Document:

d1274678_ex4-7.htm

EXECUTION COPY

 

 

 

 

Ultrapetrol (Bahamas) Limited

 

as Issuer

 

 

7.25% CONVERTIBLE SENIOR NOTES DUE 2017

 

INDENTURE

 

Dated as of December 23, 2010

 

Manufacturers and Traders Trust Company

 

as Trustee

 

 

  

  

  

TABLE OF CONTENTS

 

 

	 	  

Page

 

	
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

 

	
 5 

	
Section 1.01

	
Definitions.

	
 5

	
Section 1.02

	
Other Definitions.

	
12

	
Section 1.03

	
Incorporation by Reference of Trust Indenture Act

	
13

	
Section 1.04

	
Rules of Construction.

	
13

	
Section 1.05

	
Acts of Holders

 

	
14

	
ARTICLE 2 THE NOTES

 

	
15

	
Section 2.01

	
Designation, Amount and Issuance of Notes.

	
15

	
Section 2.02

	
Form of Notes

	
15

	
Section 2.03

	
Denomination of Notes.

	
17

	
Section 2.04

	
Payments

	
17

	
Section 2.05

	
Execution and Authentication

	
19

	
Section 2.06

	
Registrar, Paying Agent and Conversion Agent.

	
20

	
Section 2.07

	
Money and Securities Held in Trust.

	
22

	
Section 2.08

	
Holder Lists.

	
22

	
Section 2.09

	
Transfer and Exchange

	
22

	
Section 2.10

	
Transfer Restrictions.

	
26

	
Section 2.11

	
Replacement Notes.

	
28

	
Section 2.12

	
Temporary Notes

	
29

	
Section 2.13

	
Cancellation.

	
29

	
Section 2.14

	
Outstanding Notes.

	
30

	
Section 2.15

	
Persons Deemed Owners

	
30

	
Section 2.16

	
Repurchases.

	
30

	
Section 2.17

	
CUSIPs.

 

	
30

	
ARTICLE 3 REPURCHASE AT THE OPTION OF THE HOLDER

 

	
31

	
Section 3.01

	
Fundamental Change Permits Holders To Require The Company To Repurchase the Notes.

	
31

	
Section 3.02

	
Fundamental Change Notice

	
31

	
Section 3.03

	
Fundamental Change Repurchase Notice

	
33

	
Section 3.04

	
Withdrawal of Fundamental Change Repurchase Notice

	
34

	
Section 3.05

	
Effect of Fundamental Change Repurchase Notice

	
34

	
Section 3.06

	
Notes Repurchased in Part

	
35

	
Section 3.07

	
Covenant to Comply With Securities Laws Upon Repurchase of Notes

	
35

	
Section 3.08

	
Deposit of Fundamental Change Repurchase Price

	
36

	
Section 3.09

	
Covenant Not to Repurchase Notes Upon Certain Events of Default

 

	
36

 

  

i

  

 

 

	
ARTICLE 4 COVENANTS

 

	
36

	
Section 4.01

	
Payment of Notes.

	
36

	
Section 4.02

	
144A Information.

	
37

	
Section 4.03

	
Reports.

	
37

	
Section 4.04

	
Additional Interest.

	
37

	
Section 4.05

	
Compliance Certificate

	
38

	
Section 4.06

	
Restriction on Purchases by the Company and by Affiliates of the Company

	
39

	
Section 4.07

	
Taxes

	
39

	
Section 4.08

	
Corporate Existence.

	
39

	
Section 4.09

	
Par Value Limitation.

	
39

	
Section 4.10

	
Stay, Extension and Usury Laws

	
40

	
Section 4.11

	
Further Instruments and Acts

 

	
40

	
ARTICLE 5 CONSOLIDATION, MERGER AND SALE OF ASSETS

 

	
40

	
Section 5.01

	
Company May Consolidate, Merge or Sell Its Assets Only on Certain Terms

	
40

	
Section 5.02

	
Successor Substituted

 

	
41

	
ARTICLE 6 DEFAULTS AND REMEDIES

 

	
41

	
Section 6.01

	
Events of Default

	
41

	
Section 6.02

	
Acceleration

	
43

	
Section 6.03

	
Other Remedies

	
43

	
Section 6.04

	
Sole Remedy for Failure to Report.

	
44

	
Section 6.05

	
Waiver of Past Defaults.

	
44

	
Section 6.06

	
Control by Majority

	
45

	
Section 6.07

	
Limitation on Suits

	
45

	
Section 6.08

	
Rights of Holders To Receive Payment

	
45

	
Section 6.09

	
Collection Suit by Trustee

	
46

	
Section 6.10

	
Trustee May File Proofs of Claim

	
46

	
Section 6.11

	
Priorities

	
46

	
Section 6.12

	
Undertaking for Costs

 

	
47

	
ARTICLE 7 TRUSTEE

 

	
47

	
Section 7.01

	
Duties of Trustee

	
47

	
Section 7.02

	
Rights of Trustee.

	
48

	
Section 7.03

	
Individual Rights of Trustee

	
49

	
Section 7.04

	
Trustee’s Disclaimer

	
49

	
Section 7.05

	
Notice of Defaults

	
49

	
Section 7.06

	
Compensation and Indemnity

	
50

	
Section 7.07

	
Replacement of Trustee.

	
51

	
Section 7.08

	
Successor Trustee by Merger

	
52

	
Section 7.09

	
Eligibility; Disqualification

	
52

	
Section 7.10

	
Trustee’s Application for Instructions from the Company

 

	
52

 

 

  

ii

  

 

	
ARTICLE 8 SATISFACTION AND DISCHARGE

 

	
52

	
Section 8.01

	
Discharge of Liability on Notes

	
52

	
Section 8.02

	
Repayment to the Company

 

	
53

	
ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

	
53

	
Section 9.01

	
Without Consent of Holders

	
53

	
Section 9.02

	
With Consent of Holders

	
54

	
Section 9.03

	
Execution of Supplemental Indentures

	
55

	
Section 9.04

	
Notices of Supplemental Indentures

	
55

	
Section 9.05

	
Effect of Supplemental Indentures

	
55

	
Section 9.06

	
Revocation and Effect of Consents, Waivers and Actions

	
55

	
Section 9.07

	
Notation on, or Exchange of, Notes

 

	
56

	
ARTICLE 10 CONVERSIONS

 

	
56

	
Section 10.01

	
Right To Convert

	
56

	
Section 10.02

	
Conversion Procedures

	
57

	
Section 10.03

	
Conversion Obligation.

	
59

	
Section 10.04

	
Common Stock Issued Upon Conversion.

	
59

	
Section 10.05

	
Adjustment of Conversion Rate

	
60

	
Section 10.06

	
Voluntary Adjustments

	
69

	
Section 10.07

	
Adjustments Upon Certain Fundamental Changes

	
70

	
Section 10.08

	
Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale

	
72

	
Section 10.09

	
No Responsibility of Trustee

	
74

	
Section 10.10

	
Adjustment to the Conversion Rate on February 13, 2012.

 

	
74

	
ARTICLE 11 REDEMPTION AT THE OPTION OF THE COMPANY

 

	
75

	
Section 11.01

	
No Sinking Fund.   No sinking fund is provided for the Notes.

	
75

	
Section 11.02

	
Right To Redeem the Notes.

	
75

	
Section 11.03

	
Redemption Notice.

	
75

	
Section 11.04

	
Effect of Redemption Notice

	
76

	
Section 11.05

	
Deposit of Redemption Price

	
77

	
Section 11.06

	
Effect of Deposit.

	
77

	
Section 11.07

	
Covenant Not to Redeem Notes Upon Certain Events of Default

	
77

	
Section 11.08

	
Repayment to the Company.

 

	
77

	
ARTICLE 12 MISCELLANEOUS

 

	
77

	
Section 12.01

	
Trust Indenture Act Controls

	
77

	
Section 12.02

	
Notices

	
77

	
Section 12.03

	
Certificate and Opinion as to Conditions Precedent

	
78

	
Section 12.04

	
Statements Required in Certificate or Opinion

	
78

 

 

  

iii

  

 

	
Section 12.05

	
Separability Clause

	
79

	
Section 12.06

	
Rules by Trustee

	
79

	
Section 12.07

	
Governing Law and Waiver of Jury Trial

	
79

	
Section 12.08

	
No Recourse Against Others

	
79

	
Section 12.09

	
Calculations

	
79

	
Section 12.10

	
Successors

	
79

	
Section 12.11

	
Multiple Originals

	
79

	
Section 12.12

	
Table of Contents; Headings

	
80

	
Section 12.13

	
Force Majeure

	
80

	
Section 12.14

	
Submission to Jurisdiction

	
80

	
Section 12.15

	
Legal Holidays

	
80

	
Section 12.16

	
No Security Interest Created

	
80

	
Section 12.17

	
Benefits of Indenture

	
80

	
Section 12.18

	
U.S.A. Patriot Act

	
80

	
Section 12.19

	
Waiver of Immunity

	
81

	  	  	  
	
Form of Note

	  	
A-1

	
Form of Transfer Certificate

	
B-1

	
Form of Restricted Stock Legend

	
C-1

 

  

iv

  

INDENTURE, dated as of December 23, 2010, between Ultrapetrol (Bahamas) Limited, a Bahamas corporation ("Company"), and Manufacturers and Traders Trust Company, a New York banking corporation, as trustee ("Trustee").

 

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders (as defined below) of the Company's 7.25% Convertible Senior Notes due 2017:

 

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 specified Person, means the power to direct or cause the direction of 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.

 

"Applicable Procedures" means, with respect to any transfer or transaction involving a Global Note or any beneficial interest therein, the rules and procedures of the Depositary for such Note, in each case to the extent applicable to such transfer or transaction and as in effect from time to time.

 

"Bankruptcy Law" means Title 11, United States Code, or any similar U.S. federal, state or non-U.S. law for the relief of debtors.

 

"Board of Directors" means the board of directors of the Company or a committee of such board duly authorized to act for it.

 

"Board Resolution" means a copy of one or more resolutions certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

 

"Business Day" means any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York or the place of payment is authorized or required by law or executive order to close or be closed.

 

"Capital Stock" means, for any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of, or interests in (however designated), the equity of such Person, but excluding any debt securities convertible into such equity.

 

"Close of Business" means 5:00 p.m., New York City time.

 

  

5

  

"Common Stock" means the shares of the common stock of the Company, par value $0.01 per share, or any other shares of Capital Stock of the Company into which such shares of common stock will be reclassified or changed.

 

"Company" means the party named as such in the first paragraph of this Indenture until a successor or assignee replaces it pursuant to the applicable provisions hereof and, thereafter, means the successor or assignee.

 

"Company Order" means a written request or order signed in the name of the Company by any Officer.

 

"Conversion Price" means, at any time, (i) $1,000 divided by (ii) the Conversion Rate in effect at such time.

 

"Conversion Rate" means, initially, 133.1691 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as provided herein.

 

"Corporate Trust Office" means the corporate trust office of the Trustee at which the trust created by this Indenture will be administered, which office, as of the Issue Date, is located at Manufacturers and Traders Trust Company, 25 South Charles Street, 11th Floor, Baltimore, MD 21201, Attention:  Ultrapetrol (Bahamas) Limited Administrator, and may later be located at such other address in Baltimore, Maryland, Wilmington, Delaware and Buffalo, New York as the Trustee, upon delivering notice to the Holders, the Paying Agent, the Conversion Agent, the Registrar and the Company, designates.

"Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

 

"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

"Definitive Notes" means Notes that are in registered definitive form.

 

"Depositary" means DTC; provided that the Company may at any time, upon delivering notice to the Holders, the Company, the Trustee, the Registrar, the Paying Agent and the Conversion Agent, appoint a successor to DTC.

 

"DTC" means The Depository Trust Company.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

"Free Trade Date" means the date that is one year after the Last Original Issue Date.

 

"Freely Tradable" means, with respect to any Notes or shares of the Common Stock issuable upon conversion of the Notes, that such Notes or such shares of Common Stock (i) are eligible to be offered, sold or otherwise transferred pursuant to Rule 144 or otherwise by a Person that is not an affiliate (as defined in Rule 144) of the Company and that has not been an affiliate (as defined in Rule 144) of the Company during the immediately preceding three month

 

  

6

  

period without any volume or manner of sale restrictions under the Securities Act and, (ii) on and after the Free Trade Date, (A) in the case of the Notes, do not bear the Restricted Notes Legend and, in the case of shares of the Common Stock, do not bear the Restricted Stock Legend, and (B) with respect to Global Notes only, are identified by an unrestricted CUSIP number in the facilities of the applicable Depositary.

 

"Fundamental Change" means an event that will be deemed to occur if any of the following occurs:

 

(i)           (A) a "person" or "group" within the meaning of Section 13(d) of the Exchange Act other than a Permitted Holder (as defined below), the Company, its Subsidiaries, and the Company and its Subsidiaries' employee benefit plans, has become the direct or indirect "beneficial owner" of shares of the Company's common equity representing more than 50% of the voting power of the Company's common equity, or (B) less than 25% of the voting power of the Company's common stock is controlled by Persons other than a Permitted Holder;

 

(ii)           the consummation of:

 

(A)           any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person; or

 

(B)           any transaction or series of related transactions in connection with which (whether by means of exchange, liquidation, consolidation, merger, combination, reclassification, recapitalization, acquisition or otherwise) all of the Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, other property, assets or cash, but excluding any merger, consolidation, share exchange or acquisition of the Company with or by another Person pursuant to which the Persons that beneficially owned, directly or indirectly, the shares of the Company's Voting Stock immediately prior to such transaction beneficially own, directly or indirectly, immediately after such transaction, shares of the surviving, continuing or acquiring Person's Voting Stock representing more than 50% of the total outstanding voting power of all outstanding classes of Voting Stock of the surviving, continuing or acquiring Person in substantially the same proportions as immediately prior to such transaction;

 

(iii)           Continuing Directors (as defined below) cease to constitute at least a majority of the Board of Directors;

 

(iv)           the Company's stockholders approve any plan or proposal for the liquidation or dissolution of the Company; or

 

(v)           the Common Stock (or other common stock or depositary shares or receipts in respect thereof into which the Notes are then convertible) ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors).

 

A transaction or event described in clause (ii) above will not constitute a Fundamental Change, however, if 90% of the consideration received or to be received by the holders of the

 

  

7

  

Common Stock, excluding cash payments for fractional shares or dissenters rights in connection with the transaction or transactions, consists of shares of common stock traded on any of The New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors) or which will be so traded or quoted when issued or exchanged in connection with such transaction or event and as a result of such transaction or event, the Notes become convertible or exchangeable into, or based on, such consideration as described in Section 10.08 hereof.  For the purposes of this definition of "Fundamental Change," any transaction or event that constitutes a Fundamental Change under both clause (i) and clause (ii) above will be deemed to constitute a Fundamental Change solely under clause (ii) of this definition of "Fundamental Change."

 

For the purposes of this definition of "Fundamental Change,"

 

(i)           "Continuing Director" means a director who either was a member of the Board of Directors on the date of the Preliminary Offering Memorandum or who becomes a member of the Board of Directors subsequent to that date and whose election, appointment or nomination for election by the holders of the Common Stock is duly approved by a majority of the continuing directors on the Board of Directors at the time of such approval, either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the entire Board of Directors in which such individual is named as nominee for director, or by a Permitted Holder; and

 

(ii)           whether a person is a "beneficial owner" will be determined in accordance with Rule 13d-3 under the Exchange Act.

 

(iii)           "Permitted Holder" means Inversiones Los Avellanos S.A., SIPSA S.A., Hazels (Bahamas) Investment Inc. and any Menendez Family Entity (as defined below) and their Affiliates as of the date of this Indenture; provided that except for a Permitted Holder specifically identified by name, in determining whether common equity is beneficially owned by a Permitted Holder, only common equity acquired and held by a Person while it is an Affiliate of one of the Permitted Holders specifically identified by name herein and as of the date of this Indenture will be treated as "beneficially owned" by such Permitted Holder.

 

(iv)           "Menendez Family Entity" shall mean any Person that is, directly or indirectly, controlled or wholly owned by any of Felipe Menendez, Ricardo Menendez, Julio Menendez or any descendant of them or the descendants of Isabel Menendez.

 

"Global Note" means a permanent global note that is in the form of the Note attached hereto as Exhibit A and that is registered in the name of the Depositary or the nominee of the Depositary and deposited with the Depositary, the nominee of the Depositary or a custodian appointed by the Depositary or the nominee of the Depositary.

 

"Global Notes Legend" means the legend set forth as such in Exhibit A hereto.

 

"Holder" or "Holders" means a Person or Persons in whose name a Note is registered in the Register.

 

  

8

  

"Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

 

"Initial Purchasers" means Jefferies & Company, Inc., Credit Suisse Securities (USA) LLC, Larrain Vial Investment Inc., FBR Capital Markets & Co. and DVB Capital Markets LLC.

 

"Issue Date" means December 23, 2010.

 

"Last Original Issue Date" means the last date of original issuance of the Notes, including the last date of issuance of any additional Notes that the Initial Purchasers purchase pursuant to their option to purchase additional Notes set forth in Section 3 of the Purchase Agreement, which date, for the avoidance of doubt, is December 23, 2010.

 

"Last Reported Sale Price" of the Common Stock (or any other security for which a Last Reported Sale Price must be determined) on any Trading Day means the closing sale price per share of the Common Stock (or such other security) (or, if no closing sale price is reported, the average of the last bid price and the last ask price or, if more than one in either case, the average of the average last bid price and the average last ask price) on that Trading Day as reported in composite transactions for the principal United States national or regional securities exchange on which the Common Stock (or such other security) is traded.  If the Common Stock (or such other security) is not listed for trading on a United States national or regional securities exchange on the relevant Trading Day, the "Last Reported Sale Price" of the Common Stock (or such other security) will be the last quoted bid price per share of the Common Stock (or such other security) in the over-the-counter market on the relevant Trading Day as reported by Pink OTC Markets Inc. or a similar organization.  If the Common Stock (or such other security) is not so quoted, the "Last Reported Sale Price" will be the average of the mid-point of the last bid price and the last ask price per share of the Common Stock (or such other security) on the relevant Trading Day from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.  Notwithstanding the foregoing, if the Last Reported Sale Price must be determined on any Trading Day for a Unit of Reference Property, the Last Reported Sale Price on such Trading Day for such Unit of Reference Property will be determined in good faith by the Board of Directors.

 

"Notes" means any of the Company's 7.25% Convertible Senior Notes due 2017 issued under this Indenture.

 

"Officer" means the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, the Chief Financial Officer, any Executive Vice President, any Senior Vice President, any Vice President, the Treasurer or the Secretary of the Company.

 

"Officers' Certificate" means a written certificate containing the information specified in Sections 12.03 and 12.04 hereof, signed in the name of the Company by any two Officers, and delivered to the Trustee; provided, that, if such certificate is given pursuant to Section 4.05 hereof, (i) one of the Officers signing such certificate must be the principal financial or accounting Officer of the Company and (ii) such certificate need not contain the information specified in Sections 12.03 and 12.04 hereof.

 

"Open of Business" means 9:00 a.m., New York City time.

 

  

9

  

"Opinion of Counsel" means a written opinion containing the information specified in Sections 12.03 and 12.04 hereof, from legal counsel.  The counsel may be an employee of, or counsel to, the Company who is reasonably satisfactory to the Trustee.

 

"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

 

"Preliminary Offering Memorandum" means the Preliminary Offering Memorandum relating to the offering of the Notes dated December 20, 2010.

 

"Pricing Term Sheet" means the Pricing Term Sheet attached to the Purchase Agreement as Schedule II thereto.

 

"Purchase Agreement" means the purchase agreement, dated December 20, 2010, between the Company and Jefferies & Company, Inc. and Credit Suisse Securities (USA) LLC, as representatives of the several Initial Purchasers listed in Schedule I thereto (the "Initial Purchasers").

 

"Restricted Notes Legend" means a legend in the form set forth in Exhibit A hereto, or any other similar legend indicating the restricted status of the Notes under Rule 144.

 

"Restricted Stock Legend" means a legend in the form set forth in Exhibit C hereto or any other similar legend indicating the restricted status of the Common Stock under Rule 144.

 

"Rule 144" means Rule 144 under the Securities Act (or any successor provision), as it may be amended from time to time.

 

"Rule 144A" means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time.

 

"SEC" means the Securities and Exchange Commission.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Shareholder Approval Date" means the date on which the Company obtains the approval of its shareholders for the issuance by the Company of a sufficient number of additional shares of Common Stock to settle from time to time upon (a) conversion, (b) a fundamental change or (c) an optional redemption at the Conversion Rate applicable at such time, as adjusted, all of the Notes, and until the Close of Business on the Business Day immediately preceding the Maturity Date.

 

"Significant Subsidiary" means any Subsidiary that is a "significant subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act.

 

"Stock Price" means, for any Make-Whole Fundamental Change, (i) if the holders of the Common Stock receive only cash in consideration for their shares of Common Stock in such

 

  

10

  

Make-Whole Fundamental Change and such Make-Whole Fundamental Change is of the type described in clause (ii) of the definition of Fundamental Change, the amount of cash paid per share of the Common Stock in such Make-Whole Fundamental Change, and (ii) otherwise, the average of the Last Reported Sales Price of the Common Stock over the five consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Make-Whole Fundamental Change Effective Date for such Make-Whole Fundamental Change.

 

"Subsidiary" means a Person more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries of the Company, or by the Company and one or more other Subsidiaries of the Company.

 

"TIA" means the Trust Indenture Act of 1939 as in effect on the Issue Date; provided, however, that if the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended.

 

"Transfer Agent" means, initially Computershare Investor Services LLC, in its capacity as the transfer agent for the Common Stock, and any successor entity acting in such capacity.

 

"Trading Day" means a day on which (i) trading in the Common Stock generally occurs on The NASDAQ Global Market or, if the Common Stock is not then listed on The NASDAQ Global Market (or the Last Reported Sale Price must be determined for another security), on the principal other United States national or regional securities exchange on which the Common Stock (or such other security) is then listed or, if the Common Stock (or such other security) is not then listed on a United States national or regional securities exchange, on the principal other market on which the Common Stock (or such other security) is then traded, and (ii) a Last Reported Sale Price of the Common Stock (or such other security) is available on such securities exchange or market.  If the Common Stock (or such other security) is not so listed or traded, "Trading Day" means a Business Day.

 

"Transfer" means, with respect to any Restricted Note or share of Common Stock that bears, or is required to bear, the Restricted Stock Legend, any sale, pledge, transfer, loan, hypothecation or other disposition of such Restricted Note or share of Common Stock, as the case may be.

 

"Trust Officer" means any officer within the Corporate Trust Administration department of the Trustee (or any successor group of the Trustee) with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter hereunder, any other officer of the Trustee to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.

 

"Trustee" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, means such successor.  The foregoing sentence will likewise apply to any such subsequent successor or successors.

 

 "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect on the Issue Date.

 

  

11

  

"Unit of Reference Property" means the amount and kind of Reference Property that a holder of one share of the Common Stock would receive in a Merger Event; provided, however, that if, in any Merger Event, the holders of the Common Stock may exchange each of their shares of Common Stock for more than one amount and kind of Reference Property and may elect which amounts and kinds of Reference Property they receive, a Unit of Reference Property will consist of the weighted average of the amounts and kinds of Reference Property received by holders of the Common Stock that affirmatively make such election.

 

"Voting Stock" of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes will have or might have voting power by reason of the happening of any contingency).

 

Section 1.02                      Other Definitions.

 

	
Term Section:

	
Defined in:

	
"Act"

	
1.05

	
"Additional Interest"

	
4.04(a)

	
"Additional Shares"

	
10.07(a)

	
"Agent Members"

	
2.02(c)

	
"Clause A Distribution"

	
10.05(c)

	
"Clause B Distribution"

	
10.05(c)

	
"Clause C Distribution"

	
10.05(c)

	
"Conversion Agent"

	
2.06(a)

	
"Conversion Date"

	
10.02(a)

	
"Conversion Notice"

	
10.02(a)

	
"Defaulted Amount"

	
2.04(d)

	
"Default Interest"

	
2.04(d)

	
"Effective Date"

	
10.05(l)

	
"Event of Default"

	
6.01(a)

	
"Ex-Dividend Date"

	
10.05(l)

	
"Extension Fee"

	
6.04(a)

	
"Fundamental Change Notice"

	
3.02(a)

	
"Fundamental Change Notice Date"

	
3.02(a)

	
"Fundamental Change Repurchase Date"

	
3.01(c)

	
"Fundamental Change Repurchase Notice"

	
3.03(a)

	
"Fundamental Change Repurchase Price"

	
3.01(b)

	
"Interest Payment Date"

	
2.04(a)

	
"Make-Whole Fundamental Change"

	
10.07(a)

	
"Make-Whole Fundamental Change Effective Date"

	
10.07(b)

	
"Maturity Date"

	
2.04(a)

	
"Merger Event"

	
10.08(a)

	
"Merger Successor Corporation"

	
10.08(a)

	
"Multi-Clause Distribution"

	
10.05(c)

 

  

12

  

	
"Paying Agent"

	
2.06(a)

	
"Redemption Date"

	
11.02(c)

	
"Redemption Notice"

	
11.03

	
"Redemption Notice Date"

	
11.03

	
"Redemption Price"

	
11.02(b)

	
"Reference Property"

	
10.08(a)

	
"Register"

	
2.06(a)

	
"Registrar"

	
2.06(a)

	
"Regular Record Date"

	
2.04(a)

	
"Reorganization Event"

	
5.01

	
"Reorganization Successor Corporation"

	
5.01(a)

	
"Reporting Event of Default"

	
6.04(a)

	
"Restricted Note"

	
2.10(a)

	
"Special Regular Record Date"

	
2.04(d)

	
"Spin-Off"

	
10.05(c)

	
"Temporary Notes"

	
2.12

	
"Valuation Period"

	
10.05(c)

 

Section 1.03                      Incorporation by Reference of Trust Indenture Act

 

.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:

 

"indenture securities" means the Notes.

 

"indenture to be qualified" means this Indenture.

 

"indenture trustee" or "institutional trustee" means the Trustee.

 

"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.

 

Section 1.04                      Rules of Construction.

 

(1)           a term has the meaning assigned to it;

 

(2)           an accounting term not otherwise defined has the meaning assigned to it and will be construed in accordance with U.S. generally accepted accounting principles;

 

(3)           "or" is not exclusive;

 

  

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(4)           "including" means including, without limitation;

 

(5)           words in the singular include the plural, and words in the plural include the singular;

 

(6)           all references to $, dollars, cash payments or money refer to United States currency; and

 

(7)           unless the context requires otherwise, all references to interest on the Notes (a) will include any Additional Interest payable pursuant to Section 4.04 hereof and any Extension Fee payable pursuant to Section 6.04 hereof, (b) but, for the avoidance of doubt, will not include any Default Interest payable on a Defaulted Amount pursuant to the terms of Section 2.04 hereof.

