASS AND RULES........................................... 3 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL........ 4 4. GUARANTEED SPEED.......................................... 4 5. GUARANTEED FUEL CONSUMPTION............................... 5 6. GUARANTEED DEADWEIGHT..................................... 5 7. GUARANTEED CARGO TANK CAPACITY............................ 5 8. SUBCONTRACTING............................................ 6 9. REGISTRATION.............................................. 6 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT........................................... 6 1. CONTRACT PRICE............................................ 6 2. CURRENCY.................................................. 6 3. TERMS OF PAYMENT.......................................... 6 4. METHOD OF PAYMENT......................................... 7 5. PREPAYMENT................................................ 8 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY ......................................................... 8 7. REFUNDS................................................... 8 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE............................................ 10 1. DELIVERY.................................................. 10 2. INSUFFICIENT SPEED........................................ 12 3. EXCESSIVE FUEL CONSUMPTION................................ 13 4. INSUFFICIENT DEADWEIGHT................................... 14 5. INSUFFICIENT CARGO TANK CAPACITY.......................... 14 6. EFFECT OF RESCISSION...................................... 15 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS............. 15 ARTICLE IV SUPERVISION AND INSPECTION...... 15 1. APPOINTMENT OF THE BUYER'S SUPERVISOR..................... 15 2. APPROVAL OF PLANS AND DRAWINGS............................ 15 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR.............. 16 (i) 4. LIABILITY OF THE SELLER................................... 17 5. SALARIES AND EXPENSES..................................... 18 6. REPLACEMENT OF SUPERVISOR................................. 18 ARTICLE V MODIFICATION, CHANGES AND EXTRAS... 18 1. HOW EFFECTED.............................................. 18 2. CHANGES IN RULES AND REGULATIONS.......................... 19 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT................ 20 4. BUYER'S SUPPLIED ITEMS.................................... 20 ARTICLE VI TRIALS.................................................................... 21 1. NOTICE.................................................... 21 2. HOW CONDUCTED............................................. 22 3. TRIAL LOAD DRAFT.......................................... 22 4. METHOD OF ACCEPTANCE OR REJECTION......................... 23 5. DISPOSITION OF SURPLUS CONSUMABLE STORES.................. 24 6. EFFECT OF ACCEPTANCE...................................... 24 ARTICLE VII DELIVERY.................................................................... 24 1. TIME AND PLACE............................................ 24 2. WHEN AND HOW EFFECTED..................................... 24 3. DOCUMENTS TO BE DELIVERED TO THE BUYER.................... 25 4. TITLE AND RISK............................................ 26 5. REMOVAL OF VESSEL......................................... 26 6. TENDER OF THE VESSEL...................................... 26 7. GAS TRIAL................................................. 27 ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY................................... 28 1. CAUSE OF DELAY............................................ 28 2. NOTICE OF DELAY........................................... 29 ARTICLE IX WARRANTY OF QUALITY......................................................... 29 1. GUARANTEE OF MATERIAL AND WORKMANSHIP..................... 29 2. NOTICE OF DEFECTS......................................... 29 3. REMEDY OF DEFECTS......................................... 30 4. EXTENT OF THE SELLER'S LIABILITY.......................... 31 5. GUARANTEE ENGINEER........................................ 32 (ii) ARTICLE X CANCELLATION BY THE BUYER.................................................. 32 ARTICLE XI BUYER'S DEFAULT............................................................. 33 1. DEFINITION OF DEFAULT..................................... 33 2. NOTICE OF DEFAULT......................................... 33 3. INTEREST AND CHARGE....................................... 33 4. DEFAULT BEFORE DELIVERY OF THE VESSEL..................... 34 5. SALE OF THE VESSEL........................................ 35 ARTICLE XII INSURANCE.................................................................. 36 1. EXTENT OF INSURANCE COVERAGE.............................. 36 2. APPLICATION OF RECOVERED AMOUNT........................... 36 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE.......... 37 ARTICLE XIII DISPUTES AND ARBITRATION.................................................... 37 1. PROCEEDINGS.............................................. 37 2. ALTERNATIVE ARBITRATION BY AGREEMENT...................... 38 3. NOTICE OF AWARD........................................... 38 ARTICLE XIV RIGHT OF ASSIGNMENT......................................................... 39 ARTICLE XV TAXES AND DUTIES............................................................ 39 1. TAXES..................................................... 39 2. DUTIES.................................................... 39 ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS........... 40 GOVERNMENTAL APPROVALS AND LICENSES................................ 40 ARTICLE XVII LAWS AND PERMITS ............................................................................ 41 ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS.......................................... 41 ARTICLE XIX (iii) NOTICE...................................................................... 41 ARTICLE XX EFFECTIVE DATE OF CONTRACT.................................................. 43 ARTICLE XXI INTERPRETATION.............................................................. 44 1. LAW APPLICABLE............................................ 44 2. DISCREPANCIES............................................. 44 3. DEFINITION................................................ 44 4. ENTIRE AGREEMENT.......................................... 44 5. REGISTRATION OF VESSEL.................................... 45 6. LANGUAGE.................................................. 45 7. AMENDMENTS................................................ 45 (iv) Schedule 1 Contract Price Installment Schedule Schedule 2 Refund Amount Schedule (Letter of Guarantee) Schedule 3 Refund Amount Schedule (Performance Bond) Exhibit A Irrevocable Letter of Refundment Guarantee Exhibit B Irrevocable Performance Bond from the Export Import Bank of China Exhibit C Irrevocable Performance Bond from Generale de Banque Exhibit D Certificate of Completion Exhibit D-1 Protocol of Acceptance and Delivery Exhibit E Trustee's Commitment letter (iv) EX-10.4 27 AMEND. & RESTATED SHIPBLDNG CONT. (HULL NO. 2248) AMENDED AND RESTATED SHIPBUILDING CONTRACT for CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2248) Date: June 26, 1997 between NAVIGATOR HOLDINGS PLC as BUYER and CHINA SHIPBUILDING TRADING COMPANY, LIMITED and JIANGNAN SHIPYARD Collectively as SELLER Amended and Restated Shipbuilding Contract H2248 AMENDED AND RESTATED SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2248) This AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "Contract"), entered into this 26th day of June, 1997 by and between Navigator Holdings PLC (formerly named Navigator Holdings, Ltd.), a company organized and existing under the laws of the Isle of Man, having its registered office at 15-19 Athol Street, Douglas, Isle of Man, (hereinafter called the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 10 Yue Tan Bei Xiao Jie, Beijing 100861, the People's Republic of China (hereinafter called "CSTC"), and JIANGNAN SHIPYARD, a corporation organized and existing under the laws of the People's Republic Of China, having its registered office at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "BUILDER" and collectively with CSTC, the "SELLER") on the other part. The BUYER and SELLER are parties to the SHIPBUILDING CONTRACT for the construction of one (1) 22,000 cubic meter liquified ethylene gas carrier (Hull No. 2248), dated February 4th, 1997, and desire to amend and restate the terms thereof in accordance with the terms and provisions of this AMENDED AND RESTATED SHIPBUILDING CONTRACT. This AMENDED AND RESTATED SHIPBUILDING CONTRACT is being executed and delivered simultaneously with the execution and delivery of four separate and individual Shipbuilding Contracts as restated and amended (the "Related Contracts") between the SELLER and the BUYER each dated as of the date hereof with respect to the construction of four sister vessels which will have the BUILDER's Hull designation numbers 2245, 2246, 2247 and 2249 (collectively, the "SISTER VESSELS"). Amended and Restated Shipbuilding Contract H2248 WITNESSETH In consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at the BUILDER's Shipyard and to sell and deliver to the BUYER after completion and successful trial one (1) 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (hereinafter called the "VESSEL") as more fully described in Article I hereof to be registered under the flag of Liberia and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same all in accordance with the terms and subject to the conditions hereinafter set forth. ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION The BUILDER shall, at its Jiangnan Shipyard, located at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "Shipyard"), construct, launch, equip, supply, and in all respects complete so as to be ready for immediate operation (subject to the gas trials as set forth in Article VII, Section 7), and deliver to the BUYER a 22,000 cubic meter liquefied ethylene gas carrier with 22,800 deadweight tons of carrying VCM on scantling draft of 10.90 meters and the class described below in Article I, Section 2 (hereinafter called the "VESSEL"), to be designated as Hull No. 2248, together with all machinery, materials, parts, supplies, equipment, appurtenances, and all other items necessary to and for the said construction, completion, delivery, and operation of the VESSEL. The VESSEL shall be built and completed in accordance with the following: (1) Specifications (Drawing No. 2LG970104) (2) General Arrangement (Drawing No. 2LG970102) (preliminary) (3) Maker List (Drawing No. 2LG970105) attached hereto and made a part hereof and signed by each of the parties to this Contract (items 1 through 3 of this Article, Section 1 are collectively referred to herein as the "Specifications"). Should there be any discrepancy between this Contract and the Specifications, the provisions in this Contract shall prevail. When there is no specific description in the Specifications a standard of workmanship and practices -2- Amended and Restated Shipbuilding Contract H2248 equivalent to the BUILDER's shipbuilding standards as practicable, generally applicable to the construction of similar size and types of vessels, shall be applicable to the construction of the VESSEL. The BUILDER, at its expense, shall, unless otherwise specifically provided herein, procure and furnish all items and permissions necessary to perform its obligations hereunder including, but not limited to, (i) plans and specifications (in addition to the Specifications), labor, machinery, materials, parts, supplies, equipment, appurtenances, and (ii) licenses, permits, inspections, surveys and approvals. 2. CLASS AND RULES The VESSEL, including its machinery and equipment, shall be constructed in accordance with the rules and regulations of Germanischer Lloyd (hereinafter called the "Classification Society") shall be distinguished in the record by the symbol of +100 A5 E "Liquefied Gas Carrier Type 2G" +MC E, AUT INERT and shall also comply with the rules and regulations as fully described in the Specifications. The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include the rules or circulars issued and becoming effective as at the date this Contract is executed and delivered (the "Effective Date"). The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for supervision of the construction of the VESSEL. All fees and charges incidental to Classification and to comply with the rules, regulations issued and becoming effective as of the Effective Date as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto. -3- Amended and Restated Shipbuilding Contract H2248 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) The basic dimensions of the VESSEL shall be Length Overall: abt. 171.50m Length between perpendiculars: 160.50m Breadth moulded: 24.20m Depth moulded: 16.70m Scantling Draft moulded (VCM): 10.90m Deadweight (VCM): 22,800mt Draught moulded (Ammonia): 9.35m Deadweight (Ammonia): 17,150mt Design Draught moulded (Ethylene): 8.80m Deadweight (Ethylene): 15,100mt Cargo Tanks Volume: 22,000cbm The above mentioned dimensions may be changed, if calculations of intact stability and damage stability show necessity and/or possibility during development of the design. But the guaranteed performance of the vessel such as speed, fuel consumption, deadweight and cargo tank volume as stipulated in following Clause 4, 5, 6 and 7 shall remain unchanged. (b) Propelling Machinery: The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN B&W 6S50MC or Sulzer 6RTA52 type Main Engine. (c) Gas Plant The VESSEL shall be equipped with a complete set of gas plant including four (4) cargo tanks of a total volume of 22,000 cubic meters (hereinafter called the "GAS PLANT") as fully described in the Specifications. 4. GUARANTEED SPEED The SELLER guarantees that the service speed of the VESSEL on ethylene condition with draft of 8.80 meters as stipulated in the Specifications at 90% MCR of main engine with 15% sea margin is to be not less than 16.5 nautical miles per hour. -4- Amended and Restated Shipbuilding Contract H2248 The above guaranteed speed shall be deemed having been achieved if the speed in sea trial condition as determined by the trial run is reached after correction according to the Specifications. The speed in sea trial condition, i.e. calm weather with wind not exceeding 6 knots (two degrees Beaufort scale) and sea state maximum 2 with clean bottom and running in deep smooth water, shall be determined as per the result of model test at ballast condition (about 20% deadweight at design draft (ethylene) of 8.8 m). The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 128 grams/brake horse power/hour at MCR of main engine at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram according to the Specifications. 6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 22,800 metric tons at the scantling draft of carrying VCM of 10.90 meters in sea water of 1.025 specific gravity. The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER's supervisor(s) or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final. 7. GUARANTEED CARGO TANK CAPACITY -5- Amended and Restated Shipbuilding Contract H2248 The SELLER guarantees that the VESSEL is to have a total cargo tank capacity of not less than 22,000 cubic meters geometric including the volume of tank domes with ambient temperature as described in the Specifications. 8. SUBCONTRACTING The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain primarily responsible for such subcontracted work. 9. REGISTRATION The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of Liberia at the time of delivery and acceptance thereof. ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE The net purchase price of the VESSEL is United States Dollars Forty Nine Million, Nine Hundred Thirty Seven Thousand (US$49,937,000) (hereinafter called the "Contract Price"), to be paid by the BUYER to SELLER for the construction and completion of the VESSEL which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof. The Contract Price shall be fixed, with no escalation and subject to upward or downward adjustment, if any, as expressly set forth in this Contract and in Schedule 1 attached hereto. To the extent that the SELLER may, under applicable law, regulation or decree (including those of the People's Republic of China), have any right(s) to escalate or change the Contract Price, such right(s) are hereby waived. The Contract Price includes all costs and expenses incurred by SELLER performing engineering calculations for designing and supplying all necessary drawings for the VESSEL, in accordance with the Specifications. 2. CURRENCY Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars ("US$"). 3. TERMS OF PAYMENT -6- Amended and Restated Shipbuilding Contract H2248 The Contract Price shall be paid by the BUYER to the SELLER in installments as indicated on Schedule 1 attached hereto. 4. METHOD OF PAYMENT (a) First Installment: On or prior to July 21, 1997 (except as may be provided in Schedule 1), the BUYER shall remit by telegraphic transfer the first installment in the amount set forth on Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER. (b) Each subsequent Installment: Except as may be provided in Schedule 1, the BUYER shall remit by telegraphic transfer each subsequent installment on the date and in the amount set forth in Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 banking days prior to the due date for payment ("SELLER's Bank"). Upon receipt of a facsimile or telex notice from the SELLER not less than six (6) banking days in New York prior to the scheduled Delivery Date, notifying the BUYER of such date, the BUYER shall deposit the amount payable upon Delivery of the VESSEL by telegraphic transfer to account of the SELLER's Bank at least three (3) banking days in the People's Republic of China prior to the scheduled Delivery of the VESSEL, with irrevocable instructions to be confirmed by the SELLER's Bank that the said deposit shall be payable to the -7- Amended and Restated Shipbuilding Contract H2248 SELLER against presentation by the SELLER of either (i) a duplicate original copy of the Protocol of Delivery and Acceptance of the VESSEL signed by the SELLER and the BUYER or (ii) a Certificate of Completion (in the form of Exhibit D hereto) signed by the SELLER, the Classification Society and Tractebel Gas Engineering GmBH (the "Certificate of Completion"), and that, in the event that the actual delivery and acceptance of the VESSEL shall not take place within seven (7) banking days following such scheduled Delivery, the said deposit shall be returned to the BUYER's bank, together with interest thereon. The SELLER's Bank shall hold the deposit in an interest bearing account and the BUYER shall be entitled to receive interest thereon. 5. PREPAYMENT The BUYER shall have the right to make prepayment of any and all installments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment. 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY The BUYER shall, concurrently with the payment of the first installment of the Contract Price, deliver to the SELLER a Trustee's Commitment Letter executed by a bank organized under the laws of the United States or any State thereof (the "Trustee Bank"), in the form annexed hereto as Exhibit "E" (the "Trustee's Commitment Letter") which shall indicate the amounts held by the Trustee Bank for the payment of the first through fifth installments of the Contract Price. Such Trustee Bank shall be an international banking institution acceptable to the SELLER. 7. REFUNDS (a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: -8- Amended and Restated Shipbuilding Contract H2248 (i) the amounts set forth on Schedules 2 and 3 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 3 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 3 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of ten percent (10%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party. -9- Amended and Restated Shipbuilding Contract H2248 (b) Upon the payment of the first installment and the delivery of the Trustee's Commitment Letter in the form of Exhibit E hereto, the SELLER shall, at its cost, furnish the BUYER with (i) an Irrevocable Letter of Guarantee given by a bank acceptable to theBUYER (hereinafter referred to as "Guarantor"), substantially in the form of Exhibit A attached hereto as to the amounts set forth in Schedule 2 hereto, together with an acknowledgement of assignment to the Trustee Bank by the Guarantor and (ii) Irrevocable Performance Bonds given by The Export Import Bank of China and Generale de Banque (hereinafter collectively referred to as "Performance Guarantor"), substantially in the form of Exhibit B and Exhibit C, respectively, attached hereto which in the aggregate are equal to the aggregate amount set forth in Schedule 3 hereto and each Schedule 3 attached to the Related Contracts as to the Sister Vessels, together with an acknowledgement of assignment to the Trustee Bank by each Performance Guarantor. The Irrevocable Letters of Guarantee and the Irrevocable Performance Bonds shall guarantee payment to the BUYER of an amount in United States Dollars, at such place as the BUYER or its assignee may designate, which is sufficient to cover all sums payable or repayable by the SELLER to the BUYER under this Contract with interest thereon as provided in Article II, Section 7(a) above, upon receipt by said Guarantor and each Performance Guarantor, respectively, from the BUYER of a written claim that it is entitled to such payment or repayment and that the SELLER has failed to make same. ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL as provided for in Schedule 1 shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty. 1. DELIVERY (a) Delayed Delivery Price Adjustment: (i) For purposes of this Contract the Original Delivery Date for the Vessel shall mean the date set forth in Article VII, Section (1) below. (ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $10,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $13,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay -10- Amended and Restated Shipbuilding Contract H2248 Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages. (iii) If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period. (iv) In the event that the BUYER elects to reject the VESSEL as allowed under this Article III, Section 1(a), the SELLER shall immediately repay to the BUYER the amounts set forth in Article II, Section 7, whereupon this Contract shall terminate and such payment shall forthwith discharge all obligations, duties and liabilities of each party hereto to the other under this Contract. -11- Amended and Restated Shipbuilding Contract H2248 (v) For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Original Delivery Date of the VESSEL is extended by reason of a Permissible Delay. For purposes of this Article a Permissible Delay means a delay caused by reason of causes and provisions of (1) Section 2 of Article V (but only as to days of extension beyond 12 days), (2) Article VIII, and (3) any delay caused by any action or inaction on the part of SELLER; provided such Permissible Delay shall be subject to the following provisions: (A) The maximum Permissible Delay for the Vessel and each Sister Vessel shall be as follows: (i) Hull No. 2245 - 60 days (ii) Hull No. 2246 - 45 days (iii) Hull No. 2247 - 30 days (iv) Hull No. 2248 - 30 days (v) Hull No. 2249 - 30 days (B) For purposes of this Contract the Extended Delivery Date for a Vessel shall mean the Original Delivery Date plus the Permissible Delay for such Vessel, (C) The aggregated Permissible Delay for the Vessel and the Sister Vessels shall not exceed 150 days, and (D) Subject to the limitations set forth in (A) above, SELLER shall have the right in its sole discretion to designate either the Vessel or any Sister Vessel as to which Vessel will be subject to a Permissible Delay. (b) Early Delivery Price Adjustment: If the SELLER notifies the BUYER by facsimile that the delivery of the VESSEL shall be made earlier than the Original Delivery Date and such notification is given not less than two (2) months prior to the newly planned delivery date, a certain amount of bonus shall be given by the BUYER to the SELLER as follows: -12- Amended and Restated Shipbuilding Contract H2248 In the event that the delivery shall be made earlier than the Original Delivery Date and notice is properly given, then a bonus shall be added to the Contract Price at a rate of United States Dollars Thirteen Thousand (US$13,000) per day for each full day earlier than the Original Delivery Date. The total increase of the Contract Price for the earlier delivery shall be added to the fifth installment of the Contract Price. 2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being equal to or less than three-tenths (3/10) of one knot below the guaranteed speed as specified in Section 4 of Article I of this Contract. (b) However, commencing with a deficiency of three-tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Section 4, Article I of this Contract, the Contract Price shall be reduced as follows: In Case Of Deficiency: Liquidated Damage ---------------------- ----------------- above 0.3 but below or at 0.40 knot US$100,000 above 0.40 but below or at 0.50 knot US$200,000 above 0.50 but below or at 0.60 knot US$600,000 above 0.60 but below or at 0.70 knot US$1,000,000 above 0.70 but below or at 0.80 knot US$1,400,000 above 0.80 but below or at 0.90 knot US$1,800,000 above 0.90 but below or at 0.99 knot US$2,200,000 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications ) of the VESSEL upon the Trial Run, is one (1) knot or more below the guaranteed speed of sixteen and half (16.5) knots, then the BUYER may at its option reject the VESSEL, rescind this Contract in accordance with provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any increase in the speed of the VESSEL. -13- Amended and Restated Shipbuilding Contract H2248 3. EXCESSIVE FUEL CONSUMPTION (a) The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than three percent (3%). (b) However, if the actual fuel consumption as determined by shop trial is greater than three percent (3%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars Seventy-Five Thousand (US$75,000 ) for each full one percent (1%) increase in fuel consumption in excess of the above said three percent (3%) (fractions of one percent to be prorated). (c) If as determined by shop trial such actual fuel consumption of the Main Engine is eight percent (8%) or more in excess of the guaranteed fuel consumption set forth in the Specifications the BUYER may, at its option, reject the VESSEL, rescind this Contract, in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any improvements in fuel consumption less than that specified and required under the provisions of this Contract and the Specifications. 4. INSUFFICIENT DEADWEIGHT (a) In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Four Hundred (400) metric tons or less below the guaranteed deadweight of 22,800 metric tons at draft moulded. (b) However, the Contract Price shall be decreased by the sum of United States Dollars One Thousand (US$1,000) for each full metric ton of such deficiency being more than Four Hundred (400) metric tons. (c) In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Eight Hundred (800) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL, rescind this Contract -14- Amended and Restated Shipbuilding Contract H2248 in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. 5. INSUFFICIENT CARGO TANK CAPACITY ( a) In the event there is a deficiency in the actual capacity of the cargo tanks determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is One Hundred (100) cubic meters or less below the guaranteed cargo tank capacity. (b) However, the Contract Price shall be decreased by the sum of United States Dollars Three Thousand Five Hundred (US$3,500) for each full cubic meter of such deficiency being more than One Hundred (100) cubic meters but equal to or less than Four Hundred (400) cubic meters. (c) In the event that there should be a deficiency in the VESSEL's actual cargo tank capacity which exceeds Four Hundred (400) cubic meters below the guaranteed cargo tank capacity the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made if the actual capacity of the cargo tanks determined as provided in the Specifications exceeds the cargo tank capacity set forth in the Specifications. 6. EFFECT OF RESCISSION It is hereby expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, the BUYER, saving its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage set forth in this Article, other than liquidated damages payable pursuant to Article III Section 1(a)(iii) above. 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS All adjustments in the Contract Price, if any, pursuant to this Article III shall be applied against the Fifth Installment of the Contract Price payable to SELLER on Delivery as defined in Article VII, Section 1. -15- Amended and Restated Shipbuilding Contract H2248 ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall in good time send to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary visa for the Supervisor to enter China will be issued in order on demand and without delay provided that the Supervisor meets with the rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of visa. 2. APPROVAL OF PLANS AND DRAWINGS The parties hereto shall, within a reasonable period of time after signing of this Contract, mutually agree upon a list of all the plans and drawings, which are to be sent to the BUYER for approval (hereinbelow called "the LIST"). Before the arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with approval or remarks, if any. Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER, in writing, of the authority the Supervisor shall have with regard to the approval or modification of plans and drawings (that is, which of the drawing and plans specified in the LIST but not yet sent to the BUYER can be submitted to and approved by the Supervisor). Nevertheless in line with the Supervisor's authority, the Supervisor shall, within five (5) days after receipt thereof, return those submitted plans and drawings with approval or remarks, if any. Unless notification is given to the BUILDER by the Supervisor or the BUYER of approval or disapproval of any plans and drawings within the above designated period of time for each case, the said plans and drawings shall be deemed to have been automatically approved. -16- Amended and Restated Shipbuilding Contract H2248 The plans and drawings approved by the BUYER or Supervisor shall be final, and any alteration thereof shall be regarded as modification specified in Article V of this Contract. 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications. The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. However the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with the agreed inspection procedure and Schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. The BUILDER agrees to furnish, free of charge, the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of the BUILDER's Shipyard, but the fees for the international communication like telephone and telefax, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation within Shanghai shall be provided to the Supervisor by the SELLER. -17- Amended and Restated Shipbuilding Contract H2248 4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employment of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage, loss or destruction was caused by negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. -18- Amended and Restated Shipbuilding Contract H2248 5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account. 6. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's yard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangable. ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, telex and telefaxes, manifesting such agreement. The letters, telexes as well as telefaxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, telexes and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and -19- Amended and Restated Shipbuilding Contract H2248 made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER's request for any modification and/or changes. 2. CHANGES IN RULES AND REGULATIONS (a) If, after the Effective Date, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree: (i) As to any increase or decrease in the guaranteed deadweight and/or cargo tank capacity and for speed of the VESSEL, if such compliance results in increased or reduced deadweight and/or cargo tank capacity and speed; and/or (ii) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans. (b) If, due to whatever reasons, the parties shall fail to agree on the increase or decrease of the guaranteed speed, deadweight and cargo tank capacity, -20- Amended and Restated Shipbuilding Contract H2248 or any alteration of the terms of this Contract, if any, then the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes. (c) The BUYER and the SELLER hereby agree to make best efforts to avoid the application and/or minimize the effect of any change in the rules and regulations of the Classification Society as to the Specifications. If the BUYER and the SELLER are unsuccessful in avoiding the application of such change in rules and regulations, then the SELLER shall effect any modifications and/or changes in Specifications without adjustment to the Contract Price and the BUYER shall grant to the SELLER the right to extend the Delivery Date (if necessary) for a maximum period of up to twelve (12) days. 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. 4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply for its own account (the "BUYER's Supplies") by the time designated by the SELLER. The delay in the delivery or the failure to deliver by the BUYER of any BUYER's Supplies within the time specified shall not extend the Delivery Date. However, if the delay in delivery of the BUYER's Supplies should exceed fifteen (15) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL and the BUYER shall accept the VESSEL so completed. -21- Amended and Restated Shipbuilding Contract H2248 The BUILDER shall be responsible for storing and handling of the BUYER's Supplies as specified in the Specifications after delivery to the BUILDER and shall install them on board the VESSEL at the BUILDER's expenses. Upon arrival of such shipment of the BUYER's Supplies, both parties shall undertake an joint unpacking inspection. If any damaged BUYER's supplies are found to be unsuitable for installation, the BUILDER shall be entitled to refuse to accept the BUYER's Supplies. ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least thirty (30) days notice in advance and seven (7) days definite notice in advance in writing by telex or telefax, of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shall promptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than five (5) days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above (other than due to the failure by the BUYER's representative to obtain a visa to enter China), then in such event, the BUYER shall be deemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER's representatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications and is satisfactory in all respects. The SELLER hereby warrants that the necessary visa for the BUYER's representatives to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until the BUYER's representatives have arrived at the BUILDER's Shipyard. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance with its best understanding of the relevant -22- Amended and Restated Shipbuilding Contract H2248 rules, regulations and/or Laws of the People's Republic of China then prevailing, then the SELLER shall so notify the BUYER and the BUYER shall endeavor to effect the replacement of all or any of such representatives. The Delivery Date as stipulated in Article VII hereof shall not be extended by any delays caused by the BUYER's replacement of its representatives pursuant to the SELLER's request. In the event of unfavorable weather on the date scheduled for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER assents in writing by telex or telefax of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, the Delivery Date shall not be extended other than pursuant to Article VIII hereof. 2. HOW CONDUCTED (a) All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications and shall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications. The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial waters equipped with speed measuring facilities. (b) The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, hydraulic oil and greases which shall be supplied by the BUYER according to the BUILDER's schedule which shall be forwarded to the BUYER by the BUILDER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, hydraulic oil and greases supplied by the BUYER shall be in accordance with the applicable engine Specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER. -23- Amended and Restated Shipbuilding Contract H2248 3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Section 2 of this Article VI, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh water, sea water or any other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account. 4. METHOD OF ACCEPTANCE OR REJECTION (a) Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL attached with the trial result, the BUYER or the BUYER's Supervisor shall within six (6) business days thereafter, notify the BUILDER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor. (b) However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications the BUILDER shall investigate with the Supervisor the cause of failure and shall take proper steps to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Trial Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) business days thereafter, notify the SELLER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-Trial Run or re-Trial Runs by the BUILDER. (c) In the event that the BUYER fails to notify the SELLER in writing by telex or telefax of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) business days period as provided for in the above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d) Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case, may be, of the VESSEL shall be referred to the Classification Society as provided in Article XIII Section 2 hereof. (e) Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as -24- Amended and Restated Shipbuilding Contract H2248 aforesaid and the SELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time before effecting delivery of the VESSEL to the BUYER under this Contract. 5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the purchasing price at the port of delivery thereof, and payment by the BUYER shall be effected, together with the payment of the fifth installment, as provided in Article II, Section 4 of this Contract. The BUYER shall supply lubricating oil, hydraulic oil and greases for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil, hydraulic oil and greases actually consumed for the said Trial Run or Trial Runs at the purchasing price incurred by the BUYER and payment by the SELLER shall be effected by deducting from the fifth installment the amount of such payment as provided in Article II, Section 4 of this Contract. 6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL in writing by telex or telefax notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing Delivery (as defined below) by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth. ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER (the "Delivery") at the BUILDER's Shipyard, in accordance with this Contract and the Specifications and with all Classification and statutory certificates (as required by Section 3 below) on or before June 1, 2000, as may be extended pursuant to Schedule 1 (the "Original Delivery Date"). -25- Amended and Restated Shipbuilding Contract H2248 2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, Delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of either (i) the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol of Delivery and Acceptance shall be prepared in triplicate and executed by each of the parties hereto or (ii) a Certificate of Completion executed by the Seller, Tractebel Gas Engineering GmbH and the Classification Society, which Certificate of Completion shall be prepared in multiple copies (5) and executed by the parties thereto. It is mutually understood and agreed that the Gas Plant of the VESSEL (the "GAS PLANT") shall be mechanically completed by the SELLER and that a running test for the equipment of the Gas Plant and a function test of its system shall be made by the SELLER prior to Delivery of the VESSEL as per clause 7 (a) of this Article whilst the full gas trial shall be made after Delivery of the VESSEL as more fully described in Section 7 of this Article. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents which shall accompany the aforementioned Protocol of Delivery and Acceptance or Certificate of Completion: (a) PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b) PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts and the like, all as specified in the Specifications, made by the BUILDER. (c) PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Section 5 of Article VI hereof. (d) FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. -26- Amended and Restated Shipbuilding Contract H2248 (e) PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER. (f) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications. It is agreed that if formal certificates are not available at the time of delivery of the VESSEL, provisional certificates issued by Classification Society or other relevant authorities shall be accepted by the BUYER, provided that the SELLER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued. (g) DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, rights in rem or other encumbrances of any nature upon the VESSEL and the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to Delivery. (h) COMMERCIAL INVOICE made by the SELLER. (i) BILL OF SALE made by the SELLER. (j) BUILDER's CERTIFICATE. 4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon Delivery thereof to and acceptance thereof by the BUYER as stated above, it being expressly understood that, until such Delivery is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER. 5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after Delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid -27- Amended and Restated Shipbuilding Contract H2248 seven (7) days, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL. 6. TENDER OF THE VESSEL If the BUYER fails to take Delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for Delivery after compliance with all procedural requirements as above provided. 7. GAS TRIAL (a) Prior to delivery of the VESSEL a running test of the equipment of the Gas Plant and a function test of its system shall be carried out utilizing either inert gas or dry air. These tests shall be repeated until its results are deemed by the Classification Society and any other relevant authority to be in conformity with this Contract and the Specifications, and the VESSEL shall not be deemed ready for Delivery by the SELLER to the BUYER pursuant to the terms of the Contract unless until the results of the aforesaid tests shall have been certified by the Classification Society. (b) After Delivery of the VESSEL at the Shipyard quay, the BUYER shall arrange at its own cost and expense to proceed the VESSEL to either Jin Shan Terminal, Shanghai or to the first load port, in the BUYER's option, in order to carry out the gas trial in accordance with the trial program furnished by the BUILDER's gas plant supplier (the "Supplier") under the supervision of the Supplier. The Supplier shall give qualified guidance, instruction and consultations with regard to the gas trial, all of which shall be arranged by the SELLER under the terms of its contract with the Supplier. The SELLER shall at its own expense dispatch its representative(s) to attend such gas trial as witness. The BUYER shall give the SELLER twenty (20) days advance notice in connection with the time and place for such trial. The gas trial shall be made latest forty-five (45) days after delivery of the VESSEL (unless the trial must be postponed until a later date not to exceed 90 days after Delivery for reasons beyond the BUYER's control) and shall be witnessed and certified by the Classification Society. -28- Amended and Restated Shipbuilding Contract H2248 (c) The SELLER shall pay all costs and charges of its own representative(s) and of the Classification Society and shall arrange at their expense for the Supplier to send at least one representative to the gas trial. (d) The BUYER shall at its own cost and expense provide suitable product in sufficient and satisfactory quantity and quality as well as utilities and consumables for operation. (e) Should the Gas Plant not be in conformity with this Contract and the Specifications, the SELLER shall remedy any such non-conformity to the satisfaction of the BUYER, the Classification Society and any other relevant authority. After the remedial works are completed the SELLER shall arrange to re-run the gas trial to the extent which will be necessary to demonstrate that the rectified part of the Gas Plant is then in conformity with this contract and the Specifications and the proper functioning of the Gas Plant as a whole is secured. (f) All direct costs and expenses of remedying the non-conformity and re-running the gas trial (including provision of suitable product, utilities and consumables) shall be for the account of the SELLER. (g) If delays are incurred relating to the use of the VESSEL, caused by an unsuccessful gas trial, remedial works and retrials for which the SELLER is responsible, with the consequence that the classification certificate has not been issued, will exceed more than twenty (20) days as from the commencement of the Gas Trials, the SELLER shall, notwithstanding the provisions contained in Article IX Section 2 and Section 4, pay to the BUYER as liquidated damages United States Dollars Ten Thousand (US$10,000) for each day of such excess delay up to a maximum amount of United States Dollars Two Hundred Thousand (US$200,000). ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual Delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the public enemy, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if -29- Amended and Restated Shipbuilding Contract H2248 any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors, as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or its sub-contractors, or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors as the case may be, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price subject nevertheless to (i) the provisions of Section 1(a) of Article III as to reduction in Contract Price, (ii) the BUYER's right of termination under Section 1(a) of Article III and (iii) all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL. 2. NOTICE OF DELAY Within fourteen (14) days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay commenced, and reasons therefor. Likewise within fourteen (14) days after such delay ends, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay ended, and also shall specify the maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification of any claim for extension of the Delivery Date within fourteen (14 ) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension. ARTICLE IX WARRANTY OF QUALITY 1. GUARANTEE OF MATERIAL AND WORKMANSHIP The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by or on behalf of the BUYER) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. -30- Amended and Restated Shipbuilding Contract H2248 2. NOTICE OF DEFECTS The BUYER shall notify the SELLER in writing by telex or telefax, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER's written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the SELLER not later than thirty (30) days after such expiry date. Telexed or telefaxed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient to comply with the requirements as to time. 3. REMEDY OF DEFECTS The SELLER shall remedy at its expense any defect, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement part, and materials cannot be accomplished without impairing or delaying the operation of the VESSEL, then, in any such event, the BUYER shall cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall, as soon as possible, give the SELLER notice in writing by telex or telefax of the time and place such repairs will be made, provided always that the burden of proof as to the necessity for such repairs and replacements shall rest with the BUYER, and a written confirmation for such repairs or replacement shall be obtained from the SELLER. Defects that affect the safety of the VESSEL or her crew and/or constitute an emergency shall be repaired either by the crew or a BUYER selected contractor in a manner reasonable under the circumstances without the SELLER's prior approval and the SELLER shall be notified as to the nature and extent of repairs as soon as possible after the repairs are undertaken and such repair work will be subject to the mutual agreement between the parties. If the VESSEL is not thereby delayed or her operation is not thereby delayed or impaired, the SELLER shall have the right to verify the nature and extent of the defects complained of by its own representative(s) or that of Classification Society. The SELLER shall, in such cases, promptly advise the BUYER, by telex or telefax, after such examination has been completed, of its acceptance or rejection of the defects as ones justifying the -31- Amended and Restated Shipbuilding Contract H2248 remedy under this Article. In all minor cases, the Guarantee Engineer, as hereinafter provided for, will act for and on behalf of the SELLER. In any circumstances, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, Singapore, Korea and Spain, whichever is lower: (a) upon the SELLER's acceptance of the defects as justifying remedy under this Article, or (b) If the SELLER neither accepts nor rejects the defects as above provided, nor requests arbitration within thirty (30) days after its receipt of the BUYER's notice of defects. Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof. 4. EXTENT OF THE SELLER'S LIABILITY The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee specified above. The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Section 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects other than those specified in Paragraph 1 above, nor shall there be any SELLER's liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL's officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors, employees or agents. -32- Amended and Restated Shipbuilding Contract H2248 Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. Neither CSTC nor the BUILDER shall, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL other than pursuant to the express terms of this Contract. The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties,guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER's negligence. This guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER. 5. GUARANTEE ENGINEER The BUILDER shall appoint one guarantee engineer (the "Guarantee Engineer") to serve the VESSEL as the BUILDER's representative for a period of six (6) months from the delivery of the VESSEL. The BUYER and its employees shall give such Guarantee Engineer full co-operation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s) the treatment comparable to the VESSEL's Chief Engineer, and shall provide him/them with accommodation and subsistence at no cost to the BUILDER and/or the Guarantee Engineer. The BUYER shall pay to the Guarantee Engineer the sum of United States Dollars Three Thousand Five Hundred only (US$3,500 ) per month/per person to cover his wages and miscellaneous expenses. The BUYER shall also pay the expense of his repatriation to Shanghai, the People's Republic of China by air upon termination of his service, the expense of his communications with the BUILDER when made in performance of his duties as the Guarantee Engineer and the expenses, if any, of his medical and hospital care. The BUYER, its successor(s) and/or assignee(s), shall be -33- Amended and Restated Shipbuilding Contract H2248 liable to and indemnify the BUILDER and/or the Guarantee Engineer for personal injuries, including death and damages to, or loss or destruction of property of the Guarantee Engineer, if such death, injuries, damages, loss and/or destruction were caused by gross negligence or willful misconduct of the BUYER, its successor(s) and/or assignee(s) or its employees and/or agents. Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL. ARTICLE X CANCELLATION BY THE BUYER All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the SELLER. In the event the BUYER shall exercise its right of rejection, cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing by telex or telefax, and such rejection, cancellation and/or rescission shall be effective as of the date the notice thereof is delivered by the BUYER. BUYER shall be entitled to receive from SELLER the amounts provided for in Article II, Section 7(a) above. In addition to Buyer's Right of Rejection, cancellation and/or rescission set forth in the preceding paragraph, Buyer shall cancel this Contract and Receive from the Seller the amounts provided for in Article II, Section 7(a) above, if any of the Related Contracts have been cancelled, rescinded or terminated pursuant to the Terms of such Related Contracts. ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under this Contract if any of the following events occurs: (a) The BUYER fails to pay any one of the first, second, third and fourth installments to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof; or -34- Amended and Restated Shipbuilding Contract H2248 (b) The BUYER fails to pay the fifth installment to the SELLER in accordance with Article II hereof, provided the BUYER shall have received the SELLER's notification in accordance with Article II hereof; or (c) The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under and pursuant to the provisions of this Contract. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telex or telefax after the date of occurrence of the default as per Section 1 of this Article and the BUYER shall forthwith acknowledge by telex to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telex or telefax acknowledgment to the SELLER within five (5) banking days it shall be deemed that such notification has been duly received by the BUYER. 3. INTEREST AND CHARGE (a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of ten (10%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof. (b) In any event of default by the BUYER under Section 1 (a), (b) or (c) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default. 4. DEFAULT BEFORE DELIVERY OF THE VESSEL (a) If any default by the BUYER occurs as defined in Section 1 (a), (b) or (c) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a period of continuance of such default by the BUYER. -35- Amended and Restated Shipbuilding Contract H2248 (b) If any such default as defined in Section 1 (a), (b) or (c) of this Article committed by the BUYER continues for a period of fifteen (15) banking days, then, the SELLER shall have all following rights and remedies: (i) The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Section 2 of this Article, by giving notice of such effect to the BUYER in writing by telex or telefax. Upon receipt by the BUYER of such telex or telefax notice of cancellation or rescission, all of the BUYER's Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and (ii) In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any installment or installments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and (iii) With respect to any default defined in Section 1(a) of this Article, without prejudice to the SELLER's right to recover from the BUYER the Fifth installment, interest, costs and/or expenses by applying the proceeds to be obtained from the sale of the VESSEL in accordance with the provisions set out in this Contract, the SELLER shall have the right to declare all unpaid second, third and fourth installments to be forthwith due and payable. -36- Amended and Restated Shipbuilding Contract H2248 5. SALE OF THE VESSEL (a) In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit and to sell the VESSEL at the best price available at a public or private sale advertised internationally. Such sale may include an invitation to the BUYER to participate, but will be otherwise on such terms and conditions as the SELLER may determine. In the case of sale of the VESSEL, the SELLER shall give telex or telefax or written notice to the BUYER. (b) In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the same interest rate as specified in Section 3 of this Article from the respective due dates thereof to the date of application. (c) In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labor and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract. (d) In either of the above events of sale, if the proceeds of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excess to the BUYER, provided, however that the amount of such payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER's supplies, if any, without interest. -37- Amended and Restated Shipbuilding Contract H2248 (e) If the proceeds of the sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request. ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel-laying of the first section or block of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER's Supplies, fully insured with first class Chinese insurance companies for BUILDER's risk. The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of the BUYER's Supplies. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER. 2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss: In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Section 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER. (b) Total Loss: However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either: -38- Amended and Restated Shipbuilding Contract H2248 (i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's supplies without additional expenses to the BUYER, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (ii) If due to whatever reasons the parties fail to agree on the above, then the BUYER shall deliver a written notice of rejection to SELLER and the SELLER shall refund immediately to the BUYER the amount described in Article II, Section 7, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith. (iii) Notwithstanding the provisions of (i) and (ii) above, Seller may elect to postpone delivery of the Vessel subject to the provisions of Article III, Section (1)(a). Within thirty (30) days after receiving telex or telefax notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telex of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the BUYER shall receive the refund as hereinabove provided and the provisions hereof shall apply. 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon Delivery thereof to and acceptance by the BUYER. ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS -39- Amended and Restated Shipbuilding Contract H2248 Should any dispute of any nature arise in respect of this Contract, its performance or interpretation which is not decided in accordance with Article XIII, Section 2 below, such dispute shall be settled by arbitration in London, England in accordance with the rules of the London Maritime Arbitrators Association Inc. and otherwise in accordance with the provisions of the Laws of England. The party who desires arbitration of any such dispute shall give written notice to the other party. The notice shall state the name and address of the arbitrator whom it appoints and describe the specific nature of the particular dispute. Such notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, and the other party shall, within thirty (30) days following the receipt of said notice, give written notice to the party requesting the arbitration as to the name and address of the arbitrator whom it appoints, which notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, provided that if the other party should fail to so appoint its arbitrator, the arbitrator appointed by the party desiring the arbitration may proceed with the arbitration hearing and issue an award. Otherwise the two arbitrators so chosen shall select a third arbitrator. The applicable law of England on all matters at issue shall apply. A judgement based upon the decision of the majority of the arbitrators or the sole arbitrator, as the case may be, may be entered in the appropriate court of any country having jurisdiction of either party. The arbitrators shall also decide which party, or the extent to which each party, shall pay costs of arbitration. Unless and to the extent otherwise determined by the arbitrator(s), reference to arbitration shall not relieve the BUILDER of its obligation diligently to proceed with the construction, completion and delivery of the VESSEL, but the majority of the arbitrators or the sole arbitrator, as the case may be, shall decide the extent to which the Delivery Date shall be extended by virtue of the dispute having been referred to arbitration. 2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto. 3. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by telex confirmed in writing to the SELLER and the BUYER. -40- Amended and Restated Shipbuilding Contract H2248 ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior consent of the other party is given in writing; provided, however, the BUYER may assign this Contract to one of its affiliates and the BUYER and its assignee may assign this Contract to the Trustee Bank providing the Trustee's Commitment Letter described in Article II, Section 6. In the event of an assignment of the BUYER's rights and obligations hereunder with respect to the VESSEL said assignee or the substitute party shall have all the rights and assume all the obligations of the BUYER hereunder with respect to said VESSEL and the responsibility of the BUYER hereunder, with respect to such VESSEL, shall terminate. The BUYER shall deliver to the SELLER an agreement which will guarantee performance by any assignee of this Contract. The BUYER shall deliver to the SELLER a Notice of Assignment and Acknowledgement as to any assignment of this Contract to the Trustee Bank. ARTICLE XV TAXES AND DUTIES 1. TAXES The SELLER shall be responsible for and pay, without recourse to the BUYER, any and all taxes, assessments, duties or other similar levies or charges, imposed by the Chinese authorities, whether national, municipal or local, with respect to the period up to and including Delivery (even though assessed, determined or imposed thereafter), on or in respect of (i) this Contract or any act or transaction hereunder, (ii) the VESSEL or any part thereof, or (iii) any imports of material or equipment, and including without limitation, any tax imposed with respect to the sale or Delivery to the BUYER or the VESSEL's export from China. Should the BUYER, at any time before or after Delivery, be assessed or required to pay any such taxes, assessments, duties or other similar levies or charges imposed by the Chinese authorities, the SELLER shall reimburse the BUYER therefor. 2. DUTIES The SELLER shall indemnify the BUYER for, and hold it harmless against, any duties imposed in the People's Republic of China upon materials and equipment which under the terms of this Contract and/or the Specifications will, or may be, supplied by the BUYER from the abroad for installation in the VESSEL as well as any duties -41- Amended and Restated Shipbuilding Contract H2248 imposed in the People's Republic of China upon running stores, provisions and supplies furnished by the BUYER from abroad to be stocked on board the VESSEL and also from the payment of export duties, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS GOVERNMENTAL APPROVALS AND LICENSES (a) To the extent there is a change in the laws now in effect in the People's Republic of China, the SELLER shall obtain necessary Chinese Government approvals and licenses, if any, required for the SELLER's performance under this Contract. The SELLER shall assist the BUYER in obtaining any licenses, permits, or other authorizations, or waivers, necessary for the BUYER to enter and/or reside in China to perform his functions as set forth herein or attend the Trial Runs. (b) The SELLER shall proceed as soon as possible to obtain from the Chinese Government the aforementioned licenses and permits (if any) for the VESSEL to be constructed, delivered and be exported from China, as provided herein and shall notify the BUYER as to the issuance thereof by facsimile or cable, subsequently confirmed in writing accompanied by copies of the said licenses and permits. In the event that the said licenses and permits for the VESSEL shall not have been granted by the Chinese authorities within thirty (30) days following the attempted Delivery, unless otherwise mutually agreed to by the SELLER and the BUYER, the SELLER shall be required to refund within twenty (20) days thereafter, to the BUYER the amounts set forth in Article II, Section 7 and upon payment of such amounts by Seller this Contract shall thereupon automatically become null and void and each of the parties hereto shall be forthwith and completely discharged from all of its obligations to the other or the SELLER elects to postpone the DELIVERY of the VESSEL in accordance with the provisions of Article III, Section 1(a). Notwithstanding the provisions of this paragraph (b), Delivery of the Vessel is not made on or before April 1, 2001, SELLER shall refund to the Buyer the amounts set forth in Article II Section 7(a) and April 1 shall be deemed the Date of Rejection. (c) In case the VESSEL, during construction or prior to Delivery, should be requisitioned or seized by the Chinese Government, the SELLER shall forthwith pay to -42- Amended and Restated Shipbuilding Contract H2248 the BUYER the amounts set forth in Article II, Section 7 hereof, and the payment of such refund by the Seller shall forthwith release both parties from all obligations under this Contract; provided, Seller may elect to postpone the delivery of the Vessel in accordance with the provisions of Article III, Section 1(a). ARTICLE XVII LAWS AND PERMITS The SELLER shall exercise due diligence to ensure that the SELLER, its employees and representatives, shall at all times comply with all applicable laws, ordinances, statutes, rules, and regulations, including those relating to wages, hours and working conditions and insurance, adopted by any governmental authority within the People's Republic of China. The SELLER, at its expense, shall procure all priorities, permits, licenses, inspections, approvals and certificates required in connection with the construction and completion of the VESSEL and Delivery in its Jiangnan Shipyard. If required to permit performance of the work, the SELLER shall furnish any bond, security or deposits so required for its employees and representatives. ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and save harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any. Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated by the passage of any specified period of time. The SELLER indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. ARTICLE XIX NOTICE -43- Amended and Restated Shipbuilding Contract H2248 Any and all notices and communications in connection with this Contract shall be addressed as follows: To the BUYER: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue 19th Floor New York, New York 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 To CSTC: China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 To the BUILDER: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 Any notices and communications sent by CSTC and the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER. Any change of address shall be communicated in writing by registered mail by the party making such change to the other party and in the event of failure to give such notice of change communications addressed to the party at their last known address shall be deemed sufficient. Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be -44- Amended and Restated Shipbuilding Contract H2248 delivered five (5) days after the date of dispatch, and telex or telefax acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language. ARTICLE XX EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon the execution and delivery of this Contract and the Specifications. -45- Amended and Restated Shipbuilding Contract H2248 ARTICLE XXI INTERPRETATION; MISCELLANEOUS 1. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern. However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern. 3. DEFINITION In absence of stipulation of "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days". 4. ENTIRE AGREEMENT This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract after signing of the Contract. -46- Amended and Restated Shipbuilding Contract H2248 5. REGISTRATION OF VESSEL The BUYER intends to register the VESSEL under Liberian flag but may elect an alternate registry within a reasonable time prior to Delivery (subject to mutual agreement on necessary modifications as provided for in Article V, Section 1. 6. LANGUAGE This Contract and the Plan and Specifications have been prepared in the English language, which shall control. The Contract has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. The Plan and Specifications have been signed in duplicate, one counterpart being retained by the BUILDER and one by the BUYER. 7. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. -47- Amended and Restated Shipbuilding Contract H2248 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Kalpow ------------------------- Name: Richard Kalpow ----------------------- Title: President ---------------------- CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping ------------------------- Name: Shen Yiping ----------------------- Title: Vice President ---------------------- JIANGNAN SHIPYARD By: /s/ Gong Jingen ------------------------- Name: Gong Jingen ----------------------- Title: Vice President ---------------------- -48- Amended and Restated Shipbuilding Contract H2248 Schedule 1 Contract Price Installment Schedule -49- Amended and Restated Shipbuilding Contract H2248 Schedule 2 Refund Amount Schedule (Letter of Guarantee) -50- Amended and Restated Shipbuilding Contract H2248 Schedule 3 Refund Amount Schedule (Performance Bond) -51- Amended and Restated Shipbuilding Contract H2248 EXHIBIT "A": IRREVOCABLE LETTER OF REFUNDMENT GUARANTEE [STATIONERY OF GUARANTOR BANK] [Date] Navigator Holdings PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and, together with CSTC, the "SELLER") and in consideration of Navigator Holdings PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contract dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") made by and between the BUYER and the SELLER for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2248 (hereinafter called the "VESSEL"), The Export Import Bank of China the "Bank") the undersigned, do guarantee the payment (and not merely the collectability of the same) to the BUYER by the SELLER immediately upon demand of an amount up to but not exceeding a total amount as set forth in Schedule 1 hereto (calculated in accordance with the immediately following paragraph), together with simple interest thereon calculated at the rate of ten percent (10.0%) per annum on the basis of a 360 day year from and including the date of receipt of demand to but not including the date of remittance by telegraphic transfer of such refund. Subject to BUYER making installment payments in accordance with Article II of the Contract, the amount of this Guarantee will be automatically increased during the term of this Guarantee and shall be equal to the sum of: (i) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month in which the Date A-1 Amended and Restated Shipbuilding Contract H2248 of Rejection occurs; and (ii) an amount equal to the product of (X) the difference between (1) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 1 hereto as of the first day of the month in which the Date of Rejection of the vessel under the Contract occurs and (y) a fraction the numerator of which is numeric day of the month of the date on which the Refund Amount (as hereinafter defined) is actually paid and the denominator of which is 30 (collectively, the "Refund Amount"). BUYER's right to demand payment under this Guarantee shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contract, (iii) upon the cancellation, termination or rescission of the Contract by the BUYER in accordance with the terms of Contract as set forth in Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b), or Article XVI (b) or (c), or (iv) the insolvency or bankruptcy of BUILDER. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to us by the BUYER. Payment under this Guarantee is available at the counters of ______________ Bank against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within eleven (11) banking days. This Guarantee is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. In the event that the BUYER's demand is for a lesser amount than the amount of this Guarantee, the interest payable will be calculated on the amount of the BUYER's demand and not on the amount of this Guarantee. We agree that this Guarantee shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; A-2 Amended and Restated Shipbuilding Contract H2248 and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Guarantee shall become effective from the time of the actual receipt of the first installment by the SELLER from the BUYER under the Contract and the Refund Amount payable under this Guarantee shall correspond to the total installment payments actually made by the BUYER to the SELLER from time to time under the Contract prior to the delivery of the VESSEL including applicable interest. This Guarantee shall expire and become null and void on the earlier to occur of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by the Bank of either a copy of the Protocol of Delivery and Acceptance of the VESSEL, purportedly signed by the BUYER and the SELLER and issued in the form attached hereto as Appendix B or a copy of the Certificate of Completion of the Vessel signed by the respective parties thereto in the form attached hereto as Appendix C; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Guarantee shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contract or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Guarantee shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Guarantee shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law; provided the Refund Amount shall be adjusted to reflect the delay resulting from such arbitration and shall be calculated in accordance with Schedule 1 hereto to the date payment is actually made. A-3 Amended and Restated Shipbuilding Contract H2248 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Guarantor] By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ A-4 Amended and Restated Shipbuilding Contract H2248 SCHEDULE 1 TO EXHIBIT A REFUND AMOUNT Net Date Amount ---- ------ A-5 Amended and Restated Shipbuilding Contract H2248 Appendix A to Exhibit A __________________Bank __________________ __________________ Re: Irrevocable Letter of Refundment Guarantee No. __ (the "Guarantee") The undersigned hereby certifies to [Name of Guarantor] with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Guarantee for payment of US$ _________, plus simple interest thereon calculated at the rate of percent per annum on the basis of a 360 day year from __________ to the date payment is effected by [Name of Guarantor] to the BUYER in accordance with the payment instructions provided below. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contract dated the ___ day of _____________, 1997, made by and among Navigator Holdings PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2248, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ____________________________ By:_________________________ Date:_______________________ A-6 Amended and Restated Shipbuilding Contract H2248 Appendix B to Exhibit A PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL:____________________ SELLER's Hull No. 2248 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:___________________________ Name:_________________________ Title:________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:___________________________ Name:_________________________ Title:________________________ JIANGNAN SHIPYARD By:___________________________ Name:_________________________ Title:________________________ A-7 Amended and Restated Shipbuilding Contract H2248 Appendix C to Exhibit A CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings PLC (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ___________________ Seller's Hull No.: ___________________ Type of Vessel: ___________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ A-8 Amended and Restated Shipbuilding Contract H2248 EXHIBIT "B": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and together with CSTC collectively called the "SELLER") and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers respectively having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Export-Import Bank of China (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Twenty Six Million Seven Hundred Thousand (US$26,700,000) (the "Payment Amount"), if and when the same or any part thereof becomes payable to BUYER from the SELLER under any Contract or Contracts if any such Contract or Contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI (b) and (c)) of such Contract or Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon actual receipt in full by the SELLER of the initial installment due under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. B-1 Amended and Restated Shipbuilding Contract H2248 Payment under this Performance Bond is available at the counters of Export-Import Bank of China in __________________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented under the column heading specified in the Notice of Demand. If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within eleven (11) banking days. The right of the BUYER to demand payment under this Performance Bond by presentation of a Notice of Demand shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery or Certificates of Completion for each of the five (5) VESSELS in the form of Appendix B or Appendix C to this Performance Bond; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. B-2 Amended and Restated Shipbuilding Contract H2248 Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contracts, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. B-3 Amended and Restated Shipbuilding Contract H2248 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Performance Guarantor] By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ B-4 Amended and Restated Shipbuilding Contract H2248 SCHEDULE 1 REFUND AMOUNT Net Date Amount ---- ------ B-5 Amended and Restated Shipbuilding Contract H2248 Appendix A to Exhibit B _________________Bank _________________ _________________ Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to The Export Import Bank of China with reference to Performance Bond No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Notice of Demand, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date). 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] _________________________ By:______________________ Date:____________________ B-5 Amended and Restated Shipbuilding Contract H2248 B-6 Appendix B to Exhibit B PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: _______________________ SELLER's Hull No. 2248 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:___________________________ Name:_________________________ Title:________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:___________________________ Name:_________________________ Title:________________________ JIANGNAN SHIPYARD By:___________________________ Name:_________________________ Title:________________________ B-7 Appendix C to Exhibit B CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ____________________ Seller's Hull No.: ____________________ Type of Vessel: ____________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ B-8 EXHIBIT "C": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of Tractebel Gas Engineering GmBH and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" together with CSTC collectively called the "SELLER") the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Generale de Banque (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Thirteen Million Three Hundred Thousand (US$13,300,000) (the "Payment Amount"), if and when the same or any part thereof become payable to BUYER from the SELLER under any Contract or Contracts if any such contract or contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI(b) and (c)) of the Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon payment of the initial installment under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. Payment under this Performance Bond is available at the counters of _______________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the C-1 BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented and under the column heading specified in the Notice of Demand less the amount paid by the Export-Import Bank of China under such Bank's Irrevocable Performance Bond dated _______, 1997 (the "Ex-Im Performance Bond"). In addition, the BUYER's right to demand payment as provided above is subject to delivery by BUYER to the Bank of a copy of the notice of demand presented to the Export-Import Bank of China under the Ex-Im Performance Bond in the amount of US$26,700,000 and evidence that such amount has been paid. If the Notice of Demand is received by the Bank by 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the same business day. If the Notice of Demand is received by the Bank after 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the next succeeding business day. The right of the BUYER to demand payment under this Performance Bond shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery and/or Certificates of Completion for each of the five (5) VESSELs in the form of Appendix B or Appendix C to this Performance Bond; and (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. C-2 Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. This Performance Bond is governed by and enforced and construed in accordance with the laws of England. For: Generale de Banque By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ C-3 Appendix A to Exhibit C Notice of Demand Generale de Banque ____________________ ____________________ Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to Generale de Banque with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Certificate, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date), less $26,700,000, the amount paid by the Export Import Bank of China pursuant to the attached Notice of Demand presented by the undersigned on _________________. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [INSERT PAYMENT INSTRUCTIONS] ___________________________ By:________________________ Date:______________________ C-4 Appendix B to Exhibit C PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: ______________________ SELLER's Hull No. 2248 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:___________________________ Name:_________________________ Title:________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:___________________________ Name:_________________________ Title:________________________ JIANGNAN SHIPYARD By:___________________________ Name:_________________________ Title:________________________ C-5 Appendix C to Exhibit C CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ______________________ Seller's Hull No.: ______________________ Type of Vessel: ______________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ C-6 EXHIBIT "D" CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ______________________ Seller's Hull No.: ______________________ Type of Vessel: ______________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ D-1 D-2 EXHIBIT "D-1" PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: ______________________ SELLER's Hull No. 2248 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:___________________________ Name:_________________________ Title:________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:___________________________ Name:_________________________ Title:________________________ JIANGNAN SHIPYARD By:___________________________ Name:_________________________ Title:________________________ D-1-1 EXHIBIT "E": TRUSTEE'S COMMITMENT LETTER JIANGNAN SHIPYARD c/o China Shipbuilding Trading Company, Limited and CHINA SHIPBUILDING TRADING COMPANY, LIMITED 10 Yue Tan Bei Xiao Jie Beijing 100861 The People's Republic Bank of China Re: Shipbuilding Contract for Construction of 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (the "Contract") Ladies and Gentlemen: This is to confirm that the undersigned as indenture trustee under the Indenture (the "Indenture") dated as of _____________, 1997, among the undersigned, as trustee (the "Indenture Trustee"), _________________, ________________, __________________, _______________, __________________, (collectively, the "Owners") and ________________, as agent for the Owners, is holding in Account No. ______, the Pre-Funding Account established under and pursuant to the terms of Indenture, an amount equal to US$_________. 1. Pursuant to the terms of the Indenture, the undersigned shall automatically disburse from amounts held in the Pre-Funding Account the first through fourth installments of the Contract Price (as defined in the Amended and Restated Shipbuilding Contract dated June 26, 1997 with respect to Hull No. 2248 (the "Vessel")) on the dates and in the manner set forth in Schedule 1 of the Contract and in accordance with Section 4 of Article II of the Contract and Schedule 1 hereto. 2. The Fourth Installment shall be payable to the Seller only after the Trustee has received a duplicate original, or facsimile copy of such original, of either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to each Vessel having an Original Delivery Date prior to that of the Vessel. 3. The fifth installment shall be paid in accordance with the provisions of Article II, Section (4) upon receipt by the Indenture Trustee of a Protocol of Delivery and Acceptance signed by both the SELLER and the BUYER or a Certificate of Completion signed by the SELLER, Germanischer Lloyd and Tractebel Gas Engineering GmBH. E-1 4. Any payment by us shall be made in United States Dollars by telegraphic transfer to Bank of China New York Branch, 410 Madison Avenue, New York New York 10017 U.S.A. as receiving bank nominated by you for credit to the account of China Shipbuilding Trading Company, Limited with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advise from Bank of China, New York Branch to Bank of China, Head Office, Banking Department, or through other receiving bank to be nominated by you from time to time, in favor of China Shipbuilding Trading Company Limited or your assignee. We hereby agree to make all payments as aforesaid unless directed by you in writing. 5. Our obligation to make the first through fourth installments due under the Contract shall not be affected or prejudiced by any dispute between the SELLER and the BUYER under the Contract or by the BUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of the terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under the Commitment. 6. This Trustee's Commitment Letter shall come into full force and effect upon delivery to you of this Trustee's Commitment Letter and shall continue in force and effect until the full payment of the second, third, fourth and fifth installments or the termination of the Contract in accordance with the terms thereof. 7. All payments by us under this Trustee's Commitment Letter shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal to the amount which would have been received had no such deduction or withholding been required to be made. 8. This Trustee's Commitment Letter shall be construed in accordance with and governed by the Laws of New York. 9. Upon expiration of this Trustee's Commitment Letter, you shall return the same to us without any request or demand from us. For the avoidance of doubt, this Trustee's Commitment Letter shall have no further force and effect upon its expiration pursuant to Clause 6 hereof, notwithstanding that the same may not have been returned to us pursuant to the Clause 8. IN WITNESS WHEREOF, we have caused this Trustee's Commitment Letter to be executed and delivered by our duly authorized representative the day and year above written. [Name of Trustee Bank] E-2 By:_________________________ Name:_______________________ Title:______________________ E-3 TABLE OF CONTENTS Page ARTICLE I DESCRIPTION AND CLASS........................................................ 2 1. DESCRIPTION................................................ 2 2. CLASS AND RULES............................................ 3 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL......... 4 4. GUARANTEED SPEED........................................... 4 5. GUARANTEED FUEL CONSUMPTION................................ 5 6. GUARANTEED DEADWEIGHT...................................... 5 7. GUARANTEED CARGO TANK CAPACITY............................. 5 8. SUBCONTRACTING............................................. 6 9. REGISTRATION............................................... 6 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT............................................ 6 1. CONTRACT PRICE............................................. 6 2. CURRENCY................................................... 6 3. TERMS OF PAYMENT........................................... 6 4. METHOD OF PAYMENT.......................................... 7 5. PREPAYMENT................................................. 8 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY .......................................................... 8 7. REFUNDS.................................................... 8 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE............................................. 10 1. DELIVERY................................................... 10 2. INSUFFICIENT SPEED......................................... 12 3. EXCESSIVE FUEL CONSUMPTION................................. 13 4. INSUFFICIENT DEADWEIGHT.................................... 14 5. INSUFFICIENT CARGO TANK CAPACITY........................... 14 6. EFFECT OF RESCISSION....................................... 15 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS.............. 15 ARTICLE IV SUPERVISION AND INSPECTION....... 15 1. APPOINTMENT OF THE BUYER'S SUPERVISOR...................... 15 2. APPROVAL OF PLANS AND DRAWINGS............................. 15 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR............... 16 (i) 4. LIABILITY OF THE SELLER.................................... 17 5. SALARIES AND EXPENSES...................................... 18 6. REPLACEMENT OF SUPERVISOR.................................. 18 ARTICLE V MODIFICATION, CHANGES AND EXTRAS.... 18 1. HOW EFFECTED............................................... 18 2. CHANGES IN RULES AND REGULATIONS........................... 19 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT................. 20 4. BUYER'S SUPPLIED ITEMS..................................... 20 ARTICLE VI TRIALS..................................................................... 21 1. NOTICE..................................................... 21 2. HOW CONDUCTED.............................................. 22 3. TRIAL LOAD DRAFT........................................... 22 4. METHOD OF ACCEPTANCE OR REJECTION.......................... 23 5. DISPOSITION OF SURPLUS CONSUMABLE STORES................... 24 6. EFFECT OF ACCEPTANCE....................................... 24 ARTICLE VII DELIVERY..................................................................... 24 1. TIME AND PLACE............................................. 24 2. WHEN AND HOW EFFECTED...................................... 24 3. DOCUMENTS TO BE DELIVERED TO THE BUYER..................... 25 4. TITLE AND RISK............................................. 26 5. REMOVAL OF VESSEL.......................................... 26 6. TENDER OF THE VESSEL....................................... 26 7. GAS TRIAL.................................................. 27 ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY.................................... 28 1. CAUSE OF DELAY............................................. 28 2. NOTICE OF DELAY............................................ 29 ARTICLE IX WARRANTY OF QUALITY.......................................................... 29 1. GUARANTEE OF MATERIAL AND WORKMANSHIP...................... 29 2. NOTICE OF DEFECTS.......................................... 29 3. REMEDY OF DEFECTS.......................................... 30 4. EXTENT OF THE SELLER'S LIABILITY........................... 31 5. GUARANTEE ENGINEER......................................... 32 (ii) ARTICLE X CANCELLATION BY THE BUYER................................................... 32 ARTICLE XI BUYER'S DEFAULT.............................................................. 33 1. DEFINITION OF DEFAULT...................................... 33 2. NOTICE OF DEFAULT.......................................... 33 3. INTEREST AND CHARGE........................................ 33 4. DEFAULT BEFORE DELIVERY OF THE VESSEL...................... 34 5. SALE OF THE VESSEL......................................... 35 ARTICLE XII INSURANCE................................................................... 36 1. EXTENT OF INSURANCE COVERAGE............................... 36 2. APPLICATION OF RECOVERED AMOUNT............................ 36 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE........... 37 ARTICLE XIII DISPUTES AND ARBITRATION..................................................... 37 1. PROCEEDINGS............................................... 37 2. ALTERNATIVE ARBITRATION BY AGREEMENT....................... 38 3. NOTICE OF AWARD............................................ 38 ARTICLE XIV RIGHT OF ASSIGNMENT.......................................................... 39 ARTICLE XV TAXES AND DUTIES............................................................. 39 1. TAXES...................................................... 39 2. DUTIES..................................................... 39 ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS......... 40 GOVERNMENTAL APPROVALS AND LICENSES................................. 40 ARTICLE XVII LAWS AND PERMITS ............................................................................. 41 ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS........................................... 41 ARTICLE XIX (iii) NOTICE....................................................................... 41 ARTICLE XX EFFECTIVE DATE OF CONTRACT................................................... 43 ARTICLE XXI INTERPRETATION............................................................... 44 1. LAW APPLICABLE............................................. 44 2. DISCREPANCIES.............................................. 44 3. DEFINITION................................................. 44 4. ENTIRE AGREEMENT........................................... 44 5. REGISTRATION OF VESSEL..................................... 45 6. LANGUAGE................................................... 45 7. AMENDMENTS................................................. 45 (iv) Schedule 1 Contract Price Installment Schedule Schedule 2 Refund Amount Schedule (Letter of Guarantee) Schedule 3 Refund Amount Schedule (Performance Bond) Exhibit A Irrevocable Installment Letter of Refundment Guarantee Exhibit B Irrevocable Performance Bond from the Export Import Bank of China Exhibit C Irrevocable Performance Bond from Generale de Banque Exhibit D Certificate of Completion Exhibit D-1 Protocol of Acceptance and Delivery Exhibit E Trustee's Commitment letter (v) EX-10.5 28 AMEND. & RESTATED SHIPBLDNG CONT. (HULL NO. 2249) AMENDED AND RESTATED SHIPBUILDING CONTRACT for CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2249) Date: June 26, 1997 between NAVIGATOR HOLDINGS PLC as BUYER and CHINA SHIPBUILDING TRADING COMPANY, LIMITED and JIANGNAN SHIPYARD Collectively as SELLER Amended and Restated Shipbuilding Contract H2249 AMENDED AND RESTATED SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE (1) 22,000 CUBIC METERS LIQUEFIED ETHYLENE GAS CARRIER (HULL NO. 2249) This AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "Contract"), entered into this 26th day of June, 1997 by and between Navigator Holdings PLC (formerly named Navigator Holdings, Ltd.), a company organized and existing under the laws of the Isle of Man, having its registered office at 15-19 Athol Street, Douglas, Isle of Man, (hereinafter called the "BUYER") on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People's Republic of China, having its registered office at 10 Yue Tan Bei Xiao Jie, Beijing 100861, the People's Republic of China (hereinafter called "CSTC"), and JIANGNAN SHIPYARD, a corporation organized and existing under the laws of the People's Republic Of China, having its registered office at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "BUILDER" and collectively with CSTC, the "SELLER") on the other part. The BUYER and SELLER are parties to the SHIPBUILDING CONTRACT for the construction of one (1) 22,000 cubic meter liquified ethylene gas carrier (Hull No. 2249), dated February 4th, 1997, and desire to amend and restate the terms thereof in accordance with the terms and provisions of this AMENDED AND RESTATED SHIPBUILDING CONTRACT. This AMENDED AND RESTATED SHIPBUILDING CONTRACT is being executed and delivered simultaneously with the execution and delivery of four separate and individual Shipbuilding Contracts as restated and amended (the "Related Contracts") between the SELLER and the BUYER each dated as of the date hereof with respect to the construction of four sister vessels which will have the BUILDER's Hull designation numbers 2245, 2246, 2247 and 2248 (collectively, the "SISTER VESSELS"). Amended and Restated Shipbuilding Contract H2249 WITNESSETH In consideration of the mutual covenants contained herein, the SELLER agrees to build, launch, equip and complete at the BUILDER's Shipyard and to sell and deliver to the BUYER after completion and successful trial one (1) 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (hereinafter called the "VESSEL") as more fully described in Article I hereof to be registered under the flag of Liberia and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same all in accordance with the terms and subject to the conditions hereinafter set forth. ARTICLE I DESCRIPTION AND CLASS 1. DESCRIPTION The BUILDER shall, at its Jiangnan Shipyard, located at 2 Gao Xiong Road, Shanghai 200011, the People's Republic of China (hereinafter called the "Shipyard"), construct, launch, equip, supply, and in all respects complete so as to be ready for immediate operation (subject to the gas trials as set forth in Article VII, Section 7), and deliver to the BUYER a 22,000 cubic meter liquefied ethylene gas carrier with 22,800 deadweight tons of carrying VCM on scantling draft of 10.90 meters and the class described below in Article I, Section 2 (hereinafter called the "VESSEL"), to be designated as Hull No. 2249, together with all machinery, materials, parts, supplies, equipment, appurtenances, and all other items necessary to and for the said construction, completion, delivery, and operation of the VESSEL. The VESSEL shall be built and completed in accordance with the following: (1) Specifications (Drawing No. 2LG970104) (2) General Arrangement (Drawing No. 2LG970102) (preliminary) (3) Maker List (Drawing No. 2LG970105) attached hereto and made a part hereof and signed by each of the parties to this Contract (items 1 through 3 of this Article, Section 1 are collectively referred to herein as the "Specifications"). Should there be any discrepancy between this Contract and the Specifications, the provisions in this Contract shall prevail. When there is no specific description in the Specifications a standard of workmanship and practices -2- Amended and Restated Shipbuilding Contract H2249 equivalent to the BUILDER's shipbuilding standards as practicable, generally applicable to the construction of similar size and types of vessels, shall be applicable to the construction of the VESSEL. The BUILDER, at its expense, shall, unless otherwise specifically provided herein, procure and furnish all items and permissions necessary to perform its obligations hereunder including, but not limited to, (i) plans and specifications (in addition to the Specifications), labor, machinery, materials, parts, supplies, equipment, appurtenances, and (ii) licenses, permits, inspections, surveys and approvals. 2. CLASS AND RULES The VESSEL, including its machinery and equipment, shall be constructed in accordance with the rules and regulations of Germanischer Lloyd (hereinafter called the "Classification Society") shall be distinguished in the record by the symbol of +100 A5 E "Liquefied Gas Carrier Type 2G" +MC E, AUT INERT and shall also comply with the rules and regulations as fully described in the Specifications. The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include the rules or circulars issued and becoming effective as at the date this Contract is executed and delivered (the "Effective Date"). The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the "Classification Surveyor") to the BUILDER's Shipyard for supervision of the construction of the VESSEL. All fees and charges incidental to Classification and to comply with the rules, regulations issued and becoming effective as of the Effective Date as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society. Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto. -3- Amended and Restated Shipbuilding Contract H2249 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL (a) The basic dimensions of the VESSEL shall be Length Overall: abt. 171.50m Length between perpendiculars: 160.50m Breadth moulded: 24.20m Depth moulded: 16.70m Scantling Draft moulded (VCM): 10.90m Deadweight (VCM): 22,800mt Draught moulded (Ammonia): 9.35m Deadweight (Ammonia): 17,150mt Design Draught moulded (Ethylene): 8.80m Deadweight (Ethylene): 15,100mt Cargo Tanks Volume: 22,000cbm The above mentioned dimensions may be changed, if calculations of intact stability and damage stability show necessity and/or possibility during development of the design. But the guaranteed performance of the vessel such as speed, fuel consumption, deadweight and cargo tank volume as stipulated in following Clause 4, 5, 6 and 7 shall remain unchanged. (b) Propelling Machinery: The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN B&W 6S50MC or Sulzer 6RTA52 type Main Engine. (c) Gas Plant The VESSEL shall be equipped with a complete set of gas plant including four (4) cargo tanks of a total volume of 22,000 cubic meters (hereinafter called the "GAS PLANT") as fully described in the Specifications. 4. GUARANTEED SPEED The SELLER guarantees that the service speed of the VESSEL on ethylene condition with draft of 8.80 meters as stipulated in the Specifications at 90% MCR of main engine with 15% sea margin is to be not less than 16.5 nautical miles per hour. -4- Amended and Restated Shipbuilding Contract H2249 The above guaranteed speed shall be deemed having been achieved if the speed in sea trial condition as determined by the trial run is reached after correction according to the Specifications. The speed in sea trial condition, i.e. calm weather with wind not exceeding 6 knots (two degrees Beaufort scale) and sea state maximum 2 with clean bottom and running in deep smooth water, shall be determined as per the result of model test at ballast condition (about 20% deadweight at design draft (ethylene) of 8.8 m). The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications. 5. GUARANTEED FUEL CONSUMPTION The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 128 grams/brake horse power/hour at MCR of main engine at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram according to the Specifications. 6. GUARANTEED DEADWEIGHT The SELLER guarantees that the VESSEL is to have a deadweight of not less than 22,800 metric tons at the scantling draft of carrying VCM of 10.90 meters in sea water of 1.025 specific gravity. The term, "Deadweight", as used in this Contract, shall be as defined in the Specifications. The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER's supervisor(s) or the party authorized by the BUYER. Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final. 7. GUARANTEED CARGO TANK CAPACITY The SELLER guarantees that the VESSEL is to have a total cargo tank capacity of not less than 22,000 cubic meters geometric including the volume of tank domes with ambient temperature as described in the Specifications. -5- Amended and Restated Shipbuilding Contract H2249 8. SUBCONTRACTING The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER's Shipyard. The SELLER shall remain primarily responsible for such subcontracted work. 9. REGISTRATION The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of the Republic of Liberia at the time of delivery and acceptance thereof. ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT 1. CONTRACT PRICE The net purchase price of the VESSEL is United States Dollars Forty Nine Million, Nine Hundred Thirty Seven Thousand (US$49,937,000) (hereinafter called the "Contract Price"), to be paid by the BUYER to SELLER for the construction and completion of the VESSEL which is exclusive of the cost for the BUYER's Supplies as provided in Article V hereof. The Contract Price shall be fixed, with no escalation and subject to upward or downward adjustment, if any, as expressly set forth in this Contract and in Schedule 1 attached hereto. To the extent that the SELLER may, under applicable law, regulation or decree (including those of the People's Republic of China), have any right(s) to escalate or change the Contract Price, such right(s) are hereby waived. The Contract Price includes all costs and expenses incurred by SELLER performing engineering calculations for designing and supplying all necessary drawings for the VESSEL, in accordance with the Specifications. 2. CURRENCY Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars ("US$"). 3. TERMS OF PAYMENT The Contract Price shall be paid by the BUYER to the SELLER in installments as indicated on Schedule 1 attached hereto. -6- Amended and Restated Shipbuilding Contract H2249 4. METHOD OF PAYMENT (a) First Installment: On or prior to July 21, 1997 (except as may be provided in Schedule 1), the BUYER shall remit by telegraphic transfer the first installment in the amount set forth on Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER. (b) Each subsequent Installment: Except as may be provided in Schedule 1, the BUYER shall remit by telegraphic transfer each subsequent installment on the date and in the amount set forth in Schedule 1 to the account of Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through any other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 banking days prior to the due date for payment ("SELLER's Bank"). Upon receipt of a facsimile or telex notice from the SELLER not less than six (6) banking days in New York prior to the scheduled Delivery Date, notifying the BUYER of such date, the BUYER shall deposit the amount payable upon Delivery of the VESSEL by telegraphic transfer to account of the SELLER's Bank at least three (3) banking days in the People's Republic of China prior to the scheduled Delivery of the VESSEL, with irrevocable instructions to be confirmed by the SELLER's Bank that the said deposit shall be payable to the SELLER against presentation by the SELLER of either (i) a duplicate original copy of the Protocol of Delivery and Acceptance of the VESSEL signed by the SELLER and the BUYER or (ii) a Certificate of -7- Amended and Restated Shipbuilding Contract H2249 Completion (in the form of Exhibit D hereto) signed by the SELLER, the Classification Society and Tractebel Gas Engineering GmBH (the "Certificate of Completion"), and that, in the event that the actual delivery and acceptance of the VESSEL shall not take place within seven (7) banking days following such scheduled Delivery, the said deposit shall be returned to the BUYER's bank, together with interest thereon. The SELLER's Bank shall hold the deposit in an interest bearing account and the BUYER shall be entitled to receive interest thereon. 5. PREPAYMENT The BUYER shall have the right to make prepayment of any and all installments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment. 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY The BUYER shall, concurrently with the payment of the first installment of the Contract Price, deliver to the SELLER a Trustee's Commitment Letter executed by a bank organized under the laws of the United States or any State thereof (the "Trustee Bank"), in the form annexed hereto as Exhibit "E" (the "Trustee's Commitment Letter") which shall indicate the amounts held by the Trustee Bank for the payment of the first through fifth installments of the Contract Price. Such Trustee Bank shall be an international banking institution acceptable to the SELLER. 7. REFUNDS (a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth on Schedules 2 and 3 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, -8- Amended and Restated Shipbuilding Contract H2249 (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 3 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 3 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of ten percent (10%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party. (b) Upon the payment of the first installment and the delivery of the Trustee's Commitment Letter in the form of Exhibit E hereto, the SELLER shall, at its cost, furnish the BUYER with (i) an Irrevocable Letter of Guarantee given by a bank acceptable to the BUYER (hereinafter referred to as "Guarantor"), substantially in the form of Exhibit A attached hereto as to the amounts set forth in Schedule 2 hereto, together with an acknowledgement of assignment to the Trustee Bank by the Guarantor and (ii) Irrevocable Performance Bonds given by The Export Import Bank of -9- Amended and Restated Shipbuilding Contract H2249 China and Generale de Banque (hereinafter collectively referred to as "Performance Guarantor"), substantially in the form of Exhibit B and Exhibit C, respectively, attached hereto which in the aggregate are equal to the aggregate amount set forth in Schedule 3 hereto and each Schedule 3 attached to the Related Contracts as to the Sister Vessels, together with an acknowledgement of assignment to the Trustee Bank by each Performance Guarantor. The Irrevocable Letters of Guarantee and the Irrevocable Performance Bonds shall guarantee payment to the BUYER of an amount in United States Dollars, at such place as the BUYER or its assignee may designate, which is sufficient to cover all sums payable or repayable by the SELLER to the BUYER under this Contract with interest thereon as provided in Article II, Section 7(a) above, upon receipt by said Guarantor and each Performance Guarantor, respectively, from the BUYER of a written claim that it is entitled to such payment or repayment and that the SELLER has failed to make same. ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE The Contract Price of the VESSEL as provided for in Schedule 1 shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty. 1. DELIVERY (a) Delayed Delivery Price Adjustment: (i) For purposes of this Contract the Original Delivery Date for the Vessel shall mean the date set forth in Article VII, Section (1) below. (ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $10,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $13,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages. -10- Amended and Restated Shipbuilding Contract H2249 (iii) If delivery of the VESSEL is delayed for any reason beyond the Original Delay Period, the Builder may elect to further postpone delivery of the Vessel beyond the Original Delay Period until March 31, 2001 provided SELLER pays liquidated damages monthly in advance to the BUYER at the rate of US$18,000 per day from the end of the Original Delay Period to a date which is 6 months thereafter (the "First Penalty Date"), and US$20,000 per day from the First Penalty Date to the date which is 6 months thereafter (the "Second Penalty Date"), and US$22,000 per day from the Second Penalty Date until March 31, 2001. If the SELLER fails to make any liquidated damages payment, BUYER, in its sole discretion, may either (i) reject the VESSEL or (ii) waive its right to receive the payment of liquidated damages and further reduce the Contract Price for the VESSEL by an amount equal to the liquidated damages which would have been payable. Notwithstanding any other provision contained in this Contract to the contrary, this Contract shall be deemed rescinded on April 1, 2001 and the Buyer shall be entitled to receive the amounts set forth in Article II, Section 7(a) above. Any waiver by the BUYER of its right to receive liquidated damages monthly in advance is not a waiver of the BUYER's right to (a) demand payment of such liquidated damages at a later date, (b) demand monthly advances as to Liquidated Damages for any subsequent months of delay or (c) reject the VESSEL at such later date if liquidated damages are not paid upon demand. The liquidated damages calculated pursuant to this paragraph are in addition to the reduction in the fifth installment of the Contract Price as calculated pursuant to (ii) above for the Original Delay Period. (iv) In the event that the BUYER elects to reject the VESSEL as allowed under this Article III, Section 1(a), the SELLER shall immediately repay to the BUYER the amounts set forth in Article II, Section 7, whereupon this Contract shall terminate and such payment shall forthwith discharge all obligations, duties and liabilities of each party hereto to the other under this Contract. (v) For the purpose of this Article, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Original Delivery Date of the VESSEL is extended by reason of a Permissible Delay. For purposes of this Article a Permissible Delay means a delay caused by reason of causes and provisions of (1) Section 2 of Article V (but only as to days of extension beyond 12 days), -11- Amended and Restated Shipbuilding Contract H2249 (2) Article VIII, and (3) any delay caused by any action or inaction on the part of SELLER; provided such Permissible Delay shall be subject to the following provisions: (A) The maximum Permissible Delay for the Vessel and each Sister Vessel shall be as follows: (i) Hull No. 2245 - 60 days (ii) Hull No. 2246 - 45 days (iii) Hull No. 2247 - 30 days (iv) Hull No. 2248 - 30 days (v) Hull No. 2249 - 30 days (B) For purposes of this Contract the Extended Delivery Date for a Vessel shall mean the Original Delivery Date plus the Permissible Delay for such Vessel, (C) The aggregated Permissible Delay for the Vessel and the Sister Vessels shall not exceed 150 days, and (D) Subject to the limitations set forth in (A) above, SELLER shall have the right in its sole discretion to designate either the Vessel or any Sister Vessel as to which Vessel will be subject to a Permissible Delay. (b) Early Delivery Price Adjustment: If the SELLER notifies the BUYER by facsimile that the delivery of the VESSEL shall be made earlier than the Original Delivery Date and such notification is given not less than two (2) months prior to the newly planned delivery date, a certain amount of bonus shall be given by the BUYER to the SELLER as follows: In the event that the delivery shall be made earlier than the Original Delivery Date and notice is properly given, then a bonus shall be added to the Contract Price at a rate of United States Dollars Thirteen Thousand (US$13,000) per day for each full day earlier than the Original Delivery Date. The total increase of the Contract Price for the earlier delivery shall be added to the fifth installment of the Contract Price. -12- Amended and Restated Shipbuilding Contract H2249 2. INSUFFICIENT SPEED (a) The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being equal to or less than three-tenths (3/10) of one knot below the guaranteed speed as specified in Section 4 of Article I of this Contract. (b) However, commencing with a deficiency of three-tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Section 4, Article I of this Contract, the Contract Price shall be reduced as follows: In case of deficiency: Liquidated Damage above 0.3 but below or at 0.40 knot US$100,000 above 0.40 but below or at 0.50 knot US$200,000 above 0.50 but below or at 0.60 knot US$600,000 above 0.60 but below or at 0.70 knot US$1,000,000 above 0.70 but below or at 0.80 knot US$1,400,000 above 0.80 but below or at 0.90 knot US$1,800,000 above 0.90 but below or at 0.99 knot US$2,200,000 (c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications ) of the VESSEL upon the Trial Run, is one (1) knot or more below the guaranteed speed of sixteen and half (16.5) knots, then the BUYER may at its option reject the VESSEL, rescind this Contract in accordance with provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any increase in the speed of the VESSEL. 3. EXCESSIVE FUEL CONSUMPTION (a) The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer's works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than three percent (3%). -13- Amended and Restated Shipbuilding Contract H2249 (b) However, if the actual fuel consumption as determined by shop trial is greater than three percent (3%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars Seventy-Five Thousand (US$75,000 ) for each full one percent (1%) increase in fuel consumption in excess of the above said three percent (3%) (fractions of one percent to be prorated). (c) If as determined by shop trial such actual fuel consumption of the Main Engine is eight percent (8%) or more in excess of the guaranteed fuel consumption set forth in the Specifications the BUYER may, at its option, reject the VESSEL, rescind this Contract, in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made for any improvements in fuel consumption less than that specified and required under the provisions of this Contract and the Specifications. 4. INSUFFICIENT DEADWEIGHT (a) In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Four Hundred (400) metric tons or less below the guaranteed deadweight of 22,800 metric tons at draft moulded. (b) However, the Contract Price shall be decreased by the sum of United States Dollars One Thousand (US$1,000) for each full metric ton of such deficiency being more than Four Hundred (400) metric tons. (c) In the event that there should be a deficiency in the VESSEL's actual deadweight which exceeds Eight Hundred (800) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X of this Contract and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. 5. INSUFFICIENT CARGO TANK CAPACITY (a) In the event there is a deficiency in the actual capacity of the cargo tanks determined as provided in the Specifications, the Contract Price shall not be -14- Amended and Restated Shipbuilding Contract H2249 decreased if such deficiency is One Hundred (100) cubic meters or less below the guaranteed cargo tank capacity. (b) However, the Contract Price shall be decreased by the sum of United States Dollars Three Thousand Five Hundred (US$3,500) for each full cubic meter of such deficiency being more than One Hundred (100) cubic meters but equal to or less than Four Hundred (400) cubic meters. (c) In the event that there should be a deficiency in the VESSEL's actual cargo tank capacity which exceeds Four Hundred (400) cubic meters below the guaranteed cargo tank capacity the BUYER may, at its option, reject the VESSEL, rescind this Contract in accordance with the provisions of Article X and receive the amounts payable by SELLER to BUYER as provided in Article II, Section 7(a) above. (d) No payment shall be made if the actual capacity of the cargo tanks determined as provided in the Specifications exceeds the cargo tank capacity set forth in the Specifications. 6. EFFECT OF RESCISSION It is hereby expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds this Contract pursuant to any provision under this Article, the BUYER, saving its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damage set forth in this Article, other than liquidated damages payable pursuant to Article III Section 1(a)(iii) above. 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS All adjustments in the Contract Price, if any, pursuant to this Article III shall be applied against the Fifth Installment of the Contract Price payable to SELLER on Delivery as defined in Article VII, Section 1. ARTICLE IV SUPERVISION AND INSPECTION 1. APPOINTMENT OF THE BUYER'S SUPERVISOR The BUYER shall in good time send to and maintain at the BUILDER's Shipyard, at the BUYER's own cost and expense, one or more representative(s) who shall be duly accredited in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the "Supervisor") to supervise and survey the -15- Amended and Restated Shipbuilding Contract H2249 construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary visa for the Supervisor to enter China will be issued in order on demand and without delay provided that the Supervisor meets with the rules, regulations and laws of the People's Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of visa. 2. APPROVAL OF PLANS AND DRAWINGS The parties hereto shall, within a reasonable period of time after signing of this Contract, mutually agree upon a list of all the plans and drawings, which are to be sent to the BUYER for approval (hereinbelow called "the LIST"). Before the arrival of the Supervisor at the BUILDER's Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with approval or remarks, if any. Concurrently with the arrival of the Supervisor at the BUILDER's Shipyard, the BUYER shall notify the BUILDER, in writing, of the authority the Supervisor shall have with regard to the approval or modification of plans and drawings (that is, which of the drawing and plans specified in the LIST but not yet sent to the BUYER can be submitted to and approved by the Supervisor). Nevertheless in line with the Supervisor's authority, the Supervisor shall, within five (5) days after receipt thereof, return those submitted plans and drawings with approval or remarks, if any. Unless notification is given to the BUILDER by the Supervisor or the BUYER of approval or disapproval of any plans and drawings within the above designated period of time for each case, the said plans and drawings shall be deemed to have been automatically approved. The plans and drawings approved by the BUYER or Supervisor shall be final, and any alteration thereof shall be regarded as modification specified in Article V of this Contract. 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications. -16- Amended and Restated Shipbuilding Contract H2249 The Supervisor shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER's Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the Supervisor discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the Supervisor shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. However the BUYER undertakes and assures the SELLER that the Supervisor shall carry out his inspections in accordance with the agreed inspection procedure and Schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. The BUILDER agrees to furnish, free of charge, the Supervisor with office space, and other reasonable facilities according to BUILDER's practice at, or in the immediate vicinity of the BUILDER's Shipyard, but the fees for the international communication like telephone and telefax, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the Supervisor shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL's construction. The travel expenses for the said access to SELLER's subcontractors outside of Shanghai shall be at BUYER's account. The transportation within Shanghai shall be provided to the Supervisor by the SELLER. 4. LIABILITY OF THE SELLER The Supervisor engaged by the BUYER under this Contract shall at all times be deemed to be in the employment of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by negligence of the SELLER, or of any of the SELLER's employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the Supervisor, or of the BUYER's employees or agents, unless such damage, loss or destruction was caused -17- Amended and Restated Shipbuilding Contract H2249 by negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. -18- Amended and Restated Shipbuilding Contract H2249 5. SALARIES AND EXPENSES All salaries and expenses of the Supervisor, or any other employees employed by the BUYER under this Article, shall be for the BUYER's account. 6. REPLACEMENT OF SUPERVISOR The SELLER has the right to request the BUYER in writing to replace any of the Supervisor who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction together with reasons. The BUYER shall investigate the situation by sending its representative to the BUILDER's yard, if necessary, and if the BUYER considers that such SELLER's request is justified, the BUYER shall effect the replacement as soon as conveniently arrangable. ARTICLE V MODIFICATION, CHANGES AND EXTRAS 1. HOW EFFECTED The Specifications in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER's reasonable judgment, adversely affect the BUILDER's other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER, or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, telex and telefaxes, manifesting such agreement. The letters, telexes as well as telefaxes exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, telexes and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to -19- Amended and Restated Shipbuilding Contract H2249 change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER's request for any modification and/or changes. 2. CHANGES IN RULES AND REGULATIONS (a) If, after the Effective Date, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree: (i) As to any increase or decrease in the guaranteed deadweight and/or cargo tank capacity and for speed of the VESSEL, if such compliance results in increased or reduced deadweight and/or cargo tank capacity and speed; and/or (ii) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary. Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans. (b) If, due to whatever reasons, the parties shall fail to agree on the increase or decrease of the guaranteed speed, deadweight and cargo tank capacity, or any alteration of the terms of this Contract, if any, then the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance -20- Amended and Restated Shipbuilding Contract H2249 with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes. (c) The BUYER and the SELLER hereby agree to make best efforts to avoid the application and/or minimize the effect of any change in the rules and regulations of the Classification Society as to the Specifications. If the BUYER and the SELLER are unsuccessful in avoiding the application of such change in rules and regulations, then the SELLER shall effect any modifications and/or changes in Specifications without adjustment to the Contract Price and the BUYER shall grant to the SELLER the right to extend the Delivery Date (if necessary) for a maximum period of up to twelve (12) days. 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT In the event that any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. 4. BUYER'S SUPPLIED ITEMS The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply for its own account (the "BUYER's Supplies") by the time designated by the SELLER. The delay in the delivery or the failure to deliver by the BUYER of any BUYER's Supplies within the time specified shall not extend the Delivery Date. However, if the delay in delivery of the BUYER's Supplies should exceed fifteen (15) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL and the BUYER shall accept the VESSEL so completed. The BUILDER shall be responsible for storing and handling of the BUYER's Supplies as specified in the Specifications after delivery to the BUILDER and shall install them on board the VESSEL at the BUILDER's expenses. -21- Amended and Restated Shipbuilding Contract H2249 Upon arrival of such shipment of the BUYER's Supplies, both parties shall undertake an joint unpacking inspection. If any damaged BUYER's supplies are found to be unsuitable for installation, the BUILDER shall be entitled to refuse to accept the BUYER's Supplies. ARTICLE VI TRIALS 1. NOTICE The BUYER and the Supervisor shall receive from the SELLER at least thirty (30) days notice in advance and seven (7) days definite notice in advance in writing by telex or telefax, of the time and place of the VESSEL's sea trial as described in the Specifications (hereinafter referred to as "the Trial Run") and the BUYER and the Supervisor shall promptly acknowledge receipt of such notice. The BUYER's representatives and/or the Supervisor shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure of the BUYER's representatives to be present at the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as provided above, shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than five (5) days by reason of the failure of the BUYER's representatives to be present after receipt of due notice as provided above (other than due to the failure by the BUYER's representative to obtain a visa to enter China), then in such event, the BUYER shall be deemed to have waived its right to have its representatives on board the VESSEL during the Trial Run, and the BUILDER may conduct such Trial Run without the BUYER's representatives being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications and is satisfactory in all respects. The SELLER hereby warrants that the necessary visa for the BUYER's representatives to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until the BUYER's representatives have arrived at the BUILDER's Shipyard. However, should the nationalities and other personal particulars of the BUYER's representatives be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People's Republic of China then prevailing, then the SELLER shall so notify the BUYER and the BUYER shall endeavor to effect the replacement of all or any of such representatives. The Delivery Date as stipulated in Article VII hereof shall not be extended by any delays caused by the BUYER's replacement of its representatives pursuant to the SELLER's -22- Amended and Restated Shipbuilding Contract H2249 request. In the event of unfavorable weather on the date scheduled for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER assents in writing by telex or telefax of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, the Delivery Date shall not be extended other than pursuant to Article VIII hereof. 2. HOW CONDUCTED (a) All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications and shall prove fulfillment of the performance required for the Trial Run as set forth in the Specifications. The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial waters equipped with speed measuring facilities. (b) The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, hydraulic oil and greases which shall be supplied by the BUYER according to the BUILDER's schedule which shall be forwarded to the BUYER by the BUILDER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, hydraulic oil and greases supplied by the BUYER shall be in accordance with the applicable engine Specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER. 3. TRIAL LOAD DRAFT In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Section 2 of this Article VI, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores -23- Amended and Restated Shipbuilding Contract H2249 necessary for the conduct of the Trial Run. The necessary ballast (fresh water, sea water or any other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER's account. 4. METHOD OF ACCEPTANCE OR REJECTION (a) Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL attached with the trial result, the BUYER or the BUYER's Supervisor shall within six (6) business days thereafter, notify the BUILDER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor. (b) However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications the BUILDER shall investigate with the Supervisor the cause of failure and shall take proper steps to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Trial Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) business days thereafter, notify the SELLER in writing by telex or telefax of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-Trial Run or re-Trial Runs by the BUILDER. (c) In the event that the BUYER fails to notify the SELLER in writing by telex or telefax of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) business days period as provided for in the above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL. (d) Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case, may be, of the VESSEL shall be referred to the Classification Society as provided in Article XIII Section 2 hereof. (e) Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid and the SELLER shall be obliged to comply with and/or remove such qualifications and/or remarks (if such qualifications and/or remarks are acceptable to the SELLER) at the time before effecting delivery of the VESSEL to the BUYER under this Contract. -24- Amended and Restated Shipbuilding Contract H2249 5. DISPOSITION OF SURPLUS CONSUMABLE STORES Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the purchasing price at the port of delivery thereof, and payment by the BUYER shall be effected, together with the payment of the fifth installment, as provided in Article II, Section 4 of this Contract. The BUYER shall supply lubricating oil, hydraulic oil and greases for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil, hydraulic oil and greases actually consumed for the said Trial Run or Trial Runs at the purchasing price incurred by the BUYER and payment by the SELLER shall be effected by deducting from the fifth installment the amount of such payment as provided in Article II, Section 4 of this Contract. 