 

Section 1.05      Acts of Holders  .  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action will become effective when such instrument or instruments are delivered to the Trustee and to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent will be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.05.

 

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof.  Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit will also constitute sufficient proof of such signer's authority.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

 

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note will bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company, the Paying Agent, the Conversion Agent or the Registrar in reliance thereon, whether or not notation of such action is made upon such Note.

 

If the Company will solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company will have no obligation to do so.  If such a record date is fixed, such request, demand,

 

  

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authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the Close of Business on such record date will be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Notes will be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date will be deemed effective unless it will become effective pursuant to the provisions of this Indenture not later than six months after the record date.

 

 

ARTICLE 2

 

THE NOTES

 

Section 2.01         Designation, Amount and Issuance of Notes.

 

(a)           The Notes will be designated as "7.25% Convertible Senior Notes due 2017."  The aggregate principal amount of Notes that initially may be authenticated and delivered under this Indenture is limited to $80,000,000.  From time to time, the Company may issue and execute, and the Trustee may authenticate, Notes delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.09, 2.11, 2.12, 3.06 and 10.02 hereof.  In addition, the Company may issue an unlimited aggregate principal amount of additional Notes in accordance with clause (b) of this Section 2.01.

 

(b)           Without the consent of any Holder, and notwithstanding anything to the contrary in Sections 2.01(a) or 2.05 hereof, the Company may increase the aggregate principal amount of the Notes issued under this Indenture by reopening this Indenture and issuing additional Notes with the same terms and the same CUSIP number as the initial Notes, which Notes will be considered to be part of the same series of Notes as those initially issued hereunder; provided, that the Company may not issue such additional Notes unless, for U.S. federal income tax purposes, such additional Notes will be part of the same issue as the initial Notes.  Prior to issuing any such additional Notes, the Company will deliver to the Trustee a Company Order, an Officers' Certificate and an Opinion of Counsel, which Officers' Certificate and Opinion of Counsel will address any matters required to be addressed under Section 12.04 hereof.

 

Section 2.02                      Form of Notes

 

(a)           General.  The Notes will be substantially in the form of Exhibit A hereto, but may include any notations, legends or endorsements required by any applicable law (or regulation promulgated thereunder), stock exchange rule or usage, or any insertions, omissions or other variations otherwise permitted or required by this Indenture.  Whenever any such notation, legend or endorsement, or any such insertion, omission or other variation is applicable to a Note, the Company will provide such notation, legend or endorsement, or such insertion, omission or other variation to the Trustee in writing.

 

  

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Each Note will bear a Trustee's certificate of authentication substantially in the form set forth in Exhibit A hereto.

 

Notes that are Global Notes will bear the Global Notes Legend and the "Schedule of Exchanges of Interests in the Global Note" attached thereto.

 

Notes that are Restricted Notes will bear the Restricted Notes Legend.

 

The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent that any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture will govern and control.

 

(b)           Initial and Subsequent Notes.  The Notes initially will be issued in global form, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee, at its Corporate Trust Office, as custodian for the Depositary.  Except to the extent provided in Section 2.09(c) hereof, all Notes will be represented by one or more Global Notes.

 

(c)           Global Notes.  Each Global Note will represent the aggregate principal amount of then outstanding Notes endorsed thereon and provide that it represents such aggregate principal amount of then outstanding Notes, which aggregate principal amount may, from time to time, be reduced or increased to reflect transfers, exchanges, conversions, redemptions or repurchases by the Company.

 

Only the Trustee, or the custodian holding such Global Note for the Depositary, at the direction of the Trustee, may endorse a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of then outstanding Notes represented thereby, and whenever the Holder of a Global Note delivers instructions to the Trustee to increase or decrease the aggregate principal amount of then outstanding Notes represented by a Global Note in accordance with Section 2.09 hereof, the Trustee, or the custodian holding such Global Note for the Depositary, at the direction of the Trustee, will endorse such Global Note to reflect such increase or decrease in the aggregate principal amount of then outstanding Notes represented thereby.  None of the Trustee, the Company or any agent of the Trustee or the Company will have any responsibility or bear any liability for any aspect of the records relating to, or payments made on account of, the ownership of any beneficial interest in a Global Note or with respect to maintaining, supervising or reviewing any records relating to such beneficial interest.

 

Neither any member of, or participant in, the Depositary (collectively, the "Agent Members") nor any other Person on whose behalf an Agent Member may act will have any rights under this Indenture with respect to any Global Note or under such Global Note, and the Company, the Trustee and any agent of the Company or the Trustee, may, for all purposes, treat the Depositary, or its nominee, if any, as the absolute owner and Holder of such Global Note.

 

The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action that Holders are entitled to take under this Indenture or the Notes, and, notwithstanding the foregoing, nothing herein will prevent the Company, the Trustee or any

 

  

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agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a Holder of any interest in any Note.

 

Section 2.03                      Denomination of Notes.  The Notes will be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples of $1,000 in excess thereof.

 

Section 2.04                      Payments

 

(a)           General.

 

(i)           Payment at Maturity.      Unless earlier paid or deemed paid pursuant to any of Sections 3.05, 10.03 or 11.06 hereof, the Notes will mature on January 15, 2017 (the "Maturity Date") and, on the Maturity Date, the Company will pay each Holder of Notes $1,000 in cash for each $1,000 principal amount of Notes held, together with accrued and unpaid interest to, but not including, the Maturity Date on such Notes.

 

(ii)           Payment of Interest.  Each Note will accrue interest at a rate equal to 7.25% per annum from the most recent date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from the Issue Date until, subject to the provisions of clause (d) of this Section 2.04, the date the principal amount of such Note is paid or deemed paid, as the case may be, pursuant to clause (i) of this Section 2.04(a) or any of Sections 3.05, 10.03 or 11.06 hereof.

 

Interest will be payable semi-annually in arrears on January 15 and July 15 of each year (each, an "Interest Payment Date"),  beginning July 15, 2011, to the Holder of each Note as of the Close of Business on January 1 or July 1, as the case may be, immediately preceding the applicable Interest Payment Date (each such date, a "Regular Record Date"), regardless of whether such Note is converted, repurchased or redeemed after such Regular Record Date.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

(iii)           Method of Payment.  The Company will pay the principal of, the Fundamental Change Repurchase Price or the Redemption Price for, and the interest on, any Global Note to the Depositary by wire transfer of immediately available funds on the relevant payment date.

 

The Company will pay the principal of, the Fundamental Change Repurchase Price or Redemption Price for, and any interest due on the Maturity Date on, any Definitive Note in cash to the applicable Holder of such Note at the office of the Paying Agent on the relevant payment date.

 

The Company will pay interest on any Definitive Note (except interest due on the Maturity Date) to the applicable Holder of such Note by ACH payment or by wire transfer to an account of such Holder within the United States, for each interest payment corresponding to each Regular Record Date occurring during the period beginning on the date on which such Holder

 

  

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delivered such request and ending on the date, if any, on which such Holder delivers to the Registrar a written instruction to the contrary, by wire transfer of immediately available funds to the account specified by such Holder.

 

(b)           Interest Rights Preserved.  Subject to the provisions of Section 2.04(d) hereof, and, to the extent applicable, Sections 2.09 and 2.11 hereof, each Note delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of, any other Note will carry any rights to the payment and accrual of interest that were carried by the relevant surrendered Note.

 

(c)           Additional Interest; Extension Fee. Pursuant to Section 4.04 hereof, in certain circumstances, Additional Interest will accrue on the Notes.  Pursuant to Section 6.05 hereof, in certain circumstances, the Company may, at its election, be obligated to pay Holders the Extension Fee.  Unless the context requires otherwise, all references in this Indenture to interest on the Notes will include such Additional Interest and Extension Fee, but will not include any Default Interest payable pursuant to Section 2.04(d) hereof.

 

(d)           Defaulted Amounts.  Whenever any amount payable on a Note (including, the principal of, the Fundamental Change Repurchase Price or Redemption Price for, and interest on, such Note) has become due and payable, but the Company fails to punctually pay or duly provide for such amount (any such amount, a "Defaulted Amount"), such Defaulted Amount will forthwith cease to be payable to the Holder of such Note on the relevant payment date by virtue of its having been due such payment on such payment date, but will instead, to the extent permitted under applicable law, accrue interest ("Default Interest") at a rate equal the interest rate in effect immediately prior to the accrual of Default Interest plus 0.50% per annum from, and including, such payment date and to, but excluding, the date on which such Defaulted Amount is paid by the Company in accordance with either clause (i) below.

 

(i)           The Company may elect to pay any Defaulted Amount and Default Interest on such Defaulted Amount to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the Close of Business on a special record date for the payment of such Defaulted Amount and Default Interest (a "Special Regular Record Date") fixed in accordance with the following procedures:

 

(A)           At least 30 days before the date on which the Company proposes to pay such Defaulted Amounts and Default Interest thereon, the Company will deliver to the Trustee written notice of (I) the proposed payment date for such Defaulted Amounts and Default Interest thereon and (II) the aggregate amount of such Defaulted Amounts and Default Interest thereon.

 

(B)           Simultaneously with delivering such notice to the Trustee, the Company will deposit with the Trustee an amount of money, in immediately available funds, equal to the aggregate amount of such Defaulted Amounts and Default Interest thereon, and upon receipt of such money, the Trustee will hold such money in trust for the benefit of the Persons entitled to such Defaulted Amounts and Default Interest pursuant to this Section 2.04(d)(i).

 

  

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(C)           Upon (i) receipt of such notice and (ii) the Company's depositing such money, the Company will promptly fix a Special Regular Record Date for the payment of such Defaulted Amounts and Default Interest thereon, which Special Regular Record Date will be not more than 15 calendar days and not less than 10 calendar days prior to the payment date on which such Defaulted Amounts and Default Interest thereon will be paid by the Company, and notify the Trustee of the Special Regular Record Date.  The Trustee will then, in the name and at the expense of the Company, deliver notice to each Holder specifying such Special Regular Record Date and the date on which such Defaulted Amounts and Default Interest thereon will be paid by the Company.

 

(D)           After such notice has been delivered by the Trustee, such Defaulted Amounts and Default Interest thereon will be paid to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the Close of Business on the Special Regular Record Date specified in such notice and such Defaulted Amounts and Default Interest thereon will no longer be payable pursuant to the following clause (ii) of this Section 2.04(d)(i).

 

(ii)           The Company may pay any Defaulted Amounts and Default Interest on such Defaulted Amounts in any other lawful manner that is not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes are then listed (or, if applicable, have been listed) or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment will be deemed practicable by the Trustee.

 

Section 2.05                      Execution and Authentication

 

(a)           In General.  A Note will be valid only if executed by the Company and authenticated by the Trustee.

 

(b)           Execution.  A Note will be deemed to have been executed by the Company when an Officer signs such Note on behalf of the Company.  The Officer's signature may be manual or facsimile, and the validity of such Officer's signature will not turn on whether such signatory remains an Officer at the time the Trustee authenticates such Note.

 

(c)            Authentication.  A Note will be deemed authenticated when an authorized signatory of the Trustee manually signs the certificate of authentication on such Note.  An authorized signatory of the Trustee will manually sign the certificate of authentication on a Note only if (i) the Company delivers such Note to the Trustee, (ii) such Note is validly executed by the Company in accordance with Section 2.05(b) hereof, and (iii) the Company delivers, before or with such Note, a Company Order setting forth (A) a request that the Trustee authenticate such Note; (B) the principal amount of such Note; (C) the name of the Holder of such Note, (D) the date on which such Note is to be authenticated; and (E) any insertions, omissions or other variations, notations, legends or endorsements permitted under Section 2.02 hereof and applicable to such Note.  If the Company Order also specifies that the Trustee must deliver such

 

  

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Note to the Holder or the Depositary, the Trustee will promptly deliver such Note in accordance with such Company Order.

 

The Trustee may appoint an authenticating agent.  If the Trustee appoints an authenticating agent and such authenticating agent is reasonably acceptable to the Company, such authenticating agent may authenticate a Note whenever the Trustee may authenticate such Note; provided, however, that such authenticating agent may not authenticate any Notes pursuant to Section 2.12 hereof.  For purposes of this provision, each reference in this Indenture to authentication by the Trustee will be deemed to include authentication by an authenticating agent, and an authenticating agent will have the same rights to deal with the Company as the Trustee would have if it were performing the duties that the authentication agent was validly appointed to undertake.

 

Section 2.06                      Registrar, Paying Agent and Conversion Agent.

 

(a)           General.  The Company will maintain an office or agency in the continental United States where Notes may be presented for registration of transfer or for exchange (the "Registrar"), an office or agency where the Notes may be presented for payment, repurchase or redemption (the "Paying Agent"), an office or agency where the Notes may be presented for conversion (the "Conversion Agent") and an office or agency where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served.

 

The Registrar will keep a register for the recordation of, and will record, the names and addresses of Holders, the Notes held by each Holder and the transfer, exchange, repurchase, redemption and conversion of Notes (the "Register").  The entries in the Register will be conclusive, and the parties may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Holder hereunder for all purposes of this Indenture.  The Register will be in written form or in any form capable of being converted into written form within a reasonably prompt period of time.

 

The Company may have one or more registrars, one or more paying agents, one or more conversion agents and one or more places where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served.  Before appointing any Registrar, Paying Agent or Conversion Agent that is not otherwise a party to this Indenture, the Company will enter into an appropriate agency agreement with such Registrar, Paying Agent or Conversion Agent, as the case may be, which agency agreement will implement the provisions of this Indenture that relate to such replacement or additional registrar, paying agent or conversion agent, as the case may be.  The term Registrar includes any additional registrars named pursuant to this Indenture.  The term Paying Agent includes any additional paying agent named pursuant to this Indenture.  The term Conversion Agent includes any additional conversion agent named pursuant to this Indenture.

 

(b)           Initial Designations.  The Company initially appoints the Trustee as the Registrar, the Paying Agent and the Conversion Agent, and the Notes initially may be presented for registration of transfer or for exchange, payment, repurchase, redemption and conversion to the Trustee, in its capacity as the Registrar, Paying Agent or Conversion Agent, as the case may be,

 

  

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at the Corporate Trust Office.  Notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served at the Corporate Trust Office.

 

(c)           Removal, Resignation and Replacement.  The Company may remove any Registrar, Paying Agent or Conversion Agent by delivering written notice to the Trustee and to such Registrar, Paying Agent or Conversion Agent; provided, however, that no such removal will become effective unless (i) after such removal, at least one Registrar, Paying Agent and Conversion Agent will remain; (ii) a successor has accepted appointment as Registrar, Paying Agent or Conversion Agent, as the case may be, the Company and such successor have entered into an agency agreement in accordance with Section 2.06(a) hereof, and the Company has delivered written notice of such appointment and a copy of such agency agreement to the Trustee, or (iii) the Company has delivered written notice to the Trustee that the Trustee will serve as the successor Registrar, Paying Agent or Conversion Agent, as the case may be, in accordance with Section 2.06(d) hereof; and provided, further, that the right to effect any such change or removal in no way relieves the Company of its obligation to maintain a Registrar, Paying Agent and Conversion Agent in the continental United States. The Company may also change the place where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served, or reduce the number of such places; provided, however, that the right to effect any such change or reduction in no way relieves the Company of its obligation to maintain a place in the continental United States where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served.

 

In addition, the Registrar, Paying Agent or Conversion Agent may resign at any time by delivering written notice of such resignation to each of the Company and the Trustee; provided, however, that if the Trustee is serving as Registrar, Paying Agent or Conversion Agent, the Trustee may resign from such capacity only if it also resigns as Trustee in accordance with Section 7.07 hereof.

 

(d)           Failure to Maintain an Office or Agency.  If the Company fails to maintain in the continental United States, a Registrar, Paying Agent, Conversion Agent or place where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served, the Trustee will act as the Registrar, Paying Agent, Conversion Agent, or place, as the case may be, and the office where the Notes may be presented for registration of transfer or for exchange, presented for payment, repurchase or redemption or surrendered for conversion, or place where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served, as the case may be, will be the Corporate Trust Office.  In each such case, the Trustee will be entitled to compensation for such action pursuant to Section 7.06 hereof.

 

(e)           Notices.  Promptly upon the effectiveness of any removal or appointment of a Registrar, Paying Agent or Conversion Agent, or upon any change in the location of the office of any Registrar, Paying Agent or Conversion Agent, or of the place where notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served, the Company will deliver to each Holder written notice of such removal, appointment or change in location, as the case may be, which notice will include a brief description of the removal, appointment or change in location, as the case may be, and list the name and address of each continuing (and newly appointed, if applicable) Registrar, Paying Agent and Conversion Agent and place where

 

  

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notices and demands to, or upon, the Company with respect to the Notes and this Indenture may be served.

 

Section 2.07                      Money and Securities Held in Trust.  Except as otherwise provided herein, by no later than 10:00 a.m., New York City time, on each due date for a payment on any Note, the Company will deposit with the Paying Agent an amount of money in immediately available funds, if deposited on the due date sufficient to make such payment when due.

 

The Company will require that each Paying Agent (other than the Trustee, if the Trustee is a Paying Agent) agree in writing that it will (i) segregate all money and securities it holds for making payments with respect to the Notes; (ii) hold such money and securities in trust for the benefit of Holders; and (iii) notify the Trustee, in writing, as promptly as practicable, if the Company defaults in making any payment on the Notes.

 

If any such default has occurred and is continuing, the Paying Agent will, upon receiving a written request from the Trustee, forthwith pay to the Trustee all of the money and securities it holds in trust.  In addition, at any time, the Company may require the Paying Agent to pay all money and securities that it holds for making payments with respect to the Notes to the Trustee and to account for any money and securities it has disbursed.  After delivering all of such money and securities to the Trustee pursuant to this Section 2.07, the Paying Agent will have no further liability for such money and securities.

 

Section 2.08                      Holder Lists. The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders.  The Company will furnish to the Trustee, (i) within five Business Days after each Regular Record Date, a list of the names and addresses of Holders as of such Regular Record Date, and (ii) at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of such request, a list of the names and addresses of Holders as of no more than 15 days immediately prior to the date such list is furnished, in each case, in such form as the Trustee may reasonably require.

 

Section 2.09                      Transfer and Exchange

 

(a)           Provisions Applicable to All Transfers and Exchanges.

 

(i)           Subject to the restrictions set forth in this Section 2.09, Definitive Notes and beneficial interests in Global Notes may be transferred or exchanged from time to time as desired, and each such transfer or exchange will be noted by the Registrar in the Register.

 

(ii)           All Notes issued upon any registration of transfer or exchange in accordance with this Indenture will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.

 

(iii)           No service charge will be imposed on any Holder of a Definitive Note or any owner of a beneficial interest in a Global Note for any exchange or registration of transfer, but each of the Company, the Trustee or the Registrar may require such Holder or owner of a beneficial interest to pay a sum sufficient to cover any documentary, stamp or transfer tax,

 

  

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assessment or other governmental charge imposed in connection with such registration of transfer or exchange.

 

(iv)           Unless the Company specifies otherwise, none of the Company, the Trustee, the Registrar or any co-registrar will be required to exchange or register a transfer of any Note (i) surrendered for conversion, except to the extent that any portion of such Note has not been surrendered for conversion, (ii) subject to a Fundamental Change Repurchase Notice validly delivered pursuant to Section 3.03 hereof, except to the extent any portion of such Note is not subject to a Fundamental Change Repurchase Notice, or (iii) after the Company has delivered a Redemption Notice pursuant to Section 11.03 hereof, except to the extent that (A) the Company has failed to redeem such Note on the applicable Redemption Date in accordance with Article 11 hereof, (B) a portion of such Note was surrendered for conversion after the applicable Redemption Date or (C) a portion of such Note was made subject to a Fundamental Change Repurchase Notice relating to a Fundamental Change Repurchase Date that will occur before the applicable Redemption Date.

 

(v)           The Trustee will 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 Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are 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.

 

(b)           In General; Transfer and Exchange of Beneficial Interests in Global Notes. So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, except to the extent required by Section 2.09(c) hereof:

 

(i)           all Notes will be represented by one or more Global Notes;

 

(ii)           every transfer and exchange of a beneficial interest in a Global Note will be effected through the Depositary in accordance with the Applicable Procedures and the provisions of this Indenture (including the restrictions on Transfer set forth in Section 2.10 hereof); and

 

(iii)           each Global Note may be transferred only as a whole and only (A) by the Depositary to a nominee of the Depositary, (B) by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or (C) by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

 

(c)        Transfer and Exchange of Global Notes.

 

(i)           Notwithstanding any other provision of this Indenture, each Global Note will be exchanged for Definitive Notes if the Depositary delivers written notice to the Company that:

 

(A)           the Depositary is unwilling or unable to continue to act as Depositary; or

 

  

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(B)           the Depositary is no longer registered as a clearing agency under the Exchange Act; and,

 

in each case, the Company promptly delivers a copy of such notice to the Trustee and the Company fails to appoint a successor Depositary within 90 days after receiving such notice from the Depositary.

 

In each such case, (1) each Global Note will be deemed surrendered to the Trustee for cancellation, (2) the Trustee will promptly cancel each such Global Note in accordance with the Applicable Procedures, (3) the Company, (x) in accordance with Section 2.05 hereof, will promptly execute, for each beneficial interest in each Global Note so cancelled, an aggregate principal amount of Definitive Notes equal to the aggregate principal amount of such beneficial interest, registered in such name and authorized denominations as the Depositary specifies, and bearing such legends as such Definitive Notes are required to bear under Sections 2.02 and Section 2.10 hereof, and, (y) as provided in Section 2.05(c) hereof, will promptly deliver to the Trustee such Definitive Notes and a Company Order including the information specified in Section 2.05(c) hereof with respect to such Definitive Notes, and (4) the Trustee, upon receipt of such Definitive Notes and such Company Order, in accordance with Section 2.05 hereof, will promptly authenticate, and deliver to the Holders specified in such Company Order, such Definitive Notes.

 

(ii)           In addition:

 

(A)           if an Event of Default has occurred and is continuing, any owner of a beneficial interest in a Global Note may exchange such beneficial interest for Definitive Notes by delivering a written request to the Company, the Registrar and the Trustee; or

 

(B)           at any time, the Company may, in its sole discretion, at the request of the owner of a beneficial interest in a Global Note, permit the exchange of such owner's beneficial interest, by delivering a written request to the Registrar, the Trustee and the owner of such beneficial interest.

 

In each case, (1) upon receipt of such request, the Registrar will promptly deliver written notice of such request to the Company and the Trustee, which notice must identify the owner of the beneficial interest to be exchanged, the aggregate principal amount of such beneficial interest and the CUSIP number of the relevant Global Note; (2) the Trustee, upon receipt of such notice, will promptly cause the aggregate principal amount of such Global Note to be reduced by the aggregate principal amount of the beneficial interest to be so exchanged in accordance with the Applicable Procedures, (3)  the Company (x) in accordance with Section 2.05 hereof, will promptly execute, for such beneficial interest, a Definitive Note having aggregate principal amount equal to the aggregate principal amount of such beneficial interest, registered in the name of the owner specified in the notice delivered by the Registrar, and bearing such legends as such Definitive Note is required to bear under Sections 2.02 and 2.10 hereof, and, (y) as provided in Section 2.05(c) hereof, will promptly deliver to the Trustee such Definitive Note and a Company Order including the information specified in Section 2.05(c) hereof with respect to such Definitive Note, and (4) the Trustee, upon receipt of such Definitive Note and such Company Order, will promptly, in accordance with Section 2.05 hereof, authenticate, and deliver

 

  

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to the Holder specified in such Company Order, such Definitive Note.  If, after such exchange, all of the beneficial interests in a Global Note have been exchanged for Definitive Notes, such Global Note will be deemed surrendered to the Trustee for cancellation, and the Trustee will cause such Global Note to be cancelled in accordance with the Applicable Procedures.

 

(d)           Transfer and Exchange of Definitive Notes.  If Definitive Notes are issued, a Holder may:

 

(i)           transfer a Definitive Note by:  (A) surrendering such Definitive Note for registration of transfer to the Registrar, together with any endorsements or instruments of transfer reasonably required by any of the Company, the Trustee and the Registrar; (B) if such Definitive Note is a Restricted Note, delivering any documentation that any of the Company, the Trustee and the Registrar reasonably require to ensure that such transfer complies with Section 2.10 hereof and any applicable securities laws; and (C) satisfying any other requirements for such transfer set forth in this Section 2.09 and Section 2.10 hereof.  Upon the satisfaction of conditions (A), (B) and (C), (1) the Company, (x) in accordance with Section 2.05 hereof, will promptly execute a new Definitive Note, in the name of the designated transferee, having an aggregate principal amount equal to that of the transferred Definitive Note and bearing such legends as such Definitive Note is required to bear under Sections 2.02 and 2.10 hereof, and (y) as provided in Section 2.05(c) hereof, will promptly deliver to the Trustee such Definitive Note and a Company Order including the information specified in Section 2.05(c) with respect to such Definitive Note, and (2) the Trustee, upon receipt of such Definitive Note and such Company Order, will promptly, in accordance with Section 2.05 hereof, authenticate, and deliver to the Holder specified in such Company Order, such Definitive Note.

 

(ii)           exchange one or more Definitive Notes for one or more other Definitive Notes of any authorized denominations, and aggregate principal amount equal to the aggregate principal amount of the one or more Definitive Notes to be exchanged, by surrendering such one or more Definitive Notes, together with any endorsements or instruments of transfer reasonably required by any of the Company, the Trustee and the Registrar, at any office or agency maintained by the Company for such purposes pursuant to Section 4.02 hereof.  Whenever a Holder so surrenders one or more Definitive Notes for exchange, (1) the Company, (x) in accordance with Section 2.05 hereof, will promptly execute one or more new Definitive Notes, each in the name of such Holder, in the authorized denomination or denominations that such Holder requested (which authorized denomination or authorized denominations, as the case may be, must in aggregate, equal the aggregate principal amount of the one or more Definitive Notes to be exchanged), and bearing a unique registration number not contemporaneously outstanding and such legends as such Definitive Note is required to bear under Sections 2.02 and 2.10 hereof, and (y) as provided in Section 2.05(c) hereof, will promptly deliver to the Trustee each such Definitive Note and a Company Order including the information specified in Section 2.05(c) with respect to each such Definitive Note, and (2) the Trustee, upon receipt of each such Definitive Note and such Company Order, will promptly, in accordance with Section 2.05 hereof, authenticate, and deliver to the Holder specified in such Company Order, each such Definitive Note.

 

  

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(iii)           transfer or exchange a Definitive Note for a beneficial interest in a Global Note by (A) surrendering such Definitive Note for registration of transfer or exchange to the Registrar, together with any endorsements or instruments of transfer reasonably required by any of the Company, the Trustee and the Registrar; (B) if such Definitive Note is a Restricted Note, delivering any documentation that any of the Company, the Trustee and the Registrar reasonably require to ensure that such transfer complies with Section 2.10 hereof and any applicable securities laws; (C) satisfying any other requirements for such transfer set forth in this Section 2.09 and Section 2.10 hereof; and (D) providing written instructions to the Trustee to make an adjustment in its books and records with respect to the applicable Global Note to reflect an increase in the aggregate principal amount of the Notes represented by such Global Note, which instructions will contain information regarding the Depositary account to be credited with such increase.  Upon the satisfaction of conditions (A), (B), (C) and (D), the Trustee (1) will promptly cancel such Definitive Note and, (2) will promptly cause the aggregate principal amount of such Global Note to be increased by the aggregate principal amount of such Definitive Note, and credit, or cause to be credited, the account of the Person specified in the instructions provided by the exchanging Holder in an amount equal to the aggregate principal amount of such Definitive Note, in each case, in accordance with the Applicable Procedures.  If at the time of such exchange, no Global Notes are then outstanding, the Company, (x) in accordance with Section 2.05 hereof, will promptly execute and deliver to the Trustee, a new Global Note registered in the name of the Depositary or a nominee of the Depositary, as the case may be, having the appropriate aggregate principal amount, and bearing such legends as such Global Note is required to bear under Sections 2.02 and 2.10 hereof, and (y) as provided in Section 2.05(c) hereof, will promptly deliver to the Trustee such Global Note and a Company Order including the information specified in Section 2.05(c) with respect to such Global Note, and (2) the Trustee, upon receipt of such Global Note and such Company Order, will promptly, in accordance with Section 2.05 hereof, authenticate, and deliver to the Depositary, its nominee, or a custodian of the Depositary or its nominee, as the case may be, such Global Note.

 

Section 2.10                      Transfer Restrictions.

 

(a)           Restricted Notes.

 

(i)           General.  Each Note (and every security issued in exchange therefor or substitution thereof, except any shares of Common Stock issued upon conversion thereof, which may bear the Restricted Stock Legend) that bears, or that is required under this Section 2.10 to bear, the Restricted Notes Legend will be deemed a "Restricted Note," and will be subject to the restrictions on Transfer set forth in this Indenture (including in the Restricted Notes Legend) unless such restrictions on Transfer are eliminated or otherwise waived by written consent of the Company, and each Holder of a Restricted Note, by such Holder's acceptance of such Restricted Note, will be deemed to be bound by the restrictions on Transfer applicable to such Note.

 

(ii)           When Restrictions Apply.  Except as provided elsewhere in this Indenture (including, without limitation, clause (iii) of this Section 2.10(a)), until the Free Trade Date, every certificate evidencing a Note (and every security issued in exchange therefor or substitution thereof, except any shares of Common Stock issued upon the conversion thereof, which may be required to bear the Restricted Stock Legend) will bear the Restricted Notes Legend unless:

 

  

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(A)           such Note, is being Transferred to a Person other than (x) the Company or (y) an affiliate (as defined in Rule 144) of the Company pursuant to a registration statement that was effective under the Securities Act at the time of such Transfer; or

 

    (B)           such Note, is being Transferred to a Person other than (x) the Company or (y) an affiliate (as defined in Rule 144) of the Company, pursuant to an available exemption from the registration requirements of the Securities Act (including, without limitation, Rule 144) and, after such Transfer, such Note will no longer constitute "a restricted security" (within the meaning of Rule 144),

 

and, in case (B), the transferring Holder delivers to the Trustee, the Company and the Registrar any documents or evidence required pursuant to the Restricted Notes Legend or this Indenture (including, in the case of Definitive Notes, clause (iii) of this Section 2.10(a)).

 

(iii)           Termination of Transfer Restrictions.

 

(A)           Except as otherwise provided in this Indenture (including, without limitation, clause (B) of this Section 2.10(a)(iii)) or as permitted under the terms of the Restricted Notes Legend, if a Holder requests that the Company remove the Restricted Notes Legend from a Definitive Note that is a Restricted Note, the Restricted Notes Legend will not be removed from such Restricted Note unless such Holder delivers, (1) to each of the Company and the Registrar a transfer certificate in the form attached as Exhibit B hereto and, (2) to each of the Company, the Registrar and the Trustee, any evidence that each of the Company, the Registrar and the Trustee, as the case may be, reasonably require, that (x) neither the Restricted Notes Legend nor the Transfer restrictions set forth therein are required to ensure that Transfers of such Restricted Note will comply with applicable law and (y) that, after such Transfer, such Restricted Note will not be a "restricted security" (within the meaning of Rule 144); provided, however, that, upon provision of such required transfer certificate and evidence, the Company, the Trustee and the Registrar will permit such Restricted Note to be exchanged in accordance with Section 2.09(d)(ii) hereof for one or more new Definitive Notes that do not bear the Restricted Notes Legend.  In addition, upon receipt by the Trustee and the Registrar of a Company Order specifying that a Note need not bear the Restricted Notes Legend to comply with applicable law, each of the Trustee and the Registrar will permit any Restricted Note to be exchanged in accordance with Section 2.09(d)(ii) hereof for one or more new Definitive Notes that do not bear the Restricted Notes Legend.

 

(B)           At any time on or after the Free Trade Date, if any Notes are represented by one or more Global Notes that are Restricted Notes, the Company may delegend such Notes by:

 

(1)           providing written notice to the Trustee and the Registrar that the Free Trade Date has occurred and instructing the Trustee to remove the Restricted Notes Legend from such Global Notes or to deem the Restricted Notes Legend removed;

 

(2)           providing written notice to each owner of a beneficial interest in any of such Global Notes, which notice will state that the Restricted Notes Legend has

 

  

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been removed or has been deemed removed from the applicable Global Note and include the unrestricted CUSIP that will thereafter apply to such applicable Global Note;

 

(3)           providing written notice to the Trustee and the Depositary that the CUSIP number for each such Global Note will be changed to an unrestricted CUSIP number, which unrestricted CUSIP number will be listed in such notice;

 

(4)           complying with any Applicable Procedures for delegending; and

 

(5)           providing written notice to the Transfer Agent that the Free Trade Date has occurred,

 

whereupon the Restricted Notes Legend will be deemed removed from such Global Notes.

 

(iv)           Reinstatement of Restricted Notes Legend.  If the Restricted Notes Legend is removed from the face of a Note and the Note is subsequently held by the Company or an affiliate (as defined in Rule 144) of the Company, the Restricted Notes Legend will be reinstated.

 

(b)           Restricted Stock.  If any shares of Common Stock are issued upon conversion of the Notes, and such shares of Common Stock are issued prior to the Free Trade Date, then any certificate representing such shares of Common Stock will, upon issuance, bear the Restricted Stock Legend unless:

 

(i)           such shares of Common Stock are being issued to a Person other than (x) the Company or (y) an affiliate (as defined in Rule 144) of the Company pursuant to a registration statement that is effective under the Securities Act at the time of such issuance;

 

(ii)           such shares of Common Stock are being issued to a Person other than (x) the Company or (y) an affiliate (as defined in Rule 144) of the Company (2) pursuant to an available exemption from the registration requirements of the Securities Act such that, upon issuance, such shares of Common Stock will not constitute "restricted securities" (within the meaning of Rule 144); or

 

(iii)           the Company delivers a Company Order to the Transfer Agent and the Registrar stating that the certificate representing such shares of Common Stock need not bear the Restricted Stock Legend to comply with applicable law.

 

Section 2.11                      Replacement Notes.

 

If (a)(i) a mutilated Note is surrendered to the Registrar or (ii) the Holder of a Note claims that such Note has been lost, destroyed or stolen and provides the Company and the Trustee with (A) evidence of such loss, theft or destruction that is reasonably satisfactory to the Company and the Trustee and (B) any amount or kind of security or indemnity that either of the Company or the Trustee reasonably requests to protect itself from any loss that it may suffer upon replacement of such Note, and, in either case, (b) such Holder satisfies any other reasonable

 

  

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requirements of the Trustee, including the payment of any tax or other governmental charge that may be imposed in connection with the replacement of such Note, then, in either case, unless the Company or the Trustee receives notice that such Note has been acquired by a bona fide purchaser, the Company will, in accordance with Section 2.05 hereof, promptly execute and deliver to the Trustee, and the Trustee, upon receipt of a Company Order, in accordance with Section 2.05 hereof, will promptly authenticate and deliver, in the name of such Holder, a replacement Note having the same aggregate principal amount as the Note that was mutilated or claimed to be lost, destroyed or stolen, bearing any restrictive legends required by Section 2.10 hereof and with a registration number not contemporaneously outstanding.

 

Every new Note issued pursuant to this Section 2.11 in exchange for any mutilated Note, or in lieu of any destroyed, lost or stolen Note, will constitute an original contractual obligation of the Company and any other obligor upon the Notes, regardless of whether the mutilated, destroyed, lost or stolen Note will be at any time enforceable by anyone, and will be entitled to all benefits of (and will be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

Section 2.12                      Temporary Notes.  Until Definitive Notes are ready for delivery, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee will, upon written request of the Company, authenticate and deliver temporary Notes (printed or lithographed) ("Temporary Notes").  Temporary Notes will be issuable in any authorized denomination, and substantially in the form of Definitive Notes, but with such omissions, insertions and variations as may be appropriate for Temporary Notes, all as may be determined by the Company.  Every such Temporary Note will be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Definitive Notes.  Without unreasonable delay the Company will prepare, execute and deliver to the Trustee or such authenticating agent Definitive Notes (other than any Global Note) and thereupon any or all Temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 2.06 hereof and the Trustee or such authenticating agent will authenticate and deliver in exchange for such Temporary Notes Definitive Notes having an aggregate principal amount equal to such Temporary Notes.  Such exchange will be made by the Company at its own expense and without any charge therefor.  Until so exchanged, the Temporary Notes will, in all respects, be entitled to the same benefits and subject to the same limitations under this Indenture as Definitive Notes authenticated and delivered hereunder.

 

Section 2.13                      Cancellation. At any time, the Company may deliver Notes to the Trustee for cancellation.  Whenever any Note is surrendered to the Registrar, Conversion Agent or Paying Agent for registration of transfer, exchange, conversion, repurchase, redemption or payment, the Registrar, Conversion Agent or Paying Agent, as the case may be, will promptly forward such Note to the Trustee.  Upon receipt of any such Note, the Trustee, in its customary manner, will promptly cancel and dispose of such Note.  The Company may not issue new Notes to replace Notes that it has repurchased, redeemed, paid or delivered to the Trustee for cancellation or that a Holder has converted pursuant to Article 10 hereof.

 

  

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Section 2.14                      Outstanding Notes. At any time, Notes outstanding are limited to all Notes authenticated by the Trustee except (i) those cancelled by it, (ii) those delivered to it for cancellation and (iii) those deemed not outstanding under Sections 3.05, 10.02 and 11.06 hereof and clauses (a) and (b) of this Section 2.14.

 

(a)           If a Note is replaced pursuant to Section 2.11 hereof, such Note will cease to be outstanding at the time of its replacement unless the Trustee and the Company receive proof satisfactory to them that such Note is held by a bona fide purchaser.

 

(b)           In addition, if the Company, any other obligor or an Affiliate of the Company or an Affiliate of such other obligor holds a Note, such Note will be disregarded and deemed not to be outstanding for purposes of determining whether the Holders of the requisite aggregate principal amount of Notes have given or concurred in any request, demand, authorization, direction, notice, consent, waiver or other action hereunder.  Subject to the foregoing, only Notes outstanding at the time of any such determination will be considered in such determination (including determinations pursuant to Articles 6 and 9 hereof).

 

Section 2.15                      Persons Deemed Owners.   Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered in the Register as the owner of such Note for the purpose of receiving the payment of the principal, Fundamental Change Repurchase Price or Redemption  Price of, and interest, if any, on, such Note, for the purpose of conversion of such Note and for all other purposes whatsoever with respect to such Note, and none of the Company, the Trustee or any agent of the Company or the Trustee will be affected by any notice to the contrary.

 

Section 2.16                      Repurchases. The Company may, from time to time, repurchase Notes in open market purchases or in negotiated transactions without delivering prior notice to Holders.

 

Section 2.17                      CUSIPs.

 

(a)           Whenever "CUSIP" and "ISIN" numbers are generally in use, the Company will use CUSIP and ISIN numbers with respect to the Notes, which CUSIP and ISIN numbers (i) for Restricted Notes, will be restricted numbers, and (ii) for Notes that are not Restricted Notes, will be unrestricted numbers.  Whenever the Company uses CUSIP and ISIN numbers, the Trustee will also use CUSIP and ISIN numbers in each notice it delivers to the Holders; provided, that neither the Company nor the Trustee will be responsible for any defect in any CUSIP or ISIN number that appears on any Note, check, advice of payment or notice, including without limitation, any notice delivered pursuant to Section 11.03. The Company will promptly notify the Trustee in writing in the event of any change in the CUSIP or ISIN numbers.

 

(b)           In addition, if, when any shares of Common Stock are issued upon conversion of a Note, CUSIP and ISIN numbers are generally in use, the Company will use CUSIP and ISIN numbers with respect to such shares of Common Stock, which CUSIP and ISIN numbers (i) for shares of Common Stock to which the restrictions on Transfer set forth in the Restricted Stock Legend apply, will be restricted numbers, and (ii) for shares of Common Stock to which the

 

  

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restrictions on Transfer set forth in the Restricted Stock Legend do not apply, will be unrestricted numbers.

 

(c)           Whenever any of the CUSIP or ISIN numbers with respect to the Notes or the shares of Common Stock issuable upon conversion of the Notes changes, ceases to be used, or begins to be used, the Company will deliver prompt written notice of such change, cessation, or beginning to each of the Trustee and the Holders.

 

ARTICLE 3

 

REPURCHASE AT THE OPTION OF THE HOLDER

 

Section 3.01                      Fundamental Change Permits Holders To Require The Company To Repurchase the Notes.

 

(a)           General.  If a Fundamental Change occurs at any time prior to the Maturity Date, each Holder will have the right to require the Company to repurchase all of its Notes or any portion of its Notes in a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof on the Fundamental Change Repurchase Date for such Fundamental Change for an amount of cash equal to the Fundamental Change Repurchase Price for such Fundamental Change Repurchase Date and such Notes.

 

(b)           Fundamental Change Repurchase Price.  The "Fundamental Change Repurchase Price" means, for any Notes to be repurchased on any Fundamental Change Repurchase Date, a price equal to 100% of the principal amount of such Notes, plus accrued and unpaid interest, if any, on such Notes to, but excluding, such Fundamental Change Repurchase Date; provided, however, that if a Fundamental Change Repurchase Date occurs after a Regular Record Date, but on or prior to the Interest Payment Date corresponding to such Regular Record Date, the Company will pay the accrued and unpaid interest on such Notes on such Interest Payment Date to the Holder of such Notes on such Regular Record Date.

 

(c)           Fundamental Change Repurchase Date.  The "Fundamental Change Repurchase Date" means, for any Fundamental Change, the date specified by the Company in the Fundamental Change Notice for such Fundamental Change, which date will be a Business Day not less than 20 Business Days, nor more than 35 Business Days, immediately following the Fundamental Change Notice Date for such Fundamental Change.

 

Section 3.02                               Fundamental Change Notice

 

(a)           General.  On or before the 10th calendar day immediately following the effective date of a Fundamental Change, the Company will deliver to each Holder (and to any beneficial owners of a Global Note, as required by applicable law), the Trustee and the Paying Agent written notice of such Fundamental Change and the resulting repurchase right (the "Fundamental Change Notice," and the date of such mailing, the "Fundamental Change Notice Date").  Simultaneously with mailing any Fundamental Change Notice to the Holders, the Trustee and the Paying Agent, the Company will publish a notice containing the same information as the Fundamental Change Notice (i) in a newspaper of general circulation in The City of New York and, (ii) on its website or through such other public medium as the Company may use at such time.

 

  

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For any Fundamental Change, the Fundamental Change Notice corresponding to such Fundamental Change will specify:

 

(i)           briefly, the events causing such Fundamental Change;

 

(ii)           the effective date of such Fundamental Change;

 

(iii)           the last date on which a Holder may exercise its right to require the Company to repurchase its Notes as a result of such Fundamental Change under this Article 3;

 

(iv)           the procedures that a Holder must follow to require the Company to repurchase a Note;

 

(v)           the Fundamental Change Repurchase Price for each $1,000 principal amount of Notes for such Fundamental Change;

 

(vi)           the Fundamental Change Repurchase Date for such Fundamental Change;

 

(vii)           that the Fundamental Change Repurchase Price for any Note for which a Fundamental Change Repurchase Notice has been duly tendered and not validly withdrawn will be paid promptly following the later of the Fundamental Change Repurchase Date and the time such Note is surrendered for repurchase;

 

(viii)           the name and address of the Paying Agent and of the Conversion Agent;

 

(ix)           the Conversion Rate in effect on the Fundamental Change Notice Date for such Fundamental Change and the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Fundamental Change Notice Date;

 

(x)           any adjustments that will be made to the Conversion Rate as a result of such Fundamental Change, including any Additional Shares by which the Conversion Rate will be increased pursuant to Section 10.07 hereof for a Holder that converts a Note "in connection with" such Fundamental Change;

 

(xi)           that any Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if such Holder withdraws such Fundamental Change Repurchase Notice in accordance with the terms of this Indenture;

 

(xii)           the procedures for withdrawing a Fundamental Change Repurchase Notice;

 

(xiii)           that if a Note or portion of a Note is subject to a validly delivered Fundamental Change Repurchase Notice, unless the Company defaults in paying the Fundamental Change Repurchase Price for such Note or portion of a Note, interest, if any, on such Note or portion of a Note will cease to accrue on and after the Fundamental Change Repurchase Date; and

  

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(xiv)           the CUSIP and ISIN number(s) of the Notes.

 

(b)           Failure or Defect.  Notwithstanding anything provided elsewhere in this Indenture, neither the failure of the Company to deliver a Fundamental Change Notice nor a defect in a Fundamental Change Notice delivered by the Company will limit the repurchase rights of any Holder under this Article 3 or impair or otherwise affect the validity of any proceedings relating to the repurchase of any Note pursuant to this Article 3.

 

Section 3.03                               Fundamental Change Repurchase Notice

 

(a)           General.  To exercise its repurchase rights under Section 3.01(a) hereof with respect to any Fundamental Change, a Holder must deliver to the Paying Agent, by the Close of Business on the Business Day immediately preceding the Fundamental Change Repurchase Date, subject to extension to comply with applicable law:

 

(i)           a duly completed "Form of Fundamental Change Repurchase Notice" in the form of Attachment 2 of the Notes that such Holder is tendering for repurchase (a "Fundamental Change Repurchase Notice");  and

 

(ii)           the Notes that such Holder is tendering for repurchase, (A) by book-entry transfer if such Notes are Global Notes, or (B) by physical delivery, if such Notes are Definitive Notes, in each case, together with any endorsements or other documents reasonably requested by the Paying Agent, the Trustee or the Company.

 

(b)           Contents of Fundamental Change Repurchase Notice.  The Fundamental Change Repurchase Notice for any Note must state:

 

(i)           if such Note is to be repurchased in part, the principal amount of such Note to be repurchased, which principal amount must equal $1,000 or an integral multiple of $1,000 in excess thereof;

 

(ii)           that such Note will be repurchased by the Company pursuant to the provisions of this Article 3 hereof; and

 

(iii)           if such Note is a Definitive Note, the registration  number of such Note.

 

If the Notes to be repurchased are Global Notes, the Fundamental Change Repurchase Notice for such Notes must comply with the Applicable Procedures.

 

(c)           Notice to Company.  If any Holder validly delivers to the Paying Agent a Fundamental Change Repurchase Notice with respect to a Note or any portion of a Note, the Paying Agent will promptly deliver to the Company a copy of such Fundamental Change Repurchase Notice.

 

  

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(d)           Effect of Improper Notice.  Unless and until the Paying Agent receives a validly endorsed and delivered Fundamental Change Repurchase Notice with respect to a Note, together with such Note, in a form that conforms in all material aspects with the description contained in such Fundamental Change Repurchase Notice, the Holder submitting the Notes will not be entitled to receive the Fundamental Change Repurchase Price for such Note.

 

Section 3.04                               Withdrawal of Fundamental Change Repurchase Notice.

 

(a)           General.  After a Holder delivers a Fundamental Change Repurchase Notice with respect to a Note, such Holder may withdraw such Fundamental Change Repurchase Notice with respect to such Note or any portion of such Note in principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof by delivering to the Paying Agent a written notice of withdrawal prior to the Close of Business on the Business Day immediately preceding the Fundamental Change Repurchase Date to the Paying Agent. Any such withdrawal notice must state:

 

(i)           the principal amount of the Notes with respect to which such notice of withdrawal pertains, which must equal $1,000 or an integral multiple of $1,000 in excess thereof;

 

(ii)           the principal amount of the Notes that remains subject to the original Fundamental Change Repurchase Notice, which portion must have a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof; and

 

(iii)           if the Notes subject to such Fundamental Change Repurchase Notice were Definitive Notes, the registration numbers of the Notes to be withdrawn and the Notes that will remain subject to the Fundamental Change Repurchase Notice.

 

If the Notes to be withdrawn are Global Notes, a Holder must deliver its notice of withdrawal in compliance with the Applicable Procedures.

 

(b)           Return of Note.  Upon receipt of a validly delivered withdrawal notice, the Paying Agent will promptly (i) if such notice pertains to a Definitive Note or a portion of a Definitive Note, return such Note or portion of a Note to such Holder, in the amount specified in such withdrawal notice; and, (ii) if such notice pertains to a beneficial interest in a Global Note, in compliance with the Applicable Procedures, deem to be cancelled any instructions for book-entry transfer of such beneficial interest, in the amount specified in such withdrawal notice.

 

(c)           Notice to Company.  If any Holder validly delivers to the Paying Agent a notice of withdrawal with respect to a Note or any portion of a Note, the Paying Agent will promptly deliver to the Company a copy of such notice of withdrawal.

 

Section 3.05                      Effect of Fundamental Change Repurchase Notice

 

(a)           General.  If a Holder validly delivers to the Paying Agent a Fundamental Change Repurchase Notice (together with all necessary endorsements) with respect to a Note, such Holder may no longer convert such Note unless and until such Holder validly withdraws such Fundamental Change Repurchase Notice in accordance with Section 3.04 hereof.

 

  

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(b)           Timing of Payment.  Upon the Paying Agent's receipt of (i) a valid Fundamental Change Repurchase Notice (together with all necessary endorsements and documents) and (ii) the Notes to which such Fundamental Change Repurchase Notice pertains, the Holder of the Notes to which such Fundamental Change Repurchase Notice pertains will be entitled, except to the extent such Holder has validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 3.04 hereof, to receive the Fundamental Change Repurchase Price with respect to such Notes on the later of (i) the Fundamental Change Repurchase Date and (ii)(A) if such Notes are Definitive Notes, the date of delivery of such Notes to the Paying Agent, or (B) if such Notes are Global Notes, the date of book-entry transfer of such Notes to the Paying Agent, or, if such later date is not a Business Day, the Business Day immediately following such later date.

 

(c)           Effect of Deposit.  If, as of 10:00 a.m., New York City time, on the Fundamental Change Repurchase Date for any Fundamental Change, the Company, in accordance with Section 3.08 hereof, has deposited with the Paying Agent money in immediately available funds sufficient to pay the Fundamental Change Repurchase Price for every Note subject to a Fundamental Change Repurchase Notice validly delivered in accordance with Section 3.03 hereof and not validly withdrawn in accordance with Section 3.04 hereof, at the Close of Business on the Fundamental Change Repurchase Date:

 

(i)           the Notes to be repurchased will cease to be outstanding and interest will cease to accrue on such Notes (whether or not book-entry transfer of such Notes is made or whether or not such Notes are delivered to the Paying Agent); and

 

(ii)           all other rights of the Holders of such Notes with respect to such Notes (other than the right to receive payment of the Fundamental Change Repurchase Price upon delivery or transfer of such Notes and any Defaulted Amounts or Default Interest with respect to the Notes) will terminate.

 

Section 3.06                      Notes Repurchased in Part.  If any Definitive Note is to be repurchased only in part, the Holder must surrender such Note at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder of such Note or such Holder's attorney-in-fact, duly authorized in writing), whereupon the Company, in accordance with Section 2.05 hereof, will promptly execute, and, upon receipt of a Company Order, the Trustee, in accordance with Section 2.05 hereof, will promptly authenticate and deliver, to the surrendering Holder, a new Note or Notes of any authorized denomination or denominations requested by such Holder in aggregate principal amount equal to the portion of the principal amount of the Note so surrendered which is not repurchased.  If any Global Note is repurchased in part, the Company Order will instruct the Trustee to decrease the principal amount of such Global Note by the principal amount repurchased. Any Notes that are repurchased or owned by the Company, whether or not in connection with a Fundamental Change, will be submitted to the Trustee for cancellation and will be duly retired by the Company.

 

Section 3.07                      Covenant to Comply With Securities Laws Upon Repurchase of Notes.  In connection with any repurchase offer pursuant to a Fundamental Change Repurchase Notice

 

  

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under this Article 3, the Company will, to the extent applicable, (i) comply with Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time of the offer to repurchase the Notes, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with any applicable United States federal and state securities laws so as to permit Holders to exercise their rights and obligations under Section 3.01 hereof in the time and in the manner specified in Sections 3.01 and 3.03 hereof.

 

Section 3.08                      Deposit of Fundamental Change Repurchase Price.  Prior to 10:00 a.m., New York City time, on the Fundamental Change Repurchase Date, the Company will deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, will segregate and hold in trust as provided in Section 2.07 hereof) an amount of immediately available funds sufficient to pay the Fundamental Change Repurchase Price of all the Notes or portions thereof that the Company is required to repurchase on such Fundamental Change Repurchase Date.

 

Section 3.09                      Covenant Not to Repurchase Notes Upon Certain Events of Default

 

(a)           General.  Notwithstanding anything to the contrary in this Article 3, the Company will not purchase any Notes under this Article 3 if, as of the Fundamental Change Repurchase Date, the principal amount of the Notes has been accelerated, such acceleration has not been rescinded and such acceleration did not result from a Default that would be cured by the Company's payment of the Fundamental Change Repurchase Price.

 

(b)           Deemed Withdrawals.  If, on any Fundamental Change Repurchase Date, (i) a Fundamental Change Repurchase Notice for a Note has been validly tendered in accordance with Section 3.03 hereof and has not been validly withdrawn in accordance with Section 3.04 hereof, and (ii) pursuant to this Section 3.09, the Company is not permitted to purchase Notes, the Paying Agent, upon receipt of written notice from the Company stating that the Company, pursuant to this Section 3.09, is not permitted to purchase Notes, will deem such Fundamental Change Repurchase Notice withdrawn.

 

(c)           Return of Notes.  If a Holder tenders a Note for purchase pursuant to this Article 3 and, on the Fundamental Change Repurchase Date, pursuant to this Section 3.09, the Company is not permitted to purchase such Note, the Paying Agent will (i) if such Note is a Definitive Note, return such Note to such Holder, and (ii) if such Note is held in book-entry form, in compliance with the Applicable Procedures, deem to be cancelled any instructions for book-entry transfer of such Note.