6. EFFECT OF ACCEPTANCE The BUYER's acceptance of the VESSEL in writing by telex or telefax notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing Delivery (as defined below) by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth. ARTICLE VII DELIVERY 1. TIME AND PLACE The VESSEL shall be delivered safely afloat by the SELLER to the BUYER (the "Delivery") at the BUILDER's Shipyard, in accordance with this Contract and the Specifications and with all Classification and statutory certificates (as required by Section 3 below) on or before September 1, 2000, as may be extended pursuant to Schedule 1 (the "Original Delivery Date"). 2. WHEN AND HOW EFFECTED Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, Delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the -25- Amended and Restated Shipbuilding Contract H2249 other, of either (i) the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol of Delivery and Acceptance shall be prepared in triplicate and executed by each of the parties hereto or (ii) a Certificate of Completion executed by the Seller, Tractebel Gas Engineering GmbH and the Classification Society, which Certificate of Completion shall be prepared in multiple copies (5) and executed by the parties thereto. It is mutually understood and agreed that the Gas Plant of the VESSEL (the "GAS PLANT") shall be mechanically completed by the SELLER and that a running test for the equipment of the Gas Plant and a function test of its system shall be made by the SELLER prior to Delivery of the VESSEL as per clause 7 (a) of this Article whilst the full gas trial shall be made after Delivery of the VESSEL as more fully described in Section 7 of this Article. 3. DOCUMENTS TO BE DELIVERED TO THE BUYER Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents which shall accompany the aforementioned Protocol of Delivery and Acceptance or Certificate of Completion: (a) PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications. (b) PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts and the like, all as specified in the Specifications, made by the BUILDER. (c) PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Section 5 of Article VI hereof. (d) FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER. (e) PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER. (f) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications. It is agreed that if formal certificates are not available at the time of delivery of the VESSEL, provisional certificates issued by Classification Society or other relevant authorities shall be accepted by the BUYER, provided that the SELLER shall furnish -26- Amended and Restated Shipbuilding Contract H2249 the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued. (g) DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, rights in rem or other encumbrances of any nature upon the VESSEL and the BUYER's title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to Delivery. (h) COMMERCIAL INVOICE made by the SELLER. (i) BILL OF SALE made by the SELLER. (j) BUILDER's CERTIFICATE. 4. TITLE AND RISK Title to and risk of the VESSEL shall pass to the BUYER only upon Delivery thereof to and acceptance thereof by the BUYER as stated above, it being expressly understood that, until such Delivery is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER. 5. REMOVAL OF VESSEL The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after Delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER's right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL. 6. TENDER OF THE VESSEL If the BUYER fails to take Delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the -27- Amended and Restated Shipbuilding Contract H2249 SELLER shall have the right to tender the VESSEL for Delivery after compliance with all procedural requirements as above provided. 7. GAS TRIAL (a) Prior to delivery of the VESSEL a running test of the equipment of the Gas Plant and a function test of its system shall be carried out utilizing either inert gas or dry air. These tests shall be repeated until its results are deemed by the Classification Society and any other relevant authority to be in conformity with this Contract and the Specifications, and the VESSEL shall not be deemed ready for Delivery by the SELLER to the BUYER pursuant to the terms of the Contract unless until the results of the aforesaid tests shall have been certified by the Classification Society. (b) After Delivery of the VESSEL at the Shipyard quay, the BUYER shall arrange at its own cost and expense to proceed the VESSEL to either Jin Shan Terminal, Shanghai or to the first load port, in the BUYER's option, in order to carry out the gas trial in accordance with the trial program furnished by the BUILDER's gas plant supplier (the "Supplier") under the supervision of the Supplier. The Supplier shall give qualified guidance, instruction and consultations with regard to the gas trial, all of which shall be arranged by the SELLER under the terms of its contract with the Supplier. The SELLER shall at its own expense dispatch its representative(s) to attend such gas trial as witness. The BUYER shall give the SELLER twenty (20) days advance notice in connection with the time and place for such trial. The gas trial shall be made latest forty-five (45) days after delivery of the VESSEL (unless the trial must be postponed until a later date not to exceed 90 days after Delivery for reasons beyond the BUYER's control) and shall be witnessed and certified by the Classification Society. (c) The SELLER shall pay all costs and charges of its own representative(s) and of the Classification Society and shall arrange at their expense for the Supplier to send at least one representative to the gas trial. (d) The BUYER shall at its own cost and expense provide suitable product in sufficient and satisfactory quantity and quality as well as utilities and consumables for operation. (e) Should the Gas Plant not be in conformity with this Contract and the Specifications, the SELLER shall remedy any such non-conformity to the satisfaction of the BUYER, the Classification Society and any other relevant -28- Amended and Restated Shipbuilding Contract H2249 authority. After the remedial works are completed the SELLER shall arrange to re-run the gas trial to the extent which will be necessary to demonstrate that the rectified part of the Gas Plant is then in conformity with this contract and the Specifications and the proper functioning of the Gas Plant as a whole is secured. (f) All direct costs and expenses of remedying the non-conformity and re-running the gas trial (including provision of suitable product, utilities and consumables) shall be for the account of the SELLER. (g) If delays are incurred relating to the use of the VESSEL, caused by an unsuccessful gas trial, remedial works and retrials for which the SELLER is responsible, with the consequence that the classification certificate has not been issued, will exceed more than twenty (20) days as from the commencement of the Gas Trials, the SELLER shall, notwithstanding the provisions contained in Article IX Section 2 and Section 4, pay to the BUYER as liquidated damages United States Dollars Ten Thousand (US$10,000) for each day of such excess delay up to a maximum amount of United States Dollars Two Hundred Thousand (US$200,000). ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY 1. CAUSE OF DELAY If, at any time before actual Delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than 35 degree centigrade, Acts of God or the public enemy, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors, as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the BUILDER or works of the BUILDER or its sub-contractors, or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors as the case may be, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price subject nevertheless to (i) the provisions of Section 1(a) of Article III as to reduction in Contract Price, (ii) the BUYER's right of termination under Section 1(a) of Article III and (iii) all relevant -29- Amended and Restated Shipbuilding Contract H2249 provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL. 2. NOTICE OF DELAY Within fourteen (14) days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay commenced, and reasons therefor. Likewise within fourteen (14) days after such delay ends, the SELLER shall advise the BUYER in writing by telex or telefax of the date such delay ended, and also shall specify the maximum period of the time by which the date for delivery of the VESSEL is extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER's notification of any claim for extension of the Delivery Date within fourteen (14 ) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension. ARTICLE IX WARRANTY OF QUALITY 1. GUARANTEE OF MATERIAL AND WORKMANSHIP The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and equipment thereof that are manufactured or furnished or supplied by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by or on behalf of the BUYER) against all defects which are due to defective materials, and/or poor workmanship or failure to construct in conformity with the Specifications. 2. NOTICE OF DEFECTS The BUYER shall notify the SELLER in writing by telex or telefax, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER's written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the SELLER not later than thirty (30) days after such expiry date. Telexed or telefaxed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days -30- Amended and Restated Shipbuilding Contract H2249 after such expiry date and that a claim is forthcoming will be sufficient to comply with the requirements as to time. 3. REMEDY OF DEFECTS The SELLER shall remedy at its expense any defect, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement part, and materials cannot be accomplished without impairing or delaying the operation of the VESSEL, then, in any such event, the BUYER shall cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall, as soon as possible, give the SELLER notice in writing by telex or telefax of the time and place such repairs will be made, provided always that the burden of proof as to the necessity for such repairs and replacements shall rest with the BUYER, and a written confirmation for such repairs or replacement shall be obtained from the SELLER. Defects that affect the safety of the VESSEL or her crew and/or constitute an emergency shall be repaired either by the crew or a BUYER selected contractor in a manner reasonable under the circumstances without the SELLER's prior approval and the SELLER shall be notified as to the nature and extent of repairs as soon as possible after the repairs are undertaken and such repair work will be subject to the mutual agreement between the parties. If the VESSEL is not thereby delayed or her operation is not thereby delayed or impaired, the SELLER shall have the right to verify the nature and extent of the defects complained of by its own representative(s) or that of Classification Society. The SELLER shall, in such cases, promptly advise the BUYER, by telex or telefax, after such examination has been completed, of its acceptance or rejection of the defects as ones justifying the remedy under this Article. In all minor cases, the Guarantee Engineer, as hereinafter provided for, will act for and on behalf of the SELLER. In any circumstances, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, Singapore, Korea and Spain, whichever is lower: (a) upon the SELLER's acceptance of the defects as justifying remedy under this Article, or -31- Amended and Restated Shipbuilding Contract H2249 (b) If the SELLER neither accepts nor rejects the defects as above provided, nor requests arbitration within thirty (30) days after its receipt of the BUYER's notice of defects. Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof. 4. EXTENT OF THE SELLER'S LIABILITY The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee specified above. The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Section 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects other than those specified in Paragraph 1 above, nor shall there be any SELLER's liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL's officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors, employees or agents. Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. Neither CSTC nor the BUILDER shall, in any circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL other than pursuant to the express terms of this Contract. -32- Amended and Restated Shipbuilding Contract H2249 The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties,guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER's negligence. This guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER. 5. GUARANTEE ENGINEER The BUILDER shall appoint one guarantee engineer (the "Guarantee Engineer") to serve the VESSEL as the BUILDER's representative for a period of six (6) months from the delivery of the VESSEL. The BUYER and its employees shall give such Guarantee Engineer full co-operation in carrying out his duties as the representative of the BUILDER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s) the treatment comparable to the VESSEL's Chief Engineer, and shall provide him/them with accommodation and subsistence at no cost to the BUILDER and/or the Guarantee Engineer. The BUYER shall pay to the Guarantee Engineer the sum of United States Dollars Three Thousand Five Hundred only (US$3,500 ) per month/per person to cover his wages and miscellaneous expenses. The BUYER shall also pay the expense of his repatriation to Shanghai, the People's Republic of China by air upon termination of his service, the expense of his communications with the BUILDER when made in performance of his duties as the Guarantee Engineer and the expenses, if any, of his medical and hospital care. The BUYER, its successor(s) and/or assignee(s), shall be liable to and indemnify the BUILDER and/or the Guarantee Engineer for personal injuries, including death and damages to, or loss or destruction of property of the Guarantee Engineer, if such death, injuries, damages, loss and/or destruction were caused by gross negligence or willful misconduct of the BUYER, its successor(s) and/or assignee(s) or its employees and/or agents. Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL. ARTICLE X CANCELLATION BY THE BUYER All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advances to the SELLER. In the event the BUYER shall exercise its -33- Amended and Restated Shipbuilding Contract H2249 right of rejection, cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing by telex or telefax, and such rejection, cancellation and/or rescission shall be effective as of the date the notice thereof is delivered by the BUYER. BUYER shall be entitled to receive from SELLER the amounts provided for in Article II, Section 7(a) above. In addition to Buyer's Right of Rejection, cancellation and/or rescission set forth in the preceding paragraph, Buyer shall cancel this Contract and Receive from the Seller the amounts provided for in Article II, Section 7(a) above, if any of the Related Contracts have been cancelled, rescinded or terminated pursuant to the Terms of such Related Contracts. ARTICLE XI BUYER'S DEFAULT 1. DEFINITION OF DEFAULT The BUYER shall be deemed in default of its obligation under this Contract if any of the following events occurs: (a) The BUYER fails to pay any one of the first, second, third and fourth installments to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof; or (b) The BUYER fails to pay the fifth installment to the SELLER in accordance with Article II hereof, provided the BUYER shall have received the SELLER's notification in accordance with Article II hereof; or (c) The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under and pursuant to the provisions of this Contract. 2. NOTICE OF DEFAULT If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telex or telefax after the date of occurrence of the default as per Section 1 of this Article and the BUYER shall forthwith acknowledge by telex to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telex or telefax -34- Amended and Restated Shipbuilding Contract H2249 acknowledgment to the SELLER within five (5) banking days it shall be deemed that such notification has been duly received by the BUYER. 3. INTEREST AND CHARGE (a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of ten (10%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof. (b) In any event of default by the BUYER under Section 1 (a), (b) or (c) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default. 4. DEFAULT BEFORE DELIVERY OF THE VESSEL (a) If any default by the BUYER occurs as defined in Section 1 (a), (b) or (c) of this Article, the Delivery Date shall, at the SELLER's option, be postponed for a period of continuance of such default by the BUYER. (b) If any such default as defined in Section 1 (a), (b) or (c) of this Article committed by the BUYER continues for a period of fifteen (15) banking days, then, the SELLER shall have all following rights and remedies: (i) The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Section 2 of this Article, by giving notice of such effect to the BUYER in writing by telex or telefax. Upon receipt by the BUYER of such telex or telefax notice of cancellation or rescission, all of the BUYER's Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and (ii) In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any installment or installments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and -35- Amended and Restated Shipbuilding Contract H2249 (iii) With respect to any default defined in Section 1(a) of this Article, without prejudice to the SELLER's right to recover from the BUYER the Fifth installment, interest, costs and/or expenses by applying the proceeds to be obtained from the sale of the VESSEL in accordance with the provisions set out in this Contract, the SELLER shall have the right to declare all unpaid second, third and fourth installments to be forthwith due and payable. -36- Amended and Restated Shipbuilding Contract H2249 5. SALE OF THE VESSEL (a) In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit and to sell the VESSEL at the best price available at a public or private sale advertised internationally. Such sale may include an invitation to the BUYER to participate, but will be otherwise on such terms and conditions as the SELLER may determine. In the case of sale of the VESSEL, the SELLER shall give telex or telefax or written notice to the BUYER. (b) In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the same interest rate as specified in Section 3 of this Article from the respective due dates thereof to the date of application. (c) In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER's default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labor and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract. (d) In either of the above events of sale, if the proceeds of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excess to the BUYER, provided, however that the amount of such payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER's supplies, if any, without interest. -37- Amended and Restated Shipbuilding Contract H2249 (e) If the proceeds of the sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request. ARTICLE XII INSURANCE 1. EXTENT OF INSURANCE COVERAGE From the time of keel-laying of the first section or block of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER's Supplies, fully insured with first class Chinese insurance companies for BUILDER's risk. The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of the BUYER's Supplies. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER. 2. APPLICATION OF RECOVERED AMOUNT (a) Partial Loss: In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Section 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER. (b) Total Loss: However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either: -38- Amended and Restated Shipbuilding Contract H2249 (i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL's damages and/or reinstallation of BUYER's supplies without additional expenses to the BUYER, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (ii) If due to whatever reasons the parties fail to agree on the above, then the BUYER shall deliver a written notice of rejection to SELLER and the SELLER shall refund immediately to the BUYER the amount described in Article II, Section 7, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith. (iii) Notwithstanding the provisions of (i) and (ii) above, Seller may elect to postpone delivery of the Vessel subject to the provisions of Article III, Section (1)(a). Within thirty (30) days after receiving telex or telefax notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telex of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and the BUYER shall receive the refund as hereinabove provided and the provisions hereof shall apply. 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE The SELLER's obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon Delivery thereof to and acceptance by the BUYER. ARTICLE XIII DISPUTES AND ARBITRATION 1. PROCEEDINGS -39- Amended and Restated Shipbuilding Contract H2249 Should any dispute of any nature arise in respect of this Contract, its performance or interpretation which is not decided in accordance with Article XIII, Section 2 below, such dispute shall be settled by arbitration in London, England in accordance with the rules of the London Maritime Arbitrators Association Inc. and otherwise in accordance with the provisions of the Laws of England. The party who desires arbitration of any such dispute shall give written notice to the other party. The notice shall state the name and address of the arbitrator whom it appoints and describe the specific nature of the particular dispute. Such notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, and the other party shall, within thirty (30) days following the receipt of said notice, give written notice to the party requesting the arbitration as to the name and address of the arbitrator whom it appoints, which notice shall be sent by registered air mail and shall be addressed in the manner set forth in Article XIX, provided that if the other party should fail to so appoint its arbitrator, the arbitrator appointed by the party desiring the arbitration may proceed with the arbitration hearing and issue an award. Otherwise the two arbitrators so chosen shall select a third arbitrator. The applicable law of England on all matters at issue shall apply. A judgement based upon the decision of the majority of the arbitrators or the sole arbitrator, as the case may be, may be entered in the appropriate court of any country having jurisdiction of either party. The arbitrators shall also decide which party, or the extent to which each party, shall pay costs of arbitration. Unless and to the extent otherwise determined by the arbitrator(s), reference to arbitration shall not relieve the BUILDER of its obligation diligently to proceed with the construction, completion and delivery of the VESSEL, but the majority of the arbitrators or the sole arbitrator, as the case may be, shall decide the extent to which the Delivery Date shall be extended by virtue of the dispute having been referred to arbitration. 2. ALTERNATIVE ARBITRATION BY AGREEMENT Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto. 3. NOTICE OF AWARD Notice of any award shall immediately be given in writing or by telex confirmed in writing to the SELLER and the BUYER. -40- Amended and Restated Shipbuilding Contract H2249 ARTICLE XIV RIGHT OF ASSIGNMENT Neither of the parties hereto shall assign this Contract to any other individual, firm, company or corporation unless prior consent of the other party is given in writing; provided, however, the BUYER may assign this Contract to one of its affiliates and the BUYER and its assignee may assign this Contract to the Trustee Bank providing the Trustee's Commitment Letter described in Article II, Section 6. In the event of an assignment of the BUYER's rights and obligations hereunder with respect to the VESSEL said assignee or the substitute party shall have all the rights and assume all the obligations of the BUYER hereunder with respect to said VESSEL and the responsibility of the BUYER hereunder, with respect to such VESSEL, shall terminate. The BUYER shall deliver to the SELLER an agreement which will guarantee performance by any assignee of this Contract. The BUYER shall deliver to the SELLER a Notice of Assignment and Acknowledgement as to any assignment of this Contract to the Trustee Bank. ARTICLE XV TAXES AND DUTIES 1. TAXES The SELLER shall be responsible for and pay, without recourse to the BUYER, any and all taxes, assessments, duties or other similar levies or charges, imposed by the Chinese authorities, whether national, municipal or local, with respect to the period up to and including Delivery (even though assessed, determined or imposed thereafter), on or in respect of (i) this Contract or any act or transaction hereunder, (ii) the VESSEL or any part thereof, or (iii) any imports of material or equipment, and including without limitation, any tax imposed with respect to the sale or Delivery to the BUYER or the VESSEL's export from China. Should the BUYER, at any time before or after Delivery, be assessed or required to pay any such taxes, assessments, duties or other similar levies or charges imposed by the Chinese authorities, the SELLER shall reimburse the BUYER therefor. 2. DUTIES The SELLER shall indemnify the BUYER for, and hold it harmless against, any duties imposed in the People's Republic of China upon materials and equipment which under the terms of this Contract and/or the Specifications will, or may be, supplied by the BUYER from the abroad for installation in the VESSEL as well as any duties imposed in the People's Republic of China upon running stores, provisions and -41- Amended and Restated Shipbuilding Contract H2249 supplies furnished by the BUYER from abroad to be stocked on board the VESSEL and also from the payment of export duties, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER. ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS GOVERNMENTAL APPROVALS AND LICENSES (a) To the extent there is a change in the laws now in effect in the People's Republic of China, the SELLER shall obtain necessary Chinese Government approvals and licenses, if any, required for the SELLER's performance under this Contract. The SELLER shall assist the BUYER in obtaining any licenses, permits, or other authorizations, or waivers, necessary for the BUYER to enter and/or reside in China to perform his functions as set forth herein or attend the Trial Runs. (b) The SELLER shall proceed as soon as possible to obtain from the Chinese Government the aforementioned licenses and permits (if any) for the VESSEL to be constructed, delivered and be exported from China, as provided herein and shall notify the BUYER as to the issuance thereof by facsimile or cable, subsequently confirmed in writing accompanied by copies of the said licenses and permits. In the event that the said licenses and permits for the VESSEL shall not have been granted by the Chinese authorities within thirty (30) days following the attempted Delivery, unless otherwise mutually agreed to by the SELLER and the BUYER, the SELLER shall be required to refund within twenty (20) days thereafter, to the BUYER the amounts set forth in Article II, Section 7 and upon payment of such amounts by Seller this Contract shall thereupon automatically become null and void and each of the parties hereto shall be forthwith and completely discharged from all of its obligations to the other or the SELLER elects to postpone the Delivery of the VESSEL in accordance with the provisions of Article III, Section 1(a). Notwithstanding the provisions of this paragraph (b), Delivery of the Vessel is not made on or before April 1, 2001, SELLER shall refund to the Buyer the amounts set forth in Article II Section 7(a) and April 1 shall be deemed the Date of Rejection. (c) In case the VESSEL, during construction or prior to Delivery, should be requisitioned or seized by the Chinese Government, the SELLER shall forthwith pay to the BUYER the amounts set forth in Article II, Section 7 hereof, and the payment of such refund by the Seller shall forthwith release both parties from all obligations -42- Amended and Restated Shipbuilding Contract H2249 under this Contract; provided, Seller may elect to postpone the delivery of the Vessel in accordance with the provisions of Article III, Section 1(a). ARTICLE XVII LAWS AND PERMITS The SELLER shall exercise due diligence to ensure that the SELLER, its employees and representatives, shall at all times comply with all applicable laws, ordinances, statutes, rules, and regulations, including those relating to wages, hours and working conditions and insurance, adopted by any governmental authority within the People's Republic of China. The SELLER, at its expense, shall procure all priorities, permits, licenses, inspections, approvals and certificates required in connection with the construction and completion of the VESSEL and Delivery in its Jiangnan Shipyard. If required to permit performance of the work, the SELLER shall furnish any bond, security or deposits so required for its employees and representatives. ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and save harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any. Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER's obligation under this Article should not be terminated by the passage of any specified period of time. The SELLER indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any. ARTICLE XIX NOTICE -43- Amended and Restated Shipbuilding Contract H2249 Any and all notices and communications in connection with this Contract shall be addressed as follows: To the BUYER: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue 19th Floor New York, New York 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 To CSTC: China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 To the BUILDER: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 Any notices and communications sent by CSTC and the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER. Any change of address shall be communicated in writing by registered mail by the party making such change to the other party and in the event of failure to give such notice of change communications addressed to the party at their last known address shall be deemed sufficient. Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telex or telefax acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. -44- Amended and Restated Shipbuilding Contract H2249 Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language. ARTICLE XX EFFECTIVE DATE OF CONTRACT This Contract shall become effective upon the execution and delivery of this Contract and the Specifications. -45- Amended and Restated Shipbuilding Contract H2249 ARTICLE XXI INTERPRETATION; MISCELLANEOUS 1. LAW APPLICABLE The parties hereto agree that the validity, enforcement and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 2. DISCREPANCIES All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern. However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern. 3. DEFINITION In absence of stipulation of "banking day(s)" or "business day(s)", the "day" or "days" shall be taken as "calendar day" or "calendar days". 4. ENTIRE AGREEMENT This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract after signing of the Contract. -46- Amended and Restated Shipbuilding Contract H2249 5. REGISTRATION OF VESSEL The BUYER intends to register the VESSEL under Liberian flag but may elect an alternate registry within a reasonable time prior to Delivery (subject to mutual agreement on necessary modifications as provided for in Article V, Section 1. 6. LANGUAGE This Contract and the Plan and Specifications have been prepared in the English language, which shall control. The Contract has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. The Plan and Specifications have been signed in duplicate, one counterpart being retained by the BUILDER and one by the BUYER. 7. AMENDMENTS No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. -47- Amended and Restated Shipbuilding Contract H2249 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Kaplow -------------------------- Name: Richard Kaplow Title: President CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping -------------------------- Name: Shen Yiping Title: Vice President JIANGNAN SHIPYARD By: /s/ Gong Jingen -------------------------- Name: Gong Jingen Title: Vice President -48- Amended and Restated Shipbuilding Contract H2249 Schedule 1 Contract Price Installment Schedule -49- Amended and Restated Shipbuilding Contract H2249 Schedule 2 Refund Amount Schedule (Letter of Guarantee) -50- Amended and Restated Shipbuilding Contract H2249 Schedule 3 Refund Amount Schedule (Performance Bond) -51- Amended and Restated Shipbuilding Contract H2249 Exhibit "A": IRREVOCABLE LETTER OF REFUNDMENT GUARANTEE [STATIONERY OF GUARANTOR BANK] [Date] Navigator Holdings PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and, together with CSTC, the "SELLER") and in consideration of Navigator Holdings PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contract dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") made by and between the BUYER and the SELLER for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2249 (hereinafter called the "VESSEL"), The Export Import Bank of China the "Bank") the undersigned, do guarantee the payment (and not merely the collectability of the same) to the BUYER by the SELLER immediately upon demand of an amount up to but not exceeding a total amount as set forth in Schedule 1 hereto (calculated in accordance with the immediately following paragraph), together with simple interest thereon calculated at the rate of ten percent (10.0%) per annum on the basis of a 360 day year from and including the date of receipt of demand to but not including the date of remittance by telegraphic transfer of such refund. Subject to BUYER making installment payments in accordance with Article II of the Contract, the amount of this Guarantee will be automatically increased during the term of this Guarantee and shall be equal to the sum of: (i) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs; and (ii) an amount equal to the product of (X) the difference A-1 Amended and Restated Shipbuilding Contract H2249 between (1) the amount set forth on Schedule 1 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 1 hereto as of the first day of the month in which the Date of Rejection of the vessel under the Contract occurs and (y) a fraction the numerator of which is numeric day of the month of the date on which the Refund Amount (as hereinafter defined) is actually paid and the denominator of which is 30 (collectively, the "Refund Amount"). BUYER's right to demand payment under this Guarantee shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contract, (iii) upon the cancellation, termination or rescission of the Contract by the BUYER in accordance with the terms of Contract as set forth in Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b), or Article XVI (b) or (c), or (iv) the insolvency or bankruptcy of BUILDER. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to us by the BUYER. Payment under this Guarantee is available at the counters of ______________ Bank against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Refund Amount (plus interest thereon) in immediately available funds within eleven (11) banking days. This Guarantee is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. In the event that the BUYER's demand is for a lesser amount than the amount of this Guarantee, the interest payable will be calculated on the amount of the BUYER's demand and not on the amount of this Guarantee. We agree that this Guarantee shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under A-2 Amended and Restated Shipbuilding Contract H2249 applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Guarantee shall become effective from the time of the actual receipt of the first installment by the SELLER from the BUYER under the Contract and the Refund Amount payable under this Guarantee shall correspond to the total installment payments actually made by the BUYER to the SELLER from time to time under the Contract prior to the delivery of the VESSEL including applicable interest. This Guarantee shall expire and become null and void on the earlier to occur of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by the Bank of either a copy of the Protocol of Delivery and Acceptance of the VESSEL, purportedly signed by the BUYER and the SELLER and issued in the form attached hereto as Appendix B or a copy of the Certificate of Completion of the Vessel signed by the respective parties thereto in the form attached hereto as Appendix C; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Guarantee shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contract or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Guarantee shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Guarantee shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law; provided the Refund Amount shall be adjusted to reflect the delay resulting from such arbitration and shall be calculated in accordance with Schedule 1 hereto to the date payment is actually made. A-3 Amended and Restated Shipbuilding Contract H2249 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Guarantor] By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ A-4 Amended and Restated Shipbuilding Contract H2249 Schedule 1 to Exhibit A REFUND AMOUNT Net Date Amount ---- ------ A-5 Amended and Restated Shipbuilding Contract H2249 Appendix A to Exhibit A _________________Bank _________________ _________________ Re: Irrevocable Letter of Refundment Guarantee No. __ (the "Guarantee") The undersigned hereby certifies to [Name of Guarantor] with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Guarantee for payment of US$ _________, plus simple interest thereon calculated at the rate of percent per annum on the basis of a 360 day year from __________ to the date payment is effected by [Name of Guarantor] to the BUYER in accordance with the payment instructions provided below. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contract dated the ___ day of _____________, 1997, made by and among Navigator Holdings PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of one (1) 22,000 cubic meter liquefied ethylene gas carrier having Hull No. 2249, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contract") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [insert payment instructions] _______________________________ By:____________________________ Date:__________________________ A-6 Amended and Restated Shipbuilding Contract H2249 Appendix B to Exhibit A PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: _______________________ SELLER's Hull No. 2249 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:_____________________________ Name:___________________________ Title:__________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:_____________________________ Name:___________________________ Title:__________________________ JIANGNAN SHIPYARD By:_____________________________ Name:___________________________ Title:__________________________ A-7 Amended and Restated Shipbuilding Contract H2249 Appendix C to Exhibit A CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings PLC (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: __________________________ Seller's Hull No.: __________________________ Type of Vessel: __________________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:_____________________________ By:_____________________________ Name:___________________________ Name:___________________________ Title:__________________________ Title:__________________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:_____________________________ By:_____________________________ Name:___________________________ Name:___________________________ Title:__________________________ Title:__________________________ A-8 Amended and Restated Shipbuilding Contract H2249 Exhibit "B": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" and together with CSTC collectively called the "SELLER") and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay SELLER the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers respectively having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Export-Import Bank of China (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Twenty Six Million Seven Hundred Thousand (US$26,700,000) (the "Payment Amount"), if and when the same or any part thereof becomes payable to BUYER from the SELLER under any Contract or Contracts if any such Contract or Contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI (b) and (c)) of such Contract or Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon actual receipt in full by the SELLER of the initial installment due under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. B-1 Amended and Restated Shipbuilding Contract H2249 Payment under this Performance Bond is available at the counters of Export-Import Bank of China in __________________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented under the column heading specified in the Notice of Demand. If the Notice of Demand is received by the Bank by 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within ten (10) banking days. If the Notice of Demand is received by the Bank after 12:00 noon local time on a banking day, the Bank shall pay the Demand Amount in immediately available funds within eleven (11) banking days. The right of the BUYER to demand payment under this Performance Bond by presentation of a Notice of Demand shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery or Certificates of Completion for each of the five (5) VESSELS in the form of Appendix B or Appendix C to this Performance Bond; or (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the SELLER is B-2 Amended and Restated Shipbuilding Contract H2249 rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for payment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contracts, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. B-3 Amended and Restated Shipbuilding Contract H2249 This Guarantee is governed by and enforced and construed in accordance with the laws of England. For: [Name of Performance Guarantor] By:_____________________________ By:_____________________________ Name:___________________________ Name:___________________________ Title:__________________________ Title:__________________________ B-4 Amended and Restated Shipbuilding Contract H2249 Schedule 1 REFUND AMOUNT Net Date Amount ---- ------ B-5 Amended and Restated Shipbuilding Contract H2249 Appendix A to Exhibit B _______________ Bank _______________ _______________ Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to The Export Import Bank of China with reference to Performance Bond No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Notice of Demand, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date). 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [insert payment instructions] _________________________ By:______________________ Date:____________________ B-6 Appendix B to Exhibit B PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: _____________________ SELLER's Hull No. 2249 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:___________________________ Name:_________________________ Title:________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:___________________________ Name:_________________________ Title:________________________ JIANGNAN SHIPYARD By:___________________________ Name:_________________________ Title:________________________ B-7 Appendix C to Exhibit B CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: ________________________ Seller's Hull No.: ________________________ Type of Vessel: ________________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:___________________________ By:___________________________ Name:_________________________ Name:_________________________ Title:________________________ Title:________________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:___________________________ By:___________________________ Name:_________________________ Name:_________________________ Title:________________________ Title:________________________ B-8 Exhibit "C": IRREVOCABLE PERFORMANCE BOND [STATIONERY OF PERFORMANCE GUARANTOR BANK] [Date] Navigator Holdings, PLC c/o Cambridge Petroleum Transport Corporation 535 Madison Avenue 19th Floor New York, New York 10022 Dear Sirs: At the request of Tractebel Gas Engineering GmBH and in consideration of Navigator Holdings, PLC (the "BUYER") agreeing to pay China Shipbuilding Trading Company, Limited ("CSTC") and Jiangnan Shipyard (the "Builder" together with CSTC collectively called the "SELLER") the installments of the contract price (the "Contract Price") pursuant to the Amended and Restated Shipbuilding Contracts dated the 26th day of June, 1997, as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") made by and between the BUYER and the SELLER for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carriers having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (hereinafter called the "VESSELS"), Generale de Banque (the "Bank") guarantees the payment (and not merely the collectability of the same) to the BUYER by the SELLER, immediately upon demand, of an amount up to but not exceeding a total aggregate amount of United States Dollars Thirteen Million Three Hundred Thousand (US$13,300,000) (the "Payment Amount"), if and when the same or any part thereof become payable to BUYER from the SELLER under any Contract or Contracts if any such contract or contracts are cancelled by the BUYER in accordance with the terms (Article III, 1(a), 2(c), 3(c), 4(c), 5(c), Article X, Article XII 2(b) and Article XVI(b) and (c)) of the Contracts (any a "Cancellation Event"). This Performance Bond shall become effective upon payment of the initial installment under each of the Contracts. Payment shall be made to the BUYER in United States Dollars in accordance with the payment instruction given to the BANK by the BUYER. Payment under this Performance Bond is available at the counters of _______________ against presentation of the BUYER's signed statement issued in the form attached hereto as Appendix A ("Notice of Demand"). The Notice of Demand shall set forth the dollar amount to be paid to the BUYER under this Performance Bond, which amount shall be based upon Schedule 1 C-1 attached hereto (the "Demand Amount") provided such Demand Amount shall not exceed the Payment Amount. As to any date on which a Notice of Demand is presented, the Demand Amount shall be equal to the amount set forth opposite the calendar month in which such Notice of Demand is presented and under the column heading specified in the Notice of Demand less the amount paid by the Export-Import Bank of China under such Bank's Irrevocable Performance Bond dated _______, 1997 (the "Ex-Im Performance Bond"). In addition, the BUYER's right to demand payment as provided above is subject to delivery by BUYER to the Bank of a copy of the notice of demand presented to the Export-Import Bank of China under the Ex-Im Performance Bond in the amount of US$26,700,000 and evidence that such amount has been paid. If the Notice of Demand is received by the Bank by 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the same business day. If the Notice of Demand is received by the Bank after 12:00 noon local time on a business day, the Bank shall pay the Demand Amount in immediately available funds on the next succeeding business day. The right of the BUYER to demand payment under this Performance Bond shall become effective on the earlier to occur of (i) April 1, 2001, (ii) the date on which the SELLER fails to pay any liquidated damages payable to BUYER as provided in Section 1(a) of Article III of the Contracts, (iii) the occurrence of a Cancellation Event or (iv) the bankruptcy or insolvency of the Builder. This Performance Bond is available for one payment only, whether for the full amount hereof or any part thereof, as may be demanded by the BUYER. We agree that this Performance Bond shall be a continuing guarantee and (i) shall not be impaired or discharged by the granting of time or any other indulgence to the SELLER, or any other forbearance (whether as to payment, time, performance, or otherwise) which might, but for this provision, have any such effect; (ii) shall not be conditioned or contingent upon the BUYER's pursuit of any remedy that it has against the SELLER; and (iii) shall be unconditional irrespective of any other circumstance that might otherwise constitute a legal or equitable discharge of a surety or guarantor under applicable law, and we hereby waive any and all rights (whether by counterclaim, set off or otherwise) and defenses at law or in equity that may be available to us by reason of such circumstance. This Performance Bond shall expire and become null and void on the earlier of (i) the receipt by the BUYER of the sum guaranteed hereby; (ii) the receipt by Bank of a copy of the Protocol of Acceptance and Delivery and/or Certificates of Completion for each of the five (5) VESSELs in the form of Appendix B or Appendix C to this Performance Bond; and (iii) 5:00 p.m. New York time on May 1, 2001, in any such case this Performance Bond shall be returned to us; provided, the Bank further agrees that its obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time any payment, or any part thereof, made by the C-2 SELLER is rescinded or must otherwise be restored by the BUYER upon the bankruptcy or reorganization of the SELLER. Notwithstanding the provisions hereinabove, in case we receive notification from the BUYER or the SELLER confirmed by an arbitrator stating that the BUYER's claim to cancel the Contracts or the BUYER's claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the Contract, the period of validity of this Performance Bond shall be extended until thirty (30) days after the final award shall be rendered in the arbitration and a copy thereof acknowledged by the arbitrators. In such case, this Performance Bond shall not be available unless and until such acknowledged copy of the final award in the Arbitration justifying the BUYER's claim is presented to us; subject to any appeal of such final award which may be permitted under English law. This Performance Bond is governed by and enforced and construed in accordance with the laws of England. For: Generale de Banque By:___________________________ By:___________________________ Name:_________________________ Name:_________________________ Title:________________________ Title:________________________ C-3 Appendix A to Exhibit C Notice of Demand Generale de Banque _____________________ _____________________ Re: Irrevocable Performance Bond No. __ (the "Performance Bond") The undersigned hereby certifies to Generale de Banque with reference to Guarantee No. ______ that: 1. The undersigned is duly authorized to execute and deliver this certificate on behalf of the BUYER. 2. The BUYER hereby makes a claim against the Performance Bond for payment of US$ _________, based upon Schedule 1 attached to the Performance Bond. As of the date of this Certificate, we have received either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to ____ Vessels (as defined below). Therefore the amount claimed is based upon the amount set forth under column ____ of Schedule 1 opposite ______ (the date), less $26,700,000, the amount paid by the Export Import Bank of China pursuant to the attached Notice of Demand presented by the undersigned on _________________. 3. The amount claimed represents a demand for refund of amounts refundable to the BUYER and such demand for refund has been made in conformity with the Amended and Restated Shipbuilding Contracts each dated the 26th day of June, 1997 made by and among Navigator Holdings, PLC, or assignee (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "SELLER"), for the construction of five (5) 22,000 cubic meter liquefied ethylene gas carrier having Hull Nos. 2245, 2246, 2247, 2248 and 2249 (the "Vessels"), as amended, supplemented or otherwise modified from time to time (hereinafter called the "Contracts") and that the SELLER has failed to make the refund after receipt of our demand to the SELLER. 4. You are hereby directed to make payment of the stated amount to ________________________ [insert payment instructions] ___________________________ By:________________________ Date:______________________ C-4 Appendix B to Exhibit C PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated June 26, 1997, as amended, made by and between SELLER and the BUYER. Name of VESSEL: ____________________ SELLER's Hull No. 2249 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:____________________________ Name:__________________________ Title:_________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:____________________________ Name:__________________________ Title:_________________________ JIANGNAN SHIPYARD By:____________________________ Name:__________________________ Title:_________________________ C-1 Appendix C to Exhibit C CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: _______________________ Seller's Hull No.: _______________________ Type of Vessel: _______________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ C-2 Exhibit "D" CERTIFICATE OF COMPLETION KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Jiangnan Shipyard ("Builder"), China Shipbuilding Trading Company, Ltd. ("CSTC"), Tractebel Gas Engineering GmbH ("Tractebel") and Germanischer Lloyd ("GL") do hereby confirm that the Vessel described hereunder together with the Gas Plant is completed at ______ hours (local time) of _____ day of ____________ in accordance with the terms and conditions of the Amended and Restated Shipbuilding Contract dated ________, 1997, as amended, made by and among Navigator Holdings Ltd. (as "Buyer"), CSTC and the Builder (CSTC and Builder collectively as the "Seller") and that the Vessel is fully in compliance with the requirements of the Classification Society as described in the Shipbuilding Contract. Name of Vessel: _______________________ Seller's Hull No.: _______________________ Type of Vessel: _______________________ That this Certificate of Completion does not release Seller from its responsibilities under Article IX of the said Shipbuilding Contract. JIANGNAN SHIPYARD TRACTEBEL GAS ENGINEERING GmbH By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ CHINA SHIPBUILDING TRADING GERMANISCHER LLOYD COMPANY, LTD. By:____________________________ By:____________________________ Name:__________________________ Name:__________________________ Title:_________________________ Title:_________________________ C-3 Exhibit "D-1" PROTOCOL OF DELIVERY AND ACCEPTANCE KNOW ALL MEN BY THESE PRESENTS: That the undersigned, China Shipbuilding Trading Company and Jiangnan Shipyard (collectively the "SELLER") does hereby deliver at ________ hours (local time) on __________________, to Navigator Holdings PLC or assignee (the "BUYER"), the vessel described hereunder in accordance with the provisions of the Amended and Restated Shipbuilding Contract dated ______________, as amended, made by and between SELLER and the BUYER. Name of VESSEL: ______________________ SELLER's Hull No. 2249 Type of VESSEL: That the undersigned, Navigator Holdings PLC or assignee does hereby accept delivery of the aforesaid vessel and certify that the same is delivered in accordance with the provisions of the said Shipbuilding Contract, and that this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release SELLER from its responsibilities under Article IX of the said Shipbuilding Contract. NAVIGATOR HOLDINGS PLC By:____________________________ Name:__________________________ Title:_________________________ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By:____________________________ Name:__________________________ Title:_________________________ JIANGNAN SHIPYARD By:____________________________ Name:__________________________ Title:_________________________ D-1-1 Exhibit "E": TRUSTEE'S COMMITMENT LETTER Jiangnan Shipyard c/o China Shipbuilding Trading Company, Limited and China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 The People's Republic Bank of China Re: Shipbuilding Contract for Construction of 22,000 Cubic Meters Liquefied Ethylene Gas Carrier (the "Contract") Ladies and Gentlemen: This is to confirm that the undersigned as indenture trustee under the Indenture (the "Indenture") dated as of _____________, 1997, among the undersigned, as trustee (the "Indenture Trustee"), _________________, ________________, __________________, _______________, __________________, (collectively, the "Owners") and ________________, as agent for the Owners, is holding in Account No. ______, the Pre-Funding Account established under and pursuant to the terms of Indenture, an amount equal to US$_________. 1. Pursuant to the terms of the Indenture, the undersigned shall automatically disburse from amounts held in the Pre-Funding Account the first through fourth installments of the Contract Price (as defined in the Amended and Restated Shipbuilding Contract dated June 26, 1997 with respect to Hull No. 2249 (the "Vessel")) on the dates and in the manner set forth in Schedule 1 of the Contract and in accordance with Section 4 of Article II of the Contract and Schedule 1 hereto. 2. The Fourth Installment shall be payable to the Seller only after the Trustee has received a duplicate original, or facsimile copy of such original, of either a Protocol of Delivery and Acceptance or a Certificate of Completion with respect to each Vessel having an Original Delivery Date prior to that of the Vessel. 3. The fifth installment shall be paid in accordance with the provisions of Article II, Section (4) upon receipt by the Indenture Trustee of a Protocol of Delivery and Acceptance signed by both the SELLER and the BUYER or a Certificate of Completion signed by the SELLER, Germanischer Lloyd and Tractebel Gas Engineering GmBH. E-1 4. Any payment by us shall be made in United States Dollars by telegraphic transfer to Bank of China New York Branch, 410 Madison Avenue, New York New York 10017 U.S.A. as receiving bank nominated by you for credit to the account of China Shipbuilding Trading Company, Limited with Bank of China, Head Office, Banking Department, Beijing, the People's Republic of China with SWIFT advise from Bank of China, New York Branch to Bank of China, Head Office, Banking Department, or through other receiving bank to be nominated by you from time to time, in favor of China Shipbuilding Trading Company Limited or your assignee. We hereby agree to make all payments as aforesaid unless directed by you in writing. 5. Our obligation to make the first through fourth installments due under the Contract shall not be affected or prejudiced by any dispute between the SELLER and the BUYER under the Contract or by the BUILDER's delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of the terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under the Commitment. 6. This Trustee's Commitment Letter shall come into full force and effect upon delivery to you of this Trustee's Commitment Letter and shall continue in force and effect until the full payment of the second, third, fourth and fifth installments or the termination of the Contract in accordance with the terms thereof. 7. All payments by us under this Trustee's Commitment Letter shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal to the amount which would have been received had no such deduction or withholding been required to be made. 8. This Trustee's Commitment Letter shall be construed in accordance with and governed by the Laws of New York. 9. Upon expiration of this Trustee's Commitment Letter, you shall return the same to us without any request or demand from us. For the avoidance of doubt, this Trustee's Commitment Letter shall have no further force and effect upon its expiration pursuant to Clause 6 hereof, notwithstanding that the same may not have been returned to us pursuant to the Clause 8. IN WITNESS WHEREOF, we have caused this Trustee's Commitment Letter to be executed and delivered by our duly authorized representative the day and year above written. E-2 [Name of Trustee Bank] By:___________________________ Name:_________________________ Title:________________________ E-3 TABLE OF CONTENTS Page ARTICLE I DESCRIPTION AND CLASS ................................................... 2 1. DESCRIPTION ............................................... 2 2. CLASS AND RULES ........................................... 3 3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL ........ 4 4. GUARANTEED SPEED .......................................... 4 5. GUARANTEED FUEL CONSUMPTION ............................... 5 6. GUARANTEED DEADWEIGHT ..................................... 5 7. GUARANTEED CARGO TANK CAPACITY ............................ 5 8. SUBCONTRACTING ............................................ 6 9. REGISTRATION .............................................. 6 ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT ....................................... 6 1. CONTRACT PRICE ............................................ 6 2. CURRENCY .................................................. 6 3. TERMS OF PAYMENT .......................................... 6 4. METHOD OF PAYMENT ......................................... 7 5. PREPAYMENT ................................................ 8 6. SECURITY FOR PAYMENT OF INSTALLMENTS BEFORE DELIVERY 8 7. REFUNDS ................................................... 8 ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE ........................................ 10 1. DELIVERY .................................................. 10 2. INSUFFICIENT SPEED ........................................ 12 3. EXCESSIVE FUEL CONSUMPTION ................................ 13 4. INSUFFICIENT DEADWEIGHT ................................... 14 5. INSUFFICIENT CARGO TANK CAPACITY .......................... 14 6. EFFECT OF RESCISSION ...................................... 15 7. SCHEDULE OF PAYMENTS DUE TO PRICE ADJUSTMENTS ............. 15 ARTICLE IV SUPERVISION AND INSPECTION ................... 15 1. APPOINTMENT OF THE BUYER'S SUPERVISOR ..................... 15 2. APPROVAL OF PLANS AND DRAWINGS ............................ 15 3. SUPERVISION AND INSPECTION BY THE SUPERVISOR .............. 16 4. LIABILITY OF THE SELLER ................................... 17 (i) 5. SALARIES AND EXPENSES ..................................... 18 6. REPLACEMENT OF SUPERVISOR ................................. 18 ARTICLE V MODIFICATION, CHANGES AND EXTRAS ............. 18 1. HOW EFFECTED .............................................. 18 2. CHANGES IN RULES AND REGULATIONS .......................... 19 3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT ................ 20 4. BUYER'S SUPPLIED ITEMS .................................... 20 ARTICLE VI TRIALS ................................................................ 21 1. NOTICE .................................................... 21 2. HOW CONDUCTED ............................................. 22 3. TRIAL LOAD DRAFT .......................................... 22 4. METHOD OF ACCEPTANCE OR REJECTION ......................... 23 5. DISPOSITION OF SURPLUS CONSUMABLE STORES .................. 24 6. EFFECT OF ACCEPTANCE ...................................... 24 ARTICLE VII DELIVERY ................................................................ 24 1. TIME AND PLACE ............................................ 24 2. WHEN AND HOW EFFECTED ..................................... 24 3. DOCUMENTS TO BE DELIVERED TO THE BUYER .................... 25 4. TITLE AND RISK ............................................ 26 5. REMOVAL OF VESSEL ......................................... 26 6. TENDER OF THE VESSEL ...................................... 26 7. GAS TRIAL ................................................. 27 ARTICLE VIII DELAYS AND EXTENSION OF TIME FOR DELIVERY ............................... 28 1. CAUSE OF DELAY ............................................ 28 2. NOTICE OF DELAY ........................................... 29 ARTICLE IX WARRANTY OF QUALITY ..................................................... 29 1. GUARANTEE OF MATERIAL AND WORKMANSHIP ..................... 29 2. NOTICE OF DEFECTS ......................................... 29 3. REMEDY OF DEFECTS ......................................... 30 4. EXTENT OF THE SELLER'S LIABILITY .......................... 31 5. GUARANTEE ENGINEER ........................................ 32 ARTICLE X CANCELLATION BY THE BUYER .............................................. 32 (ii) ARTICLE XI BUYER'S DEFAULT ......................................................... 33 1. DEFINITION OF DEFAULT ..................................... 33 2. NOTICE OF DEFAULT ......................................... 33 3. INTEREST AND CHARGE ....................................... 33 4. DEFAULT BEFORE DELIVERY OF THE VESSEL ..................... 34 5. SALE OF THE VESSEL ........................................ 35 ARTICLE XII INSURANCE .............................................................. 36 1. EXTENT OF INSURANCE COVERAGE .............................. 36 2. APPLICATION OF RECOVERED AMOUNT ........................... 36 3. TERMINATION OF THE SELLER'S OBLIGATION TO INSURE .......... 37 ARTICLE XIII DISPUTES AND ARBITRATION ................................................ 37 1. PROCEEDINGS ............................................... 37 2. ALTERNATIVE ARBITRATION BY AGREEMENT ...................... 38 3. NOTICE OF AWARD ........................................... 38 ARTICLE XIV RIGHT OF ASSIGNMENT ..................................................... 39 ARTICLE XV TAXES AND DUTIES ........................................................ 39 1. TAXES ..................................................... 39 2. DUTIES .................................................... 39 ARTICLE XVI GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS ....... 40 GOVERNMENTAL APPROVALS AND LICENSES ............................ 40 ARTICLE XVII LAWS AND PERMITS ......................................................................... 41 ARTICLE XVIII PATENTS, TRADEMARKS AND COPYRIGHTS ...................................... 41 ARTICLE XIX NOTICE................................................................... 41 ARTICLE XX EFFECTIVE DATE OF CONTRACT .............................................. 43 (iii) ARTICLE XXI INTERPRETATION .......................................................... 44 1. LAW APPLICABLE ............................................ 44 2. DISCREPANCIES ............................................. 44 3. DEFINITION ................................................ 44 4. ENTIRE AGREEMENT .......................................... 44 5. REGISTRATION OF VESSEL .................................... 45 6. LANGUAGE .................................................. 45 7. AMENDMENTS ................................................ 45 (iv) Schedule 1 Contract Price Installment Schedule Schedule 2 Refund Amount Schedule (Letter of Guarantee) Schedule 3 Refund Amount Schedule (Performance Bond) Exhibit A Irrevocable Letter of Refundment Guarantee Exhibit B Irrevocable Performance Bond from the Export Import Bank of China Exhibit C Irrevocable Performance Bond from Generale de Banque Exhibit D Certificate of Completion Exhibit D-1 Protocol of Acceptance and Delivery Exhibit E Trustee's Commitment letter (v) EX-10.6 29 AMEN. 1; AMEND. REST. SHIPBLDNG CONT. (IOM I-A) AMENDMENT No. 1 made as of this 1st day of August, 1997 (this "AMENDMENT") to the AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "SHIPBUILDING CONTRACT") dated as of June 26, 1997 among Navigator Gas (IOM I-A) Limited as assignee of Navigator Holdings PLC's rights, title and interest (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, as "SELLER") for construction of one (1) 22,000 Cubic Meters Liquified Ethylene Gas Carrier (Hull No. 2245). Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the SHIPBUILDING CONTRACT. WHEREAS, the BUYER and SELLER desire to amend certain terms and schedules of the SHIPBUILDING CONTRACT to and in accordance with Section 7 of Article XXI of the SHIPBUILDING CONTRACT for the purpose of correcting provisions therein which have resulted from the increased cost of borrowing incurred by the BUYER to finance the acquisition of the Vessel; NOW, THEREFORE, in consideration of the foregoing, BUYER and SELLER agree as follows: 1. Section 7(a) of Article II of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth in Schedule 2 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) the amount set forth on Schedule 3 hereto calculated as of the calendar month in which the Date of Rejection occurs. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of eleven percent (11.0%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party." 2. Section 1(a)(ii) of Article III of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $11,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $14,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages." 3. Section 3(a) of Article XI of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of eleven percent (11.0%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof." 4. Schedule 2 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 2 attached hereto shall be attached as Schedule 2 to the SHIPBUILDING CONTRACT. 2 5. Schedule 3 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 3 attached hereto shall be attached as Schedule 3 to the SHIPBUILDING CONTRACT. 6. Schedule 1 to Exhibit A of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 1 to Exhibit A attached hereto shall be attached as Schedule 1 to Exhibit A to the SHIPBUILDING CONTRACT. 7. The parties hereto agree that the validity, enforcement and interpretation of this AMENDMENT and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 8. This AMENDMENT has been prepared in the English language, which shall control. This AMENDMENT has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. 9. This AMENDMENT may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be duly executed on the day and year first above written. NAVIGATOR GAS (IOM I-A) LIMITED By: /s/ Joseph Avantario --------------------------- Name: Joseph Avantario ------------------------- Title: Director ------------------------ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping --------------------------- Name: Shen Yiping ------------------------- Title: Vice President ------------------------ JIANGNAN SHIPYARD By: /s/ Gong Jingsen --------------------------- Name: Gong Jingsen ------------------------- Title: Vice President ------------------------ 4 Navigator Gas Transport PLC July 31, 1997 SCHEDULE 1 - REFUNDMENT GUARANTEE HULL NO. 2245 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640 783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 11,651,490 6.8 01-Mar-98 11,746,744 7.8 01-Apr-98 11,841,998 8.8 01-May-98 11,937,252 9.8 01-Jun-98 12,032 506 10.8 01-Jul-98 12 ,27,761 11.8 01-Aug-98 12,223,015 12.8 01-Sep-98 12,318,269 13.8 01-Oct-98 12,413,523 14.8 01-Nov-98 19,367,077 15.8 01-Dec-98 19,519,484 16.8 01-Jan-99 19,671,891 17.8 01-Feb-99 19,824,297 18.8 01-Mar-99 24,548,904 19.8 01-Apr-99 24,739,412 20.8 01-May-99 24,929,921 21.8 01-Jun-99 25,120,429 22.8 01-Jul-99 26,310,937 23.8 01-Aug-99 25,501,446 24.8 01-Sep-99 25,691,954 25.8 01-Oct-99 25,882,462 26.8 01-Nov-99 26,072,971 27.8 01-Dec-99 26,263,479 28.8 01-Jan-2000 26,453,987 29.6 01-Feb-2000 26,644,496 30.8 01-Mar-2000 26,835,004 31.8 01-Apr-2000 26,949,512 32.8 01-May-2000 27,062,021 33.8 01-Jun-2000 27,172,529 34.8 01-Jul-2000 27,281,037 35.8 01-Aug-2000 27,397,546 36.8 01-Sep-2000 27,512,054 37.8 01-Oct-2000 27,593,562 38.8 01-Nov-2000 27,673,071 39.8 01-Dec-2000 27,750,579 40.8 01-Jan-2001 27,826,087 41.8 01-Feb-2001 27,908,596 42.8 01-Mar-2001 27,989,104 43.8 01-Apr-2001 28,036,612 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 2 - REFUNDMENT GUARANTEE - HULL NO. 2245 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-7 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-58 4,755,088 5.8 01-Feb-94 11,651,490 6.8 01-Mar-98 11,746,744 7.8 01-Apr-98 11,841,998 8.8 01-May-98 11,937,252 9.8 01-Jun-98 12,032,506 10.8 01-Jul-98 12,127,761 11.8 01-Aug-98 12,223,015 12.8 01-Sep-98 12,318,269 13.8 01-Oct-98 12,413,523 14.8 01-Nov-98 19,367,077 15.8 07-Dec-98 19,519,484 16.8 01-Jan-99 19,671,897 17.8 01-Feb-99 19,824,297 18.8 01-Mar-99 24,548,904 19.8 01-Apr-99 24,739,412 20.8 01-May-99 24,929,921 21.8 01-Jun-99 25,120,429 22.8 01-Jul-99 25,310,937 23.8 01-Aug-99 25,501,446 24.8 01-Sep-99 25,691,954 25.8 01-Oct-99 25,882,462 26.8 01-Nov-99 26,072,971 27.8 01-Dec-99 26,263,479 28.8 01-Jan-2000 26,453,987 29.8 01-Feb-2000 26,644,496 30.8 01-Mar-2000 26,835,004 31.8 01-Apr-2000 26,949,512 32.8 01-May-2000 27,062,021 33.8 01-Jun-2000 27,172,529 34.8 01-Jul-2000 27,281,037 35.8 01-Aug-2000 27,397,546 36.8 01-Sep-2000 27,512,054 37.8 01-Oct-2000 27,593,562 38.8 01-Nov-2000 27,673,071 39.8 01-Dec-2000 27,750,579 40.8 01-Jan-2001 27,826,087 41.6 01-Feb-2001 27,908,596 42.8 01-Mar-2001 27,989,104 43.8 01-Apr-2001 28,036,612 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 3 - PERFORMANCE BOND - HULL NO. 2245 MONTH DATE AMOUNT 0.0 Aug-97 1,809,110 0.8 Sep-97 4,491,527 1.8 Oct-97 4,707,218 2.8 Nov-97 4,940,494 3.8 Dec-97 5,152,309 4.8 Jan-98 5,390,623 5.8 Feb-98 5,599,326 6.8 Mar-98 5,789,047 7.8 Apr-98 6,009,634 8.8 May-98 6,212,588 9.8 Jun-98 6,430,502 10.8 Jul-98 6,649,293 11.8 Aug-98 6,875,008 12.8 Sep-98 7,107,149 13.8 Oct-98 7,322,520 14.8 Nov-98 7,501,684 15.8 Dec-98 7,697,280 16.8 Jan-99 7,917,004 17.8 Feb-99 8,153,756 18.8 Mar-99 8,320,637 19.8 Apr-99 8,530,300 20.8 May-99 8,728,639 21.8 Jun-99 9,096,957 22.8 Jul-99 9,492,622 23.8 Aug-99 5,134,216 24.8 Sep-99 5,332,211 25.8 Oct-99 5,518,196 26.8 Nov-99 5,714,371 27.8 Dec-99 5,898,399 26.8 Jan-2000 6,105 697 29.8 Feb-2000 6,322,279 30.8 Mar-2000 6,517,722 31.8 Apr-2000 6,253,015 32.8 May-2000 5,975,863 33.8 Jun-2000 5,707,433 34.8 Jul-2000 5,444,607 35.8 Aug-2000 5,175,332 36.8 Sep-2000 4,909,363 37.8 Oct-2000 4,600,672 38.8 Nov-2000 4,300,459 39.8 Dec-2000 3,986,735 40.8 Jan-2001 3,694,792 41.8 Feb-2001 3,407,662 42.8 Mar-2001 3,085,898 43.8 Apr-2001 2,559,658 Cambridge Partners, L.L.C. FINAL EX-10.7 30 AMEND. #1; AMEND. REST. SHIPBLDNG CONT. (IOM I-B) AMENDMENT No. 1 made as of this 1st day of August, 1997 (this "AMENDMENT") to the AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "SHIPBUILDING CONTRACT") dated as of June 26, 1997 among Navigator Gas (IOM I-B) Limited as assignee of Navigator Holdings PLC's rights, title and interest (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, as "SELLER") for construction of one (1) 22,000 Cubic Meters Liquified Ethylene Gas Carrier (Hull No. 2246). Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the SHIPBUILDING CONTRACT. WHEREAS, the BUYER and SELLER desire to amend certain terms and schedules of the SHIPBUILDING CONTRACT to and in accordance with Section 7 of Article XXI of the SHIPBUILDING CONTRACT for the purpose of correcting provisions therein which have resulted from the increased cost of borrowing incurred by the BUYER to finance the acquisition of the Vessel; NOW, THEREFORE, in consideration of the foregoing, BUYER and SELLER agree as follows: 1. Section 7(a) of Article II of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth in Schedule 2 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) the amount set forth on Schedule 3 hereto calculated as of the calendar month in which the Date of Rejection occurs. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of eleven percent (11.0%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party." 2. Section 1(a)(ii) of Article III of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $11,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $14,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages." 3. Section 3(a) of Article XI of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of eleven percent (11.0%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof." 4. Schedule 2 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 2 attached hereto shall be attached as Schedule 2 to the SHIPBUILDING CONTRACT. 2 5. Schedule 3 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 3 attached hereto shall be attached as Schedule 3 to the SHIPBUILDING CONTRACT. 6. Schedule 1 to Exhibit A of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 1 to Exhibit A attached hereto shall be attached as Schedule 1 to Exhibit A to the SHIPBUILDING CONTRACT. 7. The parties hereto agree that the validity, enforcement and interpretation of this AMENDMENT and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 8. This AMENDMENT has been prepared in the English language, which shall control. This AMENDMENT has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. 9. This AMENDMENT may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be duly executed on the day and year first above written. NAVIGATOR GAS (IOM I-B) LIMITED By: /s/ Joseph Avantario --------------------------- Name: Joseph Avantario ------------------------- Title: Director ------------------------ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping --------------------------- Name: Shen Yiping ------------------------- Title: Vice President ------------------------ JIANGNAN SHIPYARD By: /s/ Gong Jingen --------------------------- Name: Gong Jingen ------------------------- Title: Vice President ------------------------ 4 Navigator Gas Transport PLC July 31, 1997 SCHEDULE 1 - REFUNDMENT GUARANTEE - HULL NO. 2246 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 11,841,998 11.8 01-Aug-98 11,937,252 12.8 01-Sep-98 12,032,506 13.8 01-Oct-98 12,127,761 14.8 01-Nov-98 12,223,015 15.8 01-Dec-98 12,318,269 16.8 01-Jan-99 12,413,523 17.8 01-Feb-99 12,508,777 18.8 01-Mar-99 12,604,031 19.8 01-Apr-99 19,557,586 20.8 01-May-99 19,709,992 21.8 01-Jun-99 19,862,399 22.8 01-Jul-99 20,014,806 23.8 01-Aug-99 24,739,412 24.8 01-Sep-99 24,929,921 25.8 01-Oct-99 25,120,429 26.8 01-Nov-99 25,310,937 27.8 01-Dec-99 25,501,446 28.8 01-Jan-2000 25,691,954 29.8 01-Feb-2000 25,882,462 30.8 01-Mar-2000 26,072,971 31.8 01-Apr-2000 26,263,479 32.8 01-May-2000 26,453,987 33.8 01-Jun-2000 26,644,496 34.8 01-Jul-2000 26,757,004 35.8 01-Aug-2000 26,877,512 36.8 01-Sep-2000 26,996,021 37.8 01-Oct-2000 27,112,529 38.8 01-Nov-2000 27,227,037 39.8 01-Dec-2000 27,339,546 40.8 01-Jan-2001 27,420,054 41.8 01-Feb-2001 27,507,562 42.8 01-Mar-2001 27,593,071 43.8 01-Apr-2001 27,675,579 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 2 - REFUNDMENT GUARANTEE - HULL NO. 2246 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 11,841,998 11.8 01-Aug-98 11,937,252 12.8 01-Sep-98 12,032,506 13.8 01-Oct-98 12,127,761 14.8 01-Nov-98 12,223,015 15.8 01-Dec-98 12,318,269 16.8 01-Jan-99 12,413,523 17.8 01-Feb-99 12,508,777 18.8 01-Mar-99 12,604,031 19.8 01-Apr-99 19,557,586 20.8 01-May-99 19,709,992 21.8 01-Jun-99 19,862,399 22.8 01-Jul-99 20,014,806 23.8 01-Aug-99 24,739,412 24.8 01-Sep-99 24,929,921 25.8 01-Oct-99 25,120,429 26.8 01-Nov-99 25,310,937 27.8 01-Dec-99 25,501,446 28.8 01-Jan-2000 25,691,954 29.8 01-Feb-2000 25,882,462 30.8 01-Mar-2000 26,072,971 31.8 01-Apr-2000 26,263,479 32.8 01-May-2000 26,453,987 33.8 01-Jun-2000 26,644,496 34.8 01-Jul-2000 26,757,004 35.8 01-Aug-2000 26,877,512 36.8 01-Sep-2000 26,996,021 37.8 01-Oct-2000 27,112,529 38.8 01-Nov-2000 27,227,037 39.8 01-Dec-2000 27,339,546 40.8 01-Jan-2001 27,420,054 41.8 01-Feb-2001 27,507,562 42.8 01-Mar-2001 27,593,071 43.8 01-Apr-2001 27,675,579 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 3 - PERFORMANCE BOND - HULL NO. 2246 MONTH DATE AMOUNT 0.0 Aug-97 1,829,659 0.8 Sep-97 4,513,787 1.8 Oct-97 4,730,972 2.8 Nov-97 4,965,925 3.8 Dec-97 5,179,198 4.8 Jan-98 5,419,179 5.8 Feb-98 5,682,838 6.8 Mar-98 5,888,364 7.8 Apr-98 6,130,079 8.8 May-98 6,351,120 9.8 Jun-98 6,589,701 10.8 Jul-98 6,777,094 11.8 Aug-98 7,003,405 12.8 Sep-98 7,236,253 13.8 Oct-98 7,452,039 14.8 Nov-98 7,682,302 15.8 Dec-98 7,895,308 16.8 Jan-99 8,133,779 17.8 Feb-99 8,393,362 18.8 Mar-99 8,606,941 19.8 Apr-99 8,798,724 20.8 May-99 9,007,537 21.8 Jun-99 9,227,864 22.8 Jul-99 9,450,835 23.8 Aug-99 9,646,393 24.8 Sep-99 10,026,826 25.8 Oct-99 10,419,142 26.8 Nov-991 6,062,777 27.8 Dec-99 6,245,665 28.8 Jan-2000 6,452,133 29.8 Feb-2000 6,668,220 30.8 Mar-2000 6,862,406 31.8 Apr-2000 7,071,513 32.8 May-2000 7,269,095 33.8 Jun-2000 7,554,455 34.8 Jul-2000 7,288,286 35.8 Aug-2000 7,025,566 36.8 Sep-2000 6,766,042 37.8 Oct-2000 6,494,266 38.8 Nov-2000 6,231,049 39.8 Dec-2000 5,985,003 40.8 Jan-2001 5,690,928 41.8 Feb-2001 5,410,168 42.8 Mar-2001 5,096,858 43.8 Apr-2001 4,488,458 Cambridge Partners, L.L.C. FINAL EX-10.8 31 AMEND. #1; AMEND. REST. SHIPBLDNG CONT. (IOM I-C) AMENDMENT No. 1 made as of this 1st day of August, 1997 (this "AMENDMENT") to the AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "SHIPBUILDING CONTRACT") dated as of June 26, 1997 among Navigator Gas (IOM I-C) Limited as assignee of Navigator Holdings PLC's rights, title and interest (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, as "SELLER") for construction of one (1) 22,000 Cubic Meters Liquified Ethylene Gas Carrier (Hull No. 2247). Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the SHIPBUILDING CONTRACT. WHEREAS, the BUYER and SELLER desire to amend certain terms and schedules of the SHIPBUILDING CONTRACT to and in accordance with Section 7 of Article XXI of the SHIPBUILDING CONTRACT for the purpose of correcting provisions therein which have resulted from the increased cost of borrowing incurred by the BUYER to finance the acquisition of the Vessel; NOW, THEREFORE, in consideration of the foregoing, BUYER and SELLER agree as follows: 1. Section 7(a) of Article II of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth in Schedule 2 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) the amount set forth on Schedule 3 hereto calculated as of the calendar month in which the Date of Rejection occurs. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of eleven percent (11.0%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party." 2. Section 1(a)(ii) of Article III of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $11,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $14,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages." 3. Section 3(a) of Article XI of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of eleven percent (11.0%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof." 4. Schedule 2 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 2 attached hereto shall be attached as Schedule 2 to the SHIPBUILDING CONTRACT. 2 5. Schedule 3 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 3 attached hereto shall be attached as Schedule 3 to the SHIPBUILDING CONTRACT. 6. Schedule 1 to Exhibit A of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 1 to Exhibit A attached hereto shall be attached as Schedule 1 to Exhibit A to the SHIPBUILDING CONTRACT. 7. The parties hereto agree that the validity, enforcement and interpretation of this AMENDMENT and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 8. This AMENDMENT has been prepared in the English language, which shall control. This AMENDMENT has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. 9. This AMENDMENT may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be duly executed on the day and year first above written. NAVIGATOR GAS (IOM I-C) LIMITED By: /s/ Richard Klapow --------------------------- Name: Richard Klapow ------------------------- Title: Director ------------------------ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping --------------------------- Name: Shen Yiping ------------------------- Title: Vice President ------------------------ JIANGNAN SHIPYARD By: /s/ Gong Jingen --------------------------- Name: Gong Jingen ------------------------- Title: Vice President ------------------------ 4 Navigator Gas Transport PLC July 31, 1997 SCHEDULE 1 - REFUNDMENT GUARANTEE - HULL NO. 2247 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 11,994,405 15.8 01-Dec-98 12,089,659 16.8 01-Jan-99 12,184,913 17.8 01-Feb-99 12,280,167 18.8 01-Mar-99 12,375,421 19.8 01-Apr-99 12,470,676 20.8 01-May-99 12,565,930 21.8 01-Jun-99 12,661,184 22.8 01-Jul-99 19,614,738 23.8 01-Aug-99 19,767,145 24.8 01-Sep-99 19,919,551 25.8 01-Oct-99 20,071,958 26.8 01-Nov-99 24,796,565 27.8 01-Dec-99 24,987,073 28.8 01-Jan-2000 25,177,581 29.8 01-Feb-2000 25,368,090 30.8 01-Mar-2000 25,558,598 31.8 01-Apr-2000 25,749,106 32.8 01-May-2000 25,939,615 33.8 01-Jun-2000 26,130,123 34.8 01-Jul-2000 26,320,631 35.8 01-Aug-2000 26,511,140 36.8 01-Sep-2000 26,701,648 37.8 01-Oct-2000 26,892,156 38.8 01-Nov-2000 27,014,665 39.8 01-Dec-2000 27,135,173 40.8 01-Jan-2001 27,253,681 41.8 01-Feb-2001 27,380,190 42.8 01-Mar-2001 27,504,698 43.8 01-Apr-2001 27,627,206 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 Schedule 2 - Refundment Guarantee - Hull No. 2247 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 11,994,405 15.8 01-Dec-98 12,089,659 16.8 01-Jan-99 12,184,913 17.8 01-Feb-99 12,280,167 18.8 01-Mar-99 12,375,421 19.8 01-Apr-99 12,470,676 20.8 01-May-99 12,565,930 21.8 01-Jun-99 12,661,184 22.8 01-Jul-99 19,614,738 23.8 01-Aug-99 19,767,145 24.8 01-Sep-99 19,919,551 25.8 01-Oct-99 20,071,958 26.8 01-Nov-99 24,796,565 27.8 01-Dec-99 24,987,073 28.8 01-Jan-2000 25,177,581 29.8 01-Feb-2000 25,368,090 30.8 01-Mar-2000 25,558,598 31.8 01-Apr-2000 25,749,106 32.8 01-May-2000 25,939,615 33.8 01-Jun-2000 26,130,123 34.8 01-Jul-2000 26,320,631 35.8 01-Aug-2000 26,511,140 36.8 01-Sep-2000 26,701,648 37.8 01-Oct-2000 26,892,156 38.8 01-Nov-2000 27,014,665 39.8 01-Dec-2000 27,135,173 40.8 01-Jan-2001 27,253,681 41.8 01-Feb-2001 27,380,190 42.8 01-Mar-2001 27,504,698 43.8 01-Apr-2001 27,627,206 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 3 - PERFORMANCE BOND - HULL NO. 2247 MONTH DATE AMOUNT 0.0 Aug-97 1,875,321 0.8 Sep-97 4,564,216 1.8 Oct-97 4,785,692 2.8 Nov-97 5,025,341 3.8 Dec-97 5,242,827 4.8 Jan-98 5,487,508 5.8 Feb-98 5,756,477 6.8 Mar-98 5,965,983 7.8 Apr-98 6,212,507 8.8 May-98 6,437,883 9.8 Jun-98 6,681,201 10.8 Jul-98 6,922,376 11.8 Aug-98 7,171,837 12.8 Sep-98 7,429,093 13.8 Oct-98 7,666,005 14.8 Nov-98 7,869,743 15.8 Dec-98 8,086,297 16.8 Jan-99 8,328,896 17.8 Feb-99 8,593,270 18.8 Mar-99 8,810,193 19.8 Apr-99 9,056,656 20.8 May-99 9,286,242 21.8 Jun-99 9,530,147 22.8 Jul-99 9,727,082 23.8 Aug-99 9,961,468 24.8 Sep-99 10,200,885 25.8 Oct-99 10,427,174 26.8 Nov-99 10,630,978 27.8 Dec-99 10,843,767 28.8 Jan-2000 11,238,067 29.8 Feb-2000 11,663,385 30.8 Mar-2000 7,310,812 31.8 Apr-2000 7,523,942 32.8 May-2000 7,725,016 33.8 Jun-2000 7,936,319 34.8 Jul-2000 8,154,589 35.8 Aug-2000 8,377,628 36.8 Sep-2000 8,604,883 37.8 Oct-2000 8,889,138 38.8 Nov-2000 8,634,172 39.8 Dec-2000 8,366,762 40.8 Jan-2001 8,111,737 41.8 Feb-2001 7,869,759 42.8 Mar-2001 7,595,905 43.8 Apr-2001 7,048,345 Cambridge Partners, L.L.C. FINAL EX-10.9 32 AMEND. #1; AMEND. REST. SHIPBLDNG CONT. (IOM I-D) AMENDMENT No. 1 made as of this 1st day of August, 1997 (this "AMENDMENT") to the AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "SHIPBUILDING CONTRACT") dated as of June 26, 1997 among Navigator Gas (IOM I-D) Limited as assignee of Navigator Holdings PLC's rights, title and interest (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, as "SELLER") for construction of one (1) 22,000 Cubic Meters Liquified Ethylene Gas Carrier (Hull No. 2248). Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the SHIPBUILDING CONTRACT. WHEREAS, the BUYER and SELLER desire to amend certain terms and schedules of the SHIPBUILDING CONTRACT to and in accordance with Section 7 of Article XXI of the SHIPBUILDING CONTRACT for the purpose of correcting provisions therein which have resulted from the increased cost of borrowing incurred by the BUYER to finance the acquisition of the Vessel; NOW, THEREFORE, in consideration of the foregoing, BUYER and SELLER agree as follows: 1. Section 7(a) of Article II of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth in Schedule 2 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) the amount set forth on Schedule 3 hereto calculated as of the calendar month in which the Date of Rejection occurs. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of eleven percent (11.0%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party." 2. Section 1(a)(ii) of Article III of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $11,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $14,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages." 3. Section 3(a) of Article XI of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of eleven percent (11.0%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof." 4. Schedule 2 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 2 attached hereto shall be attached as Schedule 2 to the SHIPBUILDING CONTRACT. 2 5. Schedule 3 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 3 attached hereto shall be attached as Schedule 3 to the SHIPBUILDING CONTRACT. 6. Schedule 1 to Exhibit A of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 1 to Exhibit A attached hereto shall be attached as Schedule 1 to Exhibit A to the SHIPBUILDING CONTRACT. 7. The parties hereto agree that the validity, enforcement and interpretation of this AMENDMENT and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 8. This AMENDMENT has been prepared in the English language, which shall control. This AMENDMENT has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. 9. This AMENDMENT may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be duly executed on the day and year first above written. NAVIGATOR GAS (IOM I-D) LIMITED By: /s/ Richard Klapow --------------------------- Name: Richard Klapow ------------------------- Title: Director ------------------------ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping --------------------------- Name: Shen Yiping ------------------------- Title: Vice President ------------------------ JIANGNAN SHIPYARD By: /s/ Gong Jingen --------------------------- Name: Gong Jingen ------------------------- Title: Vice President ------------------------ 4 Navigator Gas Transport PLC July 31, 1997 SCHEDULE 1 - REFUNDMENT GUARANTEE- HULL NO. 2248 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 5,136,105 15.8 01-Dec-98 5,174,206 16.8 01-Jan-99 5,212,308 17.8 01-Feb-99 12,108,710 18.8 01-Mar-99 12,203,964 19.8 01-Apr-99 12,299,218 20.8 01-May-99 12,394,472 21.8 01-Jun-99 12,489,726 22.8 01-Jul-99 12,584,981 23.8 01-Aug-99 12,680,235 24.8 01-Sep-99 12,775,489 25.8 01-Oct-99 19,729,043 26.8 01-Nov-99 19,881,450 27.8 01-Dec-99 20,033,856 28.8 01-Jan-2000 20,186,263 29.8 01-Feb-2000 20,338,670 30.8 01-Mar-2000 25,063,276 31.8 01-Apr-2000 25,253,785 32.8 01-May-2000 25,444,293 33.8 01-Jun-2000 25,634,801 34.8 01-Jul-2000 25,825,310 35.8 01-Aug-2000 26,015,818 36.8 01-Sep-2000 26,206,326 37.8 01-Oct-2000 26,396,835 38.8 01-Nov-2000 26,587,343 39.8 01-Dec-2000 26,777,851 40.8 01-Jan-2001 26,968,360 41.8 01-Feb-2001 27,099,868 42.8 01-Mar-2001 27,229,376 43.8 01-Apr-2001 27,357,885 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 2 - REFUNDMENT GUARANTEE - HULL NO. 2248 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 5,136,105 15.8 01-Dec-98 5,174,206 16.8 01-Jan-99 5,212,308 17.8 01-Feb-99 12,108,710 18.8 01-Mar-99 12,203,964 19.8 01-Apr-99 12,299,218 20.8 01-May-99 12,394,472 21.8 01-Jun-99 12,489,726 22.8 01-Jul-99 12,584,981 23.8 01-Aug-99 12,680,235 24.8 01-Sep-99 12,775,489 25.8 01-Oct-99 19,729,043 26.8 01-Nov-99 19,881,450 27.8 01-Dec-99 20,033,856 28.8 01-Jan-2000 20,186,263 29.8 01-Feb-2000 20,338,670 30.8 01-Mar-2000 25,063,276 31.8 01-Apr-2000 25,253,785 32.8 01-May-2000 25,444,293 33.8 01-Jun-2000 25,634,801 34.8 01-Jul-2000 25,825,310 35.8 01-Aug-2000 26,015,818 36.8 01-Sep-2000 26,206,326 37.8 01-Oct-2000 26,396,835 38.8 01-Nov-2000 26,587,343 39.8 01-Dec-2000 26,777,851 40.8 01-Jan-2001 26,968,360 41.8 01-Feb-2001 27,099,868 42.8 01-Mar-2001 27,229,376 43.8 01-Apr-2001 27,357,885 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 3 - PERFORMANCE BOND - HULL NO. 2248 MONTH DATE AMOUNT 0.0 Aug-97 1,907,461 0.8 Sep-97 4,599,477 1.8 Oct-97 4,823,738 2.8 Nov-97 5,066,457 3.8 Dec-97 5,286,673 4.8 Jan-98 5,534,421 5.8 Feb-98 5,806,889 6.8 Mar-98 6,018,952 7.8 Apr-98 6,268,619 8.8 May-98 6,496,804 9.8 Jun-98 6,743,214 10.8 Jul-98 6,987,403 11.8 Aug-98 7,240,007 12.8 Sep-98 7,500,531 13.8 Oct-98 7,740,385 14.8 Nov-98 7,997,777 15.8 Dec-98 8,234,263 16.8 Jan-99 8,498,245 17.8 Feb-99 8,735,114 18.8 Mar-99 8,954,096 19.8 Apr-99 9,203,262 20.8 May-99 9,435,184 21.8 Jun-99 9,681,736 22.8 Jul-99 9,930,353 23.8 Aug-99 10,185,747 24.8 Sep-99 10,447,390 25.8 Oct-99 10,643,575 26.8 Nov-99 10,883,123 27.8 Dec-99 11,108,983 28.8 Jan-2000 11,357,079 29.8 Feb-2000 11,615,729 30.8 Mar-2000 11,817,585 31.8 Apr-2000 12,215,867 32.8 May-2000 12,625,964 33.8 Jun-2001 8,287,439 34.8 Jul-2000 8,507,516 35.8 Aug-2000 8,732,527 36.8 Sep-2000 8,961,909 37.8 Oct-2000 9,179,881 38.8 Nov-2000 9,407,534 39.8 Dec-2000 9,623,647 40.8 Jan-2001 9,922,590 41.8 Feb-2001 9,686,661 42.8 Mar-2001 9,418,639 43.8 Apr-2001 8,871,079 Cambridge Partners, L.L.C. FINAL EX-10.10 33 AMEND. #1; AMEND. REST. SHIPBLDNG CONT. (IOM I-E) AMENDMENT No. 1 made as of this 1st day of August, 1997 (this "AMENDMENT") to the AMENDED AND RESTATED SHIPBUILDING CONTRACT (the "SHIPBUILDING CONTRACT") dated as of June 26, 1997 among Navigator Gas (IOM I-E) Limited as assignee of Navigator Holdings PLC's rights, title and interest (the "BUYER") and China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, as "SELLER") for construction of one (1) 22,000 Cubic Meters Liquified Ethylene Gas Carrier (Hull No. 2249). Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the SHIPBUILDING CONTRACT. WHEREAS, the BUYER and SELLER desire to amend certain terms and schedules of the SHIPBUILDING CONTRACT to and in accordance with Section 7 of Article XXI of the SHIPBUILDING CONTRACT for the purpose of correcting provisions therein which have resulted from the increased cost of borrowing incurred by the BUYER to finance the acquisition of the Vessel; NOW, THEREFORE, in consideration of the foregoing, BUYER and SELLER agree as follows: 1. Section 7(a) of Article II of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) All payments made by the BUYER hereunder in United States Dollars and prior to Delivery and BUYER's acceptance of the VESSEL shall be in the nature of installments to the SELLER. In the event that, the VESSEL is rejected by the BUYER, or this Contract is canceled or terminated by the BUYER, all in accordance with the terms of this Contract, or if the SELLER should default in Delivery of the VESSEL or is guilty of breach of this Contract justifying a rescission thereof by the BUYER then, and in any such event, the SELLER shall refund to the BUYER an amount equal to the sum of the following: (i) the amounts set forth in Schedule 2 hereto calculated as of the first day of the calendar month in which the Date of Rejection occurs, (ii) an amount equal to the product of (x) the difference between (1) the amount set forth on Schedule 2 hereto calculated as of the first day of the calendar month immediately succeeding the month in which the Date of Rejection occurs and (2) the amount set forth on Schedule 2 hereto as of the first day of the month in which the Date of Rejection occurs and (y) a fraction the numerator of which is the numeric day of the month of the Date of Rejection and the denominator of which is 30, and (iii) the amount set forth on Schedule 3 hereto calculated as of the calendar month in which the Date of Rejection occurs. If the amount as calculated above is not paid on the Date of Rejection there shall be added to such amount interest at the rate of eleven percent (11.0%) per annum from and including the Date of Rejection to but not including the date such amount is paid. Such refunds by the SELLER to the BUYER shall forthwith discharge all obligations, duties, and liabilities of each of the parties hereto to the other under this Contract. Any and all refunds made to the BUYER under this Article II, Section 7 shall be made in United States Dollars. Throughout this Contract, whenever interest is due on any amounts to be paid or refunded by either party, said interest shall be calculated as simple interest, based on the actual number of days divided by 360. For purposes of this Section 7(a) Date of Rejection means the date on which written notice of rejection, cancellation or rescission is delivered by BUYER to SELLER. All refunds made by the SELLER to the BUYER under this contract shall be paid in United States Dollars by telegraphic transfer to the BUYER's account or its assignee's account as set forth in a written notice to the SELLER from such party." 2. Section 1(a)(ii) of Article III of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(ii) If the Delivery is not made on the Original Delivery Date (subject to a Permissible Delay as defined below), the SELLER shall pay the BUYER, as liquidated damages (not as penalty), the amount of $11,000 for each calendar day for the first ninety (90) calendar days of delay beyond the Extended Delivery Date (as hereinafter defined) and the amount of $14,500 for each calendar day of delay thereafter up to and including the 210th day from the Original Delivery Date ("Original Delay Period"). Liquidated damages calculated with respect to the Original Delay Period shall be recovered by the BUYER through a reduction in the Fifth Installment payable by the BUYER to the SELLER in an amount equal to such Liquidated Damages." 3. Section 3(a) of Article XI of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and is hereby amended to read as follows: "(a) If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such installment at the rate of eleven percent (11.0%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Section 1 (c) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the VESSEL is tendered for delivery by the SELLER, as provided in Article VII Section 6 hereof." 4. Schedule 2 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 2 attached hereto shall be attached as Schedule 2 to the SHIPBUILDING CONTRACT. 2 5. Schedule 3 of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 3 attached hereto shall be attached as Schedule 3 to the SHIPBUILDING CONTRACT. 6. Schedule 1 to Exhibit A of the SHIPBUILDING CONTRACT is hereby deleted in its entirety and Schedule 1 to Exhibit A attached hereto shall be attached as Schedule 1 to Exhibit A to the SHIPBUILDING CONTRACT. 7. The parties hereto agree that the validity, enforcement and interpretation of this AMENDMENT and of each Article and part hereof be governed by and interpreted in accordance with the Laws of England. 8. This AMENDMENT has been prepared in the English language, which shall control. This AMENDMENT has been signed in triplicate, one counterpart being retained by the BUILDER, one by CSTC and one by the BUYER. 9. This AMENDMENT may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be duly executed on the day and year first above written. NAVIGATOR GAS (IOM I-E) LIMITED By: /s/ Richard Klapow ---------------------------- Name: Richard Klapow ------------------------- Title: Director ------------------------ CHINA SHIPBUILDING TRADING COMPANY, LIMITED By: /s/ Shen Yiping --------------------------- Name: Shen Yiping ------------------------- Title: Vice President ------------------------ JIANGNAN SHIPYARD By: /s/ Gong Jingen --------------------------- Name: Gong Jingen ------------------------- Title: Vice President ------------------------ 4 Navigator Gas Transport PLC July 31, 1997 SCHEDULE 1 - REFUNDMENT GUARANTEE - HULL NO. 2249 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 5,136,105 15.8 01-Dec-98 5,174,206 16.8 01-Jan-99 5,212,308 17.8 01-Feb-99 5,250,410 18.8 01-Mar-99 5,288,511 19.8 01-Apr-99 5,326,613 20.8 01-May-99 5,364,715 21.8 01-Jun-99 12,261,116 22.8 01-Jul-99 12,356,371 23.8 01-Aug-99 12,451,625 24.8 01-Sep-99 12,546,879 25.8 01-Oct-99 12,642,133 26.8 01-Nov-99 12,737,387 27.8 01-Dec-99 12,832,641 28.8 01-Jan-2000 12,927,896 29.8 01-Feb-2000 19,881,450 30.8 01-Mar-2000 20,033,856 31.8 01-Apr-2000 20,186,263 32.8 01-May-2000 20,338,670 33.8 01-Jun-2000 25,063,276 34.8 01-Jul-2000 25,253,785 35.8 01-Aug-2000 25,444,293 36.8 01-Sep-2000 25,634,801 37.8 01-Oct-2000 25,825,310 38.8 01-Nov-2000 26,015,818 39.8 01-Dec-2000 26,206,326 40.8 01-Jan-2001 26,396,835 41.8 01-Feb-2001 26,587,343 42.8 01-Mar-2001 26,777,851 43.8 01-Apr-2001 26,968,360 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 2 - REFUNDMENT GUARANTEE - HULL NO. 2249 MONTH DATE AMOUNT 0.0 07-Aug-97 4,572,200 0.8 01-Sep-97 4,602,681 1.8 01-Oct-97 4,640,783 2.8 01-Nov-97 4,678,885 3.8 01-Dec-97 4,716,986 4.8 01-Jan-98 4,755,088 5.8 01-Feb-98 4,793,190 6.8 01-Mar-98 4,831,291 7.8 01-Apr-98 4,869,393 8.8 01-May-98 4,907,495 9.8 01-Jun-98 4,945,596 10.8 01-Jul-98 4,983,698 11.8 01-Aug-98 5,021,800 12.8 01-Sep-98 5,059,901 13.8 01-Oct-98 5,098,003 14.8 01-Nov-98 5,136,105 15.8 01-Dec-98 5,174,206 16.8 01-Jan-99 5,212,308 17.8 01-Feb-99 5,250,410 18.8 01-Mar-99 5,288,511 19.8 01-Apr-99 5,326,613 20.8 01-May-99 5,364,715 21.8 01-Jun-99 12,261,116 22.8 01-Jul-99 12,356,371 23.8 01-Aug-99 12,451,625 24.8 01-Sep-99 12,546,879 25.8 01-Oct-99 12,642,133 26.8 01-Nov-99 12,737,387 27.8 01-Dec-99 12,832,641 28.8 01-Jan-2000 12,927,896 29.8 01-Feb-2000 19,881,450 30.8 01-Mar-2000 20,033,856 31.8 01-Apr-2000 20,186,263 32.8 01-May-2000 20,338,670 33.8 01-Jun-2000 25,063,276 34.8 01-Jul-2000 25,253,785 35.8 01-Aug-2000 25,444,293 36.8 01-Sep-2000| 25,634,801 37.8 01-Oct-2000 25,825,310 38.8 01-Nov-2000 26,015,818 39.8 01-Dec-2000 26,206,326 40.8 01-Jan-2001 26,396,835 41.8 01-Feb-2001 26,587,343 42.8 01-Mar-2001 26,777,851 43.8 01-Apr-2001 26,968,360 Cambridge Partners, L.L.C. FINAL Navigator Gas Transport PLC July 31, 1997 SCHEDULE 3 - PERFORMANCE BOND - HULL NO. 2249 MONTH DATE AMOUNT 0.0 Aug-97 1,944,896 0.8 Sep-97 4,640,114 1.8 Oct-97 4,867,180 2.8 Nov-97 5,113,041 3.8 Dec-97 5,335,997 4.8 Jan-98 5,586,870 5.8 Feb-98 5,862,973 6.8 Mar-98 6,077,560 7.8 Apr-98 6,330,442 8.8 May-98 6,561,446 9.8 Jun-98 6,811,012 10.8 Jul-98 7,058,244 11.8 Aug-98 7,314,047 12.8 Sep-98 7,577,918 13.8 Oct-98 7,820,732 14.8 Nov-98 8,081,411 15.8 Dec-98 8,320,795 16.8 Jan-99 8,588,112 17.8 Feb-99 8,881,814 18.8 Mar-99 9,118,022 19.8 Apr-99 9,390,022 20.8 May-99 9,641,573 21.8 Jun-99 9,860,039 22.8 Jul-99 10,111,009 23.8 Aug-99 10,368,930 24.8 Sep-99 10,633,266 25.8 Oct-99 10,880,858 26.8 Nov-99 11,142,656 27.8 Dec-99 11,387,519 28.8 Jan-2000 11,658,649 29.8 Feb-2000 11,891,381 30.8 Mar-2000 12,129,743 31.8 Apr-2000 12,385,117 32.8 May-2000 12,627,351 33.8 Jun-2000 12,847,110 34.8 Jul-2000 13,253,536 35.8 Aug-2000 13,686,971 36.8 Sep-2000 13,943,251 37.8 Oct-2000 14,189,496 38.8 Nov-2000 14,444,255 39.8 Dec-2000 14,688,865 40.8 Jan-2001 14,957,062 41.8 Feb-2001 15,236,859 42.8 Mar-2001 15,491,380 43.8 Apr-2001 15,491,380 Cambridge Partners, L.L.C. FINAL EX-10.11 34 MANAGEMENT AGREEMENT ============================================================================== Navigator Gas Management Limited, as Manager Navigator Gas (IOM I-A) Limited Navigator Gas (IOM I-B) Limited Navigator Gas (IOM I-C) Limited Navigator Gas (IOM I-D) Limited Navigator Gas (IOM I-E) Limited, as Owners Navigator Gas Transport PLC, as Issuer Navigator Holdings PLC, ------------------------------------------- MANAGEMENT AGREEMENT ------------------------------------------- ============================================================================== This Management Agreement, dated as of August 1, 1997 (the "Agreement"), among Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited (each, an "Owner" and, collectively, the "Owners"), Navigator Gas Transport PLC (the "Issuer"), as Issuer, Navigator Holdings PLC ("Holdings") and Navigator Gas Management Limited (the "Manager"). PRELIMINARY STATEMENT The Issuer is issuing two series of mortgage notes pursuant to two separate indentures. One series of notes (the "First Priority Notes") will be issued pursuant to an Indenture (the "First Priority Indenture"), dated as of August 1, 1997, among the Issuer, the Owners and United States Trust Company of New York, as trustee (the "First Priority Trustee"). The other series of notes (the "Second Priority Notes" and, collectively with the First Priority Notes, the "Notes") will be issued pursuant to an Indenture (the "Second Priority Indenture" and, collectively with the First Priority Indenture, the "Indentures"), dated as of August 1, 1997, among the Issuer, the Owners and The Chase Manhattan Bank, as trustee (the "Second Priority Trustee" and, collectively with the First Priority Trustee, the "Trustees"). Holdings is issuing warrants (the "Warrants") pursuant to a Warrant Agreement (the "Warrant Agreement"), dated as of August 1, 1997. As collateral for the Notes and to provide working capital for the Owners, Credit Suisse First Boston acting through its London branch, as funding bank and administrating bank for the participating banks party to the Letter of Credit Reimbursement Agreement (as defined below) (the "Letter of Credit Issuer") is issuing a letter of credit (the "Letter of Credit") pursuant to the Letter of Credit Reimbursement Agreement. As further collateral for the Notes and the obligations under the Letter of Credit Reimbursement Agreement, the Trustees, the Letter of Credit Issuer, Holdings, the Issuer and the Owners have entered into a Collateral Agency and Intercreditor Agreement (the "Intercreditor Agreement"), dated as of August 1, 1997. The Issuer's obligation to reimburse the Letter of Credit Issuer for draws made under the Letter of Credit, the Owners guaranty thereof and Holdings pledge in respect thereto is set forth in the Letter of Credit Reimbursement Agreement and Guaranty (the "Letter of Credit Reimbursement Agreement"), dated as of August 1, among the Letter of Credit Issuer, the participating banks from time to time party thereto, the Issuer, Holdings and the Owners. The net proceeds of the offering of the Notes and the Warrants are being loaned to the Owners to finance the construction of five 22,000 cubic meter semi-refrigerated ethylene-capable gas carriers (each, a "Vessel" and, collectively, the "Vessels"). The Issuer, the Owners and Holdings desire to engage the Manager to provide management services for the Issuer, the Owners and Holdings and for the Vessels. The Manager is willing to provide such services to the Issuer, the Owners, Holdings and the Vessels pursuant to this Agreement upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Owners, Holdings and the Manager hereby agree as follows: ARTICLE I DEFINITIONS Capitalized terms shall have the meanings assigned to such terms in the Intercreditor Agreement. ARTICLE II ADMINISTRATIVE MANAGEMENT Section 2.01 APPOINTMENT OF MANAGER AS MANAGER OF ADMINISTRATIVE OBLIGATIONS. The Issuer, the Owners and Holdings hereby appoint the Manager and the Manager hereby accepts its appointment as manager of the administrative and corporate obligations of the Issuer, the Owners and Holdings. Section 2.02 ADMINISTRATIVE RESPONSIBILITIES OF MANAGER. The Manager hereby covenants and agrees with the Issuer, the Owners and Holdings that the Manager shall or shall cause its designee to do the following: (i) maintain the respective books and records of the Issuer, the Owners and Holdings; (ii) prepare and file the respective annual financial statements and annual tax returns of the Issuer, the Owners and Holdings, if required; (iii) provide all office staff and accommodations for the Issuer, the Owners and Holdings; (iv) prepare and submit invoices to each Owner or to each Owner's assignee for the cost and expense of (A) recording the related Mortgage under the laws of the Registration Jurisdiction, (B) the annual corporate fees of such Owner, (C) the annual fees of the officers and directors of such Owner, (D) the annual premiums for directors and officers liability insurance for the directors and officers of such Owner, if any, and (D) any other expenses properly incurred on behalf of such Owner; (v) prepare and submit invoices to the Issuer or to the Issuer's assignee for the cost and expense of (A) the annual corporate and tax exemption fees of the Issuer, (B) the annual fees of the officers and directors of the Issuer, (C) the annual premiums for directors and officers liability insurance for the directors and officers of the Issuer, if any, and (D) any other expenses properly incurred on behalf of the Issuer; (vi) prepare and submit invoices to Holdings or to Holdings's assignee for the cost and expense of (A) the annual corporate fees of Holdings, (B) the annual fees of the officers and directors of Holdings, (C) the annual premiums for directors and officers liability insurance for the directors and officers of Holdings, if any, and (E) any other expenses properly incurred on behalf of Holdings; - 2 - (vii) on or prior to the first Business Day of each month commencing after the Delivery Date of any Vessel, determine and certify to the Trustees, CSFB and the Collateral Agent the Monthly Operating Deposit; (viii) on and after any Business Day commencing 90 days prior to the Delivery Date of any Vessel (as reasonably determined by the Issuer and evidenced by an Officer's Certificate), determine and certify to the Trustees and the Collateral Agent whether a Working Capital Draw is to be made under the Letter of Credit; (ix) provide written notice to the Trustees, CSFB and the Collateral Agent at least three (3) Business Days prior to each Vessel Purchase Installment Date for each Vessel; (x) prepare and file any and all information, documents and reports required in order to comply with Section 13 or 15(d) of the Exchange Act; (xi) pursuant to Section 7.08 of the First Priority Indenture, appoint a First Priority Trustee in the manner described in Section 7.08 of the First Priority Indenture so that there shall at all times be an indenture trustee under the First Priority Indenture; (xii) pursuant to Section 7.08 of the Second Priority Indenture, appoint a Second Priority Trustee in the manner described in Section 7.08 of the Second Priority Indenture so that there shall at all times be an indenture trustee under the Second Priority Indenture; (xiii) pursuant to Section 6.5 of the Intercreditor Agreement, appoint a Collateral Agent in the manner described in Section 6.5 of the Intercreditor Agreement so that there shall at all times be a collateral agent under the Intercreditor Agreement; (xiv) pursuant to Sections 4.02 and 4.12 of the First Priority Indenture and Sections 4.02 and 4.12 of the Second Priority Indenture, file with the First Priority Trustee and the Second Priority Trustee, respectively, the information, documents and reports described therein; (xv) pursuant to Sections 4.18, 8.02, 11.02, 11.03 and 11.12 of the First Priority Indenture, Sections 4.18, 8.02, 11.02, 11.03 and 11.12 of the Second Priority Indenture and Sections 4.2, 4.4 and 5.12 of the Intercreditor Agreement, file with the First Priority Trustee, the Second Priority Trustee and the Collateral Agent, respectively, the Officer's Certificates and Opinions of Counsel described therein; (xvi) pursuant to Sections 3.01 and 6.01 of the First Priority Indenture, Sections 3.01 and 6.01 of the Second Priority Indenture and Sections 3.1, 3.2 and 4.2 of the Intercreditor Agreement, provide the First Priority Trustee, the Second Priority Trustee and the Collateral Agent, respectively, with the notices, instructions and opinions described therein; and (xvii) in the event of a casualty of a Vessel, certify to the Trustees and the Collateral Agent as to whether repairs are necessary or desirable for the use, operation or maintenance of such Vessel. - 3 - ARTICLE III ADMINISTRATIVE MANAGEMENT OF THE VESSELS Section 3.01 APPOINTMENT OF MANAGER AS MANAGER OF THE VESSELS. Each Owner hereby appoints the Manager and the Manager hereby accepts its appointment to act as administrative manager of such Owner's Vessel from and after the date hereof to the date the Vessel is disposed of by the Owner or the Manager is removed pursuant to Section 4.02. Section 3.02 RESPONSIBILITIES OF THE MANAGER. From and after the Issue Date, the Manager hereby covenants and agrees with each Owner that: (a) The Manager shall after the Delivery Date of a Vessel (i) maintain and preserve the related Vessel and her equipment in good condition, running order and repair, so that the Vessel shall be, insofar as due diligence can make her so, tight, staunch, strong and well and sufficiently tackled, appareled, furnished, equipped and in every respect seaworthy and in good operating condition, (ii) keep the Vessel in such conditions will entitle her to be classed +100 A5 E "Liquified Gas Carrier Type 2G" +MC E, AUT INERT from Germanischer Lloyd, an independent vessel classification society. (b) The Manager shall for the account of each Owner attend to, supervise and perform all matters and details involving the operation and management of such Owner's Vessel including but not limited to: (i) unless instructed to the contrary, in case of general or particular average, the appointment of an adjuster and assistance in preparing the average account, the taking of proper security for the cargo's and freight's proportion of average, and in all ways reasonably possible the protection of the interest of such Vessel, with such fees as may be allowed by underwriters to be retained by the Manager as compensation therefor; (ii) in case of particular average, the settlement of claims in conjunction with the Owner's protection and indemnity insurance and the making of disbursements accordingly for such Owner's account, and the doing of such other acts and the execution and delivery of such other documents as in the Manager's judgment may be necessary or appropriate for the conduct of the agency and operation of such Vessel; (iii) the attendance to all matters involving such Vessel's crew, including, but not limited to, the following: (A) the procuring and enlisting for such Vessel, as required by applicable law, competent, reliable and duly licensed personnel (hereinafter referred to as "crew members"), and all replacements therefor as from time to time may be required in full accordance with International Trade Federation certification; - 4 - (B) the arranging for and procuring of all transportation, board and lodging for the crew members as and when required; (C) the keeping and maintaining of full and complete records of any labor agreements which may be entered into between Manager and the crew members, in accordance with existing or future collective bargaining agreements between employer organizations and unions; (D) the settlement of all wages with the crew members during the course of and upon termination of their employment; (E) the handling of all details and settlement of any and all claims of the crew members including, but not limited to, those arising out of accidents, sickness, or death, loss of personal effects, disputes under articles or contracts of enlistment, policies of insurance, pension plans and fines; (F) the keeping and maintaining of all administrative and financial records relating to the crew members as required by law, labor agreements or the Owner, and rendering to the Owner any and all reports when, as and in such form as requested by the Owner; and (G) the performance of any other function in connection with the crew members as may be required by the Owner; and (H) ensuring the Vessel is operated in such a manner so as not to prejudice the owners Isle of Man tax exempt status. (iv) the approval, settlement and payment for the Owner's account of all charges incurred in connection with the operation of the Vessel, but limited to, the cost of the items listed in sub-paragraphs (A) through (G) of paragraph (iii) hereof, repair charges, any amounts due to any government agency with respect to the crew, and all contributions to welfare or similar plans required by the collective bargaining agreements relating to or covering the Vessel's crew and to which Manager is a party; (v) the prompt reporting to the Owner of the Vessel's movement, position at sea, arrival and departure dates, casualties and damages received or caused by the Vessel in such form and on such terms as may be requested by the Owner; (vi) keeping the Owner informed about the planned drydocking and/or repairs effecting the Vessel's trading, supplying the Owner current copies of the repair lists, damage reports and reports of inspection of the Vessel; and (vii) arranging for the supervising drydocking, surveys, repairs, renewals, alterations, betterments and upkeep of the Vessel, obtaining details, specifications and estimates of costs of repairs and renewals, at any time carrying out running - 5 - or emergency repairs necessary for the seaworthiness or economical operation of the Vessel. (c) The Manager, for the account of each Owner, shall procure and retain in full force and effect all customary insurance pertaining to such Owner's Vessel as instructed by the Owner and as required by the related Mortgage and all such policies and indemnity, hull and machinery, war risk and pollution covering the Vessel, shall (i) include Manager as an assured as its interests may appear (ii) contain provisions waiving the insurer's right of subrogation against Manager (iii) cover the full liability of Manager to the extent of the cover (iv) provide there shall be no liability for Manager for the payment of premiums, commissions, club calls, assessments, deductibles or advances and (v) contain a provision requiring the insurer to provide thirty (30) days prior notice before any material change in or cancellation of the insurance becomes effective. (d) the Manager shall review and approve all charters and contacts of affreightment for the Vessels. (e) The Manager shall monitor and enforce the performance by GEBAB of the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement (the "GEBAB Agreements"). In no event shall the Manager be responsible for the costs and expenses incurred in connection with the enforcement of the GEBAB Agreements. (f) The Manager shall provide the services of such officers and other staff of suitable skills and experience from among the members of the staff of the Manager as may be necessary in order properly to perform the services referred to herein. (g) The Manager shall provide office equipment and the use of accounting or computing equipment when and to the extent required and the necessary executive, clerical and secretarial personnel for the performance of the services herein set out. (h) The Manager shall keep all books and records of things done and transactions performed on behalf of each Owner. Section 3.03 MANAGER TO ACT AS ATTORNEY-IN-FACT OF OWNERS. Each Owner hereby constitutes the Manager, and its successors and assigns, its true and lawful attorney, irrevocably, with full power in its own name, in the name of its agents or nominees or in the name of such Owner or otherwise, to execute any and all documents, instruments, agreements and applications for and on behalf of such Owner relating to or in connection with (i) the registration of such Owner's Vessel under the laws of the Registration Jurisdiction, (ii) the monitoring and enforcement of the terms and conditions of the GEBAB Agreements and (iii) the performance by such Owner of its obligations under the GEBAB Agreements as the Manager may deem to be necessary or advisable. Section 3.04 MANAGER TO ACT AS OWNERS' REMARKETING AGENT. Each Owner hereby appoints and the Manager accepts appointment as such Owner's exclusive marketing - 6 - agent with respect to the sale and/or charter of such Owner's Vessel on the terms and conditions set forth in this Agreement. ARTICLE IV GENERAL PROVISIONS REGARDING THE MANAGER Section 4.01 NO DUTIES EXCEPT AS SPECIFIED IN AGREEMENT OR INSTRUCTIONS. (a) The Manager shall not have any duty or obligation to manage, make any payment in respect of, register, record, sell, repair, advance any amounts in connection with the repair of, dispose of or otherwise deal with the Vessels or any part thereof, or otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Manager is a party, except as expressly provided by the terms of this Agreement. No implied duties or obligations shall be read into this Agreement against the Manager. (b) Under no circumstances shall the Manager be liable for (i) the Issuer's, the Owners' or Holdings' obligations under the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, the other Security Agreements or the indebtedness evidenced by the Notes or (ii) the validity or sufficiency of the Indentures, the Letter of Credit Reimbursement Agreement, the Intercreditor Agreement, or any of the other Security Agreements. The Manager shall not assume any liability, duty or obligation to any Person, other than as expressly provided for herein. (c) The Manager shall not have any duty to conduct any affirmative investigation, other than as specifically set forth in this Agreement, as to GEBAB's performance of its obligations under the Technical Supervision Agreement, the Technical Management Agreement or the Commercial Management Agreement or the condition of the Vessels. (d) No provision of this Agreement shall be construed to relieve the Manager from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct. The duties and obligations of the Manager shall be determined solely by the express provisions of this Agreement and the Manager shall not be liable except for the performance of its duties and obligations as specifically set forth in this Agreement. No implied covenants or obligations shall be read into this Agreement against the Manager and, in the absence of bad faith on the part of the Manager, the Manager may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Manager and conforming to the requirements of this Agreement. (e) The Manager may consult with counsel and any advice or opinion of counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel. (f) The right of the Manager to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Manager shall not be answerable for - 7 - other than its gross negligence or willful misconduct in the performance of such act, and the delivery hereunder to the Manager of any notice, document or report shall not give rise to an affirmative obligation on the part of the Manager to take any action with respect thereto, except as otherwise expressly provided herein. (g) The Manager has the right to appoint attorneys, accountants and other agents in connection with the Manager's obligations under the Agreement. Section 4.02 RESIGNATION BY OR REMOVAL OF MANAGER. The Manager may resign its duties at any time upon 30 days prior written notice to the Issuer, the Owners, Holdings, the Trustees, CSFB and the Collateral Agent. The Manager may be removed by the Issuer, an Owner or Holdings with or without cause upon 30 days prior written notice to the Manager, the Trustees and the Collateral Agent; PROVIDED, HOWEVER, if the Issuer, an Owner or Holdings removes the Manager without cause, the Manager shall be entitled to receive the compensation described in Section 4.04(a) hereof through the date which is 90 days after the receipt of such notice. In the event of the resignation or removal of the Manager, a successor manager shall be appointed by the Owners. The Owners shall give the Collateral Agent notice of the successor manager's acceptance of such appointment and shall cause such successor to execute any and all documents requested by the Collateral Agent to evidence such successor's acceptance of all of the obligations of the Manager pursuant to this Agreement. For the purposes of this Agreement, any material breach of any material obligation of the Manager hereunder shall give the Owners the right to remove the Manager with cause. Section 4.03 INDEMNIFICATION. The Owners shall indemnify the Manager and its successors and assigns, and hold them harmless against and from, any and all liabilities, obligations, losses, damages, taxes, penalties, claims, actions, suits, costs, expenses (including legal fees and expenses) of any kind and nature whatsoever (collectively, "Expenses") which may be imposed on, incurred by or asserted at any time against the Manager (whether or not indemnified against by other parties) in any way relating to or arising out of this Agreement, the Indentures, the Letter of Credit Reimbursement Agreement or any Security Agreement; PROVIDED, HOWEVER, that the Owners shall not be required to indemnify the Manager for Expenses arising or resulting from its own willful misconduct or gross negligence. Section 4.04 COMPENSATION. The Manager shall receive as compensation for its services hereunder an amount equal to the sum of (i) $30,000 per annum per Vessel that has not been accepted by the related Owner and (ii) $120,000 per annum per Vessel that has been accepted by the related Owner, payable on each Management Fee Payment Date as provided in Section 3.3(c)(ii) of the Intercreditor Agreement. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01 AMENDMENT. This Agreement may be amended from time to time by written agreement signed by the parties hereto upon the written consent of the Collateral Agent. - 8 - Section 5.02 SEVERABILITY. If any provision of this Agreement is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections contained in this Agreement shall not affect the remaining portions of this Agreement, or any part thereof. Section 5.03 NOTICES. All demands, notices and communications hereunder shall be in writing, personally delivered or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Manager, at the following address: 15-19 Athol Street, Douglas, Isle of Man, (b) in the case of each of the Owners, at the following address: 15-19 Athol Street, Douglas, Isle of Man, (c) in the case of the Issuer, at the following address: 15-19 Athol Street, Douglas, Isle of Man, (d) in the case of Holdings, at the following address: 15-19 Athol Street, Douglas, Isle of Man, (e) in the case of the First Priority Trustee and the Collateral Agent, at the following address: 114 West 47th Street, New York, New York 10036- 1532 Attention: Corporate Trust Department and (f) in the case of the Second Priority Trustee at the following address:450 West 33rd Street, New York, New York 10001 Attention: Corporate Trust Department, or at other such address as shall be designated by such party in a written notice to the other parties. Section 5.04 CAPTIONS. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 5.05 GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law. Section 5.06 NO DEMISE. Nothing herein contained shall be construed as creating a demise of any Vessel to the Manager. Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be deemed or construed to create a partnership or joint venture among the parties hereto, and the services of each party shall be rendered as an independent contractor and not as agent for any other party. Section 5.08 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterpart, each of which shall be deemed to be an original. Such counterparts shall constitute one and the same agreement. Section 5.09 SURVIVAL. The representations, covenants and agreements contained in or made pursuant to this Agreement in respect of either party hereto shall survive the execution and delivery of this Agreement and shall continue in effect so long as such party's obligations hereunder remain outstanding. - 9 - Section 5.10 INTEGRATION. This Agreement and the Schedule and Exhibits hereto constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings or representations pertaining to the subject matter hereof, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 5.11 REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 5.12 GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement except as otherwise expressly provided or unless the context otherwise requires: (a) the defined terms in this Agreement shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles", "Sections", "Subsections", "paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Agreement; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. - 10 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized, all as of the day and year first above written. Navigator Gas Management Limited, as Manager By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas (IOM I-A) Limited, as Owner By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas (IOM I-B) Limited, as Owner By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas (IOM I-C) Limited, as Owner By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas (IOM I-D) Limited, as Owner By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas (IOM I-E) Limited, as Owner By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Gas Transport PLC, as Issuer By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- Navigator Holdings PLC By: /s/ Richard Klapow ------------------------ Name: Richard Klapow ---------------------- Title: Director ---------------------- - 11 - EX-10.12 35 BIMCO SHIP MANAGEMENT AGREEMENTS & EXHIBITS