 

ARTICLE 4

 

COVENANTS

 

Section 4.01                      Payment of Notes.  The Company will pay or cause to be paid the principal of, Fundamental Change Repurchase Price or Redemption Price for, and any accrued and unpaid interest on, the Notes on the dates and in the manner required under this Indenture.  Any principal of, Fundamental Change Repurchase Price or Redemption Price for, or interest on, a Note will be considered paid on the date due if the Paying Agent, if other than the Company or

 

  

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a Subsidiary thereof, holds, as of 10:00 a.m. New York City time on the due date, money deposited by the Company in immediately available funds and designated for, and sufficient to pay, such principal, Fundamental Change Repurchase Price, Redemption Price, or interest then due.  To the extent lawful, the Company will also pay Default Interest on any Defaulted Amounts in accordance with Section 2.04 hereof.

 

Section 4.02                      144A Information. Whenever the Company is not subject to Section 13 or Section 15(d) of the Exchange Act, if any Notes or shares of Common Stock issuable upon the conversion of the Notes constitute "restricted securities" within the meaning of Rule 144, the Company will, upon the request of a Holder or beneficial owner of the Notes, or a holder or beneficial owner of the Common Stock issuable upon the conversion of the Notes, promptly furnish or cause to be furnished to the applicable Holder, beneficial owner, or any prospective purchaser designated by the applicable Holder or beneficial owner of the Notes, or any holder, beneficial owner, or any prospective purchaser designated by the applicable holder or beneficial owner of the Common Stock, as the case may be, all of the information that a prospective purchaser of the Notes or the Common Stock, as the case may be, is required to receive under Rule 144A(d)(4) of the Securities Act for the Notes or shares of Common Stock, as the case may be, to be resold to such prospective purchaser pursuant the exemption from registration provided by Rule 144A.

 

Section 4.03                      Reports. The Company will deliver to the Trustee copies of all quarterly and annual reports that the Company is required to deliver to the SEC on Forms 20-F and 6-K, and any other documents, information or other reports that the Company is required to file with the SEC under Sections 13 or 15(d) of the Exchange Act no later than the time that the Company is required to file such quarterly and annual reports, other documents, information or other reports with the SEC (after giving effect to any grace period provided by Rule 12b-25 under the Exchange Act).  Any document filed by the Company with the SEC via the EDGAR system will be deemed to be delivered to the Trustee at the time such document is filed via the EDGAR system; provided, however, that the Trustee will have no responsibility whatsoever to determine whether the Company has made any filing via the EDGAR system.

 

Delivery of such quarterly and annual reports, and such other documents, information and other reports to the Trustee will be for informational purposes only, and the Trustee's receipt of such will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely conclusively on Officers' Certificates).

 

Section 4.04                      Additional Interest.

 

(a)           General.  If, at any time during the period beginning on, and including, the date that is six months after the Last Original Issue Date and ending on, but not including, the Free Trade Date, the Company fails to timely file (after giving effect to any grace period provided by Rule 12b-25) any document or report that it is required to file with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act, as applicable (other than current reports on Form 6-K), the Company will pay additional interest (the "Additional Interest") on the principal amount of then outstanding Notes. The Additional Interest will accrue from the due date of each such missed filing until the earlier of (i) the Free Trade Date and (ii) the date such failure to file is corrected.

 

  

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In addition, if, and for so long as, the restrictive legend on the Notes has not been removed or either the Notes or the Common Stock issued upon the conversion of the Notes are not Freely Tradable at all times on and after the Free Trade Date (or the next succeeding Business Day if the Free Trade Date is not a Business Day), the Company will pay Additional Interest on the Notes.  Such Additional Interest will accrue on each day during such period on which the Notes or the Common Stock issued upon conversion of the Notes are not Freely Tradable.

 

In each case, the Additional Interest will be payable on the same dates and in the same manner as the stated interest on the Notes and will initially accrue at the rate of 0.25% per annum on the principal amount of then outstanding Notes.  If the Additional Interest accrues for more than 90 consecutive days, the rate at which the Additional Interest accrues will increase to 0.50% per annum on the principal amount of then outstanding Notes beginning on the 91st consecutive day on which it accrues and ending on the last consecutive day on which it continues to accrue. Additional Interest pursuant to the foregoing provisions will be payable in arrears on each Interest Payment Date following accrual in the same manner as regular interest on the Notes.

 

(b)           Notice to Trustee.  If the Company is required to pay Additional Interest on any Note, no later than five Business Days prior to the date on which such Additional Interest is scheduled to be paid, the Company will provide to the Trustee (and if the Trustee is not the Paying Agent, to the Paying Agent) an Officers' Certificate, which Officers' Certificate will state (i) that the Company is obligated to pay Additional Interest pursuant to this Section 4.04, (ii) the amount of such Additional Interest that the Company is required to pay under this Section 4.04, (iii) the amount of such Additional Interest that the Company will pay, (iv) the scheduled date on which such Additional Interest will be paid to Holders and (v) a direction that the Trustee (or, if the Trustee is not the Paying Agent, the Paying Agent) pay such Additional Interest to the extent it receives funds from the Company to do so, on the scheduled payment date for such Additional Interest.  The Trustee will not have any duty or responsibility to any Holder to determine whether any Additional Interest is payable, or, if any Additional Interest is payable, the amount of such Additional Interest that is payable.

 

Section 4.05                      Compliance Certificate

 

(a)           Annual Compliance Certificate.  Within 120 days after the end of each fiscal year of the Company, beginning with the fiscal year ending on December 31, 2010, the Company will deliver to the Trustee an Officers' Certificate, which Officers' Certificate will state (i) that the Officers signing such Officers' Certificate have supervised a review of the activities of the Company and its Subsidiaries with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture during the preceding fiscal year, and (ii) to the best knowledge of each of the Officers signing such Officers' Certificate, (A) whether the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided under this Indenture) or, if one or more Defaults or Events of

 

  

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Default have occurred, what events triggered such Defaults or Events of Default and what actions the Company is taking or proposes to take with respect to such Defaults or Events of Default, and (B) whether any event has occurred and remains in existence by reason of which any payment of the principal of, the Fundamental Change Repurchase Price or the Redemption Price for, or interest on, or any delivery of any of the consideration due upon conversion of, a Note is prohibited, and if any such event has occurred and remains in existence, a description, in reasonable detail, of such event or events and what actions the Company is taking or proposes to take with respect to such event or events.

 

(b)           Certificate of Default or Event of Default.  Within 30 days after a Default occurs, the Company will deliver to the Trustee an Officers' Certificate describing such Default, its status and a description, in reasonable detail, of what action the Company is taking or proposes to take with respect to such Default.

 

Section 4.06                      Restriction on Purchases by the Company and by Affiliates of the Company

 

.  Neither the Company nor any of its Subsidiaries will purchase or otherwise acquire any Notes without canceling such Notes.  In addition, the Company will use commercially reasonable efforts to prevent any affiliate of the Company (as defined in Rule 144) or Person that is not an affiliate (as defined in Rule 144) of the Company but has been an affiliate (as defined in Rule 144) of the Company within the three immediately preceding months from acquiring any Note or any beneficial interest therein. The Notes will be issued with restricted CUSIP numbers. Until such time as the Company notifies the Trustee to remove the restrictive legend from the Notes, the restricted CUSIP numbers will be the CUSIP numbers for the Notes.

 

Section 4.07                      Taxes.  The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders.

 

Section 4.08                      Corporate Existence.   Subject to Article 5 hereof, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect:

 

(a)           its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary; and

 

(b)           the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries;

 

provided, however, that the Company will not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders.

 

Section 4.09                      Par Value Limitation.  The Company will not take any action that, after giving effect to any adjustment pursuant to Section 10.05 or 10.07 hereof, would result in the Conversion Price becoming less than the par value of one share of Common Stock.  In addition, the Company will not adjust the Conversion Rate pursuant to Section 10.06 hereof such that the Conversion Price would be less than the par value of one share of Common Stock.

  

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Section 4.10                      Stay, Extension and Usury Laws.  The Company covenants that, to the extent that it may lawfully do so, it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that 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 covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will instead suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.11                      Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the terms of this Indenture.

 

ARTICLE 5

 

CONSOLIDATION, MERGER AND SALE OF ASSETS

 

Section 5.01                      Company May Consolidate, Merge or Sell Its Assets Only on Certain Terms

 

.  The Company will not, directly or indirectly, (1) consolidate with or merge with or into, or (2) sell, convey, transfer or lease all or substantially all of its properties and assets to, any other Person (any such transaction, a "Reorganization Event"), unless:

 

(a)           either:

 

(i)           the Company is the surviving corporation; or

 

(ii)           the resulting, surviving or transferee Person (if other than the Company) of such Reorganization Event (the "Reorganization Successor Corporation"):

 

(A)           is a corporation organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia; and

 

(B)           expressly assumes, by executing and delivering a supplemental indenture to the Trustee that is reasonably satisfactory in form to the Trustee in accordance with Section 9.03 hereof, all of the obligations of the Company under the Notes and this Indenture;

 

(b)           immediately after giving effect to such Reorganization Event, no Default will have occurred and be continuing; and

 

(c)           prior to the effective date of such Reorganization Event, the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that:

 

(i)           such consolidation, merger, conveyance, sale, transfer or lease and such supplemental indenture comply with Section 5.01(a) hereof; and

 

(ii)           all conditions precedent to such consolidation, merger, conveyance, sale, transfer or lease provided in this Indenture have been satisfied.

 

  

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Section 5.02                      Successor Substituted.  If any Reorganization Event occurs that complies with Section 5.01(a)(ii) and 5.01(b) hereof, and the Company has complied with Section 5.01(c) hereof:

 

(a)           from and after the date of such Reorganization Event, the Reorganization Successor Company for such Reorganization Event will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such Reorganization Successor Company had been named as the Company herein; and

 

(b)           except in the case of a Reorganization Event that is a conveyance, transfer or lease of all or substantially all of the Company's assets, the Person named as the "Company" in the first paragraph of this Indenture or any successor that will thereafter have become such in the manner prescribed in this Article 5 will be released from its obligations under this Indenture and may be dissolved, wound up and liquidated at any time.

 

ARTICLE 6

 

DEFAULTS AND REMEDIES

 

Section 6.01                      Events of Default

 

(a)           General.  Each of the following events will be an "Event of Default":

 

(i)           the Company fails to pay the principal of the Notes (including any Fundamental Change Repurchase Price or Redemption Price) when due at maturity, upon Redemption, repurchase upon a Fundamental Change, declaration of acceleration or otherwise;

 

(ii)           the Company fails to pay any interest when due and such failure continues for a period of 30 days after the applicable due date;

 

(iii)           the Company fails to give any Fundamental Change Notice, Redemption Notice or notice of a Make-Whole Fundamental Change, in each case, when due;

 

(iv)           the Company fails to comply with its obligation to convert a Note in accordance with Article 10 hereof upon a Holder's exercise of its conversion rights with respect to such Note;

 

(v)           the Company fails to comply with its obligations under Article 5 hereof;

 

(vi)           the Company fails to perform or observe any of its covenants or warranties in this Indenture or in the Notes (other than a covenant or agreement specifically addressed in clauses (i) through (v) above) and such failure continues for a period of 30 days after (A) the Company receives notice of such failure from the Trustee or (B) the Company and the Trustee receive notice of such failure from Holders of at least 25% of the aggregate principal amount of then outstanding Notes;

 

(vii)           the default by the Company or any Subsidiary with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed by the Company and/or any Subsidiaries in excess of $10,000,000 in the aggregate, whether such indebtedness exists as of the Issue Date or is later created, if that default:

 

  

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(A)           results in such indebtedness becoming or being declared due and payable (prior to its express maturity); or

 

(B)           constitutes a failure to pay the principal of, or interest on, such indebtedness when due and payable at its stated maturity, upon required repurchase, upon declaration or otherwise;

 

(viii)           the Company fails or any of its Subsidiaries fail to pay one or more final and non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate uninsured or unbonded portion of which is in excess of $20 million, if the judgments are not paid, discharged or stayed within 60 days;

 

(ix)           the Company or any Significant Subsidiary, 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 Custodian of it or for any substantial part of its property;

 

(D)           makes a general assignment for the benefit of its creditors;

 

(E)           takes any comparable action under any foreign laws relating to insolvency; or

 

(F)           generally is not paying its debts as they become due;

 

(x)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(A)           is for relief against Company or any Significant Subsidiary in an involuntary case or proceeding;

 

(B)           appoints a Custodian of against Company or any Significant Subsidiary, or for any substantial part of the property of the Company or any Significant Subsidiary;

 

(C)           orders the winding up or liquidation of the Company or any Significant Subsidiary; or

 

(D)           grants any similar relief under any foreign laws;

 

  

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and, in each such case, the order or decree remains unstayed and in effect for 60 days; or

 

(xi)           the Company fails to convene a shareholder meeting on or prior to March 31, 2011.

 

(b)           Cause Irrelevant.  Each of the events enumerated in Section 6.01(a) hereof will constitute an Event of Default whatever the cause and regardless of whether voluntary or involuntary or 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.

 

Section 6.02                      Acceleration

 

(a)           Automatic Acceleration in Certain Circumstances.  If an Event of Default specified in Sections 6.01(ix) or 6.01(x) hereof occurs with respect to the Company or any Significant Subsidiary, the principal amount of, and all accrued and unpaid interest, if any, on, all of the then outstanding Notes will immediately become due and payable without any further action or notice by any party.

 

(b)           Optional Acceleration.  If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare the principal amount of, and all accrued and unpaid interest, if any, on all then outstanding Notes immediately due and payable by delivering written notice to the Company, and upon such declaration, the principal amount of, and all accrued and unpaid interest, if any, on all then outstanding Notes will immediately become due and payable.

 

(c)           Rescission of Acceleration.  Notwithstanding anything to the contrary in this Indenture, the Holders of a majority of the aggregate principal amount of the then outstanding Notes may, on behalf of the Holders of all of the then outstanding Notes, rescind any acceleration of the Notes and its consequences hereunder by delivering notice to the Trustee if (i) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing Events of Default, other than the nonpayment of the principal of, interest, if any, on, or the Fundamental Change Repurchase Price or the Redemption Price for, the Notes that has become due solely as a result of acceleration, have been cured or waived.  No such rescission will 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, accrued and unpaid interest, if any, or payment of the Fundamental Change Repurchase Price or Redemption Price for, the Notes or to enforce the performance of any provision of the Notes or this Indenture regarding any other matter.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of the Notes in the proceeding.  A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default will not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

 

  

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Section 6.04                      Sole Remedy for Failure to Report.  General.  Notwithstanding anything to the contrary in the Notes or in this Indenture, the Company may elect that the sole remedy for any Event of Default specified in Section 6.01(a)(vi) hereof relating to the Company's failure to file reports with the Trustee as required under Section 4.03(a) hereof (a "Reporting Event of Default") will, for the period beginning on the date on which such Reporting Event of Default first occurred and ending on the earlier of (A) the date on which such Reporting Event of Default is cured or validly waived in accordance with Section 6.05 hereof and (B) the 60th calendar day immediately following the date on which such Reporting Event of Default first occurred, consist of the right to receive additional interest (the "Extension Fee") on the Notes at a rate equal to 0.50% per annum on the principal amount of the then outstanding Notes.  Any Extension Fee will be payable in the same manner and on the same dates as the stated interest payable on the Notes and will accrue in addition to any Additional Interest that the Company is obligated to pay under Section 4.04 hereof.

 

(a)           Limitation on Remedy.  If (i) a Reporting Event of Default occurs and the Company elects that the sole remedy with respect to such Reporting Event of Default will be to pay the Extension Fee and (ii) on the 61st day immediately following, and including, the date on which such Reporting Event of Default first occurred, such Reporting Event of Default has not been cured or validly waived in accordance with Section 6.05 hereof, then the Notes will become subject to acceleration under Section 6.02(a) hereof on account of such Reporting Event of Default.

 

(b)           Company Election Notice.  To elect to pay the Extension Fee as the sole remedy for a Reporting Event of Default, the Company must deliver written notice of such election to the Holders, the Paying Agent and the Trustee prior to the date on which such Reporting Event of Default first occurs.  Any such notice must include a brief description of the report that the Company failed, or will fail, to file, a statement that the Company is electing to pay the Extension Fee and the date on which such Reporting Event of Default will occur.

 

If a Reporting Event of Default occurs and the Company fails to timely deliver such notice for such Reporting Event of Default, the Notes will be subject to acceleration under Section 6.02(a) hereof on account of such Reporting Event of Default and other remedies.

 

(c)           Other Events of Default.  Notwithstanding anything to the contrary herein, if the Company elects to pay the Extension Fee with respect to any Reporting Event of Default, the Company's election will not affect the rights of any Holder with respect to any other Event of Default, including with respect to any other Reporting Event of Default; provided, that, for the avoidance of doubt, in no event will the Company be obligated to pay the Extension Fee at a rate greater than 0.50% per annum on the principal amount of then outstanding Notes.

 

Section 6.05                      Waiver of Past Defaults. If an Event of Default described in Sections 6.01(a)(i), 6.01(a)(ii), 6.01(a)(iii), 6.01(a)(iv) or 6.01(a)(vi) (which, in the case of Section 6.01(a)(vi) only, relates to a covenant that cannot be amended without the consent of each affected Holder) or a Default that would lead to such an Event of Default occurs and is continuing, such Event of Default or Default may be waived only with the consent of each affected Holder.  Every other Event of Default or Default may be waived by the Holders of a majority of the aggregate principal amount of then outstanding Notes.  Whenever any Event of Default is so waived, it will cease to exist, and whenever any Default is so waived, it will be deemed cured and any Event of Default arising therefrom will be deemed not to occur.  However, no such waiver will extend to any subsequent or other Default or Event of Default or impair any consequent right.

 

  

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Section 6.06                      Control by Majority.  At any time, the Holders of a majority of the aggregate principal amount of then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or for 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 hereof, that the Trustee determines to be unduly prejudicial to the rights of a Holder or to the Trustee, or that would potentially involve the Trustee in personal liability unless the Trustee is offered indemnity or security reasonably satisfactory to it against any loss, liability or expense to the Trustee that may result from the Trustee's instituting such proceeding as the Trustee.  Prior to taking any action hereunder, the Trustee will be entitled to indemnification reasonably satisfactory to it against all losses and expenses caused by taking or not taking such action.

 

Section 6.07                      Limitation on Suits.  Except to enforce (i) its rights to receive the principal of, the Fundamental Change Repurchase Price or the Redemption Price for, interest, if any, on, a Note, or (ii) the failure of the Company to comply with its obligations under Article 10 to convert any Note, no Holder may pursue a remedy with respect to this Indenture or the Notes unless:

 

(a)           such Holder has previously delivered to the Trustee written notice that an Event of Default has occurred and is continuing;

 

(b)           the Holders of at least 25% of the aggregate principal amount of then outstanding Notes deliver to the Trustee a written request that the Trustee pursue a remedy with respect to such Event of Default;

 

(c)           such Holder or Holders have offered and, if requested, provided, to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or other expense to the Trustee that may result from complying with such written request;

 

(d)           the Trustee has not complied with such written request within 60 days after receipt of such written request and offer of security or indemnity; and

 

(e)           during such 60-day period, the Holders of a majority of the aggregate principal amount of then outstanding Notes did not deliver to the Trustee a direction inconsistent with such written request.

 

A Holder may not use its rights under this Indenture to prejudice the rights of any other Holder or to obtain a preference or priority over any other Holder, it being understood that the Trustee does not have any affirmative duty to ascertain whether any usage of its rights under this Indenture by a Holder is unduly prejudicial to such other Holders.

 

Section 6.08                      Rights of Holders To Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal of, the Fundamental Change Repurchase Price or the Redemption Price for, accrued and unpaid interest, if any, on, and any consideration due under Article 10 upon conversion of, its Note, on or after the respective due date, or to bring suit for the enforcement of any such payment and/or delivery on or after the respective due date, will not be impaired or affected without the consent of such Holder and will not be subject to the requirements of Section 6.07 hereof.

 

  

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Section 6.09                      Collection Suit by Trustee.  If an Event of Default specified in Section 6.01(a)(i), 6.01(a)(ii), 6.01(a)(iii) or 6.01(a)(iv) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, the Fundamental Change Repurchase Price or the Redemption Price for, and interest, if any, on, the Notes, and, to the extent lawful, any Default Interest on any Defaulted Amounts, and such further amount as is sufficient to cover the costs and expenses of collection provided for under Section 7.06 hereof.

 

Section 6.10                      Trustee May File Proofs of Claim.  The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, will be entitled to collect, receive and distribute any money or other property payable or deliverable on any such claims, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof out of the estate in any such proceeding, will be denied for any reason, payment of the same will be secured by a lien on, and will be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained will be deemed to authorize the Trustee to authorize or consent to, or to accept or to adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.11                      Priorities.  If the Trustee collects any money or property pursuant to this Article 6, it will pay out the money or property in the following order:

 

FIRST:  to the Trustee, its agents and attorneys for amounts due under Section 7.06 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

SECOND:  to the Holders, for any amounts due and unpaid on the principal of, the Fundamental Change Repurchase Price or the Redemption Price for, accrued and unpaid interest on, and any cash due upon the conversion of, any Note, without preference or priority of any kind, according to such amounts due and payable on all of the Notes; and

 

  

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THIRD:  the balance, if any, to the Company or to such other party as a court of competent jurisdiction directs.

 

The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section 6.11.  If the Trustee so fixes a record date and a payment date, at least 15 days prior to such record date, the Company will deliver to each Holder and the Trustee a written notice, which notice will state such record date, such payment date and the amount of such payment.

 

Section 6.12                      Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture 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 reasonable attorneys' fees and expenses, 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 6.12 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.08 hereof or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

 

ARTICLE 7

 

TRUSTEE

 

Section 7.01                      Duties of Trustee 

 

(a)   If an Event of Default has occurred and is continuing, the Trustee will 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.

 

(b)           Except during the continuance of an Event of Default:

 

(i)           the Trustee undertakes to perform such duties, and only such duties, as are specifically set forth in this Indenture, and no implied covenants or obligations will be read into this Indenture against the Trustee; and

 

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.

 

(c)           The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:

 

(i)           this paragraph does not limit the effect of Section 7.01(b) hereof;

 

(ii)           the Trustee will not be liable for any action or failure to act made in good faith by the Trustee unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

  

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(iii)           the Trustee will 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 Sections 12.03 or 12.04 hereof.

 

(d)           Whether herein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Article 7.

 

(e)           The Trustee will not be liable for interest on any money received by it or risk or expend any of its own funds.

 

(f)           Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(g)           No provision of this Indenture will 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 in the exercise of any of its rights or powers.

 

(h)           Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee will be subject to the provisions of this Article 7, and the provisions of this Article 7 will apply to the Trustee, Registrar, Paying Agent and Conversion Agent.

 

(i)           The Trustee will not be deemed to have notice of a Default or an Event of Default unless (i) a Trust Officer of the Trustee has received written notice at its Corporate Trust Office thereof from the Company or any Holder or (ii) a Trust Officer has actual knowledge thereof.

 

Section 7.02                      Rights of Trustee.

 

(a)           The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.  The Trustee may, however, in its discretion make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee determines to make such further inquiry or investigation, it will be entitled to examine the books, records and premises of the Company, personally or by agent or attorney and at the expense of the Company, and will incur no liability of any kind by reason of such inquiry or investigation.  Before the Trustee acts or refrains from acting (except in connection with an application for authorization of Notes pursuant to Section 2.05 hereof), it may require an Officers' Certificate or an Opinion of Counsel or both.  The Trustee will 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.

 

(b)           The Trustee may act through agents, attorneys or custodians and will not be responsible for the misconduct or negligence of any agent, attorney or custodian appointed with due care.

 

(c)           So long as the Trustee's conduct does not constitute willful misconduct or gross negligence, the Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

 

(d)           The Trustee may consult with counsel of its own selection, and the written advice of such counsel or Opinion of Counsel with respect to legal matters relating to this Indenture and the Notes will 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.

 

  

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(e)           The permissive rights of the Trustee to do things enumerated in this Indenture will not be construed as a duty unless so specified herein.

 

(f)           The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.

 

(g)           The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and will be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder, including the Registrar, Paying Agent and Conversion Agent.

 

(h)           The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any Person authorized to sign an Officers' Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.

 

(i)           In no event will the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

Section 7.03                      Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  However, if the Trustee acquires any conflicting interest it must eliminate the conflict within 90 days or resign.  Any Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with like rights.  However, the Trustee must comply with Sections 7.09 and 7.11 hereof.

 

Section 7.04                      Trustee's Disclaimer.  The Trustee will not be responsible for and makes no representation as to the validity, priority or adequacy of this Indenture or the Notes, it will not be accountable for the Company's use of the proceeds from the Notes, and it will not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication.

 

Section 7.05                      Notice of Defaults.  If a Default occurs and is continuing and is known to a Trust Officer of the Trustee, the Trustee will mail to each Holder notice of the Default within 90 days after such Default first occurs, or, if it is not known to the Trustee at such time, as soon as practicable after it is known to a Trust Officer of the Trustee; provided, however, that except in the case of a Default that is, or would lead to an Event of Default, described in Section 6.01(a)(i), 6.01(a)(ii), 6.01(a)(iii) or 6.01(a)(iv) hereof, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of the Holders.

 

  

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Section 7.06                      Compensation and Indemnity

 

(a)           The Company will pay to the Trustee, from time to time, such compensation as will be agreed upon, from time to time, in writing for its services.  The Trustee's compensation will not be limited by any law on compensation of a trustee of an express trust.  The Company will reimburse the Trustee upon request for all reasonable out-of-pocket fees and expenses incurred or made by it, and for all actual costs of collection, in addition to the compensation for its services.  Such expenses will include the compensation, fees and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts.  The Company will fully indemnify the Trustee against any and all loss, liability, claim, damage or expense (including attorneys' fees and expenses) incurred by it in connection with the acceptance and administration of this trust and the performance of its duties hereunder, including the costs and expenses of defending itself against any claim (whether asserted by the Company, any Holder or any other Person).  The Trustee will notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company of any claim for which it may seek indemnity of which a Trust Officer has actually received written notice will not relieve the Company of its obligations hereunder except to the extent such failure is adjudicated by a court of competent jurisdiction to have materially prejudiced the Company.  The Company will defend the claim and the Trustee will cooperate in the defense.  If the Trustee is advised by counsel in writing that it may have available to it defenses that are in conflict with the defenses available to the Company, then the Trustee may have separate counsel, and the Company will 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 willful misconduct or gross negligence.  The Company need not pay for any settlement made by the Trustee without the Company's consent, such consent not to be unreasonably withheld, delayed or conditioned.  All indemnifications and releases from liability granted hereunder to the Trustee will extend to its officers, directors, employees, agents, attorneys, custodians, successors and assigns.

 

(b)           To secure the Company's payment obligations under this Section 7.06, the Trustee will have a lien prior to the Holders on all money or property held or collected by the Trustee, other than money or property held in trust to pay the principal, accrued and unpaid interest, if any, or payment of the Fundamental Change Repurchase Price or Redemption Price on particular Notes.

 

(c)           The Company's payment obligations pursuant to this Section 7.06 will survive the resignation or removal of the Trustee and the discharge of this Indenture.   If the Trustee incurs expenses after the occurrence of a Default specified in Sections 6.01(ix) or 6.01(x) hereof with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

 

  

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Section 7.07                      Replacement of Trustee.

 

(a)           The Trustee may resign at any time by notifying the Company, in writing, at least 30 days prior to the proposed resignation.  The Holders of a majority in aggregate principal amount of then outstanding Notes may remove the Trustee by notifying the Trustee, in writing.  The Company may remove the Trustee if:

 

(i)           the Trustee fails to comply with Section 7.09 hereof;

 

(ii)           the Trustee is adjudged bankrupt or insolvent by a court of competent jurisdiction;

 

(iii)           a court of competent jurisdiction enters an order under any Bankruptcy Law appointing a receiver or other public officer to take charge of the Trustee or its property; or

 

(iv)           the Trustee otherwise becomes incapable of acting.

 

(b)           If the Trustee resigns, is removed by the Company or by the Holders of a majority in aggregate principal amount of the Notes then outstanding, 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 will promptly appoint a successor Trustee.

 

(c)           A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  The resignation of the Trustee shall become effective upon the earlier of 30 days of such resignation or the acceptance by a successor trustee of its appointment.  The removal of the retiring Trustee will become effective upon such acceptance thereupon, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee will mail a notice of its succession to Holders.  The retiring Trustee will, upon payment of all of its costs and the costs of its agents and counsel, promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.06 hereof.

 

(d)           If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

 

(e)           If the Trustee, after written request by any Holder, fails to comply with Section 7.01 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(f)           Notwithstanding the replacement of the Trustee pursuant to this Section 7.07, the Company's obligations under Section 7.06 hereof will continue for the benefit of the retiring Trustee.

 

  

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Section 7.08                      Successor Trustee by Merger

 

(a)           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 or banking association without any further act will be the successor Trustee.

 

(b)           In case at the time such successor or successors by merger, conversion or consolidation to the Trustee succeeds to the trusts created by this Indenture, any of the Notes 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 Notes so authenticated; and, in case at that time any of the Notes have not been authenticated, any such successor to the Trustee may authenticate such Notes, either in the name of any predecessor hereunder or in the name of the successor to the Trustee.

 

Section 7.09                      Eligibility; Disqualification.  The Trustee will have (or, in the case of a corporation included in a bank holding company system, the related bank holding company will have) a combined capital and surplus of at least $100,000,000, as set forth in its (or its related bank holding company's) most recent published annual report of condition.

 

Section 7.10                      Trustee's Application for Instructions from the Company.  Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action will be taken or such omission will be effective.  The Trustee will not be liable to the Company for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date will not be less than three Business Days after the date any Officer actually receives such application, unless any such Officer has consented in writing to any earlier date), unless prior to taking any such action (or the effective date in the case of any omission), the Trustee has received written instructions in response to such application specifying the action to be taken or omitted.

 

ARTICLE 8

 

SATISFACTION AND DISCHARGE

 

Section 8.01                      Discharge of Liability on Notes.  When (a)(i) the Company delivers to the Registrar all outstanding Notes (other than Notes replaced pursuant to Section 2.11 hereof) for cancellation or (ii) all outstanding Notes have become due and payable, and the Company irrevocably deposits with the Trustee or delivers to the Holders, as applicable, cash and/or shares of Common Stock and cash (in lieu of fractional shares of Common Stock) (solely to satisfy amounts due and owing as a result of conversions of the Notes), sufficient to pay all amounts due and owing on all outstanding Notes (other than Notes replaced pursuant to Section 2.11 hereof), (b) the Company pays all other sums payable by it under this Indenture and (c) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all of the applicable conditions precedent to the discharge of this Indenture described in this section have been satisfied, then, subject to Section 7.06 hereof, this Indenture will cease to be of further effect with respect to the Notes and the Holders and the Trustee will acknowledge the satisfaction and discharge of this Indenture with respect to the Notes.

 

  

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Notwithstanding the satisfaction and discharge of this Indenture, (i) any obligation of the Company to any Holder under Article 10 hereof with respect to the conversion of any Note or to the Trustee under Section 7 hereof with respect to compensation or indemnity, and (ii) any obligation of the Trustee with respect to money deposited with the Trustee under this Article 8 and Section 12.02 hereof will survive.

 

Section 8.02                      Repayment to the Company.  Subject to any applicable unclaimed property law, the Trustee and the Paying Agent, upon receiving a written request from the Company, will promptly turn over to the Company any cash or securities, including shares of Common Stock, held for payment on the Notes that remains unclaimed two years after the date on which such payment was due.  After the Trustee and the Paying Agent return such cash and securities, including shares of the Common Stock, to the Company, the Trustee and the Paying Agent will have no further liability to any Holder with respect to such cash and securities, including shares of Common Stock, and any Holder entitled to the payment of such cash or securities, including shares of Common Stock, under the Notes or this Indenture must look to the Company for payment as a general creditor of the Company.

 

 

ARTICLE 9

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

Section 9.01                      Without Consent of Holders.  The Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder:

 

(a)           to add guarantees with respect to the Company's obligations under this Indenture or the Notes;

 

(b)           to secure the Notes;

 

(c)           to provide for the assumption of the Company's obligations under this Indenture and under the Notes by a Reorganization Successor Corporation as described in Article 5 hereof;

 

(d)           to provide for the assumption of the Company's obligations under this Indenture and under the Notes by a Merger Successor Corporation as described in Section 10.08 hereof or to modify the conversion rights of the Holders in accordance with Section 10.08 hereof upon the occurrence of a Merger Event;

 

(e)           to surrender any right or power conferred upon the Company under this Indenture;

 

(f)           to add to the Company's covenants for the benefit of the Holders;

 

(g)           to cure any ambiguity or correct any inconsistency or defect in this Indenture or in the Notes that does not adversely affect Holders;

 

  

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(h)           to comply with any requirement of the SEC in connection with any qualification of this Indenture under the TIA;

 

(i)           to evidence the acceptance of appointment by a successor Trustee with respect to this Indenture;

 

(j)           to comply with the rules of any applicable depositary;

 

(k)           to conform the provisions of this Indenture to the "Description of Notes" section of the Preliminary Offering Memorandum, as supplemented by the Pricing Term Sheet; or

 

(l)           to make any other change; provided that such change individually, or in the aggregate with all other such changes, does not have, and will not have, an adverse effect on the interest of the Holders.

 

Section 9.02                      With Consent of Holders.  With the written consent of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a repurchase of, or tender offer or exchange offer for, Notes), by Act of such Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, may amend or supplement this Indenture or the Notes or waive compliance with any provision of this Indenture or the Notes; provided, however, that, without the consent of each affected Holder, no amendment or supplement to this Indenture or the Notes, or waiver of any provision of this Indenture or the Notes, may:

 

(a)           reduce the principal amount of, or change the Maturity Date of, any Note;

 

(b)           reduce the rate of, or extend the stated time for payment of, interest on any Note, including any Extension Fee;

 

(c)           reduce the Fundamental Change Repurchase Price or the Redemption Price of any Note or change the time at which, or the circumstances under which, the Notes may, or will be, redeemed or repurchased;

 

(d)           impair the right of any Holder to institute suit for any payment on any Note, including with respect to any consideration due upon conversion of a Note;

 

(e)           make any Note payable in a currency other than that stated in the Note;

 

(f)           make any change that impairs or adversely affects the conversion rights of any Holder under Article 10 hereof or otherwise reduces the number of shares of Common Stock, amount of cash or any other property receivable by a Holder upon conversion;

 

(g)           change the ranking of the Notes;

 

(h)           reduce any voting requirements included in this Indenture;

 

(i)           make any change to any amendment, modification or waiver provision of this Indenture that requires the consent of each affected Holder; or

 

  

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(j)           reduce the percentage of the aggregate principal amount of then outstanding Notes whose Holders must consent to an amendment of this Indenture or a waiver of a past default.

 

It will not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it will be sufficient if such consent approves the substance of such proposed amendment.

 

Section 9.03                      Execution of Supplemental Indentures.  Upon the request of the Company, subject to Article 7 hereof, the Trustee will sign any supplemental indenture authorized pursuant to this Article 9 if the amendment contained therein does not affect the rights, duties, liabilities or immunities of the Trustee under this Indenture.  If the supplemental indenture adversely affects the Trustee's rights, duties, liabilities or immunities under this Indenture, then the Trustee may, but need not, sign such supplemental indenture.  In executing any such supplemental indenture, the Trustee will be provided with, and, subject to the provisions of Section 7.01 hereof, will be fully protected in conclusively relying upon, an Officers' Certificate and an Opinion of Counsel stating that such supplemental indenture is authorized and permitted under this Indenture.

 

Section 9.04                      Notices of Supplemental Indentures. After an amendment or supplement to this Indenture or the Notes pursuant to Sections 9.01 or 9.02 hereof becomes effective, the Company will promptly deliver notice to the Trustee, which notice will briefly describe the substance of such amendment or supplement to this Indenture in reasonable detail and state the effective date of such amendment or supplement.  The Company, or the Trustee, at the direction of the Company, will then promptly deliver a copy of such notice to each Holder.  The failure to deliver such notice to each Holder, or any defect in such notice, will not impair or affect the validity of such amendment or supplement to this Indenture.

 

Section 9.05                      Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture under this Article 9:

 

(a)           this Indenture will be modified in accordance therewith;

 

(b)           such supplemental indenture will form a part of this Indenture for all purposes; and

 

(c)           every Holder of Notes theretofore, or thereafter, authenticated and delivered hereunder will be bound thereby.

 

Section 9.06                      Revocation and Effect of Consents, Waivers and Actions

 

(a)           Revocation.  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder, and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note.  However, any such Holder, or subsequent Holder, may revoke in writing the consent as to its Note or portion of a Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective.

 

  

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(b)           Regular Record Dates.  The Company may, but is not obligated to, fix a record date for the purpose of determining the Holders 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 those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, will be entitled to give such consent, to revoke any consent previously given or to take any such action, regardless of whether such Persons continue to be Holders after such record date.  No such consent will be valid or effective for more than 120 days after such record date.

 

(c)           Binding Effect.  After an amendment, supplement or waiver becomes effective, it will bind every applicable Holder.  Any amendment or supplement will become effective in accordance with the terms of the supplemental indenture relating thereto, which will become effective upon the execution thereof by the Trustee.

 

Section 9.07                      Notation on, or Exchange of, Notes.  If any amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of such Note to deliver such Note to the Trustee.  The Trustee may place an appropriate notation on such Note about the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company, in exchange for the Note, will issue and the Trustee will authenticate a new Note that reflects the changed terms.

 

ARTICLE 10

 

CONVERSIONS

 

Section 10.01                                Right To Convert

 

(a)           In General.  Subject to, and upon compliance with, the provisions of this Article 10, until the Close of Business on the Business Day immediately preceding the Maturity Date at any time after the Shareholder Approval Date, a Holder may, at its option, convert all of its Notes, or any portion of its Notes having a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof, into a number of shares of Common Stock and an amount of cash in lieu of fractional shares of Common Stock, all as determined in accordance with Section 10.03 hereof.  Notes may not be converted after the Close of Business on the Business Day immediately preceding the Maturity Date.

 

(b)           Closed Periods.  Notwithstanding anything to the contrary in this Indenture, (i) if the Company calls the Notes for redemption in accordance with Article 11 hereof, a Holder may not convert its Notes after the Close of Business on the Business Day immediately preceding the applicable Redemption Date except to the extent the Company fails to pay the Redemption Price for such Notes in accordance with Section 11.05 hereof, and (ii) if a Holder tenders a Repurchase Notice with respect to its Notes in accordance with Article 3 hereof, such Notes may not be converted except to the extent (A) such Notes are not subject to such Repurchase Notice; (B) such Repurchase Notice is withdrawn in accordance with Article 3 hereof; or (C) the Company fails to pay the Fundamental Change Repurchase for such Notes in accordance with Section 3.08 hereof.

 

  

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(c)           Shareholder Approval.  Notwithstanding anything to the contrary in this Indenture, Holders of the Notes may not convert any Notes if: (i) the shareholder approval required under the Company's Memorandum of Association has not been obtained or (ii) the issuance of such shares will require a shareholder approval pursuant to Rule 5635(d) of the listing rules of The NASDAQ Global Market.

 

Section 10.02                                Conversion Procedures

 

(a)           General.  To exercise its conversion right with respect to a beneficial interest in a Global Note, the owner of such beneficial interest must (i) comply with the Applicable Procedures for converting such beneficial interest; (ii) pay any funds equal to interest payable on the next Interest Payment Date that such Holder is required to pay under clause (d) of this Section 10.02; and (iii) pay any taxes or duties that such Holder is required to pay under the proviso to clause (e) of this Section 10.02.

 

To exercise its conversion right with respect to a Definitive Note, the Holder of such Note must (i) complete and manually sign the conversion notice on the back of the Note, or a facsimile of such conversion notice (such notice, or such facsimile, the "Conversion Notice"); (ii) deliver such signed and completed Conversion Notice and such Note to the Conversion Agent at its office; (iii) furnish any endorsements and transfer documents that the Company, Conversion Agent, Trustee or Transfer Agent may require; (iv) pay any funds equal to interest payable on the next Interest Payment Date that such Holder is required to pay under clause (d) of this Section 10.02; and (v) pay any taxes or duties that such Holder is required to pay under the proviso to clause (e) of this Section 10.02.

 

The first Business Day on which a Holder satisfies the foregoing requirements with respect to a Note and on which conversion of such Note is not otherwise prohibited under this Indenture will be the "Conversion Date" for such Note.

 

The conversion of any Note will be deemed to occur at the Close of Business on the Conversion Date for such Note, and any converted Note or portion thereof will cease to be outstanding upon conversion.

 

(b)           Holder of Record.  If a Holder surrenders the entire principal amount of a Note for conversion, such Person will no longer be the Holder of such Note as of the Close of Business on the Conversion Date for such Note.

 

If any shares of Common Stock are issuable upon the conversion of a Note, the Person in whose name such shares of Common Stock will be registered will become the holder of record of such shares of Common Stock at the Close of Business on the Conversion Date for such Note.

 

(c)           Conversions in Part.  If a Holder surrenders only a portion of the principal amount of a Definitive Note for conversion, promptly after the Conversion Date for such portion, the Company will, in accordance with Section 2.05 hereof, execute and deliver to the Trustee, and the Trustee will, upon receipt of a Company Order, in accordance with Section 2.05 hereof, authenticate and deliver to such Holder a new Definitive Note in an authorized denomination, having a principal amount equal to the aggregate principal amount of the unconverted portion of the Definitive Note surrendered for conversion and bearing registration numbers not contemporaneously outstanding and any restrictive legends that such Definitive Note must bear under Section 2.10 hereof.

 

  

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Upon the conversion of any beneficial interest in a Global Note, the Conversion Agent will promptly request that the Trustee make a notation on the "Schedule of Increases and Decreases of Global Note" of such Global Note to reduce the principal amount represented by such Global Note by the principal amount of the converted beneficial interest.  If all of the beneficial interests in a Global Note are so converted, such Global Note will be deemed surrendered to the Trustee for cancellation, and the Trustee will cause such Global Note to be cancelled in accordance with the Applicable Procedures.

 

(d)            Reimbursement of Interest upon Conversion.  If a Holder converts a Note after the Close of Business on a Regular Record Date, but prior to the Open of Business on the Interest Payment Date corresponding to such Regular Record Date, such Holder must accompany such Note with an amount of cash equal to the amount of interest that will be payable on such Note on the next succeeding Interest Payment Date; provided, however, that a Holder need not make such payment (A) for conversions following the Regular Record Date immediately preceding the Maturity Date; (B) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the Business Day immediately following the corresponding Interest Payment Date and the Holder converts its Note after the Close of Business on such Regular Record Date and on or prior to the Open of Business on such Interest Payment Date; (C) if the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the Business Day immediately following the Interest Payment Date corresponding to such Regular Record Date and such Holder surrenders such Note for conversion after such Regular Record Date and prior to the Open of Business on the corresponding Interest Payment Date; or (D) to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to such Note.

 

(e)           Taxes and Duties. If a Holder converts a Note, the Company will pay any documentary, stamp  or similar issue or transfer tax due on the issue of any shares of the Common Stock upon the conversion; provided, however, that if any tax is due because the converting Holder requested that shares of Common Stock be issued in a name other than its own, such Holder will pay such tax and the Conversion Agent, until having received a sum sufficient to pay such tax, may refuse to deliver any certificates representing the shares of Common Stock being issued in a name other than that of such Holder.

 

(f)           Notices.  Whenever a Conversion Date occurs with respect to a Note, the Conversion Agent will, as promptly as possible, and in no event later than the Business Day immediately following such Conversion Date, deliver to the Company and the Trustee notice that a Conversion Date has occurred, which notice will state such Conversion Date, the principal amount of Notes converted on such Conversion Date and the names of the Holders that converted Notes on such Conversion Date.

 

(g)           Withdrawal of Repurchase Notice.  If a Holder has already delivered a Repurchase Notice as described under Section 3.02 with respect to a Note, the Holder may not surrender that Note for conversion until the Holder has withdrawn the notice in accordance with this Indenture.

 

  

58

  

Section 10.03                                Conversion Obligation.

 

(a)           Conversion Obligation.  Except as set forth in Sections 10.07 and 10.08 hereof, if a Holder surrenders all or a portion of a Note for conversion, the Company will deliver to such Holder, on the third Business Day immediately following the Conversion Date for such Note, (i) a number of shares of Common Stock equal to the product of (A)(x) the principal amount of such Note to be converted divided by (y) $1,000 and (B) the Conversion Rate in effect on such Conversion Date, rounded down to the nearest whole number, and (ii) an amount of cash equal to the product of (A) the fraction of a share of Common Stock eliminated by such rounding and (B) the Last Reported Sale Price of the Common Stock on such Conversion Date.

 

(b)           Conversion of Multiple Notes by a Single Holder.  If a Holder converts more than one Note on a single Conversion Date, the number of shares of Common Stock that the Company will deliver to the converting Holder, and the amount of cash that the Company will pay to such Holder in lieu of fractional shares of Common Stock, will be computed based on the total principal amount of Notes converted on such Conversion Date by such Holder.

 

(c)           Settlement of Accrued Interest and Deemed Payment of Principal.  If a Holder converts a Note, the Company will not adjust the Conversion Rate to account for any accrued and unpaid interest on the Note, and the Company's delivery of the number of shares of Common Stock and the amount of cash, if any, into which a Note is convertible will be deemed to satisfy and discharge in full the Company's obligation to pay the principal of such Note and accrued and unpaid interest, if any, on, such Note to, but excluding the Conversion Date; provided, however, that if a Holder converts a Note after a Regular Record Date and prior to the Open of Business on the corresponding Interest Payment Date, the Company will still be obligated to pay the interest due on such Interest Payment Date to the Holder of such Note as of the Close of Business on such Regular Record Date

 

As a result, except as otherwise provided in the proviso to the immediately preceding sentence, any accrued and unpaid interest with respect to a converted Note will be deemed to be paid in full rather than cancelled, extinguished or forfeited.  In addition, if both cash and shares of the Common Stock are delivered upon the conversion of a Note, accrued and unpaid interest will be deemed to be paid first out of the amount of cash so delivered.

 

Section 10.04                                Common Stock Issued Upon Conversion.

 

(a)                      Prior to issuing any shares of Common Stock under this Article 10, and from time to time thereafter as may be necessary, the Company will reserve out of its authorized but unissued shares of Common Stock a number of shares of Common Stock sufficient to permit the conversion of the Notes.

 

(b)           Any shares of Common Stock delivered upon the conversion of the Notes will be newly issued shares or treasury shares, duly and validly issued, fully paid, nonassessable, free from preemptive rights and free of any lien or adverse claim (except to the extent of any lien or adverse claim created by the action or inaction of the Holder or other Person to whom such shares of Common Stock will be delivered).  In addition, the Company will endeavor to comply promptly with all federal and state securities laws regulating the offer and delivery of any shares of Common Stock issuable upon conversion of the Notes; provided that the Company will not be obligated to register the offer and sale of such Common Stock under the Securities Act or any other applicable securities laws.   The Company will also use commercially reasonable efforts to cause any shares of Common Stock issuable upon conversion of a Note to be listed on whatever stock exchange(s) the Common Stock is listed on the date the converting Holder becomes a record holder of such Common Stock.

 

  

59

  

(c)           If any shares of the Common Stock issued upon conversion will, upon delivery as part of the conversion obligation, be "restricted securities" (within the meaning of Rule 144 or any successor provision in effect at such time), such shares of Common Stock (i) will be issued in physical, certificated form; (ii) will not be held in book-entry form through the facilities of the Depositary; and (iii) will bear any restrictive legends the Company or the Transfer Agent deem necessary to comply with applicable law.

 

Section 10.05                                Adjustment of Conversion Rate

 

The Company will adjust the Conversion Rate from time to time as described in this Section 10.05, except that the Company will not make an adjustment to the Conversion Rate if each Holder participates (other than in a share split or share combination), at the same time and upon the same terms as holders of the Common Stock, and solely as a result of holding the Notes, in the relevant transaction described in this Section 10.05 without having to convert its Notes and as if it held number of shares of the Common Stock equal to the product of (i) the Conversion Rate in effect on the applicable record date, Effective Date or expiration date, and (ii) the aggregate principal amount of Notes held by such Holder (express in thousands) on such date, rounded up to the nearest whole number.

 

(a)           Stock Dividends and Share Splits.  If the Company exclusively issues to all or substantially all holders of the Common Stock shares of Common Stock as a dividend or distribution on shares of the outstanding Common Stock, or if the Company effects a share split of the Common Stock or a share combination of the Common Stock, the Conversion Rate will be adjusted based on the following formula:

 

where

 

CR0           =           the Conversion Rate in effect immediately prior to the Close of Business on the record date of such dividend or distribution, or immediately prior to the Open of Business on the Effective Date of such share split or share combination, as applicable;

 

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on such record date or the Open of Business on such Effective Date;

 

  

60

  

	
  

	
OS0

	
=

	
the number of shares of Common Stock outstanding immediately prior to the Close of Business on such record date or the Open of Business on such Effective Date; and

 

	
  

	
OS1

	
=

	
the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

 

Any adjustment made under this Section 10.05(a) shall become effective immediately after the Close of Business on the record date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination. If any dividend or distribution of the type described in this Section 10.05(a) is declared, but not so paid or made, the Conversion Rate will be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or announced.

 

(b)           Rights, Options and Warrants.  If the Company issues to all or substantially all holders of its outstanding Common Stock rights, options or warrants entitling such holders for a period of not more than 60 calendar days after the record date of such issuance to subscribe for, or purchase, shares of Common Stock, at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate will be increased based on the following formula:

 

where

 

	
  

	
CR0

	
=

	
the Conversion Rate in effect immediately prior to the Close of Business on the record date for such issuance;

 

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on such record date;

 

	
  

	
OS0

	
=

	
the number of shares of Common Stock outstanding immediately prior to the Close of Business on such record date;

 

	
  

	
X

	
=

	
the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and

 

	
  

	
Y

	
=

	
the number of shares of Common Stock equal to the quotient of (i) the aggregate price payable to exercise such rights, options or warrants, over (ii) the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

 

  

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Any increase made under this Section 10.05(b) will be made successively whenever any such rights, options or warrants are issued.  To the extent that shares of Common Stock are not delivered after the expiration of such rights, options or warrants, including because the issued rights, options or warrants were not exercised, the Conversion Rate will be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, the Conversion Rate will be decreased to the Conversion Rate that would then be in effect if the record date for such issuance had not occurred.

 

For purposes of this Section 10.05(b), in determining whether any rights, options or warrants entitle holders of the Common Stock to subscribe for, or purchase, shares of Common Stock at a price less than the average of the Last Reported Sale Prices of Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement for an issuance, and in determining the aggregate offering price of such shares of Common Stock, there will be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

 

(c)           Spin-Offs and Other Distributed Property.

 

(i)           If the Company distributes shares of its Capital Stock, evidences of its indebtedness or other assets or property of the Company, or rights, options or warrants to acquire Capital Stock of the Company or other securities, to all or substantially all holders of the Common Stock, excluding:

 

(A)           dividends, distributions, rights, options or warrants for which an adjustment was effected pursuant to Section 10.05(a) hereof or Section 10.05(b) hereof, as applicable;

 

(B)           dividends or distributions paid exclusively in cash for which an adjustment was effected pursuant to Section 10.05(d) hereof; and

 

(C)           Spin-Offs for which the provisions set forth in Section 10.04(c)(ii) hereof will apply,

 

then the Conversion Rate will be adjusted based on the following formula:

 

where

 

	
  

	
CR0

	
=

	
the Conversion Rate in effect immediately prior to the Close of Business on the record date for such distribution;

 

  

62

  

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on such record date;

 

	
  

	
SP0

	
=

	
the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

 

	
  

	
FMV

	
=

	
the fair market value (as determined by the Company's Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants distributed with respect to each outstanding share of Common Stock on the Ex-Dividend Date for such distribution.

 

Notwithstanding the foregoing, if "FMV" (as defined above) is equal to or greater than the "SP0" (as defined above), in lieu of the foregoing increase, each Holder will receive, for each $1,000 principal amount of Notes held on the record date for the distribution, at the same time and upon the same terms as holders of the Common Stock, the amount and kind of shares of Capital Stock, evidences of indebtedness, assets or property, rights, options or warrants or other securities that such Holder would have received if such Holder had owned a number of shares of Common Stock equal to the Conversion Rate in effect on the record date for such distribution.

 

Any increase made under this Section 10.05(c) will become effective immediately after the Close of Business on the record date for such distribution. If such distribution is not so paid or made, or if any rights, options or warrants are not exercised before their expiration date, the Conversion Rate will be decreased to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

(ii)           With respect to an adjustment pursuant to this Section 10.05(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to an Affiliate, a Subsidiary or other business unit of the Company, and such Capital Stock or similar equity interest is listed or quoted (or will be listed or quoted upon the consummation of the transaction) on a national securities exchange or a reasonably comparable non-U.S. equivalent (a "Spin-Off"), the Conversion Rate will be increased based on the following formula:

 

where

 

	
  

	
CR0

	
=

	
the Conversion Rate in effect immediately prior to the Close of Business on the last Trading Day of the Valuation Period for such Spin-Off;

 

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on the last Trading Day of the Valuation Period for such Spin-Off;

 

  

63

  

	
  

	
FMV0

	
=

	
the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of Common Stock (determined for purposes of the definition of Last Reported Sale Price as if such Capital Stock or similar equity interest were the Common Stock) over the first 10 consecutive Trading Day period after, and including, the effective date of the Spin-Off (the "Valuation Period"); and

 

	
  

	
MP0

	
=

	
the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.