- ------------------------------------------------------------------------------------------------------------------------------------ 1. Date of Agreement THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT February 28, 1997 CODE NAME: "SHIPMAN" PART 1 - ------------------------------------------------------------------------------------------------------------------------------------ 2. Owners (Name, place of registered office and law of registry) 3. Technical Managers (name, place of registered office and law of registry) (herein referred to as Manager) Navigator Holdings, PLC on behalf of each individual SHIPOWNING COMPANIES IDENTIFIED ON SCHEDULE 1 HERETO GEBAB Gesellschaft fuer Konzeption, Beratung, ---------------------------------------------------------- Vermittlund und Name BETREUUNG PRIVATER INVESTITIONEN MBH AND EACH OF ITS ----------------------------------------------------- AFFILIATED COMPANIES -------------------- Name c/o Cambridge Partners LLC, 535 Madison Avenue, New York, NEW YORK RUDOLF-DIESEL-STRABE 11, 40670 MEERBUSCH ---------------------------------------------------------- ---------------------------------------- Place of registered office Place of registered office ---------------------------------------------------------- ----------------------------------------------------- Law of registry Law of registry - ------------------------------------------------------------------------------------------------------------------------------------ 4. Day and year of commencement of Agreement (Cl. 2.1.) Upon Delivery of Vessels Identified on Schedule 1 - ------------------------------------------------------------------------------------------------------------------------------------ 5. Crewing (state "yes" or "no" as agreed) (Cl. 2.3.(i) and Cl. 3.) 6. Technical Management (state "yes" or "no" as agreed) (Cl. 2.3.(ii) and Cl. 4.) Yes Yes - ------------------------------------------------------------------------------------------------------------------------------------ 7. Insurance (state "yes" or "no" as agreed) (Cl. 2.3.(iii) and Cl. 5.) 8. Freight Management (state "yes" or "no" as agreed) (Cl. 2.3.(iv) and Cl. 6.) Yes No - ------------------------------------------------------------------------------------------------------------------------------------ 9. Accounting (state "yes" or "no" as agreed) (Cl. 2.3.(v) and Cl. 7.) 10. Chartering (state "yes" or "no" as agreed; if "yes", also state period of employment)(Cl. 2.3.(vi) and Cl. 8.) Yes NO ----------------------------------------------------- period of employment in excess of which owners' prior consent shall first be obtained - ------------------------------------------------------------------------------------------------------------------------------------ 11. Sale or purchase of vessel (state "yes" or "no" as agreed) (Cl. 12. Provisions (state "yes" or "no" as agreed) (Cl. 2.3. 2.3.(vii) and Cl. 9.) (viii) and Cl. 10.) Yes No - ------------------------------------------------------------------------------------------------------------------------------------ 13. Bunkering (state "yes" or "no" as agreed)(Cl. 2.3.Oix) and Cl. 11.) 14. Operation (state "yes" or "no" as agreed)(Cl. 2.3.(x) and Cl. 12.) Yes Yes - ------------------------------------------------------------------------------------------------------------------------------------ 15. Annual Management Fee (state "yes" or "no" as agreed) (Cl. 15.1.) 16. Redundancy Costs (state "yes" or "no" as agreed) (Cl. 15.3b.) Yes - ------------------------------------------------------------------------------------------------------------------------------------ 17. Day and year of termination of Agreement (Cl. 23.1.) See Rider - ------------------------------------------------------------------------------------------------------------------------------------ 18. Law and arbitration (state 24.2 of Cl. 24, as agreed; if 24.3. agreed also state place of arbitration) (If Box 18 not filled in 24.1 shall apply) (Cl. 24) 24.2 - ------------------------------------------------------------------------------------------------------------------------------------ 19. Notices (state postal and cable address, telex and telefax number 20. Notices (state postal and cable address, telex and for service of notice and communication TO THE OWNERS) (Cl. 25) telefax number for service of notice and communication TO THE MANAGERS) (Cl. 25) - ------------------------------------------------------------------------------------------------------------------------------------ It is mutually agreed between the party mentioned in Box 2 (hereinafter called "the Owners") and the party mentioned in Box 3 (hereinafter called "the Managers") that this Agreement consisting of PART I and PART II as well as ANNEX "A" or ANNEX "B" (as applicable) and ANNEX "C" attached hereto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II and ANNEX "A" or ANNEX "B" (as applicable) and ANNEX "C" to the extent of such conflict but no further. - ------------------------------------------------------------------------------------------------------------------------------------ Signature (Owners) Signature (Managers) on its own behalf and as agent for each of its Affiliated Companies /s/ Joseph Avantario /s/ M. Pahl - ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 1 Name Of Owner Hull No. For Vessel - ------------- ------------------- Navigator Gas (IOM I-A) Limited Hull No. 2245 Navigator Gas (IOM I-B) Limited Hull No. 2246 Navigator Gas (IOM I-C) Limited Hull No. 2247 Navigator Gas (IOM I-D) Limited Hull No. 2248 Navigator Gas (IOM I-E) Limited Hull No. 2249 RIDER TO MANAGEMENT AGREEMENT DATED FEBRUARY 28, 1997 PART I Box 16 REDUNDANCY Box 17 DURATION OF AGREEMENT The initial duration of the management agreement will be [three (3)] years and will thereafter be continued as agreed in clause 23 of "Shipman". PART II CL. 3 The managers warrant that they have a policy on alcohol and drug abuse ("Policy") applicable to each of their own and vessels under management which meets or exceeds the standards in the Oil Companies International Marine Forum Guidelines for the control of drugs and alcohol on board ships. Annex "D". CL. 15 MANAGEMENT FEE Clause 15.1 The Owner shall pay to the Manager for their services as Manager under this Agreement an annual Management Fee equal to 2.0% of the gross freight income of the Vessel for the first six years after delivery of a Vessel and 2.5% thereafter. Manager's Fee shall be payable monthly in advance on the first day of each month and shall be based upon a pre-approved budget submitted by Manager ("Budgeted Management Fee"). The Budgeted Management Fee paid pursuant to this Section shall be adjusted quarterly in arrears for each quarter ending on the last day of March, June, September and December (each a "Calendar Quarter") and the difference between the actual Management Fee earned for a Calendar Quarter and the aggregate Budgeted Management Fee paid for such Quarter shall be reflected in the Budgeted Monthly Management Fee payable on the 1st day of the second month immediately following the end of any Calendar Quarter. "Gross freight income" shall mean all income derived by the Owner from clients in relation to the employment of the Vessel(s) including but not limited to freight, time charterhire, demurrage, dead freight (demurrage and/or dead freight only to be included on the basis of the amounts actually received), less any third party brokers' commissions. - 1 - New subclauses shall be added to 15.1 15.1(a) Manager shall submit an invoice in an amount equal to the Management Fee earned for the current calendar month to Navigator. Navigator shall pay the Budgeted Management Fee on behalf of the Owner to the Manager as provided in the Indenture on the first day of the month immediately preceding the proposed delivery date for each Vessel. 15.3 New subclause shall be added to 15.3 15.3(b) The Owner will pay redundancy costs which are in excess of the funds accumulated in the redundancy fund. Any funds remaining in the Redundancy Fund after settling all costs will be refunded to the Owners. 15.6 New subclause to be added: "In case of the vessel being lost, sold, bareboat chartered or otherwise being disposed of, managers to be paid the Budgeted Management Fee (which shall be the average Budgeted Management Fee paid during the prior 12 months as adjusted) for 6 months and thereafter at 50% of the Budgeted Management Fee until all matters relating to such Vessel are settled." 15.7 New subclause to be added: "On board inspections by qualified inspector shall be included in management fee as ongoing management, but travel expenses abroad for vessel's account." Clause 16.4 Income and expense reports shall be prepared on a quarterly basis as to each Vessel subject to this Agreement and shall be presented to the Navigator Gas Management Limited ("Navigator") within 15 days after the end of each calendar quarter. CL. 23 DURATION OF AGREEMENT 23.2. The initial term of this Agreement (the "Initial Term") shall be three years commencing as to a vessel on the date such vessel is delivered. 23.2(a) After the Initial Term, this Agreement shall be terminable by Owner or Manager upon the giving of [90] days written notice of its intention to terminate this Agreement. - 2 - 23.2(b) If this Agreement has not been terminated as provided in 23.2 above, the term of this Agreement shall automatically be extended for a period of one year on each anniversary date of the day on which the Vessel subject to the Agreement was delivered, commencing on the third anniversary date of such delivery date. _________________________________ - 3 - THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN" Date of Agreement: Name Of Vessel: Particulars of Vessel: NAME Call Sign Flag Built Yard/number LOA/Width Depth Draught Gross/Net Deadweight Class Society/nbr Class Sign Next class renewal due Main engine Manager's Budget for the first year with effect from the Commencement Date of this Agreement: ================================================================================ Per Annum Per Day - -------------------------------------------------------------------------------- 1. Crew Expenses - -------------------------------------------------------------------------------- 2. Victualling - -------------------------------------------------------------------------------- 3. Insurance - -------------------------------------------------------------------------------- 4. Luboil - 4 - - -------------------------------------------------------------------------------- 5. Equipment Deck and Engine - -------------------------------------------------------------------------------- 6. Repair Deck and Engine - -------------------------------------------------------------------------------- 7. General Expenses - -------------------------------------------------------------------------------- 8. Management Fee - -------------------------------------------------------------------------------- TOTAL ================================================================================ ================================================================================ Per Annum Per Day - -------------------------------------------------------------------------------- 1. Crew Expenses - -------------------------------------------------------------------------------- 2. Victualling - -------------------------------------------------------------------------------- 3. Insurance - -------------------------------------------------------------------------------- 4. Luboil - -------------------------------------------------------------------------------- 5. Equipment Deck and Engine - -------------------------------------------------------------------------------- 6. Repair Deck and Engine - -------------------------------------------------------------------------------- 7. General Expenses - -------------------------------------------------------------------------------- 8. Management Fee - -------------------------------------------------------------------------------- TOTAL P.A. ================================================================================ Remark: Drydocking and renovation provision excluded from budget. Crew expenses NON-ITF conditions. - 5 - ANNEX "D" DRUG & ALCOHOL POLICY PREAMBLE The abuse of drugs and alcohol and their effects are one of the most significant social problems of our time. Appropriately they are receiving increasing attention both in public and in legislation. In response to this increased concern the _____________ (hereinafter referred to as "Company") has prepared the following policy statement and attendant rules that are to be adhered to by all personnel employed on vessels owned and/or managed by the company. It is our aim to enforce this policy as part of a vital contribution to safety and health on board as well as to a safe and efficient operation at installations used by the vessels. POLICY - ------ 1. No crewmember or master shall be intoxicated at any time. 2. No crewmember or master shall navigate or assist in navigating a ship or operate its equipment or perform any scheduled duties while impaired by drugs or alcohol. 3. The misuse of legitimate drugs or the use, possession, distribution or sale of illicit or unprescribed drugs on board ships is prohibited. 4. Any crewmember using medicines which can cause or can contribute to unacceptable job performance or unusual job behavior shall report this to the master. The master is then to take action appropriate to the situation. 5. Use of other substances which alone or in combination can cause or continue to unacceptable job performance or unusual job behavior is prohibited. CONTROL - ------- 1. The master shall be responsible for the control of the use of alcohol and prescribed drugs onboard. 2. Under no circumstances are the master or crewmembers allowed to consume alcoholic beverages in such quantities that will hinder them from reacting efficiently in an emergency (see procedure 3.). - 6 - 3. Masters, officers and ratings shall observe a period of abstinence from alcohol prior to commencement of watch or duty. This is to ensure that they are not intoxicated when going on duty. The length of this period of abstinence depends on the amount of alcohol consumed beforehand. It must be taken into account that the human body is able to reduce an average of 0,15 0/00 alcohol per hour. A blood alcohol content of 0,15 0/00 is reached after consumption of about one unit according to the following table: Volume Units Beer and Lagers 250cc 1 Extra Strength Beer and Lagers 250cc 2.5 Spirit/Liquor 30cc 1 Table Wine 100cc 1 Sherry or Fortified Wine 60cc 1 If the consumption of alcohol equals four units according to the above table the period of abstinence must be at least four hours. PROCEDURES - ---------- 1. Any crewmember or master found misusing legitimate drugs or found in possession of or using, selling, distributing or smuggling illicit or unprescribed drugs shall be dismissed by the company. 2. Any crewmember or master found impaired by alcohol or drugs while on duty shall immediately be relieved of his duties and replaced. The master and a relevant witness shall report such alcohol or drug abuse to the company in writing as soon as possible. A copy of such report will be put in before to the subject crewmember for signature. 3. When the effect of intoxicants on a person's manner, disposition, speech, general appearance or behavior is apparent by observation the master is to arrange for an alcohol test with the testing device. A crewmember or master shall be considered impaired when having an alcohol content of 0,4 0/00 (40mg/100 ml blood) or greater. 4. Every position of a master and officer shall be tested twice a year for alcohol and drug abuse. Such tests shall be unannounced and shall be taken during the person's duty. The person(s) to be tested and the date/time shall be designated by the Company. 5. The Company will supply the necessary testing devices. - 7 - DISTRIBUTION - ------------ All crewmembers and masters will be given a copy of this document and are to sign the attached form. The form is to be kept by the Master and a copy is to be sent to the Company's office. The master is responsible for ensuring that all members of the crew are fully aware of and understand the Company's "Drug and Alcohol Policy". - 8 - EX-10.13 36 AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS THIS AGREEMENT, made and entered into as of this 28th day of February 1997, by and among GEBAB Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH (hereinafter called "Supervisor"), Navigator Holdings, PLC on behalf of each of the shipowning companies identified on Schedule 1 hereto (each hereinafter called "Owner" and collectively the "Owners") and Jiangnan Shipyard and China Shipbuilding Trading Company (hereinafter collectively called "Contractor"): WITNESSETH: WHEREAS, each Owner (as assignee of Navigator Holdings PLC) and Contractor entered into a Shipbuilding Contract for construction (hereinafter called the "Shipbuilding Contract") as of the 4th day of February, 1997, covering the construction of a total of five (5) 22,000 cubic meters liquified/ethylene gas carriers identified on Schedule 1 hereto (each a "Vessel" and collectively the "Vessels"). WHEREAS, all defined terms contained herein shall have the meaning set forth in the Shipbuilding Contract. WHEREAS, Owner desires Supervisor, as agent for Owner, to act as Owner's technical representative with respect to technical matters related to the construction of the Vessel, including the guarantee after delivery of the Vessel under the Shipbuilding Contract. WHEREAS, Owner agrees to employ Supervisor with respect to the technical matters above mentioned under the Shipbuilding Contract. NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is mutually understood and agreed upon by and among the parties hereto as follows: 1. (a) Owner hereby appoints Supervisor as authorized technical representative to perform any and all of Owner's rights, duties, obligations and responsibilities under the provisions of Articles IV, V, VI, IX of the Shipbuilding Contract (hereinafter called "Articles") except those rights, duties, obligations and responsibilities which are specifically otherwise agreed upon in this Agreement. For purposes of this Agreement, the term Owner means each Owner who is a signatory to this Agreement to the extent that such Owner's Vessel is subject to this Agreement. (b) Supervisor hereby accepts such appointment by Owner, and undertakes to perform in good faith for and on behalf of Owner any and all of Owner's rights, duties, - 1 - obligations and responsibilities under the Articles, solely in its capacity as agent for the Owners. (c) Supervisor further undertakes to perform such appointment with due care so as to protect the rights and interests of Owner under the Shipbuilding Contract. Owner hereby acknowledges that Supervisor's performance of this appointment and any liabilities associated with it or arising out of such appointment shall terminate upon delivery of the Vessel to the Owner; provided, however, to the extent any loss, claim or damage is not discovered by Owner at the time of the delivery of the Vessel, Supervisor's liability therefore shall continue. (d) Contractor hereby acknowledges Owner's appointment of Supervisor and agrees to direct all correspondence and communications under Articles directly to Supervisor. Notwithstanding the above, prior to making any changes to the specification which materially effect the terms and conditions of the Shipbuilding Contract, Contractor shall advise the Owner. 2. Notwithstanding anything contained in the Shipbuilding Contract the following is agreed by the parties hereto: (a) Owner shall have the right, at its request, to be informed of anything under this Agreement, to observe the Vessel during the construction and attend the trial runs of the Vessel as observer(s) whose comment, if any, shall always be made through Supervisor to Contractor. The approval and/or decisions given to Contractor by Supervisor shall be deemed as those of Owner and shall bind Owner. Notwithstanding the above, acceptance or rejection of the Vessel under Article VI and Section 7 of Article VII of the Shipbuilding Contract shall always be notified by Owner to Contractor and Supervisor shall, prior to delivery of the Vessel, give Owner their advice on whether the Vessel conforms to the requirements of the Shipbuilding Contract and the Specifications. (b) Supervisor shall check contents of the documents specified in Section 3 of Article VII of the Shipbuilding Contract and confirm to Owner whether the contents are acceptable or not. (c) Contractor shall also furnish Owner and Supervisor with the list mentioned in Article IV of the Shipbuilding Contract. (d) Notwithstanding Item 1 above, for practical reasons Supervisor and Contractor may not agree on the changes pursuant to Article V of the Shipbuilding Contract without obtaining Owner's prior consent if the value for such Changes is more than US$5,000 per change or in the aggregate more than US$50,000 for such Vessel. (e) Owner shall not be responsible whatsoever for personal injuries, including death, of the Supervisor and Inspectors, or other employees or agents of Supervisor during the time they or any of them are on the Vessel, or within the premises of the - 2 - Contractor or its subcontractors, or, are otherwise engaged in and about the construction of the Vessel unless such personal injuries, including death, were caused by the negligence of Owner. (f) Any adjustment of Contract Price, except for delayed delivery, in accordance with the provisions of the Shipbuilding Contract shall be settled between Supervisor and Contractor through Owner at the Delivery of the Vessel. (g) Contractor shall also furnish Owner and Supervisor with the design and construction schedules with respect to any modifications or changes (as defined in the Building Contract) permitted by Article V of the Building Contract. (h) Supervisor shall assist Owner in case of Arbitration under Article XIII of the Shipbuilding Contract. (i) Supervisor shall (i) appoint Superintendents in accordance with the Shipbuilding Contract who shall be in attendance at the Yard and (to the extent to which Owner would be entitled under the Shipbuilding Contract) shall have free access to the Vessel and to the Contractor's shipyard and workshops and the Contractor's sub-contractors' premises as may be necessary for the proper performance of the Supervisor's duties hereunder until the Vessel has been delivered to Owner in accordance with the provisions of the Shipbuilding Contract and (ii) attend to any claim by Owner that may constitute a breach by the Contractor of the warranty of quality incorporated in the Shipbuilding Contract and supervise the remedy of any defects in the Vessels which constitute such breach and the recovery from the Contractor of any loss, damages or expenses occasioned by or connected with any such breach. (j) the Supervisor shall use reasonable efforts to ensure that, prior to a Vessel's Delivery under the Shipbuilding Contract, such Vessel is classed with Germanischer Lloyds as +100 A5 E "Liquified Gas Carrier Type 2G" +MC E, AUT INERT clean and free of any and all recommendations, reservations and qualifications and otherwise as stated in the relevant Shipbuilding Contract and is otherwise fully documented and classified in accordance with the provisions of that Shipbuilding Contract and its Specifications; (k) Supervisor shall, along with Owner, sign each Protocol of Delivery and Acceptance referred to in the Shipbuilding Contract; (l) Supervisor shall on the Delivery Date of the Vessel, use reasonable efforts to produce to or ensure the production to Owner of any and all documentation which the Contractor is required to deliver pursuant to the Shipbuilding Contract; (m) Each finished plan including the instruction books of the Vessel shall be distributed as follows: - 3 - Finished Plans Instruction Books 1 set for the Vessel 2 sets for the Vessel 2 sets for Supervisor 2 sets for Supervisor 1 set for Owner 1 set for Owner (n) Neither the Owners nor the Supervisor shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever or any nature or kind beyond their reasonable control; and (o) Supervisor shall not sub-contract any of its obligations hereunder to a third party other than an affiliate without the consent of the Owners. Supervisor as contracting party has the right to assign this agreement to any other company forming part of the GEBAB group of companies or any affiliate of such GEBAB group through a novation agreement replacing GEBAB as contracting party by such other company. (p) Affiliated Companies shall include the following organizations: Martime Asia Limited Martime-Gesellschaft fur maritime Dienstleistungen mbH MarLink Schiffahrtskontor GmbH GasChem Services GmbH & Co. KG 3. Notwithstanding what has been stipulated elsewhere in this Agreement, Supervisor shall perform the following duties on behalf of the Owner, solely in its capacity as agent. (a) Supervisor will examine all Hull and Engineering plans submitted by the builder to ensure compliance with the Shipbuilding Contract, including compliance with applicable shipbuilding standards and approve or comment upon plans accordingly. (b) The Supervisor's responsibilities will include the following: (i) Examine and inspect the construction of the designated Vessel and equipment to ensure compliance with the Specifications, approved plans and regulatory authority requirements. Examine and inspect the Vessel to ensure that all workmanship is in accordance with the best currently established practice and to bring to the Contractor's notice, any deviation from such practice and to ensure rectification. (ii) Examine and inspect all equipment in the Vessel within the jurisdiction of the Supervisor to ensure adequate facilities exist for ease of maintenance of that equipment. - 4 - (iii) Render monthly progress reports. (iv) Bring to Owner's attention any modification or improvements which, in the Supervisor's opinion, may enhance the viability of the project and/or reduce the running costs. No modification is to be put in hand unless it meets with the criteria specified in Section 2(d) or until specifically authorized by the Owner. (v) Examine all records produced by the Contractor and to confirm their correctness. (vi) Oversee any work performed in drydock prior to delivery of the Vessel. (c) The number of personnel required in the supervision team will vary during the construction period however it is expected that a team of 5 will be required at peek periods consisting of: Project Manager Engineering Superintendent #1 Engineering Superintendent #2 Electronics Superintendent Gas Engineer 4. (a) This section refers to the obligations of the Owners collectively to the Supervisor as to all of the Vessels subject to this Agreement and not as to each Vessel. (b) The contract price for Plan Approval is US$100,000 plus any travel expenses to the Yard which will be charged at cost. Owner to pay Supervisor Plan Approval cost in 4 payments of US$25,000 plus invoiced out of pocket travel expenses which shall be payable in March, June, September and December 1997. (c) Commencing in December 1997, the contract supervision cost is US$72,000 per month payable in advance based on a maximum construction period of 30 months for the series of 5 vessels. (d) Should the construction of the vessels exceed 30 months (from and including December 1997) in the aggregate, Owners will pay Supervisors US$72,000 per month for each month that the building program is extended. (e) Should the vessels not be delivered Owners will pay Supervisors the remainder of their actual out of pocket expenses on presentation of audited accounts. (f) All costs for the guarantee engineer(s) shall be borne by the Owners. - 5 - 5. Supervisor shall perform its obligations under this Agreement in all respects in accordance with the highest standards of practice and degree of care regularly observed in the shipping industry. In addition, Supervisor shall obtain errors and omissions coverage from an insurance carrier acceptable to Owner. If any work or services under this Agreement are negligently performed or omitted, then so far as may be reasonably practicable. All costs incurred to Owners as a result of said negligence or omission will be settled as provided for by the aforementioned insurance cover. If Supervisor does incur third party liability of any nature whatsoever arising out of or connected with performance of this Agreement, then Supervisor shall indemnify Owner against such third party liability and costs and expenses relating thereto; provided, however, that Supervisor shall not be required to indemnify Owner for loss or liability (A) resulting from the willful misconduct or gross negligence of Owner; or (B) directly and proximately caused by breach of a material representation or warranty made by Owner, in any agreement relating to such Vessel to which it is a party. Notwithstanding the foregoing, Supervisor shall not be responsible whatsoever for personal injuries, including death, of Owner, Contractor or other Owner, Contractor authorized personnel during the time they or any of them are on the Vessel, or within the premises of Contractor or its subcontractors, or, are otherwise engaged in and about the construction of the Vessel unless such personal injuries, including death, were caused by the negligence of Supervisor. 6. Unless specifically directed in writing to the contrary, all of the correspondences between Supervisor, Owner and Contractor as above shall be addressed as follows: To Supervisor: GEBAB Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH Rudolf-Diesel-Strabe 11 40670 Meerbusch Telefax No.: 011-21-59-91-53-53 Telephone No.: 011-21-59-91-53-0 To Owner: Navigator Holdings PLC c/o Cambridge Partners LLC 535 Madison Avenue New York, NY 10022 Telephone: 01-212-508-6500 Telefax No.: 01-212-508-6501 - 6 - To Contractor: Jiangnan Shipyard 2, Gao Xiong Road Shanghai 200011 the People's Republic of China Telex No.: 33027 JINAS CN Telefax No.: 86-21-63770297 or 63140128 China Shipbuilding Trading Company, Limited 10 Yue Tan Bei Xiao Jie Beijing 100861 the People's Republic of China Telex No.: 22029 CSSC CN Telefax No.: 86-10-68583380 or 68582420 7. Owner shall have the right to assign its rights and obligations hereunder to (i) its wholly owned subsidiary company permitted in accordance with the Shipbuilding Contract, (ii) an affiliate company and (iii) any indenture trustee providing the Trustee Commitment Letter in accordance with the Shipbuilding Contract. 8. No representative of either party shall have authority to make, and neither party shall be bound by, nor liable for, any statement, representation, promise or agreement not set forth herein. No changes, amendments or modifications shall be valid unless reduced to writing and signed by the parties. 9. The validity, enforcement and interpretation of this Agreement shall be governed by the Laws of the State of New York. 10. Should any dispute arise out of this Agreement, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for purpose of enforcing any award, this agreement may be made a rule of the Court. The arbitrators shall be members of the Society of Maritime Arbitrators, Inc. of New York and the proceedings shall be conducted in accordance with the rules of the Society. 11. Any other terms and conditions under the Shipbuilding Contract shall remain unchanged and unaltered. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year as first above written. - 7 - GEBAB Gesellschaft fuer Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH /s/ Mathias Pahl ----------------------------------------- Name: Mathias Pahl Title: Director of Shipping Navigator Holdings PLC on behalf of each individual shipowning company /s/ Richard Klapow ----------------------------------------- Name: Richard Klapow Jiangnan Shipyard /s/ Gong Jingen ----------------------------------------- Name: Gong Jingen China Shipbuilding Trading Company /s/ Shen Yeping ----------------------------------------- Name: Shen Yeping - 1 - SCHEDULE 1 Name of Owner Hull No. for Vessel Navigator Gas (IOM I-A) Limited Hull No. 2245 Navigator Gas (IOM I-B) Limited Hull No. 2246 Navigator Gas (IOM I-C) Limited Hull No. 2247 Navigator Gas (IOM I-D) Limited Hull No. 2248 Navigator Gas (IOM I-E) Limited Hull No. 2249 - 2 - EX-10.14 37 MASTER COMMERCIAL MARKETING AND SERVICES AGREEMENT MASTER COMMERCIAL MARKETING AND SERVICES AGREEMENT This Master Commercial Marketing and Services Agreement ("Agreement") dated as of February 28, 1997, by and among Navigator Holdings, PLC on behalf of each shipowning company identified on Schedule 1 hereto (each an "Owner", collectively the "Owners") and GEBAB Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH ("Manager"). W I T N E S S E T H: WHEREAS, Owners are to acquire five newly built 22,000 CBM LPG/ethylene carriers (the "Vessels") (as more fully described on Schedule 1 hereto) for use in transporting liquified petroleum gas, including without limitation, propane and butane, ammonia, chemical gases such as propylene, butadrine, vinyl chloride monomer (VCM) and ethylene (collectively "Cargo"); and WHEREAS, certain affiliates of the Manager are actively engaged in the business of soliciting Cargo for transportation from various transportation services users and the Manager desires to procure for these affiliates the use of the Vessels, on the terms and conditions set forth herein, in order to market and promote their use with Manager's customers; and NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties hereto agree as follows: Article 1. DEFINED TERMS. "Agreement" shall mean this Master Commercial Marketing and Services Agreement. "Cargo" shall have the meaning assigned to it in the first Recital. "Gross Freight Income" shall mean all income derived by the Owner from clients in relation to the employment of the Vessel(s) including but not limited to freight, time charterhire, demurrage, dead freight (demurrage and/or dead freight only to be included on the basis of the amounts actually received), less any third party brokers' commissions. Article 2. COMMERCIAL MANAGEMENT PRINCIPLES 2.1. The Manager is entrusted with the commercial management of the vessel(s) covered by this Agreement as set out hereafter for the sole and utmost commercial benefit of the owner(s) of the vessel(s). 2.2 The following services are to be performed by the Manager with his name as agent and on behalf of and for account of the Owners: (i) Advertise and promote the Vessel(s); - 1 - (ii) Engage the Vessel(s) in the transportation of petroleum and chemical gases in the worldwide trade, but always within IWL, with the Manager's liberty to breach such trading limits subject to his compliance with Article 3, Clause 3.4 hereof; (iii) Conclude all agreements of affreightment and/or charter parties for the Vessel(s) as well as all services necessary for the performance of such agreements; (iv) Operation of all agreements entered into including but not limited to invoicing and follow-up,accounting and handling of employment related expenses in port and at sea, demurrage and laytime calculations, bunkering; (v) Claims handling, if needed, in conjunction with Owners' P and I club; (vi) Duly advise Owners and/or their Technical Managers of all employment related matters enabling same to fulfill the Vessels duties under the employment agreements entered into; and (vii) Perform such other acts and services as are reasonably incident to any of the foregoing. Article 3. RIGHTS, AUTHORITY, LIABILITY AND REMUNERATION OF THE MANAGER 3.1. The Manager is entitled to engage or participate directly or indirectly in any business of size and type similar to the Vessels covered by this agreement provided such business does not negatively influence the earnings of said Vessel(s). In addition, Manager (or any member of the GEBAB group) shall not enter into a commercial marketing and services agreement (excluding technical management of similar Vessels) with respect to any vessel having a capacity in excess of 12,000 cbm up to 30,000 cbm (semi-refrigerated) which could be used in the transport of cargo similar to Cargo (as such term is defined herein) without Navigator Holdings PLC's prior consent which shall not be unreasonably withheld. The provisions of this paragraph shall in no way limit the right of the Manager or its Affiliated Companies to initiate and hold as trustee investments in vessels having substantially similar characteristics of the Vessels for third parties and to make non-controlling investments in vessels (either directly or indirectly) having substantially similar characteristics of the Vessels. 3.2. FEE. For providing marketing ("Marketing") and other services pursuant to this Agreement, Manager shall be entitled to receive a services fee (the "Manager Fee") equal to 2.0% gross freight income as defined under Article 1. 3.3. INVOICING. Manager shall timely invoice all customers for the transportation of Cargo in the Vessels, including backhauls, and instruct such customers that all payments be remitted directly to the United States Trust Company of New York as Collateral Trustee into the account designated by the Collateral Trustee ("Lockbox Account"). Each such invoice shall be at the rates negotiated between Manager and such customers. - 2 - 3.4. In order to attain the purpose of this Agreement as defined in Article 2 above, the Manager is entitled to negotiate and enter into agreements and to sign same as agent on behalf of the Owners as it deems fit subject, however, to the following restrictions: without the prior written approval of the Owners and or Technical Manager, whichever applies, which, however, shall not be unreasonably withheld, the Manager is not entitled to: (a) send the Vessel to a port outside the trading area defined in Article 2.2, Clause (ii). (Any cost for trading the Vessel outside the trading limits, as well as in areas where extra insurance is required shall be borne by the Owners); (b) send the Vessel to a port known to him or his servants to be unsafe, it being understood, however, that the Manager otherwise is not responsible for the safety of the port to which it has contracted the Vessel, provided due diligence has been observed by the Manager; (c) order the Vessel to a berth where she cannot always lie safely afloat; (d) order the Vessel to load cargo which does not comply with list of products in the Certificate of Fitness for the Carriage of Liquefied Gases in Bulk; (e) commit the Vessel to any agreement exceeding 6 months; or (f) enter into agreements on warranted terms which exceed the warranted particulars of the Vessel. 3.5. The Manager undertakes to perform its duties hereunder with due diligence and shall not be liable for the consequences of any decisions which it has made in good faith while exercising its powers covered by this Agreement. The Manager is to provide the Owner with written proof of an adequate insurance cover for errors and omissions on the part of Manager's personnel. 3.6. The Manager shall deliver a quarterly statement (a "Quarterly Statement") reflecting Gross Income of the Vessels actually received in the Collateral Trustee's account, all actual employment related expenses incurred duly supported by the relevant documents and vouchers provided same are already available, resulting net time charter earnings during the elapsed period, days employed as well as idle days and reason(s) for same. Each Quarterly Statement shall be due within 15 days after the end of each calendar quarter which shall end on the last day of March, June, September and December (each a "Calendar Quarter"). 3.7. PAYMENT OF MANAGER FEE. (a) Manager Fee earned by the Manager hereunder shall be paid by Navigator Gas Management Limited ("Navigator") on behalf of the Owner from amounts on deposit with the Collateral Trustee. Manager shall prepare and present an invoice setting forth the Manager Fee earned on each Customer Invoice actually paid to the Collateral Trustee during a Calendar Quarter. The Manager Fee shall be paid by Navigator on the sixteenth day of the month immediately following the end of each Calendar Quarter. - 3 - (b) While this Agreement remains in existence, if an Owner decides to lay-up a Vessel and such lay-up lasts for more than three months, the Management Fee for the period exceeding three months until one month before the Vessel is again put into service shall be * . * equal to one half the average Management Fee paid quarterly to the Manager by the Owner during the prior 12 month period. (c) In case a Vessel is lost, sold, bareboat chartered or otherwise disposed of, Managers shall to be paid the Management Fee (which shall be the average Management Fee paid during the prior 12 months) for 6 months and thereafter at 50% of the average Management Fee until all matters relating to such Vessel are settled. 3.8 PAYMENT OF EXPENSES. Managers will provide Owners with invoices as to employment related expenses including, but not limited to, bunkers, port charges, canal transit fees and cleaning and/or conditioning expenses for the cargo tanks. Actual expenses will be paid directly by the Owners after their approval by Navigator. 3.9. The Manager is entitled to avail itself of the services of a third party for the fulfillment of its obligations under this Agreement as it deems fit for its own account, it being understood, however, that any person employed or engaged by the Manager is to be regarded as its servant. 3.10. If the Manager decides that a third party vessel has to be chartered in or if a cargo is to be relet to a third party shipowner the corresponding charter parties are to be arranged by the Manager in the name of the Owner. Any income of such third party a vessel earned or any loss incurred under such charter is deemed Owner's revenue or loss. 3.11. The Manager for chartered tonnage has to arrange for an adequate insurance cover for charterer's liability if required so by the Manager in agreement with the Owners as well as for errors and omissions, or ensure that these risks are covered under the insurance policies to be taken out for the Vessel by Owner. Cost of such insurance cover to be borne by Owner. Article 4. LIABILITY, WARRANTIES, UNDERTAKINGS OF THE OWNERS, INSURANCE 4.1. LIABILITY. Each Owner shall be liable for any and all obligations arising from agreements entered into as a result of this Agreement as to its Vessel and the Manager shall be held harmless and kept indemnified by the Owner from any liability as a result of the aforementioned other then liabilities resulting from the gross negligence or willful misconduct of the Manager. 4.2. WARRANTIES. Each Owner warrants with respect to its Vessel(s) (a) that it is unrestricted and unconditionally entitled to enter into and remain party to this Agreement; (b) that it will maintain its right to the Vessel in order to permit the Manager to use the Vessels during the duration of this Agreement in the manner described herein; - 4 - (c) that its related Vessel, for the time during which the Manager is entitled to exploit the Vessel has the guaranteed particulars attached to this Agreement. (d) that the Vessel has entered into a P and I Club of the International Group. 4.3. UNDERTAKINGS. Each Owner covenants to the Manager with respect to its related Vessel: (a) to exercise due diligence in maintaining the highest fitness of the Vessel. This shall include compliance with the legal rules and requirements requested by the customers of the Manager; (b) to have at all times any certificates required for trading and to ensure a level of maintenance and performance acceptable to all clients of the Manager subject to the Vessel's technical capabilities; (c) to keep the Vessel crewed with personnel experienced and trained in the operation of petroleum gas tankers and conversant in English; (d) to ensure that the master of the Vessel complies with any lawful instruction of the Manager and/or his servants with utmost dispatch; (e) to ensure that the crew cleans the cargo tanks and performs purging and change grade operations where/when permissible carefully and without undue delay in order to present the Vessel for reloading on arrival at the following port and/or berth; and (f) that it will for the duration of this agreement obtain, and if obtained maintain, ISO 9002 and CDI accreditation or a similar recognized standard. 4.4. INSURANCES. (a) Each Owner shall arrange for its own account all necessary marine insurances such as but not limited to P & I, oil pollution, hull and machinery, war risk cover etc. (b) Each Owner shall include in all their marine insurance policies related to its Vessel the Manager as being fully coinsured. However, it is understood among the parties hereto that any amount or amounts not recoverable under such policies due to deductibles and/or limitations contained therein shall be borne by the Owner. (c) If required by the trade of the vessel the Owner shall arrange for Certificates of Financial Responsibility (COFR) and other necessary contracts for supervisor and clean up in the event of oil spills in U.S. waters under the U.S. Oil Pollution Act 1990. (d) Each Owner will handle and settle all claims relating to its Vessel itself and is fully responsible and fully liable for all types of claims related to its Vessel. The Manager will handle cargo claims for the Vessel, if so requested by the Owner. - 5 - 4.5. Any failure of Owner to comply with a warranty or undertaking as contained in Article 4 hereabove shall render him responsible to the Manager for all actual damages Manager or his clients has/have suffered solely and directly from such failure. Article 5. TERM, DURATION AND TERMINATION 5.1 This Agreement shall commence on the date this Agreement is executed and delivered by the parties hereto. 5.2. The term of this Agreement shall commence as to any particular Vessel on the date such Vessel is delivered to the Owner and shall run for three consecutive calendar years. Thereafter it shall continue as to such Vessel for an indefinite period of time with the related Owner or the Manager having the right to terminate same at any time by giving 6 months written notice to the Manager or the Owner, respectively. 5.3. If an Owner wishes (i) to sell its Vessels or (ii) otherwise to terminate this Agreement by withdrawing its Vessel in accordance with Article 5, Clause 5.1. above and if at that time the Manager is obligated under a commitment ("Commitment") for Vessel for the fulfillment of which the Vessel intended to be withdrawn is essential and the Commitment exceeds the period of 6 months, the Manager may decide that withdrawal contrary to 5.1. hereof will only become effective upon the Commitment being terminated. In case the Vessel is declared a total loss the agreement ceases the day the Vessel was last heard of. 5.4. The Manager has the right to terminate the agreement with respect to a specific Vessel (or specific Vessels), if such Vessel has (or such Vessels have) been sold, the shares of the owing company have been sold or for other reasons the party controlling the relevant Vessel (or Vessels) has changed and as determined-in the sole discretion of the Manager - the continuation of the Agreement with the new controlling party may be detrimental to his business. Any of the aforementioned changes are to be advised by the Owner to the Manager without undue delay. In this case the termination of the Agreement shall become effective at the time determined by the Manager irrespective of any commitment with regard to the Vessel (or Vessels) in question. 5.5. If an order be made or resolution be passed for the winding up of an Owner or if a receiver be appointed of the enterprise or property of an Owner or if an Owner shall suspend payment or cease business or make any special arrangement or composition with its creditors the Manager by notice in writing to the Owner may forthwith terminate Agreement with immediate effect irrespective of any commitment with regard to the Vessel (or Vessels) in question. 5.6. Unless otherwise specifically provided in this Agreement the Manager has the right to terminate this Agreement for one or more Vessels only (i) if the Owner is in breach of the terms of the Agreement; and (ii) after having been notified in writing by the Manager to comply with the terms of this Agreement does not do so to the detriment of the Manager and/or his business. - 6 - Article 6. SECURITY INTERESTS, ACCOUNTING. 6.1. EFFECTIVE ASSIGNS. Manager acknowledges that Owners may obtain financing from one or more third party lenders in connection with the purchase of the Vessels. In such event, each Owner will assign as the security interests its rights under this Agreement to the Collateral Trustee. Upon receipt of a written notice from Owner to the effect that Owner has so assigned such collateral to Collateral Trustee, and unless and until Manager is otherwise notified by a Collateral Trustee, this Agreement and any related agreements shall not be amended or modified and no consent or waiver hereunder shall be effective without the prior written consent of the Collateral Trustee. The Collateral Trustee shall have the right to exercise (in its own name) all rights, privileges and remedies of Owner provided herein. Manager agrees to execute, and the Collateral Trustee may record, any instruments and documents relating to such assignments. In case any Owner exercises its right of assignment as described hereabove they are, however, to remain fully responsible for the due fulfillment of this Agreement. 6.2. LOCKBOX ACCOUNT. The Manager hereby acknowledges for the benefit of the Collateral Trustee that all moneys due, including freight, dead freight, demurrage, time charterhire and/or any income receivable in accordance with a charter party are to be paid directly into the Lockbox Account by wire transfer of funds until such time as Manager has received a written notice signed by the Collateral Trustee directing that all or a part of such payments should be made other than into the Lockbox Account. 6.3. The Manager will keep proper books in accordance with international practice for the accounting of shipping companies. The accounting period shall be the calendar year. 6.4. The Manager will be audited by a certified independent third party public accountant on an annual basis at the Owner's expense, if so desired by the Owner. 6.5. The Owner has the right to scrutinize at any time during the Manager's office hours the accounts provided a reasonable notice time has been received and the items to be scrutinized have been identified in advance. The Owner may be assisted by a certified accountant. 6.6. The Manager will deliver to the Owner reports and comply with any reasonable request by any of them for more relevant information forthwith. 6.7. The Manager shall not subcontract any of its obligations hereunder to a third party other than an Affiliated Company without consent of the Owner. GEBAB as contracting party has the right to assign this agreement to any Affiliated Company through a novation agreement replacing GEBAB as contracting partner by such other company . 6.8 Affiliated Companies means any of the following organizations: MarLink Schiffahrtskontor GmbH Martime Asia Limited Martime-Gesellschaft fur maritime Dienstleistungen mbH GasChem Services GmbH & Co. KG - 7 - Article 7. REPRESENTATIONS AND WARRANTIES. 7.1. By Manager. Manager hereby represents and warrants to each Owner as follows: (a) Manager is a corporation duly incorporated and validly existing in good standing under the Laws of Germany (or such other jurisdiction as may be specifically identified in any novation agreement) and has the corporate power to own its assets and carry on its business as it is being conducted and is the holder of all necessary licenses required in connection therewith. (b) Manager has the corporate power to enter into and perform, and has taken all necessary corporate action to authorize the entry into, performance and delivery of, this Agreement and the transactions contemplated by this Agreement; (c) this Agreement has been duly entered into and delivered by Manager, and this Agreement executed and delivered by Manager will, constitute legal, valid and binding obligations of Manager, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors' rights generally, and, to the extent that certain remedies require or may require enforcement by a court of equity, by such principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) as a court having jurisdiction may impose and by Laws which may affect some of such remedies by which do not make the available remedies inadequate for the substantial realization of the benefits provided herein; (d) the entry into and performance by Manager of, and the transactions contemplated by, this Agreement do not and will not: (i) conflict with any Laws binding on Manager; or (ii) conflict with the constitutional documents of Manager; or (iii) conflict with or result in default under any indenture, mortgage,chattel mortgage, deed of trust, conditional sales agreement, lease,bank loan or credit agreement or other agreement which is binding upon Manager or any of its assets nor result in the creation of any security interest over any of its assets (other than the security interests created hereunder); and (e) all authorizations, consents, registrations and notifications required in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated by this Agreement, have been (or will on or before each Delivery Date have been) obtained or effected (as appropriate) and are (or will on their being obtained or effected be) in full force and effect; Article 8. DEFAULTS. - 8 - The occurrence of proven gross negligence of any one or more of the following events shall constitute a "Default" hereunder: (i) Manager's failure to instruct any user of the Vessel to make payments in accordance with the provisions of this Agreement to the Lockbox Account, (ii) failure by the Manager to submit Quarterly Statement for 30 days beyond the due date for such statement, (iii) the filing by Manager or the filing against Manager of any petition under any bankruptcy or insolvency law or for the appointment of a trustee or other officer with similar powers, the adjudication of Manager as insolvent, the liquidation of Manager or the taking of any action for the purpose of the foregoing, (iv) any attachment against substantially all of Manager's properties, and (v) Manager's failure to perform any other term or condition hereunder. Article 9. REMEDIES. In the event of any Default under Article 8 with respect to this Agreement, Owner, in its sole discretion, may exercise any one or more of the following remedies: (i) demand that Manager pays all reasonable legal fees and expenses incurred in exercise of its remedies, (ii) sue Manager for damages for breach of this Agreement and (iii) terminate this Agreement. In any case such claim shall never exceed three times the annual management fee due under this Agreement unless same is covered by the errors and omissions insurance of the Manager. Article 10. MISCELLANEOUS. 10.1. SEVERABILITY AND CONSTRUCTION. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. For purposes of this Agreement except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date hereof; (c) references herein to "Articles", "Sections", "Subsections", "paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Agreement; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular provision; and - 9 - (f) the term "include" or "including" shall mean without limitation by reason of renumeration. 10.2. GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. 10.3. NOTICES. All notices required to be given under any of the provisions of this Agreement shall be deemed properly given if made in writing and deposited in a United States Post office by both registered and first class mail, postage prepaid, bearing the address of the respective parties as hereinafter set forth or if delivered by hand to an officer of the respective party. 10.4. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.5. BINDING NATURE OF AGREEMENT. This Agreement shall be binding upon the successors and assigns of the respective parties hereto. 10.6 ARBITRATION. Should any dispute arise out of this Agreement, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for purpose of enforcing any award, this agreement may be made a rule of the Court. The arbitrators shall be members of the Society of Maritime Arbitrators, Inc. of New York and the proceedings shall be conducted in accordance with the rules of the Society. IN WITNESS WHEREOF, the parties have hereto caused this Master Commercial Vessel Marketing and Services Agreement to be executed as of the 28th day of February , 1997. GEBAB Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH By: /s/ Mathias Pahl --------------------------- Name: Mathias Pahl --------------------------- Title: Director of Shipping --------------------------- Navigator Holdings, PLC on behalf of each individual shipowning company By: /s/ Richard Klapow --------------------------- Name: Richard Klapow --------------------------- Title: Director --------------------------- - 10 - SCHEDULE 1 Name of Ship Owner Hull No. For Vessel - ------------------ ------------------- Navigator Gas (IOM I-A) Limited Hull No. 2245 Navigator Gas (IOM I-B) Limited Hull No. 2246 Navigator Gas (IOM I-C) Limited Hull No. 2247 Navigator Gas (IOM I-D) Limited Hull No. 2248 Navigator Gas (IOM I-E) Limited Hull No. 2249 - 11 -
TABLE OF CONTENTS Article 1. DEFINED TERMS................................................................................. 1 Article 2. COMMERCIAL MANAGEMENT PRINCIPLES.............................................................. 2 Article 3. RIGHTS, AUTHORITY, LIABILITY AND REMUNERATION OF THE MANAGER.................................. 2 Article 4. LIABILITY, WARRANTIES, UNDERTAKINGS OF THE OWNERS, INSURANCE.................................. 5 Article 5. TERM, DURATION AND TERMINATION................................................................ 6 Article 6. SECURITY INTERESTS, ACCOUNTING................................................................ 7 Article 7. REPRESENTATIONS AND WARRANTIES................................................................ 8 Article 8. DEFAULTS...................................................................................... 9 Article 9. REMEDIES...................................................................................... 9 Article 10. MISCELLANEOUS................................................................................. 9
- 12 - MASTER COMMERCIAL MARKETING AND SERVICES AGREEMENT among Navigator Holdings, PLC on behalf of each of the Shipowning Companies identified on Schedule 1 hereto, each an Owner and GEBAB Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH, as Manager Dated as of February 28, 1997 - 13 - EX-10.15 38 PURCHASE AGREEMENT EXECUTION COPY NAVIGATOR GAS TRANSPORT PLC $304,000,000 $217,000,000 10 1/2% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2007 87,000 UNITS CONSISTING OF $87,000,000 12% SECOND PRIORITY SHIP MORTGAGE NOTES DUE 2007 AND WARRANTS TO PURCHASE 666,420 SHARES OF COMMON STOCK OF NAVIGATOR HOLDINGS PLC PURCHASE AGREEMENT July 31, 1997 CREDIT SUISSE FIRST BOSTON CORPORATION CAMBRIDGE PARTNERS, L.L.C. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, N.Y. 10010 Dear Sirs: 1. INTRODUCTORY. Navigator Gas Transport PLC, an Isle of Man public limited company ("Navigator"), and Navigator Holdings PLC, an Isle of Man public limited company ("Holdings" and, together with Navigator, the "Issuers"), propose, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto (the "Purchasers") (i) $217,000,000 aggregate principal amount of Navigator's 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "First Priority Notes") and (ii) 87,000 Units (the "Units"), each Unit consisting of one of Navigator's 12% Second Priority Ship Mortgage Notes Due 2007 (a "Second Priority Note") in a principal amount of $1,000 and 7.66 Warrants (each, a "Warrant") each to purchase one share of common stock, par value $.01 per share, of Holdings ("Holdings Common Stock"). The First Priority Notes and the Second Priority Notes are collectively referred to herein as the "Offered Notes", and the Offered Notes, the Units and the Warrants are collectively referred to herein as the "Offered Securities". The Offered Notes will be unconditionally guaranteed by each subsidiary of Navigator (collectively, the "Guarantors"). The guarantees issued by the Guarantors are herein referred to as the "Guarantors". The First Priority Notes will be issued under an indenture dated as of August 1, 1997 (the "First Priority Indenture"), among Navigator, the Guarantors, Holdings, and United States Trust Company of New York, as trustee (the "First Priority Trustee"). The Second Priority Notes will be issued under an indenture dated as of August 1, 1997 (the "Second Priority Indenture" and, together with the First Priority Indenture, the "Indentures") among Navigator, the Guarantors, Holdings, and The Chase Manhattan Bank, as trustee (the "Second Priority Trustee" and, together with the First Priority Trustee, the "Trustees"). The Warrants will be issued under a warrant agreement dated as of August 7, 1997 (the "Warrant Agreement"), between Holdings and The Chase Manhattan Bank, as warrant agent (the "Warrant Agent"). The United States Securities Act of 1933 is herein referred to as the "Securities Act". The net proceeds of the sale of the Offered Securities will be used primarily 2 to fund the construction of five gas carriers (collectively, the "Vessels"), each pursuant to a Building Contract (as defined). To secure their respective obligations under the Offered Notes, the Guarantees, the Security Documents (as defined) and the Letter of Credit Reimbursement Agreement (as defined), on the Closing Date (as defined): (i) Holdings will pledge and assign to the Collateral Agent (as defined) all its right, title and interest in all the shares of capital stock of Navigator ("Pledged Navigator Stock"); (ii) Navigator will pledge and assign to the Collateral Agent all its right, title and interest in all the shares of capital stock of the Guarantors ("Pledged Guarantor Stock" and, together with the Pledged Navigator Stock, the "Pledged Stock"), the Intercompany Note and all Trust Accounts; and (iii) the Guarantors will pledge and assign to the Collateral Agent all their respective rights, title and interests in (a) all Trust Accounts; (b) the Building Contracts; (c) the Building Contract Guarantees (as defined) and the Performance Bonds (as defined); (d) the Management Agreement, the Technical Supervision Agreement, the Technical Management Agreement and the Commercial Management Agreement (each, as defined); (e) certain other related collateral; and (f) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing (the collateral described in clauses (i)-(iii) above being herein referred to as the "Closing Date Collateral"). Terms not defined herein shall have the meanings assigned to them in the Intercreditor Agreement (as defined). On the Delivery Date (as defined) of each Vessel, the Guarantor of such Vessel will grant to the Collateral Agent all its right, title and interest in (i) such Vessel pursuant to the terms of the related mortgage (a "Mortgage" and, collectively, the "Mortgages"), (ii) the Trust Accounts established or funded after the Delivery Date of such Vessel, (iii) earnings and insurances with respect to such Vessel, (iv) any and all revenue earned from the employment of such Vessel, to be held in the Revenue Account or in any other applicable Trust Account, (v) requisition proceeds and the insurance policies in relation to such Vessel, (vi) certain other related collateral and (vii) all income, payments, proceeds, rights and claims, resulting from or arising out of the foregoing (the collateral described in clauses (i)-(vii) above being herein referred to as the "Delivery Date Collateral"). The rights of the various creditors of the Issuers and the Guarantors will be governed by a Collateral Agency and Intercreditor Agreement dated as of August 1, 1997 (the "Intercreditor Agreement"), among the Issuers, the Guarantors, the Trustees, the Letter of Credit Issuer (as defined) and United States Trust Company of New York, as collateral agent (the "Collateral Agent"). In addition, on or prior to the Closing Date, each Guarantor will enter into an Issue of One Debenture with the Collateral Agent (collectively, the "Issues of One Debenture"). The Intercreditor Agreement, the Issues of One Debenture and the Mortgages will hereinafter be collectively referred to as the "Security Documents". The Issuers and the Guarantors hereby agree, jointly and severally, with the several Purchasers as follows: 2. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS AND THE GUARANTORS. The Issuers and the Guarantors represent and warrant to, and agree with, jointly and severally, the several Purchasers that: (a) A preliminary offering circular and an offering circular relating to the Offered Securities to be offered by the Purchasers have been prepared by the Issuers and the Guarantors. Such preliminary offering circular and offering circular, as supplemented as of the date of this Agreement, together with any other document approved by the Issuers and the Guarantors for use in connection with the contemplated resale of the Offered Securities are hereinafter collectively referred to as the "Offering Document". On the date of this Agreement, the Offering Document does not include 3 any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Offering Document based upon written information furnished to the Issuers or the Guarantors by any Purchaser through Credit Suisse First Boston Corporation ("CSFBC") specifically for use therein, it being expressly understood and agreed that the only such information is that described as such in Section 7(b) hereto. (b) Each of the Issuers and the Guarantors has been duly incorporated and is a validly existing corporation in good standing under the laws of the Isle of Man, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Document; and each of the Issuers and the Guarantors is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification. (c) All the issued and outstanding capital stock of Navigator and each of the Guarantors has been duly authorized and validly issued and is fully paid and nonassessable, and such capital stock is legally owned directly by Holdings (in the case of Navigator), except for one share of capital stock of Navigator that is beneficially owned by Holdings but legally owned by Mr. Edward Cain of 15-19 Athol Street, Douglas, Isle of Man, IM1 1LB, and by Navigator (in the case of the Guarantors), free from liens, encumbrances and defects, except those liens created by or pursuant to the Security Documents. Holdings has no direct or indirect subsidiaries other than Navigator and the Guarantors. (d) Each of the Indentures (including the Guarantees), the Security Documents and the Intercompany Note has been duly authorized; the Offered Notes have been duly authorized; and when the Offered Notes are delivered and paid for pursuant to this Agreement on the Closing Date, each of the Indentures (including the Guarantees), the Security Documents and the Intercompany Note will have been duly executed and delivered and will conform to the description thereof contained in the Offering Document, such Offered Notes will have been duly executed, authenticated, issued and delivered and will conform to the description thereof contained in the Offering Document, and each of the Indentures (including the Guarantees), the Security Documents and the Intercompany Note, and such Offered Notes will constitute valid and legally binding obligations of the Issuers and the Guarantors, as the case may be, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. On the date on which a Vessel is accepted by a Guarantor pursuant to a Building Contract (a "Delivery Date") and upon proper filing or recording in the appropriate registry and filing offices in the Republic of Liberia ("Liberia"), the Mortgage with respect to such Vessel will create a valid, perfected mortgage on such Vessel securing the payment of the Offered Notes in accordance with the terms thereof and, except as permitted by the Security Documents, on such Delivery Date, such Vessel will be free and clear of all Liens. On the Closing Date, upon the execution and delivery of the Intercreditor Agreement and the Issues of One Debenture and upon delivery to the Collateral Agent of certificates evidencing the Pledged Stock and the Intercompany Note, the Intercreditor Agreement and the Issues of One Debenture will create valid, first priority perfected security interests in the Closing Date Collateral securing the Offered Notes and the Guarantees in accordance with the terms thereof and the Closing Date Collateral will be free and clear of all liens, except those liens created by or pursuant to the Security Documents. The Closing Date Collateral and the Delivery 4 Date Collateral for the Offered Notes and the Guarantees consist of all the real and personal property of the Issuers and the Guarantors. (e) The Warrant Agreement has been duly authorized by Holdings; the Warrants have been duly authorized by Holdings; and when the Warrants are delivered and paid for pursuant to this Agreement on the Closing Date, the Warrant Agreement will have been duly executed and delivered by Holdings, such Warrants will conform to the description thereof contained in the Offering Document and the Warrant Agreement and the Warrants will constitute valid and legally binding obligations of Holdings, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (f) No consent, approval, authorization, permission, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Offered Securities by the Issuers and the issuance of the Guarantees by the Guarantors, or for the execution, delivery and performance of any of the Indentures, the Security Documents (including the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Documents), the Intercompany Note, the Warrant Agreement, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement or the Registration Rights Agreement, except such as may be required under state securities laws and except for such filings with the Securities and Exchange Commission (the "Commission") as are required in connection with the Registration Rights Agreement dated the date hereof (the "Registration Rights Agreement"), among Navigator, the Guarantors and the Purchasers, and except for the filing of the Security Documents with the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act 1931, as amended (the "Companies Act"), and except for the permission of the Treasury of the Isle of Man pursuant to Section 2(2)(d) of the Prevention of Fraud (Investments) Act 1968 (an Act of Tynwald) (the "Prevention of Fraud Act"). (g) Under current laws and regulations of the Isle of Man and any political subdivision thereof, all interest, principal, premium, if any, and other payments due or made on the Offered Notes may be paid by the Issuers or by the Guarantors to the holders thereof in United States dollars and all such payments made to holders thereof who are non-residents of the Isle of Man will not be subject to income, withholding or other taxes under laws and regulations of the Isle of Man or any political subdivision or taxing authority thereof or therein and will otherwise be free and clear of any other tax, duty, withholding or deduction in the Isle of Man or any political subdivision or taxing authority thereof or therein and without the necessity of obtaining any governmental authorization in the Isle of Man or any political subdivision or taxing authority thereof or therein. (h) Each of this Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Issuers and the Guarantors. (i) The execution, delivery and performance of the Indentures (including the Guarantees), the Security Documents, the Warrant Agreement, the Intercompany Note, the Collateral Agreements, this Agreement and the Registration Rights Agreement, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Issuers or the Guarantors or any of their respective properties, 5 (ii) any agreement or instrument to which the Issuers or the Guarantors is a party or by which the Issuers or the Guarantors is bound or to which any of the properties of the Issuers or the Guarantors is subject, or (iii) the memorandum and articles of association of the Issuers or the Guarantors; and each of the Issuers has full power and authority to authorize, issue and sell the Offered Securities, and each of the Guarantors has full power and authority to authorize and issue the Guarantees, as contemplated by this Agreement. (j) The execution, delivery and performance by the Issuers and the Guarantors of the Letter of Credit Reimbursement Agreement and Guaranty dated as of August 7, 1997 (the "Letter of Credit Reimbursement Agreement"), among the Issuers, the Guarantors, Credit Suisse First Boston, acting through its London branch as Administrating Bank and Funding Bank (the "Letter of Credit Issuer"), and the participating banks from time to time party thereto will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Issuers or the Guarantors or any of their respective properties, (ii) any agreement or instrument to which the Issuers or the Guarantors is a party or by which the Issuers or the Guarantors is bound or to which any of the properties of the Issuers or the Guarantors is subject, or (iii) the memorandum and articles of association of the Issuers or the Guarantors. (k) The execution and delivery by the Issuers and the Guarantors of the Letter of Credit Reimbursement Agreement has been duly authorized; and on the Closing Date, the Letter of Credit Reimbursement Agreement will have been duly executed and delivered by the Issuers and the Guarantors, will constitute valid and legally binding obligations of the Issuers and the Guarantors and will be enforceable against the Issuers and the Guarantors in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity, and the Letter of Credit and the Letter of Credit Reimbursement Agreement will conform to the descriptions thereof contained in the Offering Document. (l) The execution, delivery and performance by the Issuers and the Guarantors (to the extent a party thereto) of (i) each of the five Amended and Restated Shipbuilding Contracts dated June 26, 1997 (the "Building Contracts"), among Holdings, China Shipbuilding Trading Company, Limited ("CSTC"), and Jiangnan Shipyard ("Jiangnan"), and each related Assignment and Assumption Agreement dated as of August 1, 1997, between Holdings and the applicable Guarantor (collectively, the "Assignment and Assumption Agreements"), (ii) the Triparty Agreement dated July 25, 1997 (the "Triparty Agreement"), among Holdings, CSTC, Jiangnan and Tractebel Gas Engineering GmbH ("TGE"), (iii) the Management Agreement dated as of July 1, 1997 (the "Management Agreement"), between Navigator Gas Management Limited, the Issuers and the Guarantors, (iv) the Agreement on Contract for Technical Matters dated as of February 28, 1997 (the "Technical Supervision Agreement"), among Gesellschaft fur Konzeption, Beratung, Vermittlung und Betreuung privater Investitionen mbH ("GEBAB"), Holdings, on behalf of the Guarantors, CSTC and Jiangnan, (iv) The Baltic and International Maritime Council (BIMCO) Standard Ship Management Agreement dated February 28, 1997 (the "Technical Management Agreement"), between Holdings, on behalf of the Guarantors, and GEBAB and (v) the Master Commercial Marketing and Services Agreement dated as of February 28, 1997 (the "Commercial Management Agreement"), between Holdings, on behalf of the Guarantors, and GEBAB (collectively, the "Collateral Agreements"), and of any assignment thereof effected on the Closing Date pursuant to the Intercreditor Agreement and the Issues of One Debenture, will not result in a breach or violation of 6 any of the terms and provisions of, or constitute a default under, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Issuers or the Guarantors or any of their respective properties, (ii) any agreement or instrument to which the Issuers or the Guarantors is a party or by which the Issuers or the Guarantors is bound or to which any of the properties of the Issuers or the Guarantors is subject, or (iii) the memorandum and articles of association of the Issuers or the Guarantors. (m) Each of the Collateral Agreements, the Building Contract Guarantees and the Performance Bonds conforms to the description thereof contained in the Offering Document. (n) Each of the Issuers and the Guarantors has good and marketable title to all properties and assets owned by them, in each case free from liens, encumbrances and defects (other than such liens, encumbrances and defects created under the Security Documents) that would affect the value thereof or interfere with the use made or to be made thereof by them. (o) Each of the Issuers and the Guarantors possesses adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Issuers or the Guarantors, would individually or in the aggregate have a material adverse effect on the Issuers and the Guarantors taken as a whole. (p) None of the Issuers or the Guarantors is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would individually or in the aggregate have a material adverse effect on the Issuers and the Guarantors, taken as a whole; and neither the Issuers nor the Guarantors are aware of any pending investigation which might lead to such a claim. (q) There are no pending actions, suits or proceedings against or affecting the Issuers, the Guarantors or any of their respective properties that, if determined adversely to the Issuers or the Guarantors, would individually or in the aggregate have a material adverse effect on the condition (financial or other), business, properties or results of operations of the Issuers and the Guarantors taken as a whole, or would materially and adversely affect the ability of the Issuers or the Guarantors to perform their respective obligations under the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, the Registration Rights Agreement or this Agreement, or which are otherwise material in the context of the sale of the Offered Securities; and no such actions, suits or proceedings are threatened or, to the Issuers' or the Guarantors' knowledge, contemplated. (r) The assumptions used in preparing, and the estimates disclosed in, the forecasted financial information under the caption "Certain Financial Forecast Information" represent management's current best assumptions and estimates of the 7 anticipated results of operations for Holdings and its consolidated subsidiaries for each of the years in the three-year period ended December 31, 2001, and the assumptions disclosed therein are all those the Issuers and the Guarantors believe are significant to the forecasted financial information. (s) There has occurred no development or event involving a prospective material adverse change in the condition (financial or other), business, properties or results of operations of the Issuers and the Guarantors taken as a whole, and there has been no dividend or distribution of any kind declared, paid or made by the Issuers on any class of their respective capital stock. (t) None of the Issuers or Guarantors is an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the "Investment Company Act"), nor are any of them a closed-end investment company required to be registered, but not registered, thereunder; and neither of the Issuers nor any of the Guarantors is and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document, will be an "investment company" as defined in the Investment Company Act or a "collective investment scheme" in the Isle of Man as defined in Sections (2) and (11) of the Financial Supervision Act 1988. (u) No securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation system. (v) The offer and sale of the Offered Securities in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act; and prior to the effectiveness of a registration statement as contemplated in the Registration Rights Agreement, it is not necessary to qualify an indenture in respect of the Offered Notes under the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (w) Neither the Issuers, the Guarantors, nor any of their affiliates, nor any person acting on their behalf (i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities or (ii) has offered or will offer or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (B) with respect to any such securities sold in reliance on Rule 903 of Regulation S ("Regulation S") under the Securities Act, by means of any directed selling efforts within the meaning of Rule 902(b) of Regulation S. The Issuers, the Guarantors, their affiliates and any person acting on their behalf have complied and will comply with the offering restrictions requirement of Regulation S. The Issuers and the Guarantors have not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement and the Registration Rights Agreement. (x) The proceeds to the Issuers from the offering of the Offered Securities will be used as described in the Offering Document. 8 (y) None of the Issuers, the Guarantors, any of their respective affiliates, or any director, officer, agent, employee or other person associated with or acting on behalf of the Issuers, the Guarantors or any of their respective affiliates has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (z) The representations and warranties made by the Issuers and the Guarantors (to the extent a party thereto) in the Indentures, the Warrant Agreement and the Security Documents will, when such documents are executed and delivered, be true and correct. (aa) As of the Closing Date and after the application of the proceeds of the offering as described in the Offering Document, (i) the amounts held in the Pre-Funding Account will provide cash at such times and in such amounts as will be sufficient to pay, when due, each installment payment for the Purchase Price (as defined in the Indentures) for each Vessel as well as all fees allocable to such Vessel prior to its Delivery Date and (ii) the amounts held in the Capitalized Interest Account will provide cash at such times and in such amounts as will be sufficient to pay, when due, interest on the Allocated Principal Amount (as defined in the Indentures) of the Offered Notes for each Vessel during the period prior to the Contractual Delivery Date (as defined in the Indentures) of such Vessel. (bb) Based upon the application of the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations thereunder, and published rulings and court decisions in effect as of the date hereof, and the facts set forth in the Offering Document, and assuming compliance with all provisions of the Indentures and other relevant documents, the First Priority Notes will, and the Second Priority Notes should, be characterized as indebtedness of Navigator for U.S. Federal income tax purposes. 3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Issuers agree to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Issuers, at a purchase price of (i) 96.5% of the principal amount thereof plus accrued interest (if any) from August 7, 1997, to the Closing Date, the respective principal amounts of First Priority Notes set forth opposite the names of the several Purchasers in Schedule A hereto and (ii) $965.00 per Unit plus accrued interest (if any) on the Second Priority Notes from August 7, 1997, to the Closing Date, the respective number of Units set forth opposite the names of the several Purchasers in Schedule A hereto. The Issuers will deliver against payment of the purchase price the Offered Securities in the form of one or more permanent global securities in definitive form (the "Global Securities") deposited with the applicable Trustee as custodian for The Depository Trust Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC. Interests in any permanent Global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Offering Document. Payment for the Offered Securities shall be made by the Purchasers in Federal (same day) funds by wire transfer to an account previously designated to CSFBC by the Issuers at a bank acceptable to CSFBC, at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019-7475 at 10:00 A.M. (New York time), on August 7, 1997, or at such other time not later than seven full business days thereafter as CSFBC and the Issuers determine, such time being herein referred to as the "Closing Date", against delivery to the applicable Trustee as custodian for DTC of the 9 Global Securities representing all the Offered Securities. The Global Securities will be made available for checking at the above office of Cravath, Swaine & Moore at least 24 hours prior to the Closing Date. 4. REPRESENTATIONS BY PURCHASERS; RESALE BY PURCHASERS. (a) Each Purchaser severally represents and warrants to the Issuers and the Guarantors that it is an "accredited investor" within the meaning of Regulation D under the Securities Act. (b) Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Purchaser severally represents and agrees that it has offered and sold the Offered Securities, and will offer and sell the Offered Securities (i) as part of its distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 or Rule 144A under the Securities Act ("Rule 144A"). Accordingly, neither such Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts with respect to the Offered Securities, and such Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the date of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them by Regulation S." Terms used in this subsection (b) have the meanings given to them by Regulation S. (c) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Issuers. (d) Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser severally agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. 10 (e) Each of the Purchasers severally represents and agrees that (i) it has not offered or sold and prior to the date six months after the date of issue of the Offered Securities will not offer or sell any Offered Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Offered Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. 5. CERTAIN AGREEMENTS OF THE ISSUERS AND THE GUARANTORS. The Issuers and the Guarantors agree, jointly and severally, with the several Purchasers that: (a) The Issuers will advise CSFBC promptly of any proposal to amend or supplement the Offering Document and will not effect such amendment or supplementation without CSFBC's consent. If, at any time prior to the completion of the resale of the Offered Securities by the Purchasers, any event occurs as a result of which the Offering Document as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Issuers promptly will notify CSFBC of such event and promptly will prepare, at its own expense, an amendment or supplement which will correct such statement or omission. Neither CSFBC's consent to, nor the Purchasers' delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereto. (b) The Issuers will furnish to CSFBC copies of any preliminary offering circular, the Offering Document and all amendments and supplements to such documents, in each case as soon as available and in such quantities as CSFBC requests, and the Issuers will furnish to CSFBC on the Closing Date three copies of the Offering Document signed by a duly authorized officer of each of the Issuers. At any time when either of the Issuers is not subject to Section 13 or 15(d) of the Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the Issuers will promptly furnish or cause to be furnished to each of the Purchasers and, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Issuers will pay the expenses of printing and distributing to the Purchasers all such documents. (c) The Issuers will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions in the United States and Canada as CSFBC designates and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Purchasers, provided that neither of the Issuers nor any of the Guarantors will be required to qualify as a foreign corporation or to file a general consent to service of process in any such state. 11 (d) During the period of five years after the Closing Date, the Issuers will furnish to CSFBC and, upon request, to each of the other Purchasers, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Issuers will furnish to CSFBC and, upon request, to each of the other Purchasers (i) as soon as available, a copy of each report or financial statement furnished to or filed with the Commission or any securities exchange on which any class of securities of either of the Issuers is listed, and (ii) from time to time, such other information concerning the Issuers as CSFBC may reasonably request. (e) During the period of two years after the Closing Date, the Issuers will, upon request, furnish to CSFBC, each of the other Purchasers and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Offered Securities. (f) During the period of two years after the Closing Date, the Issuers will not, and will not permit any of its affiliates (as defined in Rule 144) to, resell any of the Offered Securities that have been reacquired by any of them. (g) Neither of the Issuers nor any of the Guarantors will be or become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act, or is, or will be or become, a closed-end investment company required to be registered, but not registered, under the Investment Company Act. (h) The Issuers and the Guarantors will pay all expenses (together with VAT where applicable) incidental to the performance of their obligations under this Agreement, the Registration Rights Agreement, the Indentures, the Security Documents, the Warrant Agreement and the Intercompany Note, including (i) the fees and expenses of the Trustees, the Collateral Agent, the Warrant Agent and their professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Registration Rights Agreement, the Offered Securities, the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, the Offering Document and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (iii) the cost of qualifying the Offered Securities for trading in the Private Offerings, Resale and Trading through Automated Linkages (PORTAL) market and any expenses incidental thereto; and (iv) the cost of any advertising approved by the Issuers in connection with the issue of the Offered Securities. The Issuers or the Guarantors will also pay or reimburse the Purchasers (to the extent incurred by them) for any expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions in the United States and Canada as CSFBC designates and the printing of memoranda relating thereto, for any fees charged by investment rating agencies for the rating of the Offered Securities, for all travel expenses of the Purchasers', the Issuers' and the Guarantors' officers and employees and any other expenses of the Purchasers, the Issuers and the Guarantors in connection with attending or hosting meetings with prospective purchasers of the Offered Securities from the Purchasers and for expenses incurred in distributing preliminary offering circulars and the Offering Document (including any amendments and supplements thereto) to the Purchasers. (i) In connection with the offering, until CSFBC shall have notified the Issuers and the other Purchasers of the completion of the resale of the Offered Securities, neither the Issuers nor any of their affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which they or any of their 12 affiliates have a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither the Issuers nor any of their affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities. (j) The Issuers and the Guarantors will indemnify and hold harmless the Purchasers against any documentary, stamp or similar issuance tax, including any interest and penalties, on the creation, issuance and sale of the Offered Securities and on the execution and delivery of this Agreement. All payments to be made by the Issuers or the Guarantors hereunder shall be made without withholding or deduction for or on account of any present or future taxes, duties or governmental charges whatsoever unless the Issuers or the Guarantors are compelled by law to deduct or withhold such taxes, duties or charges. In that event, the Issuers or the Guarantors shall pay such additional amounts as may be necessary in order that the net amounts received after such withholding or deduction shall equal the amounts that would have been received if no withholding or deduction had been made. (k) The Issuers will cause each Offered Security to bear the legend set forth in the form of note attached as Exhibit 1 to the Rule 144A/Regulation S Appendix to each Indenture or the form of warrant attached as Exhibit A to the Warrant Agreement, as the case may be, until such legend shall no longer be necessary or advisable because the Offered Securities are no longer subject to the restrictions on transfer described therein. (l) The proceeds to the Issuers from the offering of the Offered Securities will be used as described in the Offering Document. 6. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of the several Purchasers to purchase and pay for the Offered Securities will be subject to the accuracy of the representations and warranties on the part of the Issuers and the Guarantors herein, to the accuracy of the statements of officers of the Issuers and the Guarantors made pursuant to the provisions hereof, to the performance by the Issuers and the Guarantors of their respective obligations hereunder and to the following additional conditions precedent: (a) The Purchasers shall have received from Coopers & Lybrand L.L.P. (i) a letter, dated the Closing Date, in an agreed form and (ii) a certificate, dated the Closing Date, certifying that after the application of the net proceeds of the offering as described in the Offering Document, the amounts held in the Pre-Funding Account will provide cash at such times and in such amounts as will be sufficient to pay, when due, each installment payment for the Purchase Price for each Vessel as well as all fees allocable to such Vessel prior to its Delivery Date, and the amounts held in the Capitalized Interest Account will provide cash at such times and in such amounts as will be sufficient to pay, when due, interest on the Allocated Principal Amount of the Offered Notes for each Vessel during the period prior to the Contractual Delivery Date of such Vessel. (b) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) a change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of CSFBC, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market, or (ii) (A) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Issuers or the Guarantors which, in the judgment of CSFBC, is material and adverse and makes it impractical or inadvisable to 13 proceed with completion of the offering or the sale of and payment for the Offered Securities; (B) any downgrading in the rating of any debt securities of either of the Issuers or any of the Guarantors by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of either of the Issuers or any of the Guarantors (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (C) any suspension or limitation of trading in securities generally on the New York Stock Exchange or The Nasdaq National Market, or any setting of minimum prices for trading on such exchange or such market, or any suspension of trading of any securities of either of the Issuers or any of their respective subsidiaries on any exchange or in the over-the-counter market; (D) any banking moratorium declared by U.S. Federal, New York or Isle of Man authorities; or (E) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of CSFBC, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the Offered Securities. (c) The Purchasers shall have received an opinion, dated the Closing Date, of Thacher Proffitt & Wood, counsel for the Issuers and the Guarantors, substantially to the effect that: (i) assuming due authorization, execution and delivery by the Issuers and the Guarantors, as the case may be, the Offered Securities have been duly authenticated and each of the Indentures, the Warrant Agreement, the Security Documents to be executed and delivered on the Closing Date, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements and the Offered Securities conforms to the descriptions thereof contained in the Offering Document; and each of the Indentures, the Warrant Agreement, such Security Documents, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements and the Offered Securities constitutes the valid and legally binding obligations of the Issuers and the Guarantors (to the extent a party thereto), enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (ii) neither of the Issuers nor any of the Guarantors is and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document, will be an "investment company" as defined in the Investment Company Act; (iii) no consent, approval, authorization or order of, or filing with, any New York or Federal governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Offered Securities by the Issuers and the issuance of the Guarantees by the Guarantors, or for the execution, delivery and performance of any of the Indentures, the Security Documents (including the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Documents), the Intercompany Note, the Warrant Agreement, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement or the Registration Rights Agreement, except such as may be required under state securities laws and except for such filings with 14 the Commission as are required in connection with the Registration Rights Agreement; (iv) the execution, delivery and performance of the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement and the Registration Rights Agreement, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any New York or Federal governmental agency or body or any court having jurisdiction over the Issuers or the Guarantors or any of their respective properties, or any agreement or instrument to which the Issuers or the Guarantors is a party or by which the Issuers or the Guarantors is bound or to which any of the properties of the Issuers or the Guarantors is subject; (v) no authorization, consent, license, permission, permit or approval (including exchange control approval) of or action by, and no notice to or filing with, any governmental authority or regulatory body of Liberia or of the State of New York, is required for the execution, delivery and performance of the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement or the Registration Rights Agreement by the respective parties thereto, and no such authorization, consent, license, permission, permit, approval, action, notice or filing is required for the grant by the Issuers and the Guarantors of the security interests in the Pledged Collateral under the Security Documents or the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Documents; (vi) upon the recording of a Mortgage with respect to a Vessel in the Office of the Deputy Commissioner of Maritime Affairs of the Republic of Liberia at the Port of New York in accordance with the laws of Liberia on the Delivery Date of such Vessel, the Mortgage will create a preferred mortgage lien covering such Vessel; (vii) the security interests in the Closing Date Collateral created by each Security Document delivered on the Closing Date do not require any action to be taken under or pursuant to the laws of Liberia or of the State of New York, in order to create or perfect such security interests or to permit the Collateral Agent to enforce its rights under the Security Document creating the same, other than (A) the delivery by Holdings of the stock certificates of Navigator to the Collateral Agent on the Closing Date, (B) the delivery by Navigator of the stock certificates of the Guarantors to the Collateral Agent on the Closing Date and (C) the delivery by the Guarantors of the Intercompany Note to Navigator; (viii) the provisions of the Security Documents are effective to create in favor of the Collateral Agent, acting as agent for the Trustees and the Letter of Credit Issuer as the secured parties, (A) a valid first priority perfected security interest in all right, title and interest of the Issuers and the Guarantors in the Pledged Collateral and (B) a valid first priority security interest in all right, title and interest of the Issuers and the Guarantors in the Closing Date Collateral, the perfection and effect of perfection or nonperfection of such Closing Date Collateral consisting of "accounts", "general intangibles" and "mobile goods" 15 (each, as defined in the Uniform Commercial Code of New York) are governed by the law of the Isle of Man; (ix) the form of Mortgage attached as Exhibit A to the Intercreditor Agreement conforms to the description thereof contained in the Offering Document; (x) such counsel have no reason to believe that the Offering Document, or any amendment or supplement thereto, as of the date hereof and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein not misleading; the descriptions in the Offering Document of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information called for with respect to such statutes, legal and governmental proceedings and contracts and other documents and fairly summarize the matters referred to therein; it being understood that such counsel need express no opinion as to the financial statements or other financial data contained in the Offering Document; (xi) it is not necessary in connection with (A) the offer, sale and delivery of the Offered Securities by the Issuers to the several Purchasers pursuant to this Agreement or (B) the initial resales of the Offered Securities by the several Purchasers in the manner contemplated by this Agreement, to register the Offered Securities under the Securities Act or, as to the Offered Notes, to qualify an indenture in respect thereof under the Trust Indenture Act; (xii) assuming the Collateral Agent has taken delivery of, and acquired its security in, the Pledged Stock in good faith and without notice of any "adverse claim" as defined in the Uniform Commercial Code of the State of New York, upon execution and delivery of the Intercreditor Agreement by the Issuers and the Guarantors and the delivery to the Collateral Agent of certificates evidencing the Pledged Stock, together with stock powers properly executed in blank with respect thereto, and the Intercompany Note, the Collateral Agent will have a valid, first priority perfected security interest in all right, title and interest of the Issuers and the Guarantors in the Pledged Collateral, free and clear of any liens or encumbrances; (xiii) insofar as any matter of United States maritime law or Liberian law is addressed therein, the statements made in the Offering Document, to the extent that they constitute matters of law or legal conclusions, fairly present the information disclosed therein; and (xiv) based upon the application of the provisions of the Code, the Treasury regulations thereunder, and published rulings and court decisions in effect as of the date hereof, and the facts set forth in the Offering Document, and assuming compliance with all provisions of the Indentures and other relevant documents, the First Priority Notes will, and the Second Priority Notes should, be characterized as indebtedness of Navigator for U.S. Federal income tax purposes. 16 (d) The Purchasers shall have received an opinion, dated the Closing Date, of Cains, special Isle of Man counsel for the Issuers and the Guarantors, substantially to the effect that: (i) each of the Issuers and the Guarantors has been duly incorporated, is validly existing as a corporation in good standing under the laws of the Isle of Man and has the corporate power and authority to own its property and to conduct its business as described in the Offering Document; (ii) the authorized capital stock of Holdings conforms as to legal matters to the description thereof contained in the Offering Document, and all capital stock in Holdings has been duly authorized, and validly issued, fully paid and nonassessable to such persons and for such consideration as is described in the Offering Document; (iii) all the issued shares of capital stock of the Issuers and the Guarantors have been duly authorized, validly issued, fully paid and nonassessable; to such counsel's knowledge, all the issued shares of Navigator and the Guarantors are legally owned by Holdings or Navigator, respectively, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, except for one share of Navigator that is beneficially owned by Holdings but legally owned by Mr. Edward Cain of 15-19 Athol Street, Douglas, Isle of Man, IM1 1LB, and except for the security interests created by or pursuant to the Security Documents; and to such counsel's knowledge, there are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock of Navigator or any of the Guarantors; (iv) the Offered Securities have been duly authorized, executed, issued and delivered by Navigator or Holdings, as the case may be, and conform to the descriptions thereof contained in the Offering Document; (v) each of this Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Issuers and the Guarantors (to the extent a party thereto); (vi) each of the Indentures, the Security Documents to be executed and delivered on the Closing Date, the Warrant Agreement, the Intercompany Note, the Letter of Credit Reimbursement Agreement and the Collateral Agreements has been duly authorized, executed and delivered by the Issuers and the Guarantors (to the extent a party thereto), and constitute valid and legally binding obligations of the Issuer or the Guarantor party thereto, enforceable against such Issuer or such Guarantor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability affecting creditors' rights and to general equity principles; (vii) no withholding taxes will be imposed on payments of principal, interest or premium (if any) thereon with respect to the Offered Notes and the holders of the Offered Notes will not be subject to any income taxes imposed by the Isle of Man solely as a result of owning the Offered Notes. In addition, the holders of the Offered Notes will not be subject to any income or withholding taxes imposed by the Isle of Man solely as a result of owning the Warrants, exercising the Warrants to purchase Holdings Common Stock or owning Holdings Common Stock. All filing, registration and recording fees 17 required under the laws of the Isle of Man in connection with the Indentures or any Security Document or other fees necessary to ensure the validity, effectiveness and priority of any liens, charges and encumbrances created thereby have been paid, other than in connection with the recording of the Mortgages; (viii) insofar as any matter of Isle of Man law is addressed therein, the statements made in the Offering Document, to the extent that they constitute matters of law or legal conclusions, fairly present the information disclosed therein; (ix) no consent, approval, authorization, permission or order of, or filing with, any court, regulatory body, administrative agency or other governmental body of the Isle of Man is required for the offering and sale of the Offered Securities or for the execution, delivery and performance of any of the Indentures, the Security Documents (including the exercise by the Collateral Agent of the rights and remedies granted to it under any of the Security Documents), the Intercompany Note, the Warrant Agreement, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement or the Registration Rights Agreement by the respective parties thereto, except for the filing of the Security Documents with the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act, and except for the permission of the Treasury of the Isle of Man pursuant to Section 2(2)(d) of the Prevention of Fraud Act; (x) the security interests created in the Closing Date Collateral by each Security Document to be executed and delivered on the Closing Date do not require any action to be taken under or pursuant to the laws of the Isle of Man in order to create or perfect such security interests or to permit the Collateral Agent to enforce its rights under the Security Document creating the same, other than (A) the delivery by Holdings of the stock certificates of Navigator to the Collateral Agent on the Closing Date, (B) the delivery by Navigator of the stock certificates of the Guarantors to the Collateral Agent on the Closing Date, (C) the delivery by each Guarantor of an Intercompany Note to Navigator; and (D) the filing of the Security Documents with the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act; (xi) each Issue of One Debenture under which the related Guarantor creates, for the benefit of the Collateral Agent as the secured party, a valid security interest in the assets of such Guarantor and the proceeds thereof, which security interest will, upon the filing of the Security Documents with the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act, rank in priority to other charges created by such Guarantor to such counsel's knowledge after due inquiry, except for those interests which, by operation of law, will take priority; (xii) the security interests created by the Security Documents (with the exception of floating charge elements of the Issue of One Debenture and any other Security Document) are specific and therefore, upon the filing of the Security Documents with the Companies Registry in the Isle of Man pursuant to Section 79 of the Companies Act, will rank in priority to all other security interests in the Closing Date Collateral and the Delivery Date Collateral that are not created under the Security Documents, except for those interests which, by operation of law, will take priority; 18 (xiii) the Security Documents constitute, in respect of floating charge elements thereof, a first priority perfected floating charge (but not a fixed charge); recoveries under the floating charge element may be subject to certain preferential creditors; (xiv) the choice of the law of the State of New York to govern this Agreement, the Registration Rights Agreement, the Indentures, the Security Documents to be executed and delivered on the Closing Date, the Warrant Agreement, the Intercompany Note and the Offered Securities constitutes a valid choice of law insofar as the law of the Isle of Man is concerned. The submission by the Issuers and the Guarantors to the non-exclusive jurisdiction of any Federal or state court in the Borough of Manhattan, The City of New York is a valid submission insofar as the law of the Isle of Man is concerned; in this regard we note that Cambridge Partners, L.L.C. has accepted its appointment by the Issuers and the Guarantors as their agent to accept service of process in the United States of America under this Agreement, the Registration Rights Agreement, the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note and the Offered Securities; (xv) in a suit on the merits brought before an Isle of Man court, an Isle of Man court may, if so requested and at its discretion, enforce an agreement between the parties as to a judgment currency other than pounds sterling; (xvi) any final and conclusive money judgment (whether in pounds sterling or otherwise) obtained in a properly constituted court of the United States will be recognized and enforceable in any proceedings before the courts of the Isle of Man without re-examination or re-litigation on any matter which shall be the subject of that judgment; (xvii) none of the Issuers or the Guarantors nor any of their respective properties has any immunity from jurisdiction of any court or from any legal process under the laws of the Isle of Man; and (xviii) the execution, delivery and the performance by the Issuers and the Guarantors of the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, the Letter of Credit Reimbursement Agreement, the Collateral Agreements, this Agreement and the Registration Rights Agreement (to the extent a party thereto), and, in the case of the Issuers, the issuance and sale of the Offered Securities and the compliance with the terms and provisions thereof, will not contravene their respective memorandum and articles of association. (e) The Purchasers shall have received from Cravath, Swaine & Moore, counsel for the Purchasers, such opinion, dated the Closing Date, with respect to the validity of the Offered Securities, the Offering Document, the exemption from registration for the offer and sale of the Offered Securities by the Issuers to the several Purchasers and the initial resales by the several Purchasers as contemplated hereby and other related matters as CSFBC may require, and the Issuers shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, Cravath, Swaine & Moore may rely as to all matters governed by United States maritime law or Liberian law upon the opinion of Thacher Proffitt & Wood referred to above, and as to the incorporation of the Issuers and the Guarantors and all other matters governed by Isle of Man law upon the opinion of Cains referred to above. 19 (f) The Purchasers shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of each of the Issuers in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the applicable Issuer and, in the case of Navigator, the Guarantors in this Agreement are true and correct, (ii) the applicable Issuer and, in the case of Navigator, the Guarantors have complied with all agreements and satisfied all conditions on their respective parts to be performed or satisfied hereunder at or prior to the Closing Date, (iii) the execution, delivery and performance of the Indentures, the Security Documents, the Warrant Agreement, the Intercompany Note, this Agreement and the Registration Rights Agreement, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any agreement or instrument to which the Issuers or the Guarantors is a party or by which the Issuers or the Guarantors is bound or to which any of the properties of the Issuers or the Guarantors is subject, (iv) all shares of capital stock of Navigator and the Guarantors are legally owned, directly or indirectly, by Holdings (except for one share of capital stock of Navigator that is beneficially owned by Holdings but is legally owned by Mr. Edward Cain of 15-19 Athol Street, Douglas, Isle of Man, IM1 1LB) free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, except for the security interests created by or pursuant to the Security Documents, (v) there are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of Navigator or any of the Guarantors and (vi) there has occurred no development or event involving a prospective material adverse change in the condition (financial or other), business, properties or results of operations of the Issuers and the Guarantors taken as a whole. (g) Concurrently with the issue and sale of the Offered Securities, the Security Documents to be executed and delivered on the Closing Date shall have been duly authorized, executed and delivered by the Issuers and the Guarantors (to the extent a party thereto); and the Purchasers shall have received conformed counterparts of each such Security Document and all other documents and agreements entered into or received thereunder in connection with each such Security Document. (h) Holdings and Navigator shall have delivered to the Collateral Agent the stock certificates of Navigator and of the Guarantors, respectively, evidencing the Pledged Stock pledged to the Collateral Agent pursuant to the Intercreditor Agreement, together with stock powers executed in blank. Each of Holdings and Navigator shall have delivered to the Collateral Agent its irrevocable proxy pursuant to the Intercreditor Agreement with respect to the Pledged Stock. (i) The issue and sale of the First Priority Notes and of the Units by the Issuers shall be consummated concurrently in accordance with the terms of this Agreement and the descriptions thereof contained in the Offering Document. (j) Concurrently with or prior to the issue and sale of the Offered Securities, the equity contributions of cash and/or services, as the case may be, of Cambridge Gas Transport Corporation, GEBAB, TGE, Arctic Gas S.A. and Xenon Shipping Inc. (collectively, the "Shareholders") in exchange for shares of capital stock of Holdings (the "Equity Financing") shall have been duly authorized by Holdings, and consummated on terms that conform to the description thereof contained in the Offering Document; and the Stockholders' Agreement to be entered into on or prior to the Closing Date, among Holdings and the Shareholders shall have been duly authorized, executed and delivered by all parties thereto and shall conform in the judgment of 20 counsel to the Purchasers to the description thereof contained in the Offering Document. (k) Concurrently with or prior to the issue and sale of the Offered Securities, the Issuers and the Guarantors shall have entered into the Letter of Credit Reimbursement Agreement, the Letter of Credit shall have been executed by the Letter of Credit Issuer and delivered to the Collateral Agent pursuant to the terms of the Intercreditor Agreement and, in the judgment of counsel to the Purchasers, the Letter of Credit and the Letter of Credit Reimbursement Agreement conform to the descriptions thereof contained in the Offering Document. The Purchasers shall have received conformed counterparts thereof and all other documents and agreements entered into or received thereunder in connection with the Letter of Credit Reimbursement Agreement. There shall exist at and as of the Closing Date (after giving effect to the transactions contemplated by this Agreement and the Equity Financing) no condition that would constitute a default (or an event that with notice, a lapse of time, or both, would constitute a default) under the Letter of Credit Reimbursement Agreement, and the Purchasers shall have received evidence thereof reasonably satisfactory to the Purchasers. (l) Concurrently with or prior to the issue and sale of the Offered Securities, (i) The Export-Import Bank of China shall have executed and delivered (A) an Irrevocable Letter of Refundment Guarantee with respect to each Building Contract (collectively, the "Building Contract Guarantees") and (B) an Irrevocable Performance Bond (the "Builders Performance Bond") with respect to the Building Contracts, and (ii) Generale de Banque S.A. shall have executed and delivered an Irrevocable Performance Bond (together with the Builders Performance Bond, the "Performance Bonds"); and the Building Contract Guarantees and the Performance Bonds shall conform in the judgment of counsel to the Purchasers with the descriptions thereof contained in the Offering Document. The Purchasers shall have received conformed counterparts of, and all other documents and agreements entered into and received in connection with, the Building Contract Guarantees and the Performance Bonds. (m) Concurrently with the issue and sale of the Offered Securities, the Guarantors shall have issued the Intercompany Note to Navigator, and the Intercompany Note shall have been duly authorized, executed and delivered by each Guarantor, shall constitute valid and legally binding obligations of such Guarantor and shall be enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Purchasers shall have received conformed counterparts of the Intercompany Note. (n) Concurrently with or prior to the issue and sale of the Offered Securities, each of the Triparty Agreement, the Management Agreement and the Assignment and Assumption Agreements shall have been duly authorized, executed and delivered by the Issuers and the Guarantors (to the extent a party thereto), shall constitute valid and legally binding obligations of the Issuers and the Guarantors (to the extent a party thereto) and shall conform, in the judgment of counsel to the Purchasers, to the description thereof contained in the Offering Document. (o) The Purchasers shall have received on or prior to the Closing Date original signed letters from each of Standard & Poor's Ratings Group and Moody's Investors Services, Inc., in form and substance customary for ratings letters issued by such agencies and otherwise reasonably satisfactory to the Purchasers, in which each such rating agency confirms that it has issued ratings for the First Priority Notes of no less 21 that "BB-" and "B1", respectively, and for the Second Priority Notes of no less than "B" and "B3", respectively. (p) The Purchasers shall have received a certificate, dated the Closing Date, of an officer of each of CSTC and Jiangnan in which such officers shall state that upon the payment of the initial installment of the Purchase Price of the Vessels on the Closing Date, there shall exist at and as of the Closing Date no condition that would constitute a default (or an event that with notice, a lapse of time, or both, would constitute a default) under any Building Contract. (q) The Purchasers shall have received conformed counterparts of each of the Collateral Agreements, each if applicable as amended on or prior to the Closing Date, and each such document shall conform in the judgment of counsel to the Purchasers to the descriptions thereof contained in the Offering Document. The Issuers will furnish the Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Purchasers request. CSFBC may in its sole discretion waive on behalf of the Purchasers compliance with any conditions to the obligations of the Purchasers hereunder, whether in respect of the Closing Date or otherwise. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuers and the Guarantors will jointly and severally indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any breach of any of the representations and warranties of the Issuers and the Guarantors contained herein or any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that neither the Issuers nor the Guarantors will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Issuers or the Guarantors by any Purchaser through CSFBC specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below. (b) Each Purchaser will severally and not jointly indemnify and hold harmless the Issuers and the Guarantors against any losses, claims, damages or liabilities to which the Issuers or the Guarantors may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or the alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuers or the Guarantors by such Purchaser through CSFBC specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Issuers or the Guarantors in connection with investigating or defending any such loss, 22 claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Purchaser consists of the following information in the Offering Document furnished on behalf of each Purchaser: the last paragraph at the bottom of the cover page concerning the terms of the offering by the Purchasers, the legend concerning over-allotments and stabilizing on the bottom paragraph of page seven and, under the caption "Plan of Distribution", (i) the third sentence of the second paragraph thereunder, (ii) the fourth paragraph thereunder and (iii) the third sentence of the sixth paragraph thereunder; it being expressly agreed and acknowledged by the Issuers and the Guarantors that the Purchasers have not provided, and shall bear no responsibility or liability under this paragraph (b) for, the information contained under the caption "Certain Financial Forecast Information" in the Offering Document. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuers or the Guarantors on the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers or the Guarantors on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Issuers or the Guarantors on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuers bear to the total discounts and commissions received by the Purchasers from the Issuers under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers, the Guarantors or the Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection 23 with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities purchased by it were resold exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. (e) The obligations of the Issuers and the Guarantors under this Section shall be in addition to any liability which the Issuers and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchasers under this Section shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Issuers and the Guarantors within the meaning of the Securities Act or the Exchange Act. 8. DEFAULT OF PURCHASERS. If any Purchaser or Purchasers default in their obligations to purchase Offered Securities hereunder and the total principal amount of the First Priority Notes, or the total number of Units, that such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the aggregate principal amount of the First Priority Notes, or 10% of the aggregate number of Units, CSFBC may make arrangements satisfactory to the Issuers for the purchase of such Offered Securities by other persons, including any of the Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Purchasers shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so default and the total principal amount of the First Priority Notes, or the total number of Units, with respect to which such default or defaults occur exceeds 10% of the aggregate principal amount of the First Priority Notes, or 10% of the aggregate number of Units, and arrangements satisfactory to CSFBC and the Issuers for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Purchaser or the Issuers or the Guarantors, except as provided in Section 9. As used in this Agreement, the term "Purchaser" includes any person substituted for a Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser from liability for its default. 9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Issuers, the Guarantors or their respective officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Purchaser, the Issuers, the Guarantors or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 8 or if for any reason the purchase of the Offered Securities by the Purchasers is not consummated, the Issuers and the Guarantors shall remain responsible for the expenses to be paid or reimbursed by any of them pursuant to Section 5 and the respective obligations of the Issuers, the Guarantors and the Purchasers pursuant to Section 7 shall remain in effect. If the purchase of the Offered Securities by the Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in clause (C), (D) or (E) of Section 6(b)(ii), the Issuers or the Guarantors will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities. 24 10. NOTICES. All communications hereunder will be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, NY 10010, Attention: Investment Banking Department--Transactions Advisory Group, or, if sent to the Issuers or the Guarantors, will be mailed, delivered or telegraphed and confirmed to any of them at 15-19 Athol Street, Douglas, Isle of Man, IM1 1LB, Attention: Mr. Edward Cain; PROVIDED, HOWEVER, that any notice to a Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Purchaser. 11. SUCCESSORS. This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder, except that holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Issuers or the Guarantors as if such holders were parties thereto. 12. REPRESENTATION OF PURCHASERS. CSFBC will act for the several Purchasers in connection with this offering and any action taken by CSFBC will be binding upon all the Purchasers. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 15. SUBMISSION TO JURISDICTION. The Issuers and the Guarantors hereby submit to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Issuers and the Guarantors irrevocably appoint Cambridge Partners, L.L.C., as their authorized agent in the Borough of Manhattan in The City of New York upon which process may be served in any such suit or proceeding, and agree that service of process upon such agent, and written notice of said service to the Issuers or the Guarantors, as the case may be, by the person serving the same to the address provided in Section 10, shall be deemed in every respect effective service of process upon the Issuers or the Guarantors, as the case may be, in any such suit or proceeding. The Issuers and the Guarantors further agree to take any and all action as may be necessary to maintain such designation and appointment of such agent in full force and effect for a period of seven years from the date of this Agreement. 16. JUDGMENT CURRENCY. The obligation of the Issuers and the Guarantors in respect of any sum due to any Purchaser shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day, following receipt by such Purchaser of any sum adjudged to be so due in such other currency, on which (and only to the extent that) such Purchaser may in accordance with normal banking procedures purchase United States dollars with such other currency; if the United States dollars so purchased are less than the sum originally due to such Purchaser hereunder, the Issuers and the Guarantors agree, as a separate obligation and notwithstanding any such judgment, to indemnify, jointly and severally, such Purchaser against such loss. If the United States dollars so purchased are greater than the sum originally due to such Purchaser hereunder, such Purchaser agrees to pay to the Issuers or the Guarantors, as the case may be, an amount equal to the excess of the dollars so purchased over the sum originally due to such Purchaser hereunder. 25 If the foregoing is in accordance with the Purchasers' understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement among the Issuers, the Guarantors and the several Purchasers in accordance with its terms. Very truly yours, NAVIGATOR GAS TRANSPORT PLC by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director NAVIGATOR GAS (IOM I-A) LIMITED by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director GAS (IOM I-B) LIMITED by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director GAS (IOM I-C) LIMITED by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director GAS (IOM I-D) LIMITED by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director GAS (IOM I-E) LIMITED by /s/ Richard Klapow ________________________________________ Name: Richard Klapow Title: Director 26 Director The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION CAMBRIDGE PARTNERS, L.L.C. by CREDIT SUISSE FIRST BOSTON CORPORATION by /s/ D. Armswary ________________________________________ Name: D. Armswary Title: Director 1 SCHEDULE A PRINCIPAL AMOUNT OF NUMBER PURCHASER FIRST PRIORITY NOTES OF UNITS - --------- ---------------------- --------- Credit Suisse First Boston Corporation...... $ 216,000,000 86,000 Cambridge Partners, L.L.C................... 1,000,000 1,000 Total.... $ 217,000,000 87,000 ============ ======= EX-10.16 39 REGISTRATION RIGHTS AGREEMENT EXECUTION COPY NAVIGATOR GAS TRANSPORT PLC $217,000,000 10 1/2% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2007 $87,000,000 12% SECOND PRIORITY SHIP MORTGAGE NOTES DUE 2007 REGISTRATION RIGHTS AGREEMENT July 31, 1997 Credit Suisse First Boston Corporation Cambridge Partners, L.L.C. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010 Dear Sirs: Navigator Gas Transport PLC, an Isle of Man public limited company (the "Issuer"), proposes to issue and sell to Credit Suisse First Boston Corporation ("CSFBC") and Cambridge Partners, L.L.C. ("Cambridge", and together with CSFBC, the "Initial Purchasers"), upon the terms set forth in a purchase agreement of even date herewith (the "Purchase Agreement"), among the Issuer, Navigator Holdings PLC ("Holdings"), the Guarantors (as defined below) and the Initial Purchasers, $217 million aggregate principal amount of its 10 1/2% First Priority Ship Mortgage Notes Due 2007 (the "First Priority Notes") and, together with its sole beneficial shareholder, Holdings, 87,000 Units (the "Units" and, together with the First Priority Notes, the "Offered Securities"), each Unit consisting of one 12% Second Priority Ship Mortgage Note Due 2007 (collectively, the "Second Priority Notes" and, together with the First Priority Notes, the "Notes") in a principal amount of $1,000 and 7.66 Warrants (each, a "Warrant") each to purchase one share of common stock, par value $0.01 per share, of Holdings ("Holdings Common Stock"). The Notes will be unconditionally guaranteed by Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited (collectively, the "Guarantors"). The Issuer and the Guarantors are collectively referred to herein as the "Company", and the obligations of the Company in this Agreement are joint and several obligations of the Issuer and the Guarantors. The First Priority Notes will be issued pursuant to an Indenture, dated as of August 1, 1997 (the "First Priority Indenture") among the Issuer, the Guarantors, Holdings, and United States Trust Company of New York, as Trustee (the "First Priority Trustee"). The Second Priority Notes will be issued pursuant to an Indenture, dated as of August 1, 1997 (the "Second Priority Indenture") among the Issuer, the Guarantors, Holdings, and The Chase Manhattan Bank, as Trustee (the "Second Priority Trustee"). The First Priority Indenture and the Second Priority Indenture are collectively referred to herein as the "Indentures", and the First Priority Trustee and the Second Priority Trustee are collectively referred to herein as the "Trustees". As an inducement to the Initial Purchasers to purchase the Offered Securities pursuant to the Purchase Agreement, the Company agrees with the Initial Purchasers, for the benefit of the 2 holders of the Notes (including the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively, the "Holders"), as follows: 1. REGISTERED EXCHANGE OFFER. The Company shall, at its cost, prepare and, not later than 45 days after (or if the 45th day is not a business day, the first business day thereafter) the date of original issue of the Notes (the "Issue Date"), file with the Securities and Exchange Commission (the "Commission") a registration statement or statements (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933 (the "Securities Act"), with respect to a proposed offer (each, a "Registered Exchange Offer" and, collectively, the "Registered Exchange Offers") to the Holders of the First Priority Notes and the Second Priority Notes, as the case may be, who are not prohibited by any law or policy of the Commission from participating in the relevant Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Notes, a like aggregate principal amount of debt securities of the Issuer (the "Exchange Securities") held by such Holders issued under the relevant Indenture and identical in all material respects to the First Priority Notes or the Second Priority Notes (except for the transfer restrictions relating to such Notes), as the case may be, that would be registered under the Securities Act. The Company shall use its best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act within 150 days (or if the 150th day is not a business day, the first business day thereafter) after the Issue Date of the Notes and shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offers is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). If the Company effects the Registered Exchange Offers, the Company will be entitled to close the Registered Exchange Offers 30 days after the commencement thereof provided that the Company has accepted all the Notes theretofore validly tendered in accordance with the terms of the relevant Registered Exchange Offer. Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offers, it being the objective of such Registered Exchange Offers to enable each Holder of the Notes electing to exchange such Notes for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offers) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder that is a broker-dealer electing to exchange Notes acquired for its own account as a result of market-making activities or other trading activities for Exchange Securities (an "Exchanging Dealer") is required to deliver a prospectus containing the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant 3 to a Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Notes constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale. The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; PROVIDED, HOWEVER, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period not less than 90 days after the consummation of the Registered Exchange Offers. If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds First Priority Notes or Second Priority Notes acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (each, a "Private Exchange" and, collectively, the "Private Exchanges") for the Notes held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the relevant Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States) to the First Priority Notes or the Second Priority Notes (collectively, the "Private Exchange Securities"), as the case may be. The Notes, the Exchange Securities and the Private Exchange Securities are hereinafter collectively called the "Securities". In connection with each Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders; (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be one of the Trustees or an affiliate of such Trustee; (d) permit Holders to withdraw tendered Notes at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply with all applicable laws. 4 As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall: (x) accept for exchange all the Notes validly tendered and not withdrawn pursuant to the Registered Exchange Offer or the Private Exchange, as the case may be; (y) deliver to the relevant Trustee for cancelation all the Notes so accepted for exchange; and (z) cause the relevant Trustee to authenticate and deliver promptly, to each Holder that validly tendered the Notes, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange. Each Indenture will provide that the Exchange Securities delivered in exchange for the relevant validly tendered Notes will not be subject to the transfer restrictions set forth in such Indenture. Each Indenture will also provide that all Securities outstanding under such Indenture will vote and consent together on all matters as one class and that none of the Securities subject to such Indenture will have the right to vote or consent as a separate class on any matter. Interest on each Exchange Security or Private Exchange Security issued pursuant to the Registered Exchange Offer or in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Notes surrendered in exchange therefor or, if no interest has been paid on such Notes, from the date of original issue of such Notes. Each Holder participating in a Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Notes or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Notes that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to 5 be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. SHELF REGISTRATION. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect the Registered Exchange Offers, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offers are not consummated within 180 days of the Issue Date, (iii) any Initial Purchaser so requests with respect to the Notes not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer or with respect to the Private Exchange Securities and, in each case, held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange, the Company shall take the following actions: (a) The Company shall, at its cost, as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 2) file with the Commission and thereafter shall use its best efforts to cause to be declared effective a registration statement or statements (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, the "Registration Statements") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration"); PROVIDED, HOWEVER, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are eligible for sale under Rule 144(k) (or any successor provision) under the Securities Act. The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law. (c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 6 3. REGISTRATION PROCEDURES. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereto and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration, shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in such Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders. (b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offers (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information; 7 (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus does not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading. (c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement. (d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). (e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference, if any). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the 8 Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. (h) Prior to any public offering of the Securities pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement. (j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above, as the case may be, shall be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). (k) Not later than the effective date of the applicable Registration Statement, the Company will provide CUSIP numbers for the Notes, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable Trustee with printed certificates for the Notes, the Exchange Securities or the Private Exchange Securities, as the case may be, in forms eligible for deposit with The Depository Trust Company. (l) The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the 9 Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of Holdings' first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period. (m) The Company shall cause the Indentures to be qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in a timely manner and containing such changes, if any, as shall be reasonably necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under either or both of the Indentures, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the relevant Indenture or Indentures. (n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish or update such information within a reasonable time after receiving such request. (o) The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration. (p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; PROVIDED, HOWEVER, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof. (q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the 10 due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof and the compliance as to form of the Shelf Registration Statement and any documents incorporated by reference therein and of the Indentures with the requirements of the Securities Act and the Trust Indenture Act, respectively. Such opinion shall also state that no facts have come to such counsel's attention which lead it to believe that, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein, contain any untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act); (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. (r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 6(c) and Section 6(d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, and such certificate as set forth in Section 6(a) of the Purchase Agreement, with appropriate date changes. (s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Notes by Holders to the Issuer (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Issuer shall mark or cause to be marked on the Notes so exchanged that such Notes are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Notes be marked as paid or otherwise satisfied. (t) The Company shall use its best efforts to (i) if the Notes of a series have been rated prior to the initial sale of such Notes, confirm that such ratings will apply to the Securities of such series covered by a Registration Statement, or (ii) if the Notes of a series were not previously rated, cause the Securities of such series covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities of such series covered by such Registration Statement, or by the managing underwriters, if any. 11 (u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such broker-dealer in complying with the requirements of such Conduct Rules, including by (i) if Rule 2720 thereto shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Conduct Rules of the NASD. (v) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby. 4. REGISTRATION EXPENSES. The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Cravath, Swaine & Moore, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offers), whether or not a Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Securities covered thereby to act as counsel for the Holders of the Securities in connection therewith, PROVIDED that such Holders shall be responsible for any and all underwriting discounts and commissions. 5. INDEMNIFICATION. (a) The Issuer and Guarantors severally and jointly agree to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which a given Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; PROVIDED, HOWEVER, that (i) the Company shall not be liable in any such 12 case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Issuer and the Guarantor shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders. (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the 13 commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsections (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the relevant Notes, pursuant to the relevant Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subsection (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution 14 as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancelation of this Agreement or any investigation made by or on behalf of any indemnified party. 6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional interest (the "Additional Interest") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iii) below, a "Registration Default"): (i) If by September 22, 1997, neither the Exchange Offer Registration Statement nor the Shelf Registration Statement, each with respect to a series of Notes, has been filed with the Commission; (ii) If by February 3, 1998, the relevant Registered Exchange Offer is not consummated and, if required in lieu thereof, the Shelf Registration Statement is not declared effective by the Commission, each with respect to a series of Notes; or (iii) If after either the Exchange Offer Registration Statement or the Shelf Registration Statement, each with respect to a series of Notes, is declared effective (A) such Registration Statement thereafter ceases to be effective (except as permitted in paragraph (b)); or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus to comply with the Securities Act or the Exchange Act or the respective rules thereunder. Additional Interest shall accrue on the applicable Notes and any Private Exchange Securities exchanged therefor at a rate of 0.50% per annum (the "Additional Interest Rate") over and above the interest set forth in the title of the Notes from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults as to the relevant Securities have been cured. (b) A Registration Default referred to in Section 6(a)(iii)(B) shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such purported Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) the occurrence of other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; PROVIDED, HOWEVER, that if such purported Registration Default occurs in any case for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured or until the Company is no longer required 15 pursuant to this Agreement to keep such Registration Statement effective or such Registration Statement or related prospectus usable. (c) Any amounts of Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of Section 6 above will be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the Additional Interest Rate by the principal amount of the Securities, multiplied by a fraction, the numerator of which is the number of days the Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. (d) "Transfer Restricted Securities" means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferrable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of such Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. 7. RULES 144 AND 144A. The Company shall use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Transfer Restricted Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Notes or Private Exchange Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Transfer Restricted Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 8. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("Managing Underwriters") will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of 16 attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 9. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company, the Initial Purchasers (if affected by such amendment, modification, supplement, waiver or consents) and the written consent of the Holders of a majority in principal amount of the Securities (taken as a class) affected by such amendment, modification, supplement, waivers or consents. (b) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: (1) if to a Holder of the Securities, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 9(b), which address initially is, with respect to each Holder, the address of such Holder to which confirmation of the sale of the Securities to such Holder was first sent by the Initial Purchasers. (2) if to the Initial Purchasers, at the following address: Credit Suisse First Boston Corporation Eleven Madison Avenue New York, NY 10010 Telephone: (212) 325-2107 Fax: (212) 325-8278 Attention: Transactions Advisory Group with a copy to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019-7475 Telephone: (212) 474-1000 Fax: (212) 474-3700 Attention: Kris F. Heinzelman, Esq. (3) if to the Company, at its address as follows: Navigator Gas Transport PLC 15-19 Athol Street Douglas, Isle of Man IM1 1LB Telephone: 44-1624-638-303 Fax: 44-1624-638-333 Attention: Mr. Edward Cain 17 with a copy to: Thacher Proffitt & Wood Two World Trade Center New York, NY 10048 Telephone: (212) 912-7400 Fax: (212) 912-7751 Attention: Charles A. Dietzgen, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. (c) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns. (e) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. (h) SEVERABILITY. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (i) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (j) AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the execution and delivery of this Agreement, the Company (i) acknowledges that it has, by separate written instrument, irrevocably designated and appointed Cambridge (and any 18 successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Agreement that may be instituted in any Federal or state court in the State of New York or brought under Federal or state securities laws, and acknowledges that Cambridge has accepted such designation, (ii) submits to the nonexclusive jurisdiction of any such court in any such suit or proceeding, and (iii) agrees that service of process upon Cambridge and written notice of said service to the Company, as the case may be, shall be deemed in every respect effective service of process upon it in any such suit or proceeding. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of Cambridge in full force and effect so long as any of the Securities shall be outstanding. To the extent that the Company may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in respect of this Agreement, to the fullest extent permitted by law. 19 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company in accordance with its terms. Very truly yours, NAVIGATOR GAS TRANSPORT PLC By: ------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-A) LIMITED By: ------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-B) LIMITED By: ------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-C) LIMITED By: /s/ Richard Kaplow ------------------------------- Name: Richard Kaplow Title: Director 20 NAVIGATOR GAS (IOM I-D) LIMITED By: /s/ Richard Kaplow ------------------------------- Name: Richard Kaplow Title: Director NAVIGATOR GAS (IOM I-E) LIMITED By: /s/ Richard Kaplow ------------------------------- Name: Richard Kaplow Title: Director The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION CAMBRIDGE PARTNERS, L.L.C. By: Credit Suisse First Boston Corporation By: /s/ Malcolm K. Price ------------------------------- Name: Malcolm K. Price Title: Managing Director ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to a Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Notes where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See Annex C, "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Notes where such Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 199 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.1 The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to a Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incidental to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. - -------- 1 In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer Prospectus. ANNEX D / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ___________________________________________ Address: ___________________________________________ ___________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EX-10.17 40 ASSIGNMENT AND ASSUMPTION AGREEMENT (IOM I-A) ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT NAVIGATOR HOLDINGS PLC, Assignor and NAVIGATOR GAS (IOM I-A) LIMITED, Assignee Dated as of July 31, 1997 ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment"), entered into as of the 31st day of July, 1997 by and between Navigator Holdings PLC, a public limited company organized under the laws of the Isle of Man (the "Assignor") and Navigator Gas (IOM I-A) Limited, a private limited company organized under the laws of the Isle of Man (the "Assignee"). PRELIMINARY STATEMENT The Assignor has entered into an Amended and Restated Shipbuilding Contract (the "Agreement"), dated June 26, 1997, with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "Builder"). The Assignor desires to assign all of its right, title and interest in, to and under the Agreement to the Assignee and the Assignee desires to assume such Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor and the Assignee agree as follows: SECTION 1. ASSIGNMENT. The Assignor hereby assigns and sets over unto the Assignee all of its rights, title and interest in, under and to the Agreement. SECTION 2. OBLIGATIONS. (a) The Assignee hereby accepts such assignment and further agrees that it shall be deemed a party to the Agreement and shall be bound by all of the terms thereof, and further agrees to assume, accept and undertake to discharge each and every one of the obligations of the Assignor under the Agreement, all in accordance with the terms and conditions thereof. (b) The Assignee hereby acknowledges and agrees that the Assignor is released and discharged from each and all of its obligation under the Agreement effective as of the delivery of this Assignment. SECTION 3. REPRESENTATIONS OF ASSIGNOR. The Assignor hereby represents and warrants that: (a) The Assignor is assigning all right, title and interest in, under and to the Agreement to the Assignee, free and clear of any and all liens, claims or encumbrances; and (b) No person or entity has asserted, and does not now have, any claim against the Assignor under the Agreement because of any action or inaction on the part of the Assignor. SECTION 4. FURTHER INSTRUMENTS. The parties hereto agree to execute and deliver, or cause to be executed and delivered, such further instruments or documents and take such other action as may be required effectively to carry out the transactions contemplated herein. -2- SECTION 5. COUNTERPARTS. This Assignment may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. SECTION 6. AMENDMENT. This Assignment may be amended from time to time by the Assignor and the Assignee by written agreement signed by the Assignor and the Assignee. SECTION 7. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with the laws of the State of New York except to the extent preempted by Federal law. SECTION 8. NOTICES. Any notices or other communications permitted or required hereunder shall be in writing and shall be deemed conclusively to have been given when delivered to (a) in the case of the Assignor, at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may hereafter be furnished to the Assignee in writing by the Assignor and (b) in the case of the Assignee at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may be furnished to the Assignor in writing by the Assignee. SECTION 9. SEVERABILITY PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Assignment shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Assignment shall in no way affect the validity or enforceability of the other provisions of this Assignment, provided, however, that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Assignment, the parties shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the same as the economic effect of this Assignment. SECTION 10. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Assignment have the meanings assigned to them in this Assignment and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles", "Sections", "Subsections", "Paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Assignment; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; -3- (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Assignment as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. SECTION 11. SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREFORE, this Assignment has been executed as of the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- NAVIGATOR GAS (IOM I-A) LIMITED By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- EX-10.18 41 ASSIGNMENT AND ASSUMPTION AGREEMENT (IOM I-B) ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT NAVIGATOR HOLDINGS PLC, Assignor and NAVIGATOR GAS (IOM I-B) LIMITED, Assignee Dated as of July 31, 1997 ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment"), entered into as of the 31st day of July, 1997 by and between Navigator Holdings PLC, a public limited company organized under the laws of the Isle of Man (the "Assignor") and Navigator Gas (IOM I-B) Limited, a private limited company organized under the laws of the Isle of Man (the "Assignee"). PRELIMINARY STATEMENT The Assignor has entered into an Amended and Restated Shipbuilding Contract (the "Agreement"), dated June 26, 1997, with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "Builder"). The Assignor desires to assign all of its right, title and interest in, to and under the Agreement to the Assignee and the Assignee desires to assume such Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor and the Assignee agree as follows: SECTION 1. ASSIGNMENT. The Assignor hereby assigns and sets over unto the Assignee all of its rights, title and interest in, under and to the Agreement. SECTION 2. OBLIGATIONS. (a) The Assignee hereby accepts such assignment and further agrees that it shall be deemed a party to the Agreement and shall be bound by all of the terms thereof, and further agrees to assume, accept and undertake to discharge each and every one of the obligations of the Assignor under the Agreement, all in accordance with the terms and conditions thereof. (b) The Assignee hereby acknowledges and agrees that the Assignor is released and discharged from each and all of its obligation under the Agreement effective as of the delivery of this Assignment. SECTION 3. REPRESENTATIONS OF ASSIGNOR. The Assignor hereby represents and warrants that: (a) The Assignor is assigning all right, title and interest in, under and to the Agreement to the Assignee, free and clear of any and all liens, claims or encumbrances; and (b) No person or entity has asserted, and does not now have, any claim against the Assignor under the Agreement because of any action or inaction on the part of the Assignor. SECTION 4. FURTHER INSTRUMENTS. The parties hereto agree to execute and deliver, or cause to be executed and delivered, such further instruments or documents and take such other action as may be required effectively to carry out the transactions contemplated herein. -2- SECTION 5. COUNTERPARTS. This Assignment may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. SECTION 6. AMENDMENT. This Assignment may be amended from time to time by the Assignor and the Assignee by written agreement signed by the Assignor and the Assignee. SECTION 7. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with the laws of the State of New York except to the extent preempted by Federal law. SECTION 8. NOTICES. Any notices or other communications permitted or required hereunder shall be in writing and shall be deemed conclusively to have been given when delivered to (a) in the case of the Assignor, at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may hereafter be furnished to the Assignee in writing by the Assignor and (b) in the case of the Assignee at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may be furnished to the Assignor in writing by the Assignee. SECTION 9. SEVERABILITY PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Assignment shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Assignment shall in no way affect the validity or enforceability of the other provisions of this Assignment, provided, however, that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Assignment, the parties shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the same as the economic effect of this Assignment. SECTION 10. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Assignment have the meanings assigned to them in this Assignment and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles", "Sections", "Subsections", "Paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Assignment; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; -3- (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Assignment as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. SECTION 11. SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREFORE, this Assignment has been executed as of the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- NAVIGATOR GAS (IOM I-B) LIMITED By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- EX-10.19 42 ASSIGNMENT AND ASSUMPTION AGREEMENT (IOM I-C) ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT NAVIGATOR HOLDINGS PLC, Assignor and NAVIGATOR GAS (IOM I-C) LIMITED, Assignee Dated as of July 31, 1997 ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment"), entered into as of the 31st day of July, 1997 by and between Navigator Holdings PLC, a public limited company organized under the laws of the Isle of Man (the "Assignor") and Navigator Gas (IOM I-C) Limited, a private limited company organized under the laws of the Isle of Man (the "Assignee"). PRELIMINARY STATEMENT The Assignor has entered into an Amended and Restated Shipbuilding Contract (the "Agreement"), dated June 26, 1997, with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "Builder"). The Assignor desires to assign all of its right, title and interest in, to and under the Agreement to the Assignee and the Assignee desires to assume such Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor and the Assignee agree as follows: SECTION 1. ASSIGNMENT. The Assignor hereby assigns and sets over unto the Assignee all of its rights, title and interest in, under and to the Agreement. SECTION 2. OBLIGATIONS. (a) The Assignee hereby accepts such assignment and further agrees that it shall be deemed a party to the Agreement and shall be bound by all of the terms thereof, and further agrees to assume, accept and undertake to discharge each and every one of the obligations of the Assignor under the Agreement, all in accordance with the terms and conditions thereof. (b) The Assignee hereby acknowledges and agrees that the Assignor is released and discharged from each and all of its obligation under the Agreement effective as of the delivery of this Assignment. SECTION 3. REPRESENTATIONS OF ASSIGNOR. The Assignor hereby represents and warrants that: (a) The Assignor is assigning all right, title and interest in, under and to the Agreement to the Assignee, free and clear of any and all liens, claims or encumbrances; and (b) No person or entity has asserted, and does not now have, any claim against the Assignor under the Agreement because of any action or inaction on the part of the Assignor. SECTION 4. FURTHER INSTRUMENTS. The parties hereto agree to execute and deliver, or cause to be executed and delivered, such further instruments or documents and take such other action as may be required effectively to carry out the transactions contemplated herein. -2- SECTION 5. COUNTERPARTS. This Assignment may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. SECTION 6. AMENDMENT. This Assignment may be amended from time to time by the Assignor and the Assignee by written agreement signed by the Assignor and the Assignee. SECTION 7. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with the laws of the State of New York except to the extent preempted by Federal law. SECTION 8. NOTICES. Any notices or other communications permitted or required hereunder shall be in writing and shall be deemed conclusively to have been given when delivered to (a) in the case of the Assignor, at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may hereafter be furnished to the Assignee in writing by the Assignor and (b) in the case of the Assignee at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may be furnished to the Assignor in writing by the Assignee. SECTION 9. SEVERABILITY PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Assignment shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Assignment shall in no way affect the validity or enforceability of the other provisions of this Assignment, provided, however, that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Assignment, the parties shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the same as the economic effect of this Assignment. SECTION 10. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Assignment have the meanings assigned to them in this Assignment and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles", "Sections", "Subsections", "Paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Assignment; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; -3- (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Assignment as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. SECTION 11. SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREFORE, this Assignment has been executed as of the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Joseph Avantario ---------------------------------- Name: Joseph Avantario -------------------------------- Title: Director -------------------------------- NAVIGATOR GAS (IOM I-C) LIMITED By: /s/ Joseph Avantario ---------------------------------- Name: Joseph Avantario -------------------------------- Title: Director -------------------------------- EX-10.20 43 ASSIGNMENT AND ASSUMPTION AGREEMENT (IOM I-D) ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT NAVIGATOR HOLDINGS PLC, Assignor and NAVIGATOR GAS (IOM I-D) LIMITED, Assignee Dated as of July 31, 1997 ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment"), entered into as of the 31st day of July, 1997 by and between Navigator Holdings PLC, a public limited company organized under the laws of the Isle of Man (the "Assignor") and Navigator Gas (IOM I-D) Limited, a private limited company organized under the laws of the Isle of Man (the "Assignee"). PRELIMINARY STATEMENT The Assignor has entered into an Amended and Restated Shipbuilding Contract (the "Agreement"), dated June 26, 1997, with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "Builder"). The Assignor desires to assign all of its right, title and interest in, to and under the Agreement to the Assignee and the Assignee desires to assume such Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor and the Assignee agree as follows: SECTION 1. ASSIGNMENT. The Assignor hereby assigns and sets over unto the Assignee all of its rights, title and interest in, under and to the Agreement. SECTION 2. OBLIGATIONS. (a) The Assignee hereby accepts such assignment and further agrees that it shall be deemed a party to the Agreement and shall be bound by all of the terms thereof, and further agrees to assume, accept and undertake to discharge each and every one of the obligations of the Assignor under the Agreement, all in accordance with the terms and conditions thereof. (b) The Assignee hereby acknowledges and agrees that the Assignor is released and discharged from each and all of its obligation under the Agreement effective as of the delivery of this Assignment. SECTION 3. REPRESENTATIONS OF ASSIGNOR. The Assignor hereby represents and warrants that: (a) The Assignor is assigning all right, title and interest in, under and to the Agreement to the Assignee, free and clear of any and all liens, claims or encumbrances; and (b) No person or entity has asserted, and does not now have, any claim against the Assignor under the Agreement because of any action or inaction on the part of the Assignor. SECTION 4. FURTHER INSTRUMENTS. The parties hereto agree to execute and deliver, or cause to be executed and delivered, such further instruments or documents and take such other action as may be required effectively to carry out the transactions contemplated herein. -2- SECTION 5. COUNTERPARTS. This Assignment may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. SECTION 6. AMENDMENT. This Assignment may be amended from time to time by the Assignor and the Assignee by written agreement signed by the Assignor and the Assignee. SECTION 7. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with the laws of the State of New York except to the extent preempted by Federal law. SECTION 8. NOTICES. Any notices or other communications permitted or required hereunder shall be in writing and shall be deemed conclusively to have been given when delivered to (a) in the case of the Assignor, at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may hereafter be furnished to the Assignee in writing by the Assignor and (b) in the case of the Assignee at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may be furnished to the Assignor in writing by the Assignee. SECTION 9. SEVERABILITY PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Assignment shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Assignment shall in no way affect the validity or enforceability of the other provisions of this Assignment, provided, however, that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Assignment, the parties shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the same as the economic effect of this Assignment. SECTION 10. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Assignment have the meanings assigned to them in this Assignment and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles", "Sections", "Subsections", "Paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Assignment; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; -3- (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Assignment as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. SECTION 11. SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREFORE, this Assignment has been executed as of the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- NAVIGATOR GAS (IOM I-D) LIMITED By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- EX-10.21 44 ASSIGNMENT AND ASSUMPTION AGREEMENT (IOM I-E) ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT NAVIGATOR HOLDINGS PLC, Assignor and NAVIGATOR GAS (IOM I-E) LIMITED, Assignee Dated as of July 31, 1997 ================================================================================ ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment"), entered into as of the 31st day of July, 1997 by and between Navigator Holdings PLC, a public limited company organized under the laws of the Isle of Man (the "Assignor") and Navigator Gas (IOM I-E) Limited, a private limited company organized under the laws of the Isle of Man (the "Assignee"). PRELIMINARY STATEMENT The Assignor has entered into an Amended and Restated Shipbuilding Contract (the "Agreement"), dated June 26, 1997, with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (collectively, the "Builder"). The Assignor desires to assign all of its right, title and interest in, to and under the Agreement to the Assignee and the Assignee desires to assume such Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor and the Assignee agree as follows: SECTION 1. ASSIGNMENT. The Assignor hereby assigns and sets over unto the Assignee all of its rights, title and interest in, under and to the Agreement. SECTION 2. OBLIGATIONS. (a) The Assignee hereby accepts such assignment and further agrees that it shall be deemed a party to the Agreement and shall be bound by all of the terms thereof, and further agrees to assume, accept and undertake to discharge each and every one of the obligations of the Assignor under the Agreement, all in accordance with the terms and conditions thereof. (b) The Assignee hereby acknowledges and agrees that the Assignor is released and discharged from each and all of its obligation under the Agreement effective as of the delivery of this Assignment. SECTION 3. REPRESENTATIONS OF ASSIGNOR. The Assignor hereby represents and warrants that: (a) The Assignor is assigning all right, title and interest in, under and to the Agreement to the Assignee, free and clear of any and all liens, claims or encumbrances; and (b) No person or entity has asserted, and does not now have, any claim against the Assignor under the Agreement because of any action or inaction on the part of the Assignor. SECTION 4. FURTHER INSTRUMENTS. The parties hereto agree to execute and deliver, or cause to be executed and delivered, such further instruments or documents and take such other action as may be required effectively to carry out the transactions contemplated herein. -2- SECTION 5. COUNTERPARTS. This Assignment may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. SECTION 6. AMENDMENT. This Assignment may be amended from time to time by the Assignor and the Assignee by written agreement signed by the Assignor and the Assignee. SECTION 7. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with the laws of the State of New York except to the extent preempted by Federal law. SECTION 8. NOTICES. Any notices or other communications permitted or required hereunder shall be in writing and shall be deemed conclusively to have been given when delivered to (a) in the case of the Assignor, at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may hereafter be furnished to the Assignee in writing by the Assignor and (b) in the case of the Assignee at 15-19 Athol Street, Douglas, Isle of Man, or such other address as may be furnished to the Assignor in writing by the Assignee. SECTION 9. SEVERABILITY PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Assignment shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Assignment shall in no way affect the validity or enforceability of the other provisions of this Assignment, provided, however, that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Assignment, the parties shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the same as the economic effect of this Assignment. SECTION 10. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Assignment have the meanings assigned to them in this Assignment and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles", "Sections", "Subsections", "Paragraphs", and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Assignment; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; -3- (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Assignment as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. SECTION 11. SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. IN WITNESS WHEREFORE, this Assignment has been executed as of the day and year first above written. NAVIGATOR HOLDINGS PLC By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- NAVIGATOR GAS (IOM I-E) LIMITED By: /s/ Richard Klapow ---------------------------------- Name: Richard Klapow -------------------------------- Title: Director -------------------------------- EX-10.22 45 FIRST PRIORITY SHIP MORTGAGE NOTES (NO. R-1) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. CUSIP NO. 63935KAA1 No. R-1 $75,000,000 10 1/2% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to CEDE & CO., or registered assigns, the principal sum of SEVENTY-FIVE MILLION DOLLARS on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: August 7, 1997 NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Klapow ----------------------------------- Richard Klapow by /s/ Joseph Avantario ----------------------------------- Joseph Avantario TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by /s/ Christine Collins ----------------------------- Christine Collins Authorized Signatory 10 1/2% First Priority Ship Mortgage Note Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage 2002 . . . . . . . . . . . . . . . . . 105.750% 2003 . . . . . . . . . . . . . . . . . 103.500 2004 . . . . . . . . . . . . . . . . . 101.750 2005 and thereafter . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bank- ruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC, 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-333 ATTENTION OF SECRETARY ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) _ to the Company; or (2) _ pursuant to an effective registration statement under the Securities Act of 1933; or (3) _ inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) _ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) _ pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. -------------------------- Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: --------------------- --------------------------------- NOTICE: To be executed by an executive officer
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Amount of decrease Amount of increase Principal amount Signature of Exchange in Principal in Principal of this Global authorized officer Amount of this Amount of this Security following of Trustee or Global Security Global Security such decrease or Securities increase Custodian
OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: --------------- Your Signature: ------------------------ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: -------------------------------- (Signature must be guaranteed) EX-10.23 46 FIRST PRIORITY SHIP MORTGAGE NOTES (NO. R-2) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. CUSIP NO. 63935KAA1 No. R-2 $75,000,000 10 1/2% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to CEDE & CO., or registered assigns, the principal sum of SEVENTY-FIVE MILLION DOLLARS on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: August 7, 1997 NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Klapow ----------------------------------- Richard Klapow by /s/ Joseph Avantario ----------------------------------- Joseph Avantario TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by /s/ Christine Collins ----------------------------- Christine Collins Authorized Signatory 10 1/2% First Priority Ship Mortgage Note Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002 . . . . . . . . . . . . . . . . . 105.750% 2003 . . . . . . . . . . . . . . . . . 103.500 2004 . . . . . . . . . . . . . . . . . 101.750 2005 and thereafter . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bank- ruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC, 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-333 ATTENTION OF SECRETARY ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) _ to the Company; or (2) _ pursuant to an effective registration statement under the Securities Act of 1933; or (3) _ inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) _ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) _ pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: such --------------------- ------------------------------ NOTICE: To be executed by an executive officer
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Amount of decrease Amount of increase Principal amount Signature of Exchange in Principal in Principal of this Global authorized officer Amount of this Amount of this Security following of Trustee or Global Security Global Security such decrease or Securities increase Custodian
OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: _______________ Your Signature: ______________________ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: _______________________________________ (Signature must be guaranteed) EX-10.24 47 FIRST PRIORITY SHIP MORTGAGE NOTES (NO. R-3) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. CUSIP NO. 63935KAA1 No. R-3 $67,000,000 10 1/2% First Priority Ship Mortgage Notes Due 2007 NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company, promises to pay to CEDE & CO., or registered assigns, the principal sum of SIXTY-SEVEN MILLION DOLLARS on June 30, 2007. Interest Payment Dates: June 30 and December 31. Record Dates: June 15 and December 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: August 7, 1997 NAVIGATOR GAS TRANSPORT PLC, by /s/ Richard Klapow ----------------------------------- Richard Klapow by /s/ Joseph Avantario ----------------------------------- Joseph Avantario TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies this is one of the Securities referred to in the Indenture. by /s/ Christine Collins ----------------------------- Christine Collins Authorized Signatory 10 1/2% First Priority Ship Mortgage Note Due 2007 1. INTEREST NAVIGATOR GAS TRANSPORT PLC, an Isle of Man public limited company (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on June 30 and December 31 of each year, commencing December 31, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 7, 1997. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 15 or December 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, United States Trust Company of New York, a bank and trust company organized under the New York Banking Law ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of August 1, 1997 ("Indenture"), among the Company, Holdings, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general secured obligations of the Company limited to $217,000,000 aggregate principal amount (subject to Section 2.06 of the Indenture). The Indenture limits (i) the incurrence of additional debt by the Company and the Owner, (ii) the payment of dividends on capital stock of the Company and the purchase, redemption or retirement of capital stock or subordinated indebtedness, (iii) investments, (iv) certain liens and sale/leaseback transactions, (v) certain transactions with affiliates, (vi) sales of assets, (vii) the issuance or sale of capital stock of subsidiaries and (viii) certain consolidations, mergers and transfers of assets. The Indenture also prohibits certain restrictions on distributions from the Owners. 5. OPTIONAL REDEMPTION Except as set forth in the next two paragraphs, the Securities may not be redeemed prior to June 30, 2002. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date): if redeemed during the 12-month period beginning June 30, Period Percentage ------ ---------- 2002 . . . . . . . . . . . . . . . . . 105.750% 2003 . . . . . . . . . . . . . . . . . 103.500 2004 . . . . . . . . . . . . . . . . . 101.750 2005 and thereafter . . . . . . . . . 100.000 If, as a result of any change in or any amendment to the laws, regulations or published tax rulings of the Isle of Man or any Successor Jurisdiction, or of any political subdivision or taxing authority thereof or therein, or any change in the official administration, application or interpretation of such laws, regulations or published tax rulings either generally or in relation to any particular Securities, which change in official administration, application or interpretation shall not have been available to the public prior to such issue date and is notified to the Company or the relevant Owners, as the case may be, on or after such issue date, it is determined by the Company or the relevant Owners, as the case may be, that the Company or the relevant Owners, as the case may be, would be required to pay, any Additional Amounts pursuant to the Indenture or the terms of any Security in respect of interest on the next succeeding Interest Payment Date (assuming, in the case of the Owners, that a payment in respect of such interest were required to be made by the relevant Owners under the Guarantees on such Interest Payment Date), and that such obligation cannot be avoided by the Company or the relevant Owners taking reasonable measures available to it, the Company or the relevant Owners, as the case may be, may, at its option, redeem all (but not less than all) the Securities in respect of which such Additional Amounts would be so payable at any time, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption; PROVIDED, HOWEVER, that (a) no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Owners, as the case may be, would be obligated, or is substantially likely to be obligated, to pay such Additional Amounts were a payment in respect of the Securities or the Guarantees, as the case may be, then due, and (b) at the time any such redemption notice is given, such obligation, or substantial likelihood, to pay such Additional Amounts must remain in effect. In addition, at any time and from time to time prior to June 30, 2000, the Company may redeem up to 35% of the aggregate principal amount of Securities with the proceeds of one or more Public Equity Offerings (with the cash proceeds thereof to the extent actually contributed to the Company) following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date); PROVIDED, HOWEVER, that at least $100 million aggregate principal amount of the Securities and $45 million aggregate principal amount of the Second Priority Notes must remain outstanding after each such redemption. 6. MANDATORY REDEMPTION In the event an Owner elects to terminate its Building Contract because of a material breach thereof by the Builders (including a failure to pay liquidated damages for any delay in the delivery of the related Vessel), the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel and for each other Vessel that has not been accepted by its related Owner as of the date of such termination, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to and including the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Refund Amount with respect to the related Building Contract(s) and (b) 60 days after the termination of such Building Contract(s) by the related Owner(s). If a Vessel is subject to Total Loss, the Securities will be subject to mandatory redemption in part, on a pro rata basis, in an aggregate principal amount equal to the Allocated Principal Amount of the Securities for such Vessel, at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption (subject to the right of a Holder of record on the relevant record date to receive interest due on the relevant Interest Payment Date), upon the earlier to occur of (a) the receipt of the Insurance Proceeds with respect to such Total Loss and (b) 60 days after such Total Loss was deemed to have occurred. 7. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. OFFERS TO PURCHASE On each Available Cash Payment Date, the Company will be required, to the extent of Available Cash on such Available Cash Payment Date, to make an Available Cash Offer to each Holder of Securities to purchase such Holder's Securities in whole or in part, at a price equal to 102% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interests due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to purchase all or any part of the Securities of such Holder at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture. 9. GUARANTEE The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by the Owners. 10. SECURITY The Securities will initially be secured by the Collateral delivered on the Issue Date. Upon the occurrence of a Delivery Date with respect to a Vessel the Securities will thereafter be secured by a first priority ship mortgage on such Vessel and all other Collateral delivered on the Delivery Date of such Vessel. The Securities will also have the benefit of the Letter of Credit. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 12. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some or all of its and the Guarantors' obligations under the Securities, the Security Agreements and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee may amend the Indenture, the Security Agreements or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional guarantees with respect to the Securities or to provide additional security for the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon required purchase, upon acceleration or otherwise, or failure by the Company or the Guarantors to redeem or purchase Securities when required; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of Holdings, the Company or the Owners if the amount accelerated (or so unpaid) exceeds $5.0 million; (v) certain events of bank- ruptcy or insolvency with respect to Holdings, the Company or the Owners; (vi) certain judgments or decrees for the payment of money in excess of $5.0 million, (vii) certain events or defaults with respect to the Guarantees or the Security Agreements and (ix) the failure by the Designated Owners to hold certain prescribed percentages of Voting Stock and Capital Stock of Holdings. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 17. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company, Holdings, the Owners or the Trustee shall not have any liability for any obligations of the Company, Holdings or the Owners under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company and the Guarantors to the extent provided therein. 22. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: NAVIGATOR GAS TRANSPORT PLC, 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB FAX: 44-1624-638-333 ATTENTION OF SECRETARY ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) _ to the Company; or (2) _ pursuant to an effective registration statement under the Securities Act of 1933; or (3) _ inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) _ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) _ pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. -------------------------- Signature Signature Guarantee: - --------------------- -------------------------- Signature must be guaranteed Signature - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: --------------------- --------------------------------- NOTICE: To be executed by an executive officer
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Amount of decrease Amount of increase Principal amount Signature of Exchange in Principal in Principal of this Global authorized officer Amount of this Amount of this Security following of Trustee or Global Security Global Security such decrease or Securities increase Custodian
OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.12 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.12 of the Indenture, state the amount in principal amount: $ Date: --------------- Your Signature: ------------------------ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: -------------------------------- (Signature must be guaranteed) EX-10.25 48 SECOND PRIORITY SHIP MORTGAGE NOTES Certificate No. U-1 THE SECURITIES ATTACHED HERETO COLLECTIVELY CONSTITUTE 87,000 UNITS (CUSIP NO. 63935KAC7) CONSISTING OF $87,000,000 12% SECOND PRIORITY SHIP MORTGAGE NOTES DUE 2007 AND WARRANTS TO PURCHASE 666,420 SHARES OF COMMON STOCK OF NAVIGATOR HOLDINGS PLC. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE U.S. IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. 1 IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. 2 EX-23.4 49 CONSENT OF CAINS September 18, 1997 Securities & Exchange Commission Washington, D.C. 20549 U.S.A. Gentlemen, Form F-4 Registration Statement under the Securities Act of 1933 Navigator Gas Transport PLC, Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited and Navigator Gas (IOM I-E) Limited - -------------------------------------------------------------------------------- We hereby consent to the use in the prospectus constituting part of the registration statement on Form F-4, of this firm's name in the form and context in which the same appears. Yours faithfully, CAINS EX-25.1 50 FORM T-1 - UNITED STATES TRUST CO. OF NEW YORK FORM T-1 ============================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _______ ------------------ UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-3818954 (Jurisdiction of incorporation (I.R.S. employer if not a U.S. national bank) identification No.) 114 West 47th Street 10036-1532 New York, NY (Zip Code) (Address of principal executive offices) ------------------ Navigator Gas Transport PLC (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ - 2 - ------------------ Navigator Gas (IOM- I-A) Limited (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ Navigator Gas (IOM- I-B) Limited (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ Navigator Gas (IOM- I-C) Limited (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ - 3 - Navigator Gas (IOM- I-D) Limited (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ Navigator Gas (IOM- I-E) Limited (Exact name of obligor as specified in its charter) Isle of Man N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 15-19 Athol Street Douglas, Isle of Man 1MI 1LB (Address of principal executive offices) (Zip Code) ------------------ 10-1/2% First Priority Ship Mortgage Notes Due 2007 (Title of the indenture securities) ============================================== - 4 - GENERAL 1. GENERAL INFORMATION Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Reserve Bank of New York (2nd District), New York, New York (Board of Governors of the Federal Reserve System) Federal Deposit Insurance Corporation, Washington, D.C. New York State Banking Department, Albany, New York (b)Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH THE OBLIGOR If the obligor is an affiliate of the trustee, describe each such affiliation. None 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15: Navigator Gas Transport PLC, Navigator Gas (IOM-I-A) Limited, Naviagator Gas (IOM-I-B), Navigator Gas (IOM-A-C), Navigator Gas (IOM-A-D), Navigator Gas (IOM-A-E) currently is not in default under any of its outstanding securities for which United States Trust Company of New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General Instruction B. 16. LIST OF EXHIBITS T-1.1 -- Organization Certificate, as amended, issued by the State of New York Banking Department to transact business as a Trust Company, is incorporated by reference to Exhibit T-1.1 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33-97056). T-1.2 -- Included in Exhibit T-1.1. T-1.3 -- Included in Exhibit T-1.1. - 5 - 16. LIST OF EXHIBITS (CONT'D) T-1.4 -- The By-Laws of United States Trust Company of New York, as amended, is incorporated by reference to Exhibit T-1.4 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33-97056). T-1.6 -- The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990. T-1.7 -- A copy of the latest report of condition of the trustee pursuant to law or the requirements of its supervising or examining authority. NOTE As of September 11, 1997, the trustee had 2,999,020 shares of Common Stock outstanding, all of which are owned by its parent company, U.S. Trust Corporation. The term "trustee" in Item 2, refers to each of United States Trust Company of New York and its parent company, U. S. Trust Corporation. In answering Item 2 in this statement of eligibility as to matters peculiarly within the knowledge of the obligor or its directors, the trustee has relied upon information furnished to it by the obligor and will rely on information to be furnished by the obligor and the trustee disclaims responsibility for the accuracy or completeness of such information. ------------------ Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, United States Trust Company of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 11th day of September, 1997. UNITED STATES TRUST COMPANY OF NEW YORK, Trustee By: /s/ Christine C. Collins ------------------------------ Christine C. Collins Assistant Vice President EXHIBIT T-1.6 The consent of the trustee required by Section 321(b) of the Act. United States Trust Company of New York 114 West 47th Street New York, NY 10036 September 1, 1995 Securities and Exchange Commission 450 5th Street, N.W. Washington, DC 20549 Gentlemen: Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the limitations set forth therein, United States Trust Company of New York ("U.S. Trust") hereby consents that reports of examinations of U.S. Trust by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. Very truly yours, UNITED STATES TRUST COMPANY OF NEW YORK By: /s/ Gerard F. Ganey --------------------- Gerard F. Ganey Senior Vice President EXHIBIT T-1.7 UNITED STATES TRUST COMPANY OF NEW YORK CONSOLIDATED STATEMENT OF CONDITION JUNE 30, 1997 (IN THOUSANDS) ASSETS - ------ Cash and Due from Banks $ 83,529 Short-Term Investments 259,746 Securities, Available for Sale 924,165 Loans 1,437,342 Less: Allowance for Credit Losses 13,779 Net Loans 1,423,563 Premises and Equipment 61,515 Other Assets 122,696 TOTAL ASSETS $2,875,214 LIABILITIES - ----------- Deposits: Non-Interest Bearing $ 763,075 Interest Bearing 1,409,017 ---------- Total Deposits 2,172,092 Short-Term Credit Facilities 404,212 Accounts Payable and Accrued Liabilities 132,213 TOTAL LIABILITIES $2,708,517 STOCKHOLDER'S EQUITY - -------------------- Common Stock 14,995 Capital Surplus 49,541 Retained Earnings 100,930 Unrealized Gains (Losses) on Securities Available for Sale, Net of Taxes 1,231 ---------- TOTAL STOCKHOLDER'S EQUITY 166,697 TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $2,875,214 I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank do hereby declare that this Statement of Condition has been prepared in conformance with the instructions issued by the appropriate regulatory authority and is true to the best of my knowledge and belief. Richard E. Brinkmann, SVP & Controller August 7, 1997 EX-25.2 51 FORM T-1 - THE CHASE MANHATTAN BANK ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) -------------------------------------------- NAVIGATOR GAS TRANSPORT PLC (Exact name of obligor as specified in its charter) ISLE OF MAN N/A (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) C/O 15-19 ATHOL STREET DOUGLAS, ISLE OF MAN IM1 1LB (Address of principal executive offices) (Zip Code) -------------------------------------------- SECOND PRIORITY SHIP MORTGAGE NOTES (Title of the indenture securities) GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 17th day of September, 1997. THE CHASE MANHATTAN BANK By /s/ L. O'Brien ---------------------------------- L. O'Brien Senior Trust Officer - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1997, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ............................................$ 13,892 Interest-bearing balances ................................... 4,282 Securities: ..................................................... Held to maturity securities........................................................ 2,857 Available for sale securities..................................... 34,091 Federal Funds sold and securities purchased under agreements to resell ........................................ 29,970 Loans and lease financing receivables: Loans and leases, net of unearned income $124,827 Less: Allowance for loan and lease losses 2,753 Less: Allocated transfer risk reserve ..... 13 -------- Loans and leases, net of unearned income, allowance, and reserve ...................................... 122,061 Trading Assets ................................................... 56,042 Premises and fixed assets (including capitalized leases)........................................................... 2,904 Other real estate owned .......................................... 306 Investments in unconsolidated subsidiaries and associated companies......................................... 232 Customers' liability to this bank on acceptances outstanding ................................................. 2,092 Intangible assets ................................................ 1,532 Other assets ..................................................... 10,448 ------ TOTAL ASSETS ..................................................... $280,709 ======== - 4 - LIABILITIES Deposits In domestic offices .......................................... $91,249 Noninterest-bearing .......... $38,157 Interest-bearing ............. 53,092 In foreign offices, Edge and Agreement subsidiaries, and IBF's ..................................................... 70,192 Noninterest-bearing .......... $ 3,712 Interest-bearing ............. 66,480 Federal funds purchased and securities sold under agree- ments to repurchase ................................................ 35,185 Demand notes issued to the U.S. Treasury ........................... 1,000 Trading liabilities ................................................ 42,307 OtherBorrowed money (includes mortgage indebtedness and obligations under calitalized leases): With a remaining maturity of one year or less ........... 4,593 With a remaining maturity of more than one year . through three years.................................... 260 With a remaining maturity of more than three years........... 146 Bank's liability on acceptances executed and outstanding 2,092 Subordinated notes and debentures ................................. 5,715 Other liabilities ................................................................... 11,373 TOTAL LIABILITIES ................................................. 264,112 EQUITY CAPITAL Perpetual Preferred stock and related surplus 0 Common stock ...................................................... 1,211 Surplus (exclude all surplus related to preferred stock)... 10,283 Undivided profits and capital reserves ............................ 5,280 Net unrealized holding gains (Losses) on available-for-sale securities .................................. (193) Cumulative foreign currency translation adjustments ......... 16 TOTAL EQUITY CAPITAL .............................................. 16,597 ------ TOTAL LIABILITIES AND EQUITY CAPITAL .............................. $280,709 ========== I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR. ) -5- EX-99.1 52 LETTER OF TRANSMITTAL - FIRST PRIORITY MORT. NOTES LETTER OF TRANSMITTAL OFFER TO EXCHANGE THE 10 1/2% FIRST PRIORITY EXCHANGE SHIP MORTGAGE NOTES DUE 2007 THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF THE OUTSTANDING 10 1/2% FIRST PRIORITY EXCHANGE SHIP MORTGAGE NOTES DUE 2007 OF NAVIGATOR GAS TRANSPORT PLC, PURSUANT TO THE PROSPECTUS DATED _______, 1997 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ___________, 1997, UNLESS THE OFFER IS EXTENDED To United States Trust Company of New York (the "First Priority Notes Exchange Agent") BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME) P.O. Box 843 111 Broadway Cooper Station New York, New York 10006 New York, New York 10276 Attention: Lower Level Corporate Attention: Corporate Trust Services Trust Window BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE (AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY): 770 Broadway 13th Floor (212) 420-6152 New York, New York 10003 confirm by telephone (800) 548-6565 Attention: Corporate Trust Services Delivery of this Letter of Transmittal to an address other than as set forth above or transmission of instructions via facsimile to a number other than the one listed above will not constitute valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before completing this Letter of Transmittal. 1 The undersigned hereby acknowledges receipt of the Prospectus dated _______, 1997 (the "Prospectus") of Navigator Gas Transport PLC, ("Navigator Gas Transport"), as agent for Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, (each an "Owner", and together with Navigator Gas Transport, the "Companies") and this Letter of Transmittal, which together constitute the offer of Navigator Gas Transport (the "Exchange Offer") to exchange up to $217,000,000 in aggregate principal amount of its registered 10 1/2% First Priority Exchange Ship Mortgage Notes due 2007 (the "First Priority Exchange Notes") for a like principal amount of its outstanding unregistered 10 1/2% First Priority Ship Mortgage Notes due 2007 (the "Existing First Priority Notes"). Existing First Priority Notes may be tendered only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ___________, 1997, unless the Navigator Gas Transport, in its sole discretion, extend the Exchange Offer, in which case the term shall mean the latest date and time to which the Exchange Offer is extended. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE FIRST PRIORITY NOTES EXCHANGE AGENT. List below the Existing First Priority Notes to which this Letter of Transmittal relates. If the space indicated below is inadequate, the Certificate or Registration Numbers and Principal Amounts should be listed on a separately signed schedule affixed hereto.