 

The adjustment to the Conversion Rate under this Section 10.05(c)(ii) will be given effect immediately after the Close of Business on the last Trading Day of the Valuation Period; provided that if the Conversion Date for a Note occurs after the record date for a Spin-Off, but on or prior to the first Trading Day of the Valuation Period for such Spin-off, the Conversion Date will be postponed until the Business Day immediately following such Trading Day (and the definition of "FMV0" will be modified pursuant to the immediately following proviso); and provided, further, that if the Conversion Date for a Note occurs after the first Trading Day of the Valuation Period for a Spin-Off, but on or before the last Trading Day of such Valuation Period, the reference in the above definition of "FMV0" to "10" will be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the effective date of such Spin-Off to, but excluding, such Conversion Date.

 

For the purposes of this Section 10.05(c) and subsections (a) and (b) of this Section 10.05, any dividend or distribution to which this Section 10.05(c) applies and which dividend or distribution also includes one or both of:

 

(A)           a dividend or distribution of shares of Common Stock to which Section 10.05(a) hereof applies (a "Clause A Distribution"); or

 

(B)           a dividend or distribution of rights, options or warrants to which Section 10.05(b) hereof applies (a "Clause B Distribution");

 

(any such distribution, a "Multi-Clause Distribution") then (i) the portion of such Multi-Clause Distribution that is not a Clause A Distribution or a Clause B Distribution will be deemed to be a dividend or distribution to which this Section 10.05(c) applies (a "Clause C Distribution"), and any Conversion Rate adjustment required by this Section 10.05(c) with respect to such Clause C Distribution will be made, without considering any shares of Common Stock issuable as part of the portion of such Multi-Clause Distribution that is a Clause A Distribution or a Clause B Distribution, as applicable, (ii) the portion of such Multi-Clause Distribution that is a Clause B Distribution, if any, will be deemed to be distributed immediately following the Clause C Distribution, and any Conversion Rate adjustment required by Section 10.05(b) hereof with respect to such Clause B Distribution will be made, with any shares of Common Stock issuable as part of the portion of such Multi-Clause Distribution that is a Clause C Distribution deemed to

 

  

64

  

be "outstanding immediately prior to the Open of Business on such record date" for the purposes of making such adjustment and (iii) the portion of such Multi-Clause Distribution that is a Clause A Distribution, if any, will be deemed to be distributed immediately following the Clause B Distribution or Clause C Distribution, as the case may be, and any Conversion Rate adjustment required by Section 10.05(a) hereof with respect to such Clause A Distribution will be made, with any shares of Common Stock issuable as part of the portion of such Multi-Clause Distribution that is either a Clause C Distribution or a Clause B Distribution deemed to be "outstanding immediately prior to the Open of Business on such record date or the Open of Business on such Effective Date" for the purposes of making such adjustment.

 

(d)           Cash Dividends or Distributions.  If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate will be increased based on the following formula:

 

 

where

 

	
  

	
CR0

	
=

	
the Conversion Rate in effect immediately prior to the Close of Business on the record date for such dividend or distribution;

 

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on the record date for such dividend or distribution;

 

	
  

	
SP0

	
=

	
the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and

 

	
  

	
C

	
=

	
the amount in cash per share the Company distributes to holders of Common Stock.

 

Such an increase shall become effective immediately after the Close of Business on the record date for such dividend or distribution. Notwithstanding the foregoing, if "C" (as defined above) is equal to or greater than "SP0" (as defined above), in lieu of the foregoing increase, each Holder will receive, for each $1,000 principal amount of Notes held on the record date for such cash dividend or distribution, at the same time and upon the same terms as holders of the Common Stock, the amount of cash that such Holder would have received if such Holder had owned a number of shares of Common Stock equal to the Conversion Rate in effect on such record date.  If any such dividend or distribution is declared but not so paid or made, the Conversion Rate will be decreased to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

(e)           Tender Offers or Exchange Offers.   If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender offer or exchange offer (as it may be amended), the Conversion Rate will be increased based on the following formula:

 

  

65

  

 

 

where

 

	
  

	
CR0

	
=

	
the Conversion Rate in effect immediately prior to the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

 

	
  

	
CR1

	
=

	
the Conversion Rate in effect immediately after the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

 

	
  

	
AC

	
=

	
the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares purchased in such tender or exchange offer;

 

	
  

	
OS0

	
=

	
the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer);

 

	
  

	
OS1

	
=

	
the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); and

 

	
  

	
SP1

	
=

	
the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on the Trading Day next succeeding the date such tender or exchange offer expires.

 

           If, however, the Conversion Date for a Note occurs on or after the date on which a tender or exchange offer expires, and on or prior to the Trading Day next succeeding the date such tender or exchange offer expires, the Conversion Date for such note will be postponed until the first Business Day immediately following such Trading Day (and the reference in the definition of "SP1" to "10" and the references in the definitions of "CR0" and "CR1" to 10th" will be modified pursuant to the immediately following proviso); provided, further, that if the Conversion Date for a Note occurs after the first Trading Day during the 10 Trading Days immediately following, and including, the Trading Day next succeeding the date a tender or exchange offer expires, but on or prior to the last Trading Day of such period, the reference in the above definition of "SP1" to "10" and the references in the above definitions of "CR0" and "CR1" to "10th" will be deemed replaced with references to such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the date such tender or exchange offer expires to, but excluding such Conversion Date.

 

  

66

  

 

(f)           Successive Adjustments.  After an adjustment to the Conversion Rate under this Article 10, any subsequent event requiring an adjustment under this Article 10 will cause an adjustment to the Conversion Rate as so adjusted, without duplication.

 

(g)           Adjustments Not Yet Effective.  If a Holder converts a Note and, as of the Conversion Date for such Note, any distribution or transaction that requires an adjustment to the Conversion Rate pursuant to Sections 10.05(a) through (e) hereof has occurred but has not yet resulted in an adjustment to the Conversion Rate and the shares of Common Stock that such Holder will receive upon settlement of its converted Note are not entitled to participate in the relevant distribution or transaction (because they were not held on a related record date or otherwise), then the Company will adjust the number of shares of Common Stock that it delivers to such Holder to reflect the relevant distribution or transaction.

 

(h)           Shareholder Rights Plans.  If the Company adopts a rights plan and such rights plan is in effect when a Holder converts a Note, the Company will deliver to such Holder, in addition to each share of Common Stock otherwise issuable to such Holder upon conversion of such Note, any rights that, under the rights plan, would be applicable to a share of Common Stock, unless prior to the Conversion Date for such Note, the rights have separated from the Common Stock, in which case, and only in such case, the Conversion Rate will be adjusted pursuant to Section 10.05(c)(i) as if, at the time of such separation, the Company had distributed to all holders of the Common Stock shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock, subject to readjustment in the event of the expiration, termination or redemption of such rights.

 

(i)           Other Adjustments.  Whenever any provision of this Indenture requires the calculation of the Last Reported Sale Price or a function thereof over a span of multiple days, the Company will make appropriate adjustments to the Last Reported Sale Price or such function thereof to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend date, Effective Date or expiration date of the event occurs at any time during the period when the Last Reported Sale Prices or functions thereof are to be calculated.  In addition, if the Ex-Dividend date, Effective Date or expiration date for any event requiring an adjustment to the Conversion Rate occurs before the date on which the Last Reported Sale Price or function thereof is to be calculated, but the event does not give rise to an adjustment to the Conversion Rate until after such date, the Company will make appropriate adjustments to the relevant calculation to account for such event.

 

(j)           Restrictions on Adjustments.  Except as a result of a share split, share combination, or readjustment resulting from dividends or distributions having been declared but not paid or made, readjustments resulting from distributed rights, options or warrants not being exercised prior to their expiration or termination and readjustments resulting from distributions or deemed distributions of contingent rights, options or warrants that were redeemed or repurchased without being exercised prior to their expiration or termination, in no event will the Conversion Rate be adjusted downward pursuant to Sections 10.05(a), (b), (c), (d) or (e) hereof.

 

  

67

  

In addition, notwithstanding anything to the contrary elsewhere in this Indenture, the Conversion Rate will not be adjusted:

 

(i)           upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company's securities and the investment of additional optional amounts in shares of Common Stock under any plan;

 

(ii)           upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, the Company or any of its Subsidiaries;

 

(iii)           upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding clause and outstanding as of the date of the Issue Date;

 

(iv)           for a change in the par value of the Common Stock; or

 

(v)           for accrued and unpaid interest.

 

(k)           Deferral of Adjustments.  The Company may defer any adjustment to the Conversion Rate unless such adjustment would increase or decrease the Conversion Rate by at least 1% of the Conversion Rate in effect at the time the Company would otherwise be required to make such adjustment; provided, however, that if the Company defers an adjustment pursuant to this Section 10.05(k), then the Company must carry forward such adjustment and take it into account in any future adjustment.  Notwithstanding the foregoing, (i) upon the Conversion Date for any Note and (ii) on each annual anniversary of the Issue Date, the Company will give effect to all adjustments that it has otherwise been deferred pursuant to this Section 10.05(k), and those adjustments will no longer be carried forward and taken into account in any future adjustment.

 

(l)           Miscellaneous.

 

(i)           Certain Definitions.

 

(A)           For purposes of this Section 10.05, (1) the number of shares outstanding at any time will include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock, but, (2) so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, will not include shares of Common Stock held in the treasury of the Company.

 

(B)           For purposes of this Section 10.05, the term "Effective Date" will mean the first date on which the Common Stock trades on the applicable exchange or in the applicable market, regular way, reflecting the transaction.

 

(C)           For purposes of this Section 10.05, the term "Ex-Dividend Date" will mean the first date on which the shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question.

 

  

68

  

(ii)           Notices.  Upon the public announcement of any event that will require the Company to make an adjustment to the Conversion Rate pursuant to this Section 10.05, the Company will deliver to each Holder a written notice, which notice will include (i) a brief description of such event, (ii) the date on which the Company anticipates that such event will occur, (iii) the date on which the Company anticipates that the adjustment to the Conversion Rate will become effective, and (iv) if any record date, expiration date, Ex-Dividend date or Effective Date is applicable to such event, such record date, expiration date, Ex-Dividend date or Effective Date.  Neither the failure to give such notice, nor any defect therein, will affect the legality or validity of such action by the Company.

 

Whenever the Company adjusts the Conversion Rate pursuant to this Section 10.05, the Company will promptly deliver to each Holder a written notice, which notice will include (i) a brief description of the event requiring adjustment to the Conversion Rate pursuant to this Section 10.05, (ii) the effective date of such adjustment, (iii) the Conversion Rate in effect after such adjustment is made and (iv) a schedule explaining, in reasonable detail, how the Company calculated such adjustment. On the same day the Company delivers such notice to each Holder, the Company will deliver to the Trustee, the Paying Agent and the Conversion Agent an Officers' Certificate that includes all of the information contained in such notice, which Officers' Certificate each of the Trustee, the Paying Agent and the Conversion Agent may treat as conclusive evidence that the adjustment specified in such Officers' Certificate is correct and will be in effect as of the effective date specified in such Officers' Certificate.  The failure to deliver such notice will not affect the legality or validity of any such adjustment.

 

Section 10.06                                Voluntary Adjustments

 

(a)           Best Interest Increases.  Subject to the limitations of Section 10.10 hereof, the Company may, from time to time, to the extent permitted by law, increase the Conversion Rate by any amount if (i) the Board of Directors determines that such increase is in the best interest of the Company, (ii) such increase is in effect for a period of at least 20 Business Days, and (iii) during such period, such increase is irrevocable.

 

(b)           Tax-Related Increases.  Subject to the limitations of Section 10.10 hereof, the Company may (but is not required to) increase the Conversion Rate if the Board of Directors determines that such increase is advisable to avoid, or diminish, any income tax imposed on holders of the Common Stock or rights to purchase the Common Stock as a result of any dividend or distribution of shares (or rights to acquire shares) or similar event treated as such for U.S. federal income tax purposes.

 

(c)           Notices.  Whenever the Board of Directors determines that the Company will increase the Conversion Rate pursuant to this Section 10.06, the Company will mail to each Holder notice of such increase at least 15 Business Days before such increase will take effect, which notice will state the increase to be made and the period during which such increase will be in effect.

 

  

69

  

Section 10.07                                Adjustments Upon Certain Fundamental Changes

 

(a)           General.  If (i) a Fundamental Change (determined after giving effect to the paragraph immediately following clause (v) of the definition thereof, but without regard to the exclusion in clause (ii)(B) of the definition thereof) occurs or (ii) the Company calls the Notes for redemption pursuant to Article 11 (either such event, a "Make-Whole Fundamental Change"), and a Holder converts its Notes in connection with such Make-Whole Fundamental Change, the Company will, in the circumstances described in this Section 10.07, increase the Conversion Rate for such Notes by the number of additional shares of Common Stock (the "Additional Shares") described in this Section 10.07.  For purposes of this Section 10.07, a conversion of Notes will be deemed to be "in connection with":

 

(i)           a Make-Whole Fundamental Change described in clause (i) of the definition of "Make-Whole Fundamental Change" if the Conversion Notice for such Notes is received by the Conversion Agent during the period beginning on, and including, the Make-Whole Fundamental Change Effective Date for such Make-Whole Fundamental Change and ending on, and including, the Business Day immediately preceding the Fundamental Change Repurchase Date for such Fundamental Change and, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the exclusion in clause (ii) of the definition thereof, the Close of Business on the 35th Business Day immediately following the Make-Whole Fundamental Change Effective Date for such Make-Whole Fundamental Change; and

 

(ii)           a Make-Whole Fundamental Change described in clause (ii) of the definition of "Make-Whole Fundamental Change" if the Conversion Notice for such Notes is received by the Conversion Agent during the period beginning on, and including, the Make-Whole Fundamental Change Effective Date for such Make-Whole Fundamental Change and ending on the Close of Business on the Business Day immediately preceding the relevant Redemption Date.

 

No later than 10 Business Days immediately prior to the anticipated effective date of a Make-Whole Fundamental Change described in clause (i) of the definition of Make-Whole Fundamental Change contained in this Section 10.07, the Company will notify the Holders of such anticipated effective date and issue a press release announcing such anticipated effective date; provided, however, that if the Company does not have knowledge of such Make-Whole Fundamental Change or its anticipated effective date at such time, the Company will issue such press release as promptly as practicable following the date on which it becomes aware of such Make-Whole Fundamental Change and its anticipated effective date, but in no event later than the third Business Day immediately following the actual Make-Whole Fundamental Change Effective Date.

 

(b)           Determination of Additional Shares.  The number of Additional Shares by which the Conversion Rate will be increased if a Holder converts a Note in connection with a Make-Whole Fundamental Change will be determined by reference to the table below, and will be based on the Make-Whole Fundamental Change Effective Date and the Stock Price for such Make-Whole Fundamental Change.  For any Make-Whole Fundamental 

 

  

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Change, the "Make-Whole Fundamental Change Effective Date" will mean, (i) if such Make-Whole Fundamental Change is of the type described in clause (i) of the definition of Make-Whole Fundamental Change contained in Section 10.07(a) hereof, the effective date of such Make-Whole Fundamental Change, and (ii) if such Make-Whole Fundamental Change is of the type described in clause (ii) of the definition of Make-Whole Fundamental Change contained in Section 10.07(a) hereof, the applicable Redemption Notice Date.

 

(c)           Adjustment of Stock Prices and Additional Shares.  The Stock Prices set forth in the first row (i.e., the column headers) of the table below will be adjusted on each date on which the Conversion Rate must be adjusted pursuant to Section 10.05.  The adjusted Stock Prices will equal the Stock Prices in effect immediately prior to such adjustment, multiplied by a fraction, (i) the numerator of which is the Conversion Rate in effect immediately prior to the adjustment giving rise to the share price adjustment, and (ii) the denominator of which is the Conversion Rate in effect immediately after the adjustment.  The numbers of Additional Shares set forth in the table below will be adjusted in the same manner, at the same time and for the same events for which the Conversion Rate is adjusted pursuant to Section 10.05 hereof.

 

(d)           Additional Shares Table.  The following table sets forth hypothetical Make-Whole Fundamental Change Effective Dates, Stock Prices and the number of Additional Shares by which the Conversion Rate will be increased per $1,000 principal amount of Notes for a Holder that converts a Note in connection with a Make-Whole Fundamental Change having such Make-Whole Fundamental Change Effective Date and Stock Price.

 

	  	

Stock Price

	

Effective Date

	
$6.13

	
$6.50

	
$7.51

	
$9.00

	
$11.00

	
$14.00

	
$17.00

	
$20.00

	
$25.00

	
$30.00

	
$35.00

	
December 23, 2010

	
29.963

	
29.908

	
28.615

	
27.415

	
19.044

	
11.980

	
8.055

	
5.690

	
3.522

	
2.501

	
0.000

	
January 15, 2012

	
29.963

	
28.523

	
26.618

	
25.933

	
17.733

	
11.009

	
7.369

	
5.215

	
3.274

	
2.377

	
0.000

	
January 15, 2013

	
29.963

	
27.139

	
24.621

	
23.855

	
15.945

	
9.729

	
6.491

	
4.625

	
2.982

	
2.248

	
0.000

	
January 15, 2014

	
29.963

	
25.754

	
22.623

	
20.342

	
13.353

	
7.951

	
5.321

	
3.867

	
2.629

	
2.105

	
0.000

	
January 15, 2015

	
29.963

	
24.369

	
20.626

	
16.070

	
9.630

	
5.572

	
3.861

	
2.982

	
2.259

	
1.998

	
0.000

	
January 15, 2016

	
29.963

	
22.985

	
17.297

	
8.809

	
4.326

	
2.640

	
2.256

	
2.095

	
1.940

	
1.993

	
0.000

	
January 15, 2017

	
29.963

	
20.677

	
0.000

	
0.000

	
0.000

	
0.000

	
0.000

	
0.000

	
0.000

	
0.000

	
0.000

 

(e)           Use of Additional Shares Table.  If the Stock Price and/or Make-Whole Fundamental Change Effective Date for a Make-Whole Fundamental Change are not set forth in the table above, then:

 

(i)           if the Stock Price is between two Stock Prices in the table or the Make-Whole Fundamental Change Effective Date is between two Make-Whole Fundamental Change Effective Dates in the table, the number of Additional Shares by which the Conversion Rate will be increased for a Holder that converts a Note in connection with such Make-Whole Fundamental Change will be determined by a straight-line interpolation between the numbers of Additional Shares set forth for the higher and lower Stock Prices listed in the table and the earlier and later Make-Whole Fundamental Change Effective Dates listed in the table, as applicable, based on a 365-day year;

 

(ii)           if the Stock Price is greater than $35.00, subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table, no Additional Shares will be added to the Conversion Rate; and

 

  

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(iii)           if the Stock Price is less than $6.13 per share, subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table, no Additional Shares will be added to the Conversion Rate.

 

Notwithstanding the foregoing, in no event will the Conversion Rate be increased as a result of this Section 10.07 to exceed 163.1321 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment in the same manner, at the same time and for the same events for which the Conversion Rate must be adjusted as set forth in Section 10.05 hereof.

 

(f)           Settlement or Conversion.  Except as provided in Section 10.08 hereof, if a Holder converts a Note in connection with a Make-Whole Fundamental Change, the Company will settle such conversion by delivering a number of shares of Common Stock and an amount of cash in lieu of fractional shares of Common Stock in accordance with Section 10.03 hereof; provided, however, that notwithstanding anything to the contrary in Section 10.03 hereof, if a Holder converts a Note in connection with a Make-Whole Fundamental Change described in clause (ii) of the definition of Fundamental Change in which the holders of the Common Stock receive only cash in consideration for their shares of Common Stock, the Company will settle such conversion by delivering to such Holder, on the third Business Day immediately following the Conversion Date for such Note, an amount of cash, for each $1,000 principal amount of such Note converted, equal to the product of (i) the Conversion Rate on the Conversion Date applicable to such Note (including any Additional Shares added to such Conversion Rate pursuant to this Section 10.07) and (ii) the Stock Price for such Make-Whole Fundamental Change.

 

Section 10.08                                Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale

 

.

 

(a)           General.  If any of the following events occur:

 

(1)           any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination or change only in par value or from par value to no par value or no par value to par value);

 

(2)           any consolidation, merger or combination involving the Company;

 

(3)           any sale, lease or other transfer to a third party of the consolidated assets of the Company and its Subsidiaries substantially as an entirety; or

 

(4)           any statutory share exchange;

 

and, in each case, as a result of which the Common Stock would be converted into, or exchanged for, other securities, other property or assets (including cash or any combination thereof) (each such event, a "Merger Event," and, for any Merger Event, the "Reference Property" for such Merger Event), then, at the effective date of such Merger Event, the Company and the resulting, surviving or transferee Person (if other than the Company) of such Merger Event (the "Merger Successor Corporation") will execute and deliver to the Trustee a supplemental indenture pursuant to Section 9.03 hereof, which supplemental indenture will (i) comply with the TIA as in force on the date such supplemental indenture is executed (if this Indenture is then qualified under the TIA and such supplemental indenture is required by law to so comply) and (ii) provide that the right to convert each $1,000 principal amount of Notes into shares of Common Stock and cash in lieu of fractional shares of Common Stock will be changed into the right to convert each $1,000 principal amount of Notes into a number of Units of Reference Property initially equal to the Conversion Rate in effect on the effective date of the Merger Event and an amount of cash in lieu of any fractional Unit of Reference Property equal to the product of (A) such fractional Unit of Reference Property and (B) the Last Reported Sale Price of a Unit of Reference Property on the applicable Conversion Date.  In addition:

 

  

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(A)           each reference to the "Last Reported Sale Price of the Common Stock" will be deemed to be replaced by a reference to the "Last Reported Sale Price of a Unit of Reference Property";

 

(B)           if a Unit of Reference Property does not consist solely of one type of common stock that is listed on a U.S. national or regional securities exchange, the adjustments to the Conversion Rate provided in Section 10.05 hereof will be modified by the Board of Directors to provide the Holders with adjustments that have an economic effect on the Holders as nearly equivalent as practicable to the economic effect the adjustments provided by Section 10.05 hereof would have had on the Holders but for such Merger Event.

 

If the Reference Property for a Merger Event includes shares of stock or other securities or assets of a Person other than the Merger Successor Corporation for such Merger Event, then such other company will also execute such supplemental indenture and such supplemental indenture will contain whatever additional provisions the Board of Directors considers to be reasonably necessary to protect the Holders and to calculate the value of a Unit of Reference Property.

 

(b)           Notices.

 

(i)           As soon as practicable upon learning the anticipated or actual effective date of any Merger Event, the Company will deliver written notice of such Merger Event to each Holder and the Trustee.  Such Notice will include:

 

(A)           a brief description of such Merger Event;

 

(B)           the Conversion Rate in effect on the date the Company delivers such notice;

 

(C)           the anticipated effective date for the Merger Event;

 

(D)           that, on and after the effective date for the Merger Event, the Notes will be convertible into Units of Reference Property and cash in lieu of fractional Units of Reference Property; and

 

(E)           the composition of a Unit of Reference Property for such Merger Event.

  

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(ii)           As promptly as practicable after executing a supplemental indenture in accordance with Section 10.08(a) hereof, the Company will:

 

(A)           file with the Trustee an Officers' Certificate briefly describing the reasons therefor, the composition of a Unit of Reference Property for such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent under this Indenture to such Merger Event have been complied with; and

 

(B)           cause to be mailed to each Holder, at the address of such Holder as it appears in the register of the Notes maintained by the Registrar, a notice of the execution of such supplemental indenture and the composition of a Unit of Reference Property for such Merger Event; provided, that the failure to deliver such notice to any Holder will not affect the validity or legality of such supplemental indenture.

 

(c)           Successive Merger Events.  If more than one Merger Event occurs, this Section 10.08 will apply successively to each Merger Event.

 

(d)           Compliance Covenant.  The Company will not become a party to any Merger Event unless its terms are consistent with this Section 10.08.

 

Section 10.09                                No Responsibility of Trustee.  The Trustee and the Conversion Agent will not have any duty or responsibility to any Holder to determine whether any facts exist that require an adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same.  Neither the Trustee nor the Conversion Agent will be responsible for any failure of the Company to deliver the number of shares of Common Stock and any amount of cash in lieu of fractional shares of the Common Stock due upon the surrender of any Notes for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 10.  Without limiting the generality of the foregoing, neither the Trustee nor the Conversion Agent will be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 10.08 hereof, including with respect to the calculation of the amount of cash and the number of Units of Reference Property, if any, receivable by Holders upon the conversion of their Notes after any Merger Event, and each, subject to the provisions of Article 6, may accept as conclusive evidence of the correctness of any such provisions, and will be protected in relying upon, the Officers' Certificate (which the Company will be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.

 

Section 10.10                                Adjustment to the Conversion Rate on February 13, 2012.

 

(a)           If the arithmetic average of the daily volume weighted average price per share of Common Stock for each of the twenty (20) consecutive Trading Days beginning on January 17, 2012 is less than $6.13 per share, the Conversion Rate shall be increased such that the Conversion Price as adjusted would represent the greater of (1) 122.5% of such arithmetic average of the daily volume weighted average price and (2) $6.13. This adjustment to the Conversion Rate shall become effective immediately after the closing price of the Issuer's Common Stock is available on February 13, 2012 or, if that date is not a business day, the next business day. However, the Conversion Price shall not be adjusted as described above if doing so would result in a Conversion Price that is greater than the Conversion Price that would have otherwise been in effect on February 13, 2012.

 

  

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(b)           Subject to any applicable listing standards, the Last Reported Sale Price per share of Common Stock and the volume-weighted average price shall be adjusted in accordance with the adjustments to the Conversion Rate described under Section 10.05 hereof. No adjustment to the last reported sale price of the Common Stock on February 13, 2012 or the volume-weighted average price shall, however, be made as a result of adjustments to the Conversion Rate described under Section 10.05.

 

(c)           The Company shall notify the Trustee, and the Holders in the manner provided in Section 12.02 hereof, of any adjustment in the Conversion Rate under this Section 10.11.

 

ARTICLE 11

 

REDEMPTION AT THE OPTION OF THE COMPANY

 

Section 11.01                                No Sinking Fund.   No sinking fund is provided for the Notes.

 

Section 11.02                                Right To Redeem the Notes.

 

(a)           General.  Prior to January 15, 2015, the Company may not redeem the Notes.  On or after January 15, 2015, and prior to the Maturity Date, the Company may redeem all, but not less than all, of the Notes on the Redemption Date for an amount of cash equal to the Redemption Price for such Redemption Date if the Last Reported Sale Price of the Common Stock equals or exceeds 130% of the Conversion Price in effect on each of at least 20 Trading Days during the 30 consecutive Trading Day period ending on the Trading Day on which the Company delivers the Redemption Notice for such redemption pursuant to Section 11.02 hereof.

 

(b)           The "Redemption Price" means, for any Notes to be redeemed on a Redemption Date, a price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, on such Notes to, but excluding, such Redemption Date; provided, however, that if a Redemption Date occurs after a Regular Record Date, but on or prior to the Interest Payment Date corresponding to such Regular Record Date, the Redemption Price for any Notes to be redeemed will equal 100% of the principal amount of such Notes and accrued and unpaid interest, if any, on such Notes will be payable to the Holder of such Notes at the Close of Business on such Regular Record Date.

 

(c)           The "Redemption Date" means, for any redemption, the date specified as such on the Redemption Notice for such redemption, which date must be a Business Day and must be not less than 30 calendar days, nor more than 45 calendar days, immediately following the date on which the Company delivers such Redemption Notice.

 

Section 11.03                                 Redemption Notice.    At least 30 calendar days but not more than 45 calendar days prior to any Redemption Date, the Company will deliver to each Holder (and to any beneficial owner of a Global Note, as required by applicable law) a written notice of redemption (the "Redemption Notice," and the date of such mailing, the "Redemption Notice Date") and, substantially contemporaneously therewith, the Company will issue a press release announcing such redemption.

 

  

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For any redemption, the Redemption Notice corresponding to such redemption will specify:

 

(i)           briefly, a description of the Company's redemption right under this Indenture;

 

(ii)           the Redemption Price for such Redemption Date (for each $1,000 principal amount of Notes);

 

(iii)           the Redemption Date for such redemption;

 

(iv)           the name and address of the Paying Agent and of the Conversion Agent;

 

(v)           that Notes called for redemption may be converted at any time before the Close of Business on the Business Day immediately preceding the Redemption Date;

 

(vi)           the Conversion Rate in effect on the Redemption Notice Date for such redemption and the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Redemption Notice Date;

 

(vii)           any Additional Shares by which the Conversion Rate will be increased pursuant to Section 10.07 hereof for a Holder that converts a Note "in connection with" the Company's election to redeem the Notes;

 

(viii)           that Notes must be surrendered to the Paying Agent on or before the Redemption Date to collect the Redemption Price;

 

(ix)           that, unless the Company defaults in paying the Redemption Price on the Redemption Date, interest, if any, on a Note will cease to accrue on and after the Redemption Date; and

 

(x)           the CUSIP and ISIN number(s) of the Notes.

 

On any Redemption Notice Date, the Company will also furnish to the Trustee an Officers' Certificate, which Officers' Certificate will set forth the aggregate principal amount of Notes then outstanding and include a copy of the Redemption Notice delivered by the Company on such Redemption Notice Date.

 

Section 11.04                                Effect of Redemption Notice . After the Company has delivered a Redemption Notice, each Holder will have the right to receive payment of the Redemption Price for its Notes on the Redemption Date (i) if the Notes are Definitive Notes, by delivering its Notes to the Paying Agent on or before the Close of Business on such Redemption Date, and (ii) if the Notes are Global Notes, by complying with the Applicable Procedures relating to the redemption and delivering the beneficial interests to be redeemed to the Paying Agent on or before the Close of Business on such Redemption Date; provided, however, that, until the Close of Business on the Business Day immediately preceding such Redemption Date, Holders may convert their Notes, regardless of whether they have been delivered to the Paying Agent for redemption, by complying with the requirements for conversion set forth in Article 10 hereof.

 

  

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Section 11.05                                Deposit of Redemption Price.  Prior to 10:00 a.m., New York City time, on the Redemption Date, the Company will deposit with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, will segregate and hold in trust as provided in Section 2.07 hereof) an amount of immediately available funds sufficient to pay the Redemption Price of all of the then outstanding Notes.

 

Section 11.06                                Effect of Deposit.  If, as of 10:00 a.m., New York City time, on any Redemption Date, the Company, in accordance with Section 11.05 hereof, has deposited with the Paying Agent money sufficient to pay the Redemption Price for every Note validly delivered in accordance with Section 11.04 hereof (and not converted before such Redemption Date), then, at the Close of Business on such Redemption Date:

 

(i)           every Note outstanding immediately prior to the Close of Business on such Redemption Date will cease to be outstanding and interest, if any, on such Notes will cease to accrue (regardless of whether such Notes were delivered to the Paying Agent or book-entry transfer has been made, as applicable); and

 

(ii)           all other rights of the Holders of such Notes with respect to such Notes (other than the right to receive payment of the Redemption Price or, in the case of Notes surrendered for conversion in accordance with Article 10 hereof, the right to receive the number of shares of Common Stock and the amount of cash in lieu of fractional share of Common Stock due upon conversion of such Notes) will terminate.

 

Section 11.07                                Covenant Not to Redeem Notes Upon Certain Events of Default

 

(a)           General.  Notwithstanding anything to the contrary in this Article 11, the Company will not redeem any Notes under this Article 11 if the principal amount of the Notes has been accelerated and such acceleration has not been rescinded on, or prior to, the Redemption Date (except in the case of an acceleration resulting from a default by the Company that would be cured by the Company's payment of the Redemption Price for such Notes).

 

(b)           Return of Notes.  If a Holder delivers a Note for redemption pursuant to Section 11.04 hereof and, on the Redemption Date, pursuant to this Section 11.07, the Company is not permitted to redeem such Note, the Paying Agent will (i) if such Note is a Definitive Note, return such Note to such Holder, and (ii) if such Note is held in book-entry form, in compliance with the Applicable Procedures, deem to be cancelled any instructions for book-entry transfer of such Note.

 

Section 11.08                                Repayment to the Company.  Subject to any applicable property laws, if, six months after the Redemption Date, any cash held by the Paying Agent remains unclaimed, the Paying Agent will promptly return such cash to the Company; provided, however, that, to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 11.05 hereof exceeds the aggregate Redemption Price of every Note outstanding, then as soon as practicable following the Redemption Date, the Trustee will return such excess to the Company.

 

ARTICLE 12

 

MISCELLANEOUS

 

Section 12.01                                Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies, or conflicts with another provision that is required to be included in this Indenture by the TIA, the required provision will control.

 

Section 12.02                                Notices Any request, demand, authorization, notice, waiver, consent or communication will be in writing and delivered in Person or mailed by first-class mail, postage prepaid, addressed as follows or by email to the following:

 

if to the Company:

Ultrapetrol (Bahamas) Limited

Ocean Center, Montagu Foreshore

East Bay Street

P.O. Box SS-19084

Nassau, Bahamas

[email]

with a copy to:

Ravenscroft Shipping Inc.

3251 Ponce de Leon Boulevard

Coral Gables, FL 33134

Attention: General Manager

[email]

if to the Trustee, Registrar, Paying Agent or Conversion Agent:

Manufacturers and Traders Trust Company

25 South Charles Street

11th Floor

Baltimore, MD 21201

Attn: Ultrapetrol (Bahamas) Limited Administrator

rdbrown@mtb.com

The Company or the Trustee, by notice given to the other in the manner provided above, may designate additional or different addresses for subsequent notices or communications.

 

Any notice or communication given to a Holder will be mailed to the Holder, by first class mail, postage prepaid, at the Holder's address as it appears on the registration books of the Registrar and will be deemed given on the date of such mailing.

 

  

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Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee.

 

If the Company mails a notice or communication to the Holders, it will, at the same time, mail a copy to the Trustee and each of the Registrar, Paying Agent and Conversion Agent.

 

If the Company is required under this Indenture to give a notice to the Holders, in lieu of delivering such notice to the Holders, the Company may deliver such notice to the Trustee at least ten Business Days prior to the date the notices are to be sent to Holders and cause the Trustee, at the Company's expense, to deliver such notice to the Holders on or prior to the date on which the Company would otherwise have been required to deliver such notice to the Holders.  In such a case, the Company will also cause the Trustee to mail a copy of the notice to each of the Registrar, Paying Agent and Conversion Agent at the same time it mails the notice to the Holders.

 

Section 12.03                                Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under this Indenture other than the authentication of the initial Global Note on the Issue Date, the Company will furnish to the Trustee:

 

(a)           an Officers' Certificate stating that, in the judgment or opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

(b)           an Opinion of Counsel stating that, in the judgment or opinion of such counsel, all such conditions precedent relating to the proposed action (to the extent of legal conclusions and subject to reasonable assumptions and exclusions) have been complied with.

 

Section 12.04                                 Statements Required in Certificate or Opinion.  Each Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition (except for such Officers' Certificate required to be delivered pursuant to Section 4.05 hereof) provided for in this Indenture will include:

 

(a)           a statement that each Person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition;

 

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements, judgments or opinions contained in such Officers' Certificate or Opinion of Counsel are based;

 

(c)           a statement that, in the judgment or opinion of each such Person, he has made such examination or investigation as is necessary to enable such Person to express an informed judgment or opinion to whether or not such covenant or condition has been complied with; and

 

(d)           a statement that, in the judgment or opinion of such Person, such covenant or condition has been complied with.

 

  

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Section 12.05                                Separability Clause.  In case any provision in this Indenture or in the Notes will be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

 

Section 12.06                                Rules by Trustee  The Trustee may make reasonable rules for action by, or a meeting of, Holders.

 

Section 12.07                                Governing Law and Waiver of Jury Trial   THE INDENTURE AND EACH NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.  EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

Section 12.08                                No Recourse Against Others.  A director, officer, employee or stockholder, as such, of the Company will not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Holder will waive and release all such liability.  The waiver and release will be part of the consideration for the issuance of the Notes.

 

Section 12.09                                Calculations. Except as otherwise provided in this Indenture, the Company will be responsible for making all calculations called for under the Notes and this Indenture.  These calculations include, but are not limited to, determinations of the Last Reported Sale Price of the Common Stock or any other security, accrued interest payable on the Notes and the Conversion Rate in effect on any Conversion Date.

 

The Company will make all calculations in good faith and, absent manifest error, its calculations will be final and binding on all Holders.  The Company will provide a copy of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company's calculations without independent verification.  If any Holder requests from the Trustee a copy of such calculations, the Trustee will promptly forward a copy of such calculations to such Holder.

 

All calculations will be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be, with 5/100,000ths rounded upward.

 

Section 12.10                                Successors.  All agreements of the Company, the Trustee, the Registrar, the Paying Agent and the Conversion Agent in this Indenture and the Notes will bind their respective successors.

 

Section 12.11                                Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each signed copy will be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission will constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF will be deemed to be their original signatures for all purposes.

 

  

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Section 12.12                                Table of Contents; Headings.  The table of contents 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 will not modify or restrict any of the terms or provisions hereof.

 

Section 12.13                                Force Majeure.  The Trustee, Registrar, Paying Agent and Conversion Agent will not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of such Person (including, but not limited to, any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).

 

Section 12.14                                Submission to Jurisdiction.  The Company:  (a) agrees that any suit, action or proceeding against it arising out of or relating to this Indenture or the Notes, as the case may be, may be instituted in any U.S. federal court with applicable subject matter jurisdiction sitting in The City of New York; (b) waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and any claim that any suit, action or proceeding in such a court has been brought in an inconvenient forum; and (c) submits to the nonexclusive jurisdiction of such courts in any suit, action or proceeding.

 

Section 12.15                                Legal Holidays.  If the Maturity Date or any Interest Payment Date, Fundamental Change Repurchase Date, Redemption Date or Conversion Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the immediately following Business Day with the same force and effect as if taken on such date, and no interest will accrue for the period from and after such date.

 

Section 12.16                                No Security Interest Created

 

.  Except as provided in Section 7.06 hereof, nothing in this Indenture or in the Notes, expressed or implied, will be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

 

Section 12.17                                Benefits of Indenture.  Nothing in this Indenture or in the Notes, expressed or implied, will give to any Person, other than the parties hereto, any Paying Agent, Conversion Agent, Registrar, and their successors hereunder, and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

Section 12.18                                U.S.A. Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions, in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

  

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Section 12.19                                Waiver of Immunity.  To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to the Company, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution of judgment, or from execution of judgment, or from other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which the proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Indenture, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives and agrees not to plead or claim any such immunity and consents to such relief and enforcement.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, Ultrapetrol (Bahamas) Limited has caused this Indenture to be duly executed as a deed the day and year first before written.

 

ULTRAPETROL (BAHAMAS) LIMITED, as Issuer

By: _______________________________

Name:

Title:

 Signature Page – Ultrapetrol (Bahamas) Limited 7.25% Convertible Senior Notes Indenture

  

82

  

IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed this Indenture as of the day and year first before written.

 

 

MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee, Paying Agent, Registrar and Conversion Agent

By:  __________________________

Name:

Title:

 Signature Page – Ultrapetrol (Bahamas) Limited 7.25% Convertible Senior Notes Indenture

  

83

  

EXHIBIT A

 

FORM OF NOTE

 

[FORM OF FACE OF NOTE]

 

NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE OR OTHERWISE ACQUIRE THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN.

THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY 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 IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE WILL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE WILL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF 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, AS AMENDED (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.

 

  

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THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY; (II) IN THE UNITED STATES 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; (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT; (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V), 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.

 

[Include the following legend on all Notes that were offered pursuant to Regulation S (the "Regulation S Legend"):]

 

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

 

  

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No.:  [                ]

CUSIP:           [•]

ISIN:               [•]

Principal Amount $[__________]

as revised by the Schedule of Increases

and Decreases of Global Note attached hereto

 

Ultrapetrol (Bahamas) Limited

7.25% Convertible Senior Notes due 2017

 

Ultrapetrol (Bahamas) Limited, a Bahamas corporation, promises to pay to [           ], or registered assigns, the principal amount of $[           ] on January 15, 2017.

 

Interest Payment Dates:  January 15 and July 15 of each year, beginning July 15, 2011.

 

Regular Record Dates: January 1 and July 1 of each year, beginning July 1, 2011.

 

Additional provisions of this Note are set forth on the other side of this Note.

 

 

 

 

 

 

 

* Upon the consummation of an automatic exchange, this CUSIP number will be deemed removed and replaced with the CUSIP number [•].

 

 

  

A-3  

  

ULTRAPETROL (BAHAMAS) LIMITED

 

By: _______________________________

Name:

Title:           

Dated:

 

 

Signature Page – Ultrapetrol (Bahamas) Limited 7.25% Convertible Senior Note

  

  

  

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

 

MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee, certifies that this is one of the Notes referred to in the within-mentioned Indenture.

 

By: _______________________________

Name:

Title:           

Dated:

Signature Page – Ultrapetrol (Bahamas) Limited 7.25% Convertible Senior Note

  

  

  

[FORM OF REVERSE OF NOTE]

 

ULTRAPETROL (BAHAMAS) LIMITED

 

7.25% Convertible Senior Notes due 2017

 

This Note is one of a duly authorized issue of notes of Ultrapetrol (Bahamas) Limited (the "Company"), designated as its 7.25% Convertible Senior Notes due 2017 (the "Notes"), all issued or to be issued under and pursuant to an indenture dated as of the Issue Date (the "Indenture"), between the Company and Manufacturers and Traders Trust Company (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders.  Capitalized terms used herein and not defined herein have the meanings ascribed to them in the Indenture, and the terms of the Notes include those stated in the Indenture and those incorporated into the Indenture.

 

1.           Interest.

 

This Note will bear interest at a rate equal to 7.25% per annum.  Interest on this Note will accrue from the most recent date to which interest has been paid or provided for, or, if no interest has been paid or provided for, the Issue Date.  Interest will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2011.  Each payment of cash interest on this Note will include interest accrued for the period commencing on and including the immediately preceding Interest Payment Date (or, if none, the Issue Date) through the day before the applicable Interest Payment Date.

 

Pursuant to Section 4.04 of the Indenture, in certain circumstances, the Company will pay Additional Interest on this Note.

 

Pursuant to Section 6.04 of the Indenture, in certain circumstances, the Company will pay an Extension Fee on this Note.

 

Pursuant to Section 2.04 of the Indenture, in certain circumstances, the Company will pay Default Interest on Defaulted Amounts with respect to this Note.

 

2.           Method of Payment.

 

The Company will promptly make all payments on this Note on the dates and in the manner provided herein and in the Indenture.  Payments on Notes represented by a Global Note (including principal and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depositary.  The Company will pay principal of, interest on and any Fundamental Change Repurchase Price or Redemption Price for, Definitive Notes at the office or agency designated by the Company for such purpose.  Interest on Definitive Notes will be paid by ACH payment or by wire transfer, as described in Section 2.04 of the Indenture, except that any payment of Interest due on the Maturity Date will be made at the office or agency designated by the Company for such purpose.  All payments on this Note will be made in money of the United States that at the time of payment is legal tender for payment of public and private debts.

 

  

A-6

  

3.           Paying Agent, Conversion Agent and Registrar.

 

Initially, Manufacturers and Traders Trust Company will act as the Trustee, Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any Paying Agent, Conversion Agent or Registrar; provided, that the Company will maintain at least one Paying Agent, Conversion Agent and Registrar in the continental United States.  The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent or Registrar.

 

4.           Repurchase by the Company at the Option of the Holder upon a Fundamental Change.

 

At the option of the Holder, and subject to the terms and conditions of the Indenture, upon the occurrence of a Fundamental Change, each Holder will have the right, at its option, to require the Company to repurchase for cash all of its Notes, or any portion of its Notes having a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof, at a Fundamental Change Repurchase Price equal to 100% of the principal amount of Notes to be purchased plus accrued and unpaid interest, if any, to but excluding, the Fundamental Change Repurchase Date, unless the Fundamental Change Repurchase Date occurs after a Regular Record Date and before the Interest Payment Date corresponding to such Regular Record Date, in which case accrued and unpaid interest, if any, on the Notes will be paid to the Holders of such Notes as of the Close of Business on such Regular Record Date.  To exercise its purchase right, a Holder must comply with the procedures set forth in Article 3 of the Indenture.

 

5.           Redemption at the Option of the Company.

 

Prior to January 15, 2015, the Company may not redeem the Notes.  Subject to the terms of the Indenture, on or after January 15, 2015, and prior to the Maturity Date, the Company may redeem all, but not less than all, of the Notes if the Last Reported Sale Price of the Common Stock equals or exceeds 130% of the Conversion Price in effect on each of at least 20 Trading Days during the 30 consecutive Trading Day period ending on the Trading Day immediately prior to the date the Company delivers the Redemption Notice for such redemption.  Any Redemption Date must be at least 30, but not more than 45, calendar days after the date on which the Company delivers the applicable Redemption Notice.  The Redemption Price that the Company will pay for any Notes that it redeems will equal to 100% of the principal amount of Notes to be purchased plus accrued and unpaid interest, if any, to but excluding, the Redemption Date, unless the Redemption Date occurs after a Regular Record Date and before the Interest Payment Date corresponding to such Regular Record Date, in which case accrued and unpaid interest, if any, on the Notes will be paid to the Holders of such Notes as of the Close of Business on such Regular Record Date

 

6.           Conversion.

 

At any time after the Shareholder Approval Date, subject to, or upon, compliance with the provisions set forth in the Indenture, a Holder of this Note has the right, at such Holder's option, to convert the principal amount hereof or any portion of such principal amount that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, into (i) a number of shares of Common Stock equal to the product of (A) the Conversion Rate in effect on the applicable

 

  

A-7

  

Conversion Date and (B) the principal amount of Notes converted divided by $1,000, rounded down to the nearest whole number, and (ii) an amount of cash equal to the product of (A) the fraction of a share of Common Stock eliminated by such rounding and (B) the Last Reported Sale Price of the Common Stock on such Conversion Date.

 

7.           Denominations; Transfer; Exchange.

 

The Notes are in fully registered form, without coupons, in denominations of $1,000 of principal amount and integral multiples of $1,000 in excess thereof.  A Holder may transfer or exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not transfer or exchange any Notes in respect of which a Fundamental Change Repurchase Notice has been given and not withdrawn (except, in the case of a Note to be repurchased in part, the portion of the Note not to be repurchased), after the Company has delivered a Notice of Redemption (except to the extent that Notes are converted or repurchased in part or the Company fails to pay the Redemption Price in accordance with Article 11 of the Indenture) or in respect of which a Conversion Notice has been given (except, in the case of a Note to be converted in part, the portion of the Note not to be converted).

 

8.           Amendment, Supplement and Waiver.

 

Subject to certain exceptions, the Indenture permits the Indenture and the Notes to be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes.   In certain circumstances, the Company and the Trustee may also amend or supplement the Indenture or the Notes without the consent of any Holder.  Subject to certain exceptions, the Indenture permits the waiver of certain Events of Default or the noncompliance with certain provisions of the Indenture and of the Notes with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes.

 

9.           Defaults and Remedies.

 

Subject to the following paragraph, if an Event of Default specified in the Indenture occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable immediately by delivering notice to the Company.  In addition, certain specified Events of Default will cause the Notes to become immediately due and payable without the Holders taking any action.

If the Company so elects, the sole remedy for an Event of Default relating to the Company's failure to comply with the reporting obligations under Section 4.03 of the Indenture will, for the 60 days after the occurrence of such Event of Default, consist exclusively of the right to receive an Extension Fee on the principal amount of the Notes.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority of the

 

  

A-8

  

principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  Subject to certain exceptions, the Trustee may withhold from Holders notice of any continuing Event of Default or Default if it determines that withholding notice is in their interest.

 

10.           Persons Deemed Owners.

 

The Holder of this Note will be treated as the owner of this Note for all purposes.

 

11.           Unclaimed Money or Notes.

 

The Trustee and the Paying Agent will return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Notes that remains unclaimed for two years, subject to applicable unclaimed property law.  After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors, unless an applicable abandoned property law designates another Person.

 

12.           Trustee Dealings with the Company.

 

The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes 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 the Trustee.

 

13.           Calculations in Respect of Notes.

 

Except as otherwise provided in the Indenture, the Company will be responsible for making all calculations called for under the Notes and the Indenture.  These calculations include, but are not limited to, determinations of the Last Reported Sale Price of the Common Stock or any other security, accrued interest payable on the Notes and the Conversion Rate in effect on any Conversion Date.

 

The Company will make all these calculations in good faith and, absent manifest error, its calculations will be final and binding on all Holders.

 

14.           No Recourse Against Others.

 

A director, officer, employee or stockholder, as such, of the Company will not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Holder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Notes.

 

15.           Authentication.

 

This Note will not be valid until an authorized signatory of the Trustee manually signs the Trustee's certificate of authentication on the other side of this Note.

 

16.           Abbreviations.

 

  

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Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

17.           GOVERNING LAW.

 

THE INDENTURE AND THE NOTES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

18.           CUSIP Numbers.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in any notices as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice, and reliance may be placed only on the other identification numbers placed thereon.

 

The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture which has in it the text of this Note in larger type.  Requests may be made to:

 

  Ultrapetrol (Bahamas) Limited

c/o Ravenscroft Shipping Inc.

3251 Ponce de Leon Boulevard

Coral Gables, FL 33134

Attention: General Manager

  

A-10

  

CONVERSION NOTICE

MANUFACTURERS AND TRADERS TRUST COMPANY

7.25% CONVERTIBLE SENIOR NOTES DUE 2017

To convert this Note, check the box £

To convert the entire principal amount of this Note, check the box £

To convert only a portion of the principal amount of this Note, check the box £ and here specify the principal amount to be converted, which principal amount must equal $1,000 or an integral multiple of $1,000 in excess thereof:

Signature Guaranteed

Participant in a Recognized Signature

Guarantee Medallion Program

By:                                                                

Authorized Signatory

  

A-11

  

FUNDAMENTAL CHANGE REPURCHASE NOTICE

Manufacturers and Traders Trust Company

25 South Charles Street, 11th Floor

Baltimore, MD 21201

Attention:  Ultrapetrol Corporate Trust Administrator

 

 

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Ultrapetrol (Bahamas) Limited (the "Company") as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the Holder hereof in accordance with the applicable provisions of the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is equal to $1,000 principal amount or an integral multiple of $1,000 in excess thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not occur during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Repurchase Date.

Principal amount to be repaid (if less than all):  $              ,000

Signature Guaranteed

 

____________________________________

Participant in a Recognized Signature

Guarantee Medallion Program

 

By: _________________________________                                                                          

Authorized Signatory

 

  

A-12

  

[Include for Global Note]

 

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL NOTE

Initial Principal Amount of Global Note:  [                           ]

	
Date

	
Amount of Increase in Principal Amount of Global Note

	
Amount of Decrease in Principal Amount of Global Note

	
Principal Amount of Global Note After Increase or Decrease

	
Notation by Registrar or Note Custodian

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

A-

  

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EXHIBIT B

 

FORM OF TRANSFER CERTIFICATE

 

ULTRAPETROL (BAHAMAS) LIMITED

7.25% CONVERTIBLE SENIOR NOTES DUE 2017

Transfer Certificate

 

In connection with any transfer of any of this Note, the undersigned registered owner of this Note hereby certifies with respect to $                principal amount of the above-captioned Notes presented or surrendered on the date hereof (the "Surrendered Note") for registration of transfer, or for exchange or conversion where the securities issuable upon such exchange or conversion are to be registered in a name other than that of the undersigned registered owner (each such transaction being a "Transfer"), that such Transfer complies with the restrictive legend set forth on the face of the Surrendered Note for the reason checked below:

 

£ The Transfer of the Surrendered Note is being made to the Company or a Subsidiary thereof; or

 

£ The Transfer of the Surrendered Note complies with Rule 144A under the Securities Act; or

 

£ The Transfer of the Surrendered Note is being made pursuant to an effective registration statement under the Securities Act; or

 

£ The Transfer of the Surrendered Note is being made pursuant to another available exemption from the registration requirement of the Securities Act.

 

Date:      ______________________________     

 

By:        _______________________________                                     

 

(If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.)

 

Signature Guaranteed

 

 

_____________________________

Participant in a Recognized Signature

Guarantee Medallion Program

 

 

By:     _______________________________

     Authorized Signatory

 

 

  

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EXHIBIT C

 

[FORM OF RESTRICTED STOCK LEGEND]

 

THE SALE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS SECURITY (AND ANY BENEFICIAL INTEREST HEREIN) MAY NOT BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED, EXCEPT:

 

	
  (A) 

	
TO THE COMPANY OR ANY SUBSIDIARY THEREOF;

 

	
  (B) 

	
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT;

 

	
  (C) 

	
TO A PERSON THAT YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; OR

 

	
  (D) 

	
UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT).

 

THE "RESALE RESTRICTION TERMINATION DATE" MEANS THE DATE: (A) THAT IS AT LEAST ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE COMPANY'S 7.25% CONVERTIBLE SENIOR NOTES DUE 2017; AND (B) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW.

 

PRIOR TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE (D), THE COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND MAY RELY UPON 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.