DESCRIPTION OF EXISTING SECOND PRIORITY NOTES TENDERED HEREBY Certificate Aggregate or Principal Amount Principal Name(s) and Address(es) of Registered Holder(s) Registration Represented by Amount (Please fill in) Numbers* Existing Second Tendered** Priority Notes ----------------------------------------------- ------------------ --------------------- ------------------- Total ================== ===================== ===================
* Need not be completed by book-entry Holders. ** Unless otherwise indicated, the Holder will be deemed to have tendered the full aggregate principal amount represented by such Existing Second Priority Notes. All tenders must be in minimum denominations of $100,000 and integral multiples of $1,000 thereafter. 2 This Letter of Transmittal is to be used (i) if certificates of Existing Second Priority Notes are to be forwarded herewith, (ii) if delivery of Existing Second Priority Notes is to be made by book-entry transfer to an account maintained by the Second Priority Notes Exchange Agent at The Depository Trust Company, pursuant to the procedures set forth in "The Exchange Offer-Procedures for Tendering" in the Prospectus or (iii) if tender of the Existing Second Priority Notes is to be made according to the guaranteed delivery procedures described in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 2. Delivery of documents to a book-entry transfer facility does not constitute delivery to the Second Priority Notes Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person in whose name Existing Second Priority Notes are registered on the books of Navigator Gas Transport or any other person who has obtained a properly completed bond power from such registered holder. The undersigned must complete, execute and deliver this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. / / CHECK HERE IF TENDERED EXISTING SECOND PRIORITY NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE SECOND PRIORITY NOTES EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution / / The Depository Trust Company Account Number Transaction Code Number Holders whose Existing Second Priority Notes are not immediately available or who cannot deliver their Existing Second Priority Notes and all other documents required hereby to the Second Priority Notes Exchange Agent on or prior to the Expiration Date must tender their Existing Second Priority Notes according to the guaranteed delivery procedure set forth in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 2. / / CHECK HERE IF TENDERED EXISTING SECOND PRIORITY NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) Name of Eligible Institution that Guaranteed Delivery If delivered by book-entry transfer: Account Number Transaction Code Number 3 / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO THAT ARE DISTRIBUTED DURING THE ONE-YEAR PERIOD FOLLOWING THE EXPIRATION DATE. Name Address 4 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Companies the principal amount of the Existing First Priority Notes indicated above. Subject to, and effective upon, the acceptance for exchange of such Existing First Priority Notes tendered hereby, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Companies all right, title and interest in and to such Existing First Priority Notes as are being tendered hereby, including all rights to accrued and unpaid interest thereon as of the Expiration Date. The undersigned hereby irrevocably constitutes and appoints the First Priority Notes Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said First Priority Notes Exchange Agent acts as the agent of the Companies in connection with the Exchange Offer) to cause the Existing First Priority Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Existing First Priority Notes and to acquire First Priority Exchange Notes issuable upon the exchange of such tendered Existing First Priority Notes, and that when the same are accepted for exchange, the Companies will acquire good and unencumbered title to the tendered Existing First Priority Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned acknowledges that this Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission set forth in no-action letters issued to third parties. Based on such interpretations, the Companies believe that the First Priority Exchange Notes issued in exchange for the Existing First Priority Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Companies within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), or a broker-dealer tendering Existing First Priority Notes acquired directly from the Companies or an affiliate thereof for its own account) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange First Priority Notes are acquired in the ordinary course of such holders' business and such holders are not engaged in and do not intend to engage in a distribution of Exchange First Priority Notes and have no arrangement or understanding with any person to participate in a distribution of Exchange First Priority Notes. By signing or electronically confirming this Letter of Transmittal, the undersigned represents to the Companies that (i) the Exchange First Priority Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of such holder's business, (ii) the undersigned is not engaged in, and does not intend to engage in, a distribution of the Exchange First Priority Notes and has no arrangement or understanding with any person to participate in a distribution of the Exchange First Priority Notes, and (iii) the undersigned is neither an "affiliate" of the Companies within the meaning of Rule 405 under the Securities Act nor a broker-dealer tendering Existing First Priority Notes acquired directly from the Companies or an affiliate thereof for its own account. If the undersigned is an affiliate within the meaning of Rule 405 under the 5 Securities Act, it represents that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer that will receive Exchange First Priority Notes for its own account in exchange for Existing First Priority Notes, it represents that the Existing First Priority Notes to be exchanged for the Exchange First Priority Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver aprospectus in connection with any resale of such Exchange First Priority Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the First Priority Notes Exchange Agent or the Companies to be necessary or desirable to complete the exchange, assignment and transfer of tendered Existing First Priority Notes or transfer ownership of such Existing First Priority Notes on the account books maintained by a book-entry transfer facility. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The Exchange Offer--Conditions." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Companies), as more particularly set forth in the Prospectus, the Companies may not be required to exchange any of the Existing First Priority Notes tendered hereby and, in such event, the Existing First Priority Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tendered Existing First Priority Notes may be withdrawn at any time prior to the Expiration Date. Unless otherwise indicated in the box entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" in this Letter of Transmittal, certificates for all Exchange First Priority Notes delivered in exchange for tendered Existing First Priority Notes, and any Existing First Priority Notes delivered herewith but not exchanged, will be registered in the name of the undersigned and shall be delivered to the undersigned at the address shown below the signature of the undersigned. If an Exchange Note is to be issued to a person other than the person(s) signing this Letter of Transmittal, or if the Exchange Note is to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address different than the address shown on this Letter of Transmittal, the appropriate boxes of this Letter of Transmittal should be completed. IF EXISTING FIRST PRIORITY NOTES ARE SURRENDERED BY HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL REGISTRATION INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN INSTRUCTION 4). 6 THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING FIRST PRIORITY NOTES TENDERED HEREBY" ABOVE AND SIGNING THISLETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE EXISTING FIRST PRIORITY NOTES AS SET FORTH IN SUCH BOX. 7
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS To be completed ONLY if the Second Priority Exchange Notes are To be completed ONLY if the Second Priority to be issued in the name of someone other than the undersigned. Exchange Notes are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Existing Second Priority Notes Tendered Hereby." Issue Exchange Note to: Mail Exchange Note to: Name: Name: Address: Address: Book-Entry Transfer Facility Account: Employer Identification or Social Security No.: (PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
REGISTERED HOLDER(S) OF EXISTING SECOND PRIORITY NOTES SIGN HERE (IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW) X X (SIGNATURE(S) OF REGISTERED HOLDER(S)) Must be signed by registered holder(s) exactly as name(s) appear(s) on the Existing Second Priority Notes or on a security position listing as the owner of the Existing Second Priority Notes or by person(s) authorized to become registered holder(s) by properly completed bond powers transmitted herewith. If signature is by attorney-in-fact, trustee, executor, administrator, guardian, officer of a corporation or other person acting in a fiduciary capacity, please provide the following information. (PLEASE PRINT OR TYPE): Name and Capacity (full title): Address (Including zip code): Area Code and Telephone Number: Taxpayer Identification or Social Security No.: Dated: SIGNATURE GUARANTEE (IF REQUIRED - SEE INSTRUCTION 4) Authorized Signature: (SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR) Name and Title: Name of Firm: Area Code and Telephone Number: (PLEASE PRINT OR TYPE) Dated: ================================================================================ 8 PAYOR: Navigator Gas Transport PLC THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED Please provide your social security number or other taxpayer identification number on the following Substitute Form W-9 and certify therein that you are subject to backup withholding. SUBSTITUTE FORM W-9 PART I - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT DEPARTMENT OF THE TREASURY AND CERTIFY BY SIGNING AND DATING BELOW. INTERNAL REVENUE SERVICE
PART I - CHECK THE BOX IF YOU ARE NOT SUBJECT ----------------- TO BACKUP WITHHOLDING UNDER SOCIAL SECURITY THE PROVISIONS OF SECTION 3406(A)(I)(C) OF THE NUMBER OR INTERNAL REVENUE CODE BECAUSE (1) EMPLOYER YOU ARE EXEMPT FROM BACKUP WITHHOLDING, (2) IDENTIFICATION YOU HAVE NOT BEEN NOTIFIED THAT YOU NUMBER ARE SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS OR (3) THE INTERNAL REVENUE SERVICE HAS NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. / / CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE. PART 3 - SIGNATURE: AWAITING TIN / / PAYORS' REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") DATED: NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A NUMBER. Signature Date 9 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically delivered Existing First Priority Notes or confirmation of any book-entry transfer to the First Priority Notes Exchange Agent's account at a book-entry transfer facility of Existing First Priority Notes tendered by book-entry transfer, as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile thereof (or electronic confirmation thereof), and any other documents required by this Letter of Transmittal, must be received by the First Priority Notes Exchange Agent at any of its addresses set forth herein on or prior to the Expiration Date. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE EXISTING FIRST PRIORITY NOTES AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH BOOKENTRY TRANSFER, IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, DELIVERY WILL BE VALID ONLY WHEN ACTUALLY RECEIVED BY THE FIRST PRIORITY NOTES EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Existing First Priority Notes for exchange. DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE SET FORTH HEREIN, WILL NOT CONSTITUTE VALID DELIVERY. 2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Existing First Priority Notes and who do not hold their Existing First Priority Notes through a book-entry transfer facility, but whose Existing First Priority Notes are not immediately available or who cannot deliver their Existing First Priority Notes, the Letter of Transmittal or any other required documents to the First Priority Notes Exchange Agent (or complete the procedures for book-entry transfer) prior to the Expiration Date, may effect a tender if: (a) the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"); (b) prior to the Expiration Date, the First Priority Notes Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number(s) of such Existing 10 First Priority Notes and the principal amount of Existing First Priority Notes tendered, stating that the tender is being made thereby and guaranteeing what, within five New York Stock Exchange trading days after the Expiration Date or the execution of the Notice of Guaranteed Delivery, the Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing the Existing First Priority Notes (or a confirmation of book-entry transfer of such Existing First Priority Notes into the First Priority Notes Exchange Agent's account at the BookEntry Transfer Facility) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the First Priority Notes Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered Existing First Priority Notes in proper form for transfer (or a confirmation of book-entry transfer of such Existing First Priority Notes into the First Priority Notes Exchange Agent's account at the Book-Entry Transfer Facility) and all other documents required by the Letter of Transmittal, are received by the First Priority Notes Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. Upon request to the First Priority Notes Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Existing First Priority Notes according to the guaranteed delivery procedures set forth above. Any Holder who wishes to tender Existing First Priority Notes pursuant to the guaranteed delivery procedures described above must ensure that the First Priority Notes Exchange Agent receives the Notice of Guaranteed Delivery relating to such Existing First Priority Notes prior to the Expiration Date. Failure to complete the guaranteed delivery procedures outlined above will not, of itself, affect the validity or effect a revocation of any Letter of Transmittal form properly completed and executed by a Holder who attempted to use the guaranteed delivery procedures. 3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of Existing First Priority Notes evidenced by a submitted certificate is tendered, the tendering Holder should fill in the principal amount tendered in the column entitled "Principal Amount Tendered" of the box entitled "Description of Existing First Priority Notes Tendered Hereby." A newly issued Existing Note for the principal amount of Existing First Priority Notes submitted but not tendered will be sent to such Holder as soon as practicable after the Expiration Date. Subject to minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof, $1,000 principal amount of Exchange First Priority Notes is offered in exchange for each $1,000 principal amount of Existing First Priority Notes. All Existing First Priority Notes delivered to the First Priority Notes Exchange Agent will be deemed to have been tendered in full unless otherwise indicated. Existing First Priority Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, after which time tenders of Existing First Priority Notes are irrevocable. To be effective, a written or facsimile transmission notice of withdrawal (or a written or electronic transmission notice of withdrawal through DTC's Automated Tender Offer Program ("ATOP") for DTC participants) must be timely received by the First Priority Notes Exchange Agent. Any such notice of 11 withdrawal must (i) specify the name of the person having deposited the Existing First Priority Notes to be withdrawn (the "Depositor"), (ii) identify the Existing First Priority Notes to be withdrawn (including the registration number(s) and principal amount of such Existing First Priority Notes or, in the case of Existing First Priority Notes transferred by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited), (iii) be signed or confirmed by the Holder in the same manner as the original signature on or confirmation of this Letter of Transmittal (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Existing First Priority Notes register the transfer of such Existing First Priority Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Existing First Priority Notes are to be registered, if different from that of the Depositor. If Existing First Priority Notes have been delivered pursuant to procedures for book-entry transfer, any notice of withdrawal must otherwise comply with DTC's procedures. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by Navigator Gas Transport, whose determination shall be final and binding on all parties. Any Existing First Priority Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange First Priority Notes will be issued with respect thereto unless the Existing First Priority Notes so withdrawn are validly retendered. Any Existing First Priority Notes which have been tendered but which are not accepted for exchange will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing First Priority Notes may be retendered by following the procedures for tender described above. 4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered Holder(s) of the Existing First Priority Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificates without alteration or enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in the Book-Entry Transfer Facility, the signature must correspond with the name as it appears on the security position listing as the owner of the Existing First Priority Notes. If any of the Existing First Priority Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Existing First Priority Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of Existing First Priority Notes. Signatures of this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution unless the Existing First Priority Notes tendered hereby are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. If this Letter of Transmittal is signed by the registered Holder or Holders of Existing First Priority Notes (which term, for the purposes described herein, shall include a 12 participant in the Book-Entry Transfer Facility whose name appears on a security listing as the owner of the Existing First Priority Notes) listed and tendered hereby, no endorsements of the tendered Existing First Priority Notes or separate written instruments of transfer or exchange are required. In any other case, the registered Holder (or acting Holder) must either properly endorse the Existing First Priority Notes or transmit properly completed bond powers with this Letter of Transmittal (in either case, executed exactly as the name(s) of the registered Holder(s) appear(s) on the Existing First Priority Notes, and, with respect to a participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Existing First Priority Notes, exactly as the name of the participant appears on such security position listing), with the signature on the Existing First Priority Notes or bond power guaranteed by an Eligible Institution (except where the Existing First Priority Notes are tendered for the account of an Eligible Institution). If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by Navigator Gas Transport, proper evidence satisfactory to Navigator Gas Transport of their authority so to act must be submitted. 5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should indicate, in the applicable box, the name and address (or account at the Book-Entry Transfer Facility) in which the Exchange First Priority Notes or substitute Existing First Priority Notes for principal amounts not tendered or not accepted for exchange are to be issued (or deposited), if different from the names and addresses or accounts of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification number or social security number of the person named must also be indicated and the tendering Holder should complete the applicable box. If no instructions are given, the Exchange First Priority Notes (and any Existing First Priority Notes not tendered or not accepted) will be issued in the name of and sent to the acting Holder of the Existing First Priority Notes or deposited at such Holder's account at the Book-Entry Transfer Facility. 6. TRANSFER TAXES. Navigator Gas Transport shall pay all transfer taxes, if any, applicable to the transfer and exchange of Existing First Priority Notes pursuant to the Exchange Offer. If, however, certificates representing the Exchange First Priority Notes or the Existing First Priority Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Existing First Priority Notes tendered, or if tendered Existing First Priority Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the Existing First Priority Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exception therefrom is not submitted herewith, the amount of such 13 transfer taxes will be collected from the tendering Holder by the First Priority Notes Exchange Agent. Except as provided in this Instruction 6, it will not be necessary for transfer stamps to be affixed to the Existing First Priority Notes listed in this Letter of Transmittal. 7. WAIVER OF CONDITIONS. Navigator Gas Transport reserve the right, in its reasonable judgment, to waive, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Existing First Priority Notes have been mutilated, lost, stolen or destroyed should contact the First Priority Notes Exchange Agent at the address indicated above for further instructions. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the First Priority Notes Exchange Agent at the address and telephone number(s) set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to Navigator Gas Transport, c/o Cambridge Fund Management, LLC, Park Avenue Tower, 65 East 55th Street, Suite 3000, New York, New York, 10022, telephone number: (212) 661-9541. 10. VALIDITY AND FORM. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Existing First Priority Notes and withdrawal of tendered Existing First Priority Notes will be determined by Navigator Gas Transport in its sole discretion, which determination will be final and binding. Navigator Gas Transport reserves the absolute right to reject any and all Existing First Priority Notes not properly tendered or any Existing First Priority Notes the acceptance of which would, in the opinion of counsel for Navigator Gas Transport, be unlawful. Navigator Gas Transport also reserves the right to waive any defects, irregularities or conditions of tender as to particular Existing First Priority Notes. Navigator Gas Transport's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Existing First Priority Notes must be cured within such time as Navigator Gas Transport shall determine. Although Navigator Gas Transport intends to notify Holders of defects or irregularities with respect to tenders of Existing First Priority Notes, none of Navigator Gas Transport, the First Priority Notes Exchange Agent or any other person shall incur any liability for failure to give such notification. Tenders of Existing First Priority Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Existing First Priority Notes received by the First Priority Notes Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or 14 waived will be returned by the First Priority Notes Exchange Agent to the tendering Holders as soon as practicable following the Expiration Date. IMPORTANT TAX INFORMATION Under federal income tax law, a Holder tendering Existing First Priority Notes is required to provide the First Priority Notes Exchange Agent with such Holder's correct TIN on Substitute Form W-9 below. If such Holder is an individual, the TIN is the Holder's social security number. The Certificate of Awaiting Taxpayer Identification Number should be completed if the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future. If the First Priority Notes Exchange Agent is not provided with the correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Holder with respect to tendered Existing First Priority Notes may be subject to backup withholding. Certain Holders (including, among others, all domestic corporations and certain foreign individuals and foreign entities) are not subject to these backup withholding and reporting requirements. Such a Holder who satisfies one or more of the conditions set forth in Part 2 of the Substitute Form W-9 should execute the certification following such Part 2. In order for a foreign Holder to qualify as an exempt recipient, that Holder must submit to the First Priority Notes Exchange Agent a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that Holder's exempt status. Such forms can be obtained from the First Priority Notes Exchange Agent. If backup withholding applies, the First Priority Notes Exchange Agent is required to withhold 31% of any amounts otherwise payable to the Holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a Holder with respect to Existing First Priority Notes tendered for exchange, the Holder is required to notify the First Priority Notes Exchange Agent of his or her correct TIN by completing the form herein certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the Internal Revenue Service has notified such Holder that he or she is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE FIRST PRIORITY NOTES EXCHANGE AGENT Each Holder is required to give the First Priority Notes Exchange Agent the social security number or employer identification number of the record Holder(s) of the Existing First Priority Notes. If Existing First Priority Notes are in more than one name or are not in the name of the actual Holder, consult the instructions on Internal Revenue Service Form W-9, which may 15 be obtained from the First Priority Notes Exchange Agent, for additional guidance on which number to report. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER If the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, write "Applied For" in the space for the TIN on Substitute Form W-9, sign and date the form and the Certificate of Awaiting Taxpayer Identification Number and return them to the First Priority Notes Exchange Agent. If such certificate is completed and the First Priority Notes Exchange Agent is not provided with the TIN within 60 days, the First Priority Notes Exchange Agent will withhold 31% of all payments made thereafter until a TIN is provided to the First Priority Notes Exchange Agent. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH THE EXISTING FIRST PRIORITY NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE FIRST PRIORITY NOTES EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. 16 EX-99.2 53 LETTER OF TRANSMITTAL; SECOND PRIORITY MORT. NOTES LETTER OF TRANSMITTAL OFFER TO EXCHANGE THE 12% SECOND PRIORITY EXCHANGE SHIP MORTGAGE NOTES DUE 2007 THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF THE OUTSTANDING 12% SECOND PRIORITY SHIP MORTGAGE NOTES DUE 2007 OF NAVIGATOR GAS TRANSPORT PLC PURSUANT TO THE PROSPECTUS DATED _______, 1997 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ___________, 1997, UNLESS THE OFFER IS EXTENDED To United States Trust Company of New York (the "Second Priority Notes Exchange Agent") BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME) P.O. Box 843 111 Broadway Cooper Station New York, New York 10006 New York, New York 10276 Attention: Lower Level Corporate Attention: Corporate Trust Services Trust Window BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE (AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY): 770 Broadway 13th Floor (212) 420-6152 New York, New York 10003 confirm by telephone (800) 548-6565 Attention: Corporate Trust Services Delivery of this Letter of Transmittal to an address other than as set forth above or transmission of instructions via facsimile to a number other than the one listed above will not constitute valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before completing this Letter of Transmittal. 1 The undersigned hereby acknowledges receipt of the Prospectus dated _______, 1997 (the "Prospectus") of Navigator Gas Transport PLC, ("Navigator Gas Transport"), Navigator Gas (IOM I-A) Limited, Navigator Gas (IOM I-B) Limited, Navigator Gas (IOM I-C) Limited, Navigator Gas (IOM I-D) Limited, and Navigator Gas (IOM I-E) Limited, (each an "Owner", and together with Navigator Gas Transport, the "Companies") and this Letter of Transmittal, which together constitute the offer of Navigator Gas Transport (the "Exchange Offer") to exchange up to $87,000,000 in aggregate principal amount of its registered 12% Second Priority Exchange Ship Mortgage Notes due 2007 (the "Second Priority Exchange Notes") for a like principal amount of its outstanding unregistered 12% Second Priority Ship Mortgage Notes due 2007 (the "Existing Second Priority Notes"). Existing Second Priority Notes may be tendered only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ___________, 1997, unless Navigator Gas Transport, in its sole discretion, extend the Exchange Offer, in which case the term shall mean the latest date and time to which the Exchange Offer is extended. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE SECOND PRIORITY NOTES EXCHANGE AGENT. List below the Existing Second Priority Notes to which this Letter of Transmittal relates. If the space indicated below is inadequate, the Certificate or Registration Numbers and Principal Amounts should be listed on a separately signed schedule affixed hereto.
DESCRIPTION OF EXISTING SECOND PRIORITY NOTES TENDERED HEREBY Certificate Aggregate or Principal Amount Principal Name(s) and Address(es) of Registered Holder(s) Registration Represented by Amount (Please fill in) Numbers* Existing Second Tendered** Priority Notes ----------------------------------------------- ------------------ --------------------- ------------------- Total ================== ===================== ===================
* Need not be completed by book-entry Holders. ** Unless otherwise indicated, the Holder will be deemed to have tendered the full aggregate principal amount represented by such Existing Second Priority Notes. All tenders must be in minimum denominations of $100,000 and integral multiples of $1,000 thereafter. 2 This Letter of Transmittal is to be used (i) if certificates of Existing Second Priority Notes are to be forwarded herewith, (ii) if delivery of Existing Second Priority Notes is to be made by book-entry transfer to an account maintained by the Second Priority Notes Exchange Agent at The Depository Trust Company, pursuant to the procedures set forth in "The Exchange Offer-Procedures for Tendering" in the Prospectus or (iii) if tender of the Existing Second Priority Notes is to be made according to the guaranteed delivery procedures described in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 2. Delivery of documents to a book-entry transfer facility does not constitute delivery to the Second Priority Notes Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person in whose name Existing Second Priority Notes are registered on the books of Navigator Gas Transport or any other person who has obtained a properly completed bond power from such registered holder. The undersigned must complete, execute and deliver this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. / / CHECK HERE IF TENDERED EXISTING SECOND PRIORITY NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE SECOND PRIORITY NOTES EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution / / The Depository Trust Company Account Number Transaction Code Number Holders whose Existing Second Priority Notes are not immediately available or who cannot deliver their Existing Second Priority Notes and all other documents required hereby to the Second Priority Notes Exchange Agent on or prior to the Expiration Date must tender their Existing Second Priority Notes according to the guaranteed delivery procedure set forth in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 2. / / CHECK HERE IF TENDERED EXISTING SECOND PRIORITY NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) Name of Eligible Institution that Guaranteed Delivery If delivered by book-entry transfer: Account Number Transaction Code Number 3 / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO THAT ARE DISTRIBUTED DURING THE ONE-YEAR PERIOD FOLLOWING THE EXPIRATION DATE. Name Address 4 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Companies the principal amount of the Existing Second Priority Notes indicated above. Subject to, and effective upon, the acceptance for exchange of such Existing Second Priority Notes tendered hereby, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Companies all right, title and interest in and to such Existing Second Priority Notes as are being tendered hereby, including all rights to accrued and unpaid interest thereon as of the Expiration Date. The undersigned hereby irrevocably constitutes and appoints the Second Priority Notes Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Second Priority Notes Exchange Agent acts as the agent of the Companies in connection with the Exchange Offer) to cause the Existing Second Priority Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Existing Second Priority Notes and to acquire Second Priority Exchange Notes issuable upon the exchange of such tendered Existing Second Priority Notes, and that when the same are accepted for exchange, the Companies will acquire good and unencumbered title to the tendered Existing Second Priority Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned acknowledges that this Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission set forth in no-action letters issued to third parties. Based on such interpretations, the Companies believe that the Second Priority Exchange Notes issued in exchange for the Existing Second Priority Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Companies within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), or a broker-dealer tendering Existing Second Priority Notes acquired directly from the Companies or an affiliate thereof for its own account) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Second Priority Notes are acquired in the ordinary course of such holders' business and such holders are not engaged in and do not intend to engage in a distribution of Exchange Second Priority Notes and have no arrangement or understanding with any person to participate in a distribution of Exchange Second Priority Notes. By signing or electronically confirming this Letter of Transmittal, the undersigned represents to the Companies that (i) the Exchange Second Priority Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of such holder's business, (ii) the undersigned is not engaged in, and does not intend to engage in, a distribution of the Exchange Second Priority Notes and has no arrangement or understanding with any person to participate in a distribution of the Exchange Second Priority Notes, and (iii) the undersigned is neither an "affiliate" of the Companies within the meaning of Rule 405 under the Securities Act nor a broker- dealer tendering Existing Second Priority Notes acquired directly from the Companies or an 5 affiliate thereof for its own account. If the undersigned is an affiliate within the meaning of Rule 405 under the Securities Act, it represents that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer that will receive Exchange Second Priority Notes for its own account in exchange for Existing Second Priority Notes, it represents that the Existing Second Priority Notes to be exchanged for the Exchange Second Priority Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Second Priority Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Second Priority Notes Exchange Agent or the Companies to be necessary or desirable to complete the exchange, assignment and transfer of tendered Existing Second Priority Notes or transfer ownership of such Existing Second Priority Notes on the account books maintained by a book-entry transfer facility. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The Exchange Offer--Conditions." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Companies), as more particularly set forth in the Prospectus, the Companies may not be required to exchange any of the Existing Second Priority Notes tendered hereby and, in such event, the Existing Second Priority Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tendered Existing Second Priority Notes may be withdrawn at any time prior to the Expiration Date. Unless otherwise indicated in the box entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" in this Letter of Transmittal, certificates for all Exchange Second Priority Notes delivered in exchange for tendered Existing Second Priority Notes, and any Existing Second Priority Notes delivered herewith but not exchanged, will be registered in the name of the undersigned and shall be delivered to the undersigned at the address shown below the signature of the undersigned. If an Exchange Note is to be issued to a person other than the person(s) signing this Letter of Transmittal, or if the Exchange Note is to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address different than the address shown on this Letter of Transmittal, the appropriate boxes of this Letter of Transmittal should be completed. IF EXISTING SECOND PRIORITY NOTES ARE SURRENDERED BY HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL REGISTRATION INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN INSTRUCTION 4). 6 THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING SECOND PRIORITY NOTES TENDERED HEREBY" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE EXISTING SECOND PRIORITY NOTES AS SET FORTH IN SUCH BOX. 7
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS To be completed ONLY if the Second Priority Exchange Notes are To be completed ONLY if the Second Priority to be issued in the name of someone other than the undersigned. Exchange Notes are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Existing Second Priority Notes Tendered Hereby." Issue Exchange Note to: Mail Exchange Note to: Name: Name: Address: Address: Book-Entry Transfer Facility Account: Employer Identification or Social Security No.: (PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
REGISTERED HOLDER(S) OF EXISTING SECOND PRIORITY NOTES SIGN HERE (IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW) X X (SIGNATURE(S) OF REGISTERED HOLDER(S)) Must be signed by registered holder(s) exactly as name(s) appear(s) on the Existing Second Priority Notes or on a security position listing as the owner of the Existing Second Priority Notes or by person(s) authorized to become registered holder(s) by properly completed bond powers transmitted herewith. If signature is by attorney-in-fact, trustee, executor, administrator, guardian, officer of a corporation or other person acting in a fiduciary capacity, please provide the following information. (PLEASE PRINT OR TYPE): Name and Capacity (full title): Address (Including zip code): Area Code and Telephone Number: Taxpayer Identification or Social Security No.: Dated: SIGNATURE GUARANTEE (IF REQUIRED - SEE INSTRUCTION 4) Authorized Signature: (SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR) Name and Title: Name of Firm: Area Code and Telephone Number: (PLEASE PRINT OR TYPE) Dated: ================================================================================ 8 PAYOR: Navigator Gas Transport PLC THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED Please provide your social security number or other taxpayer identification number on the following Substitute Form W-9 and certify therein that you are subject to backup withholding. SUBSTITUTE FORM W-9 PART I - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT DEPARTMENT OF THE TREASURY AND CERTIFY BY SIGNING AND DATING BELOW. INTERNAL REVENUE SERVICE
PART I - CHECK THE BOX IF YOU ARE NOT SUBJECT ----------------- TO BACKUP WITHHOLDING UNDER SOCIAL SECURITY THE PROVISIONS OF SECTION 3406(A)(I)(C) OF THE NUMBER OR INTERNAL REVENUE CODE BECAUSE (1) EMPLOYER YOU ARE EXEMPT FROM BACKUP WITHHOLDING, (2) IDENTIFICATION YOU HAVE NOT BEEN NOTIFIED THAT YOU NUMBER ARE SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS OR (3) THE INTERNAL REVENUE SERVICE HAS NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. / / CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE. PART 3 - SIGNATURE: AWAITING TIN / / PAYORS' REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") DATED: NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A NUMBER. Signature Date 9 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically delivered Existing Second Priority Notes or confirmation of any book-entry transfer to the Second Priority Notes Exchange Agent's account at a book-entry transfer facility of Existing Second Priority Notes tendered by book-entry transfer, as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile thereof (or electronic confirmation thereof), and any other documents required by this Letter of Transmittal, must be received by the Second Priority Notes Exchange Agent at any of its addresses set forth herein on or prior to the Expiration Date. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE EXISTING SECOND PRIORITY NOTES AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH BOOK-ENTRY TRANSFER, IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, DELIVERY WILL BE VALID ONLY WHEN ACTUALLY RECEIVED BY THE SECOND PRIORITY NOTES EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Existing Second Priority Notes for exchange. DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE SET FORTH HEREIN, WILL NOT CONSTITUTE VALID DELIVERY. 2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Existing Second Priority Notes and who do not hold their Existing Second Priority Notes through a book-entry transfer facility, but whose Existing Second Priority Notes are not immediately available or who cannot deliver their Existing Second Priority Notes, the Letter of Transmittal or any other required documents to the Second Priority Notes Exchange Agent (or complete the procedures for book-entry transfer) prior to the Expiration Date, may effect a tender if: (a) the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"); (b) prior to the Expiration Date, the Second Priority Notes Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number(s) of such Existing 10 Second Priority Notes and the principal amount of Existing Second Priority Notes tendered, stating that the tender is being made thereby and guaranteeing what, within five New York Stock Exchange trading days after the Expiration Date or the execution of the Notice of Guaranteed Delivery, the Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing the Existing Second Priority Notes (or a confirmation of book-entry transfer of such Existing Second Priority Notes into the Second Priority Notes Exchange Agent's account at the Book-Entry Transfer Facility) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Second Priority Notes Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered Existing Second Priority Notes in proper form for transfer (or a confirmation of book-entry transfer of such Existing Second Priority Notes into the Second Priority Notes Exchange Agent's account at the Book-Entry Transfer Facility) and all other documents required by the Letter of Transmittal, are received by the Second Priority Notes Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. Upon request to the Second Priority Notes Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Existing Second Priority Notes according to the guaranteed delivery procedures set forth above. Any Holder who wishes to tender Existing Second Priority Notes pursuant to the guaranteed delivery procedures described above must ensure that the Second Priority Notes Exchange Agent receives the Notice of Guaranteed Delivery relating to such Existing Second Priority Notes prior to the Expiration Date. Failure to complete the guaranteed delivery procedures outlined above will not, of itself, affect the validity or effect a revocation of any Letter of Transmittal form properly completed and executed by a Holder who attempted to use the guaranteed delivery procedures. 3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of Existing Second Priority Notes evidenced by a submitted certificate is tendered, the tendering Holder should fill in the principal amount tendered in the column entitled "Principal Amount Tendered" of the box entitled "Description of Existing Second Priority Notes Tendered Hereby." A newly issued Existing Note for the principal amount of Existing Second Priority Notes submitted but not tendered will be sent to such Holder as soon as practicable after the Expiration Date. Subject to minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof, $1,000 principal amount of Exchange Second Priority Notes is offered in exchange for each $1,000 principal amount of Existing Second Priority Notes. All Existing Second Priority Notes delivered to the Second Priority Notes Exchange Agent will be deemed to have been tendered in full unless otherwise indicated. Existing Second Priority Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, after which time tenders of Existing Second Priority Notes are irrevocable. To be effective, a written or facsimile transmission notice of withdrawal (or a written or electronic transmission notice of withdrawal through DTC's Automated Tender Offer Program ("ATOP") for DTC participants) 11 must be timely received by the Second Priority Notes Exchange Agent. Any such notice of withdrawal must (i) specify the name of the person having deposited the Existing Second Priority Notes to be withdrawn (the "Depositor"), (ii) identify the Existing Second Priority Notes to be withdrawn (including the registration number(s) and principal amount of such Existing Second Priority Notes or, in the case of Existing Second Priority Notes transferred by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited), (iii) be signed or confirmed by the Holder in the same manner as the original signature on or confirmation of this Letter of Transmittal (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Existing Second Priority Notes register the transfer of such Existing Second Priority Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Existing Second Priority Notes are to be registered, if different from that of the Depositor. If Existing Second Priority Notes have been delivered pursuant to procedures for book-entry transfer, any notice of withdrawal must otherwise comply with DTC's procedures. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Companies, whose determination shall be final and binding on all parties. Any Existing Second Priority Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Second Priority Notes will be issued with respect thereto unless the Existing Second Priority Notes so withdrawn are validly retendered. Any Existing Second Priority Notes which have been tendered but which are not accepted for exchange will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing Second Priority Notes may be retendered by following the procedures for tender described above. 4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered Holder(s) of the Existing Second Priority Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificates without alteration or enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in the Book-Entry Transfer Facility, the signature must correspond with the name as it appears on the security position listing as the owner of the Existing Second Priority Notes. If any of the Existing Second Priority Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Existing Second Priority Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of Existing Second Priority Notes. Signatures of this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution unless the Existing Second Priority Notes tendered hereby are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. 12 If this Letter of Transmittal is signed by the registered Holder or Holders of Existing Second Priority Notes (which term, for the purposes described herein, shall include a participant in the Book-Entry Transfer Facility whose name appears on a security listing as the owner of the Existing Second Priority Notes) listed and tendered hereby, no endorsements of the tendered Existing Second Priority Notes or separate written instruments of transfer or exchange are required. In any other case, the registered Holder (or acting Holder) must either properly endorse the Existing Second Priority Notes or transmit properly completed bond powers with this Letter of Transmittal (in either case, executed exactly as the name(s) of the registered Holder(s) appear(s) on the Existing Second Priority Notes, and, with respect to a participant in the Book- Entry Transfer Facility whose name appears on a security position listing as the owner of Existing Second Priority Notes, exactly as the name of the participant appears on such security position listing), with the signature on the Existing Second Priority Notes or bond power guaranteed by an Eligible Institution (except where the Existing Second Priority Notes are tendered for the account of an Eligible Institution). If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by Navigator Gas Transport, proper evidence satisfactory to Navigator Gas Transport of its authority so to act must be submitted. 5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should indicate, in the applicable box, the name and address (or account at the Book-Entry Transfer Facility) in which the Exchange Second Priority Notes or substitute Existing Second Priority Notes for principal amounts not tendered or not accepted for exchange are to be issued (or deposited), if different from the names and addresses or accounts of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification number or social security number of the person named must also be indicated and the tendering Holder should complete the applicable box. If no instructions are given, the Exchange Second Priority Notes (and any Existing Second Priority Notes not tendered or not accepted) will be issued in the name of and sent to the acting Holder of the Existing Second Priority Notes or deposited at such Holder's account at the Book-Entry Transfer Facility. 6. TRANSFER TAXES. Navigator Gas Transport shall pay all transfer taxes, if any, applicable to the transfer and exchange of Existing Second Priority Notes pursuant to the Exchange Offer. If, however, certificates representing the Exchange Second Priority Notes or the Existing Second Priority Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Existing Second Priority Notes tendered, or if tendered Existing Second Priority Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the Existing Second Priority Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. If satisfactory 13 evidence of payment of such taxes or exception therefrom is not submitted herewith, the amount of such transfer taxes will be collected from the tendering Holder by the Second Priority Notes Exchange Agent. Except as provided in this Instruction 6, it will not be necessary for transfer stamps to be affixed to the Existing Second Priority Notes listed in this Letter of Transmittal. 7. WAIVER OF CONDITIONS. Navigator Gas Transport reserves the right, in its reasonable judgment, to waive, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Existing Second Priority Notes have been mutilated, lost, stolen or destroyed should contact the Second Priority Notes Exchange Agent at the address indicated above for further instructions. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Second Priority Notes Exchange Agent at the address and telephone number(s) set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to Navigator Gas Transport, c/o Cambridge Fund Management, LLC, Park Avenue Tower, 65 East 55th Street, Suite 3000, New York, New York, 10022, telephone number: (212) 661-9541. 10. VALIDITY AND FORM. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Existing Second Priority Notes and withdrawal of tendered Existing Second Priority Notes will be determined by Navigator Gas Transport in its sole discretion, which determination will be final and binding. Navigator Gas Transport reserves the absolute right to reject any and all Existing Second Priority Notes not properly tendered or any Existing Second Priority Notes the acceptance of which would, in the opinion of counsel for Navigator Gas Transport, be unlawful. Navigator Gas Transport also reserves the right to waive any defects, irregularities or conditions of tender as to particular Existing Second Priority Notes. Navigator Gas Transport's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Existing Second Priority Notes must be cured within such time as Navigator Gas Transport shall determine. Although Navigator Gas Transport intends to notify Holders of defects or irregularities with respect to tenders of Existing Second Priority Notes, none of Navigator Gas Transport, the Second Priority Notes Exchange Agent or any other person shall incur any liability for failure to give such notification. Tenders of Existing Second Priority Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Existing Second Priority Notes received by the Second Priority Notes Exchange Agent that are not properly tendered and as to which the defects 14 or irregularities have not been cured or waived will be returned by the Second Priority Notes Exchange Agent to the tendering Holders as soon as practicable following the Expiration Date. IMPORTANT TAX INFORMATION Under federal income tax law, a Holder tendering Existing Second Priority Notes is required to provide the Second Priority Notes Exchange Agent with such Holder's correct TIN on Substitute Form W-9 below. If such Holder is an individual, the TIN is the Holder's social security number. The Certificate of Awaiting Taxpayer Identification Number should be completed if the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future. If the Second Priority Notes Exchange Agent is not provided with the correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Holder with respect to tendered Existing Second Priority Notes may be subject to backup withholding. Certain Holders (including, among others, all domestic corporations and certain foreign individuals and foreign entities) are not subject to these backup withholding and reporting requirements. Such a Holder who satisfies one or more of the conditions set forth in Part 2 of the Substitute Form W-9 should execute the certification following such Part 2. In order for a foreign Holder to qualify as an exempt recipient, that Holder must submit to the Second Priority Notes Exchange Agent a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that Holder's exempt status. Such forms can be obtained from the Second Priority Notes Exchange Agent. If backup withholding applies, the Second Priority Notes Exchange Agent is required to withhold 31% of any amounts otherwise payable to the Holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a Holder with respect to Existing Second Priority Notes tendered for exchange, the Holder is required to notify the Second Priority Notes Exchange Agent of his or her correct TIN by completing the form herein certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the Internal Revenue Service has notified such Holder that he or she is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE SECOND PRIORITY NOTES EXCHANGE AGENT Each Holder is required to give the Second Priority Notes Exchange Agent the social security number or employer identification number of the record Holder(s) of the Existing Second Priority Notes. If Existing Second Priority Notes are in more than one name or are not in the name of the actual Holder, consult the instructions on Internal Revenue Service Form W-9, 15 which may be obtained from the Second Priority Notes Exchange Agent, for additional guidance on which number to report. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER If the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, write "Applied For" in the space for the TIN on Substitute Form W-9, sign and date the form and the Certificate of Awaiting Taxpayer Identification Number and return them to the Second Priority Notes Exchange Agent. If such certificate is completed and the Second Priority Notes Exchange Agent is not provided with the TIN within 60 days, the Second Priority Notes Exchange Agent will withhold 31% of all payments made thereafter until a TIN is provided to the Second Priority Notes Exchange Agent. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH THE EXISTING SECOND PRIORITY NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE SECOND PRIORITY NOTES EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. 16 EX-99.3 54 NOTICE GUARANTEED DEL.; FIRST PRIORITY MORT. NOTES NOTICE OF GUARANTEED DELIVERY NAVIGATOR GAS TRANSPORT PLC for Tender of 10 1/2% First Priority Ship Mortgage Notes due 2007 (including those in book-entry form) This form or a facsimile hereof must be used by a holder of the 10 1/2% First Priority Ship Mortgage Notes due 2007 of Navigator Gas Transport PLC (" Navigator Gas Transport") (the "Existing First Priority Notes"), who wishes to tender Existing First Priority Notes to United States Trust Company of New York, as First Priority Notes Exchange Agent (the "First Priority Notes Exchange Agent"), pursuant to the guaranteed delivery procedures described in "The Exchange Offer-Guaranteed Delivery Procedures" of the Prospectus, dated _______, 199_ (the "Prospectus"), relating to the offer by Navigator Gas Transport to exchange the 10 1/2% First Priority Exchange Ship Mortgage Notes due 2007 that have been registered under the Securities Act of 1933, as amended, for Existing First Priority Notes, and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Existing First Priority Notes pursuant to such guaranteed delivery procedures must ensure that the First Priority Notes Exchange Agent receives this Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on ___________, 199_, or such later date and time to which the Exchange Offer may be extended (the "Expiration Date"). This form, properly completed and executed, may be delivered by hand, mail or facsimile transmission to the First Priority Notes Exchange Agent. In addition, in order to utilize the guaranteed delivery procedures to tender Existing First Priority Notes pursuant to the Exchange Offer, tender must be made through an Eligible Institution and a properly completed and duly executed Notice of Guaranteed Delivery must be received prior to the Expiration Date. Thereafter, a properly completed and executed Letter of Transmittal (or facsimile thereof) and certificate(s) representing all tendered Existing First Priority Notes (or a confirmation of book-entry transfer of such Existing First Priority Notes into the First Priority Notes Exchange Agent's account at the Book-Entry Transfer Facility) and all other documents required by the Letter of Transmittal must be received by the First Priority Notes Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Prospectus or the Letter of Transmittal. BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME) P.O. Box 843 111 Broadway Cooper Station New York, New York 10006 New York, New York 10276 Attention: Lower Level Corporate Attention: Corporate Trust Services Trust Window BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE (AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY): 770 Broadway 13th Floor (212) 420-6152 New York, New York 10003 confirm by telephone (800) 548-6565 Attention: Corporate Trust Services DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. GUARANTEE (Not to be used for signature guarantee) The undersigned, being a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an Eligible Guarantor Institution within the meaning of Rule 17 Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that the undersigned will deliver to the Second Priority Notes Exchange Agent the certificates representing the Existing Second Priority Notes being tendered hereby or confirmation of book-entry transfer of such Existing Second Priority Notes into the Second Priority Notes Exchange Agent's account at The Depository Trust Company, in proper form for transfer, together with the Letter of Transmittal (or facsimile thereof) properly completed and duly executed, with any required signature guarantees and any other required documents, all within five New York Stock Exchange trading days after the Expiration Date. (Name of Firm) (Authorized Signature) (Name) (Title) (Address) (Zip Code) (Area Code and Telephone No.) Dated: _________________________ DO NOT SEND CERTIFICATES REPRESENTING EXISTING SECOND PRIORITY NOTES WITH THIS FORM. ACTUAL SURRENDER OF EXISTING SECOND PRIORITY NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A COMPLETED AND EXECUTED LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Navigator Gas Transport, in accordance with Navigator Gas Transport's offer, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Existing First Priority Notes set forth below pursuant to the guaranteed delivery procedures described in the Prospectus and in Instruction 2 of the Letter of Transmittal. Name(s) of registered holder(s): (Please Type or Print) Address: Area Code and Telephone No.: Principal Amount of Existing First Priority Notes Tendered: Certificate Number(s) or Account Number(s) at Book-Entry Facility for Existing First Priority Notes (if available): Aggregate Principal Amount Represented by Existing Note(s): All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Signature of Holder(s): Date: MUST BE SIGNED BY THE HOLDER(S) OF THE EXISTING FIRST PRIORITY NOTES AS THEIR NAME(S) APPEAR(S) ON CERTIFICATES OR BOOK-ENTRY ACCOUNTS FOR EXISTING FIRST PRIORITY NOTES OR ON A SECURITY POSITION LISTING, OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY ENDORSEMENT AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST SET HIS OR HER FULL TITLE BELOW. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): Capacity: Address(es): / / The Depository Trust Company (Check if Existing First Priority Notes will be tendered by book-entry transfer) Account Number: _______________________________________________ THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED EX-99.4 55 NOTICE OF GUAR. DEL.; SECOND PRIORITY MORT. NOTES NOTICE OF GUARANTEED DELIVERY NAVIGATOR GAS TRANSPORT PLC for Tender of 12% Second Priority Ship Mortgage Notes due 2007 (including those in book-entry form) This form or a facsimile hereof must be used by a holder of the 12% Second Priority Ship Mortgage Notes due 2007 of Navigator Gas Transport PLC ("Navigator Gas Transport ") (the "Existing Second Priority Notes"), who wishes to tender Existing Second Priority Notes to United States Trust Company of New York, as Second Priority Notes Exchange Agent (the "Second Priority Notes Exchange Agent"), pursuant to the guaranteed delivery procedures described in "The Exchange Offer-Guaranteed Delivery Procedures" of the Prospectus, dated _______, 199_ (the "Prospectus"), relating to the offer by Navigator Gas Transport to exchange the 12% Second Priority Ship Mortgage Notes due 2007 that have been registered under the Securities Act of 1933, as amended, for Existing Second Priority Notes, and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Existing Second Priority Notes pursuant to such guaranteed delivery procedures must ensure that the Second Priority Notes Exchange Agent receives this Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on ___________, 199_, or such later date and time to which the Exchange Offer may be extended (the "Expiration Date"). This form, properly completed and executed, may be delivered by hand, mail or facsimile transmission to the Second Priority Notes Exchange Agent. In addition, in order to utilize the guaranteed delivery procedures to tender Existing Second Priority Notes pursuant to the Exchange Offer, tender must be made through an Eligible Institution and a properly completed and duly executed Notice of Guaranteed Delivery must be received prior to the Expiration Date. Thereafter, a properly completed and executed Letter of Transmittal (or facsimile thereof) and certificate(s) representing all tendered Existing Second Priority Notes (or a confirmation of book-entry transfer of such Existing Second Priority Notes into the Second Priority Notes Exchange Agent's account at the Book-Entry Transfer Facility) and all other documents required by the Letter of Transmittal must be received by the Second Priority Notes Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Prospectus or the Letter of Transmittal. BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME) P.O. Box 843 111 Broadway Cooper Station New York, New York 10006 New York, New York 10276 Attention: Lower Level Corporate Attention: Corporate Trust Services Trust Window BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE (AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY): 770 Broadway 13th Floor (212) 420-6152 New York, New York 10003 confirm by telephone (800) 548-6565 Attention: Corporate Trust Services DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. GUARANTEE (Not to be used for signature guarantee) The undersigned, being a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an Eligible Guarantor Institution within the meaning of Rule 17 Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that the undersigned will deliver to the Second Priority Notes Exchange Agent the certificates representing the Existing Second Priority Notes being tendered hereby or confirmation of book-entry transfer of such Existing Second Priority Notes into the Second Priority Notes Exchange Agent's account at The Depository Trust Company, in proper form for transfer, together with the Letter of Transmittal (or facsimile thereof) properly completed and duly executed, with any required signature guarantees and any other required documents, all within five New York Stock Exchange trading days after the Expiration Date. (Name of Firm) (Authorized Signature) (Name) (Title) (Address) (Zip Code) (Area Code and Telephone No.) Dated: _________________________ DO NOT SEND CERTIFICATES REPRESENTING EXISTING SECOND PRIORITY NOTES WITH THIS FORM. ACTUAL SURRENDER OF EXISTING SECOND PRIORITY NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A COMPLETED AND EXECUTED LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Navigator Gas Transport, in accordance with Navigator Gas Transport's offer, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Existing Second Priority Notes set forth below pursuant to the guaranteed delivery procedures described in the Prospectus and in Instruction 2 of the Letter of Transmittal. Name(s) of registered holder(s): (Please Type or Print) Address: Area Code and Telephone No.: Principal Amount of Existing Second Priority Notes Tendered: Certificate Number(s) or Account Number(s) at Book-Entry Facility for Existing Second Priority Notes (if available): Aggregate Principal Amount Represented by Existing Note(s): All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Signature of Holder(s): Date: MUST BE SIGNED BY THE HOLDER(S) OF THE EXISTING SECOND PRIORITY NOTES AS THEIR NAME(S) APPEAR(S) ON CERTIFICATES OR BOOK-ENTRY ACCOUNTS FOR EXISTING SECOND PRIORITY NOTES OR ON A SECURITY POSITION LISTING, OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY ENDORSEMENT AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST SET HIS OR HER FULL TITLE BELOW. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): Capacity: Address(es): / / The Depository Trust Company (Check if Existing Second Priority Notes will be tendered by book-entry transfer) Account Number: _______________________________________________ THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED -----END PRIVACY-ENHANCED MESSAGE-----