 

 

 

  

C-1d1274523_ex4-8.htm

 

 

Exhibit 4.8

EXECUTION VERSION

	 
	 

INVESTMENT NUMBER 30332

Loan Agreement

between

UABL PARAGUAY S.A. and

RIVERPAR S.A.

as Joint and Several Co-Borrowers

and

INTERNATIONAL FINANCE CORPORATION

Dated as of December 2, 2011

 

	 
	 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	
Article/Section

	
Item

	
Page No.

	  	  	  
	
ARTICLE I

	
1

	  	  
	
Definitions and Interpretation

	
1

	  	  
	  	
Section 1.01.  Definitions

	
1

	  	
Section 1.02.  Financial Calculations

	
23

	  	
Section 1.03.  Interpretation

	
23

	  	
Section 1.04.  Business Day Adjustment

	
23

	  	  	  
	
ARTICLE II

	
24

	  	  
	
The Loan

	
24

	  	  
	  	
Section 2.01.  The Loan

	
24

	  	
Section 2.02.  Disbursement Procedure

	
24

	  	
Section 2.03.  Interest

	
24

	  	
Section 2.04.  Change in Interest Period

	
26

	  	
Section 2.05.  Default Rate Interest

	
26

	  	
Section 2.06.  Repayment

	
26

	  	
Section 2.07A.  Voluntary Prepayment

	
27

	  	
Section 2.07B.  Mandatory Prepayment

	
28

	  	
Section 2.08.  Fees

	
28

	  	
Section 2.09.  Currency and Place of Payments

	
29

	  	
Section 2.10.  Allocation of Partial Payments

	
29

	  	
Section 2.11.  Increased Costs

	
29

	  	
Section 2.12.  Unwinding Costs

	
30

	  	
Section 2.13.  Suspension or Cancellation by IFC

	
30

	  	
Section 2.14.  Cancellation by the Borrowers

	
30

	  	
Section 2.15.  Taxes

	
31

	  	
Section 2.16.  Expenses

	
31

	  	
Section 2.17.  Illegality of Participation

	
33

	  	  
	
ARTICLE III

	
33

	  	  
	
Representations and Warranties

	
33

	  	  	  
	  	
Section 3.01.  Representations and Warranties

	
33

	  	
Section 3.02.  IFC Reliance

	
37

	  	  	  
	
ARTICLE IV

	
37

	  	  
	
Conditions of Disbursement

	
37

	  	  	  

  

-i-

  

	  	
Section 4.01.  Conditions of Disbursement

	
37

	  	
Section 4.02.  Borrowers' Certification

	
44

	  	
Section 4.03.  Conditions for IFC Benefit

	
44

	  	  	  
	
ARTICLE V

	
45

	  	  
	
Particular Covenants

	
45

	  	  	  
	  	
Section 5.01.  Affirmative Covenants

	
45

	  	
Section 5.02.  Negative Covenants

	
48

	  	
Section 5.03.  Reporting Requirements

	
51

	  	
Section 5.04.  Shipping Covenants

	
53

	  	
Section 5.05.  Insurance Covenants

	
56

	  	  	  
	
ARTICLE VI

	
60

	  	  
	
Events of Default

	
60

	  	  	  
	  	
Section 6.01.  Acceleration after Default

	
60

	  	
Section 6.02.  Events of Default

	
60

	  	
Section 6.03.  Bankruptcy

	
63

	  	  	  
	
ARTICLE VII

	
64

	  	  
	
Miscellaneous

	
64

	  	  	  
	  	
Section 7.01.  Saving of Rights

	
64

	  	
Section 7.02.  Notices

	
64

	  	
Section 7.03.  English Language

	
65

	  	
Section 7.04.  Term of Agreement

	
65

	  	
Section 7.05.  Applicable Law and Jurisdiction

	
65

	  	
Section 7.06.  Disclosure of Information

	
67

	  	
Section 7.07.  Successors and Assignees

	
68

	  	
Section 7.08.  Amendments, Waivers and Consents

	
68

	  	
Section 7.09.  Counterparts

	
68

	  	
Section 7.10.  Joint and Several

	
68

	  	  	  
	
ANNEX A

	
70

	  	  
	
PROJECT COST AND FINANCIAL PLAN

	
70

	  	  
	
ANNEX B

	
71

	  	  
	
PROJECT AUTHORIZATIONS

	
71

	  	  
	
ANNEX C

	
72

	  	  
	
INSURANCE REQUIREMENTS

	
72

	  	  

  

-ii-

  

	
ANNEX D

	
75

	  	  
	
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS

	
75

	  	  
	
ANNEX E

	
79

	  	  
	
ENVIRONMENTAL AND SOCIAL ACTION PLAN

	
79

	  	  
	
SCHEDULE 1

	
80

	  	  
	
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY

	
80

	  	  
	
SCHEDULE 2

	
82

	  	  
	
FORM OF REQUEST FOR DISBURSEMENT

	
82

	  	  
	
SCHEDULE 3

	
85

	  	  
	
FORM OF DISBURSEMENT RECEIPT

	
85

	  	  
	
SCHEDULE 4

	
86

	  	  
	
FORM OF ACCEPTANCE OF SERVICE OF PROCESS LETTER

	
86

	  	  
	
SCHEDULE 5

	
87

	  	  
	
FORM OF LETTER TO GUARANTOR'S AUDITORS

	
87

	  	  
	
SCHEDULE 6

	
89

	  	  
	
FORM OF BORROWERS' CERTIFICATION ON DISTRIBUTION OF DIVIDENDS

	
89

	  	  
	
SCHEDULE 7

	
91

	  	  
	
ACCEPTABLE BROKERS

	
91

	  	  

	
SCHEDULE 8

	
92

	  	  
	
ENVIRONMENTAL AND SOCIAL PERFORMANCE

	
92

	  	  

 

  

-iii-

  

LOAN AGREEMENT

LOAN AGREEMENT (this "Agreement") dated as of December 2, 2011 between: (1) UABL PARAGUAY S.A., a corporation organized and existing under the laws of the Republic of Paraguay ("UABLPY"), and RIVERPAR S.A., a corporation organized and existing under the laws of the Republic of Paraguay, as joint and several borrowers (collectively the "Borrowers" or "Co-Borrowers" and each a "Borrower"), and (2) INTERNATIONAL FINANCE CORPORATION, an international organization established by Articles of Agreement among its member countries including the Republic of Paraguay ("IFC").

RECITALS

(A)           The Borrowers are undertaking the construction, completion, ownership and operation of the Project (as defined below);

(B)           The Borrowers have requested IFC to provide the loan described in this Agreement to finance the construction, completion, ownership and initial operation of the Project (as defined below) and certain other costs and expenditures associated with the development of the Project; and

(C)           IFC is willing to provide the loan upon the terms and conditions set forth in this Agreement.

 

ARTICLE I

 

Definitions and Interpretation

 

Section 1.01.  Definitions. Wherever used in this Agreement, the following terms have the following meanings:

"2008 Financings" means, collectively, the 2008 UABLPY Loan, the 2008 UABLPN Loan and the 2008 Parallel Loan, and in the singular means any one of them as the context may require;

"2008 Financing Documents" means, collectively, the 2008 UABLPY Loan Documents, the 2008 UABLPN Loan Documents and the 2008 Parallel Loan Documents, and in the singular means any one of them as the context may require;

"2008 Parallel Loan" means the loan provided under the 2008 Parallel Loan Agreement;

"2008 Parallel Loan Agreement" means the Loan Agreement dated November 28, 2008 between UABLPY and OFID (OFID Agreement No. 1222PS);

"2008 Parallel Loan Documents" means, collectively, the 2008 Parallel Loan Agreement and all guarantees and security documents executed per the terms of the 2008 Parallel Loan Agreement, and in the singular means any one of them as the context may require;

  

  

  

"2008 Transaction Documents" means all other Transaction Documents listed in each of the 2008 UABLPY Loan Agreement and the 2008 UABLPN Loan Agreement that are not specifically listed herein as a 2008 document;

"2008 UABLPN Loan" means the loan provided under the 2008 UABLPN Loan Agreement;

"2008 UABLPN Loan Agreement" means the Loan Agreement dated as of September 15, 2008 among the UABLPN Borrowers and IFC (Investment Number 26858);

"2008 UABLPN Loan Documents" means, collectively, the 2008 UABLPN Loan Agreement and all guarantees and security documents executed per the terms of the 2008 UABLPN Loan Agreement, and in the singular means any one of them as the context may require;

"2008 UABLPY Loan" means the loan provided under the 2008 UABLPY Loan Agreement;

"2008 UABLPY Loan Agreement" means the Loan Agreement dated as of September 15, 2008 between UABLPY and IFC (Investment Number 26858);

"2008 UABLPY Loan Documents" means, collectively, the 2008 UABLPY Loan Agreement and all guarantees and security documents executed per the terms of the 2008 UABLPY Loan Agreement, and in the singular means any one of them as the context may require;

"2011 Parallel Loan" means the loan to be provided under the 2011 Parallel Loan Agreement;

"2011 Parallel Loan Agreement" means the loan agreement made or to be made between OFID and the Borrowers pursuant to which, subject to the terms and conditions therein, OFID will make available to the Borrowers a loan in the amount of $10,000,000 for the Project;

"2011 Parallel Loan Documents" means, collectively, the 2011 Parallel Loan Agreement and all guarantees and security documents executed per the terms of the 2011 Parallel Loan Agreement, and in the singular means any one of them as the context may require;

"2011 Senior Loans" means the 2011 Parallel Loan together with the Loan;

"2011 Senior Loan Agreements" means, collectively, this Agreement and the 2011 Parallel Loan Agreement, and in the singular means either one of them as the context may require;

"2011 Senior Loan Documents" means, collectively, the Transaction Documents and the 2011 Parallel Loan Documents, and in the singular means any one of them as the context may require;

"Acceptable Broker" means any of the sale and purchase ship brokerage companies listed in Schedule 7, as such list may from time to time be amended by agreement between IFC and the Borrowers; and any other Person that IFC may from time to time designate as an Acceptable Broker;

"Acceptable Refinancing of the Notes" means a refinancing of the Notes upon terms that include (inter alia): (A) a maturity date of no earlier than November 15, 2018, (B) no change, except as provided below, of the collateral or guarantees that presently secure or guarantee the Notes and (C) no additional assets, rights or guarantees will be given as collateral by either of the Borrowers, the

  

-2-

  

Guarantor or any of the Guarantor Subsidiaries; provided that any of the above entities may at or at any time after the Acceptable Notes Refinancing Date substitute collateral pledged to secure the Notes by other collateral free of any lien at the time of such substitution; and the refinanced Notes shall not contain terms (in addition to the those terms governing the existing Notes) that shall interfere with the rights of IFC or OFID in respect of the 2011 Senior Loan Documents;

For avoidance of doubt under no circumstance shall the Notes be secured, in whole or in part, with the assets, rights and properties that at any time secure the 2011 Senior Loans and the 2008 Financings under the 2008 Financing Documents.  Acceptable Refinancing of the Notes shall also include the prepayment in full of the Notes, provided that the funding for such prepayment is made via either additional equity injection or debt or otherwise from funds available to Ultrapetrol, and if debt, on terms and conditions acceptable to IFC;

"Acceptable Notes Refinancing Date" means the date on which IFC, after having received satisfactory evidence of the Notes refinancing, informs the Borrowers in writing that it is satisfied that the Acceptable Refinancing of the Notes has occurred;

"Accounting Standards" means US Generally Accepted Accounting Principles ("USGAAP") consistently applied;

"Action Plan" means the set of environmental, health, safety and social activities with specific deadlines to ensure compliance with IFC Performance Standards, agreed between IFC and the Guarantor on August 25, 2011, as such Action Plan may be amended or supplemented from time to time with IFC's consent (a copy of the Action Plan is attached here as Annex E);

"Affiliate" means any Person directly or indirectly controlling, controlled by or under common control with, another Person (for purposes of this definition, "control" means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise, provided that the direct or indirect ownership of 10% or more of the voting capital stock of a Person is deemed to constitute control of that Person, and "controlling" and "controlled" have corresponding meanings);

"Annual Monitoring Report" means an annual report setting out the specific social, environmental and developmental impact reporting requirements of the Borrowers in respect of their operations, confirming that they are conducting operations in compliance with Applicable S&E Law, the Action Plan and in a manner consistent with the Performance Standards, or, as the case may be, detailing any non-compliance or inconsistency together with the action being taken to ensure compliance and in a form satisfactory to IFC, as such form of Annual Monitoring Report may be amended or supplemented from time to time with IFC's consent (a copy of the Annual Monitoring Report is attached hereto as Schedule 8);

"Applicable S&E Law" means all applicable statutes, laws, ordinances, rules and regulations of Argentina and Paraguay, and the vessels shall comply with the rules and regulations of all countries in which they navigate, including but not limited to any license, permit or other governmental authorization, imposing liability or setting standards of conduct concerning any environmental, social, labor, health and safety or security risks of the type contemplated by the Performance Standards;

  

-3-

  

"Auditors" means Pistrelli, Henry, Martin y Asociados SRL, Member of E&Y Global or such other firm of internationally recognized independent public accountants that the Guarantor appoints or the Borrowers appoint from time to time as their auditors pursuant to Section 5.01 (e) (Affirmative Covenants);

"Authority" means any national, supranational, regional or local government or governmental, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person, whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank);

"Authorization" means any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors' and shareholders' approvals or consents;

"Authorized Representative" means any natural person who is duly authorized by a Borrower, the Guarantor, Ultrapetrol or a Bareboat Charterer, as the case may be, to act on its behalf for the purposes specified in, and whose name and a specimen of whose signature appear on, the Certificate of Incumbency and Authority most recently delivered by such Borrower, the Guarantor, Ultrapetrol or such Bareboat Charterer, as the case may be, to IFC;

"Bareboat Charter" means, collectively:

	
  

	
(i)

	
any bareboat charter party between the Guarantor and any of Ultrapetrol, Oceanpar, Parfina or General Ventures, respectively, providing for the demise charter of Vessels owned by any of Ultrapetrol, Oceanpar, Parfina and General Ventures to the Guarantor, and in the singular means any one of them as the context may require; and

	
  

	
(ii)

	
any lease agreement or bareboat charter entered or to be entered into by either of the Borrowers as owner or demise owner in respect of a Paraguayan Vessel;

and in the singular means any one of them as the context may require;

"Bareboat Charter Assignment" means:

	
  

	
(i)

	
a first priority assignment of the relevant Borrower's interest in each Bareboat Charter to which such Borrower is a party as owner or demise owner; and

	
  

	
(ii)

	
a second priority assignment of each of UABLPY's, UABLPN's, Eastham Barge's and Marine Financial's interest in any bareboat charter agreement to which any of them is a party as owner or demise owner and which secures the obligations under the 2008 Financings;

in each case to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement, and in the singular means any one of them as the context may require;

  

-4-

  

"Bareboat Charter Assignment Acknowledgement and Consent" means an acknowledgement and consent executed by a Bareboat Charterer with respect to each Bareboat Charter Assignment;

"Bareboat Charterer" means the charterer pursuant to any of the Bareboat Charters or pursuant to any of the bareboat charter agreements executed in connection with the 2008 Financings;

"Business Day" means a day when banks are open for business in New York, New York or, solely for the purpose of determining the applicable Interest Rate other than pursuant to Section 2.03(d) (ii) (Interest), London, England;

"CAO" means Compliance Advisor Ombudsman, the independent accountability mechanism for IFC that impartially responds to environmental and social concerns of affected communities and aims to enhance outcomes;

"CAO's Role" means (i) to respond to complaints by persons who have been or are likely to be directly affected by the social or environmental impacts of IFC projects; and (ii) to oversee audits of IFC's social and environmental performance, particularly in relation to sensitive projects, and to ensure compliance with IFC's social and environmental policies, guidelines, procedures and systems;

"Cedarino" means Cedarino S.L., a corporation organized and existing under the laws of Spain;

"Certificate of Incumbency and Authority" means a certificate provided to IFC by each Borrower, the Guarantor, Ultrapetrol, the Shareholders, a Bareboat Charterer or any other party to a Transaction Document (other than IFC, OFID and the Security Trustee) in the form of Schedule 1;

"Coercive Practice" has the meaning assigned to it in Annex D;

"Collateral" means all collateral referred to in the Security Documents and all other property that is or is intended to be subject to any Lien in favor of IFC or the Security Trustee, acting for the benefit of the Creditor Parties, as security for the 2011 Senior Loans;

"Collateral Trust Agreement" means the agreement among the Security Trustee and the Creditor Parties, and consented to by the Borrowers and each of the UABLPN Borrowers for the limited purposes stated therein, that creates a trust over the Collateral to be held by the Security Trustee for the benefit of the Creditor Parties as lenders of the 2011 Senior Loans under the 2011 Senior Loan Agreements and that provides the manner in which (i) such trust is to be administered by the Security Trustee and (ii) the proceeds of enforcement against the Collateral are to be distributed to and applied by the Creditor Parties, the Borrowers and the UABLPN Borrowers;

"Collusive Practice" has the meaning assigned to it in Annex D;

"Consolidated or Consolidated Basis" means (with respect to any financial statements to be provided, or any financial calculation to be made, under or for the purposes of this Agreement and any other Transaction Document) the method referred to in Section 1.02(c) (Financial Calculations);

  

-5-

  

"Constitutive Documents" means with respect to the Borrowers and the Guarantor, its certificate of incorporation and by-laws and, with respect to any other Person (other than a natural person), its constitutive documents, howsoever called;

"Cornamusa" means Corporación de Navegación Mundial S.A., a corporation organized and existing under the laws of Chile;

"Corrupt Practice" has the meaning assigned to it in Annex D;

"Country" means the Republic of Paraguay;

"CPTF" means Compania Paraguaya de Transporte Fluvial S.A., a corporation organized and existing under the laws of Paraguay;

"Creditor Parties" means (i) IFC as lender under this Agreement; and (ii) OFID under the 2011 Parallel Loan Agreement, and in the singular means any one of them as the context may require;

"Current Assets" means the aggregate of a Person's cash, inventories, investments classified as "held for trading", investments classified as "available for sale", trade and other receivables realizable within one year, and prepaid expenses which are to be charged to income within one year;

"Current Liabilities" means the aggregate of all liabilities of a Person falling due on demand or within one year (including the portion of Long-term Debt, but excluding Shareholder Loans, falling due within one year);

"Current Ratio" means the result obtained by dividing Current Assets (less prepaid expenses) by Current Liabilities;

"Debt to Equity Ratio" means the result obtained by dividing Financial Debt by Shareholders' Equity;

"Debt Service" means the aggregate amount of principal, interest and fees scheduled to be paid by the Borrowers under the terms of this Agreement and under the 2011 Parallel Loan Agreement falling due in the next 6 months over the Security Period;

"Debt Service Reserve Account" means account number 1034015 opened in the name of the Borrowers with Wilmington Trust, National Association;

"Debt Service Reserve Account Pledge" means a pledge in respect of the Debt Service Reserve Account executed by the Borrowers in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement, to secure the Borrowers' obligations under this Agreement and under the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

"Deputy Commissioner's Office" means the office of the Deputy Commissioner of Maritime Affairs of the Republic of Liberia, in New York, New York;

  

-6-

  

"Derivative Transaction" means any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar arrangement with respect to interest rates, currencies or commodity prices;

"Disbursement" means any disbursement of the Loan;

"Dollars" and "$" means the lawful currency of the United States of America;

"Eastham Barges" means Eastham Barges Inc., a corporation organized and existing under the laws of the Republic of Liberia;

"EH&S Management System" means a Person's environmental, health and safety management system;

"Enforcement Shortfall Amount" means any monetary shortfall whereby the aggregate proceeds derived from the enforcement of the Mortgages are less than the then outstanding amounts due and owing by the Borrowers to IFC under or in relation to the Loan Agreement and the other Transaction Documents to which either Borrower is a party;

"Event of Default" means any one of the events specified in Section 6.02 (Events of Default);

"Fair Market Value" means:

(i)           in relation to any Mortgaged Vessel that was acquired by the Borrowers or another Guarantor Subsidiary within ninety (90) days of the relevant date of valuation from any Person who was not, at the time of such acquisition, a member of the Ultrapetrol Group, the contracted acquisition price of such Mortgaged Vessel for such acquisition plus, if the relevant acquisition includes delivery outside the Parana-Paraguay River System (the "River System"), all costs reasonably incurred in connection with positioning such Mortgaged Vessel(s) in the River System in Latin America; or

(ii)           in relation to any other Mortgaged Vessel, the fair market value of such Mortgaged Vessel, determined conclusively by the average of two valuations made (each at the expense of the Borrowers) not more than forty-five (45) days prior to the relevant date of valuation by two Acceptable Brokers selected by IFC, such valuations being made on an "as is where is" basis, on the basis of a sale for prompt delivery for cash on normal arm's-length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, and on the basis of the market along the River System in Latin America or on the basis of the market in the United States appropriately adjusted for all costs reasonably incurred in connection with positioning such Mortgaged Vessel(s) in the River System in Latin America; provided that if the higher of the two valuations referred to above is more than one hundred and twenty per cent (120%) of the lower of such two valuations, then the fair market value of such Mortgaged Vessel shall be determined conclusively as the average of: (A) the higher of the two valuations aforesaid, (B) the lower of the two valuations aforesaid and (C) a third valuation by an Acceptable Broker selected by the Borrowers;

"Financial Debt" means any indebtedness of a Person or Persons, individually or in the aggregate, for or in respect of:

  

-7-

  

	
  

	
(i)

	
borrowed money;

 

	
  

	
(ii)

	
the outstanding principal amount of any bonds, debentures, notes, loan stock, commercial paper, acceptance credits, bills or promissory notes drawn, accepted, endorsed or issued by such Person;

 

	
  

	
(iii)

	
the deferred purchase price of assets or services (except trade accounts incurred and payable in the ordinary course of business to trade creditors within ninety (90) days of the date they are incurred and which are not overdue);

 

	
  

	
(iv)

	
non-contingent obligations of such Person to reimburse any other Person for amounts paid by that Person under a letter of credit or similar instrument (excluding any letter of credit or similar instrument issued for the account of such Person with respect to trade accounts incurred and payable in the ordinary course of business to trade creditors within ninety (90) days of the date they are incurred and which are not overdue);

 

	
  

	
(v)

	
the amount of any obligation in respect of any Financial Lease;

 

	
  

	
(vi)

	
amounts raised under any other transaction having the financial effect of a borrowing and which would be classified as a borrowing (and not as an off-balance sheet financing) under the Accounting Standards;

 

	
  

	
(vii)

	
the amount of such Person's obligations under any Derivative Transactions (but only the net amount owing by such Person after marking the relevant derivative transactions to market);

 

	
  

	
(viii)

	
any premium payable on a redemption or replacement of any of the foregoing items; and

 

	
  

	
(ix)

	
without double counting the amount of any obligation in respect of any guarantee or indemnity given by such Person for any of the foregoing items incurred by any other person;

 

provided that, for the avoidance of doubt, Financial Debt does not include any Shareholder Loan provided by Ultrapetrol and/or the Shareholders that is subordinated in payment and liquidation to the 2008 Financings, the Loan and the 2011 Parallel Loan;

"Financial Lease" means any lease or hire purchase contract which would, under the Accounting Standards, be treated as a finance or capital lease;

"Financial Plan" means the proposed sources of financing for the Project as set out in Annex A (Project Cost and Financial Plan);

"Financial Year" means with respect to the Borrowers or the Guarantor the accounting year of such Person commencing each year on January 1 and ending on the following December 31;

"First Liberian Mortgages" means:

  

-8-

  

	
  

	
(i)

	
the First Preferred Liberian Fleet Mortgage dated September 30, 2008 over the Liberian Vessels named in Schedule 1 thereto made by UABLPN in favor of the Security Trustee for the benefit of IFC as lender under 2008 UABLPY Loan Agreement, IFC as lender under the 2008 UABLPN Loan Agreement and OFID as lender under the 2008 Parallel Loan Agreement;

 

	
  

	
(ii)

	
the First Preferred Liberian Fleet Mortgage dated September 30, 2008 over the Liberian Vessels named in Schedule 1 thereto made by Eastham Barges in favor of the Security Trustee for the benefit of IFC as lender under 2008 UABLPY Loan Agreement, IFC as lender under the 2008 UABLPN Loan Agreement and OFID as lender under the 2008 Parallel Loan Agreement; and

 

	
  

	
(iii)

	
the First Preferred Liberian Fleet Mortgage dated September 30, 2008 over the Liberian Vessels named in Schedule 1 thereto made by Marine Financial in favor of the Security Trustee for the benefit of IFC as lender under 2008 UABLPY Loan Agreement, IFC as lender under the 2008 UABLPN Loan Agreement and OFID as lender under the 2008 Parallel Loan Agreement;

 

and in the singular means any one of them as the context may require;

"First Other Vessels Mortgage" means a first priority mortgage over one or more of the Other Vessels, executed by a Borrower, the Guarantor or another Guarantor Subsidiary as owner in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement, to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

"First Paraguayan Mortgage" means a first priority Paraguayan fleet mortgage over the Paraguayan Vessels, executed by the Borrowers and CPTF as owners in favor of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement, to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement; provided that in respect of the First Disbursement, each such First Paraguayan Mortgage shall be executed in favor of IFC as lender under the 2008 UABLPN Loan Agreement, IFC as lender under the 2008 UABLPY Loan Agreement and OFID as lender under the 2008 Parallel Loan Agreement to secure the obligations of the borrowers and the Guarantor respectively under the 2008 Financing Documents to which each is a party;

"First Ranking Security Coverage Ratio" means the ratio obtained by dividing (i) the aggregate Fair Market Value of the Paraguayan Mortgaged Vessels and the Other Mortgaged Vessels by (ii) the outstanding amount of the 2011 Senior Loans, such ratio to be at any time prior to (and including) the Acceptable Notes Refinancing Date, not less than 3.0 and at any time thereafter, not less than 1.6;

"Fraudulent Practice" has the meaning assigned to it in Annex D;

"General Ventures" means General Ventures Inc., a corporation organized and existing under the laws of Liberia;

  

-9-

  

"Guarantor" means UABL Limited, a corporation organized and existing under the laws of the Bahamas;

"Guarantor Subsidiary" means any entity:

	
  

	
(i)

	
over 50% of whose capital stock is owned, directly or indirectly, by the Guarantor;

	
  

	
(ii)

	
for which the Guarantor may nominate or appoint a majority of the members of the board of directors or other body performing similar functions; or

	
  

	
(iii)

	
which is otherwise effectively controlled by the Guarantor;

"Historical Debt Service Coverage Ratio" means with respect to a Person the ratio obtained by dividing:

	
  

	
(i)

	
the aggregate, for the last 4 fiscal quarters prior to the relevant date of calculation, of (A) Net Income for such calculation period, (B) Non-Cash Items, (C) the amount of all payments that were due during such calculation period on account of interest and other charges on Financial Debt (to the extent deducted from Net Income), and (D) the amount of all charter hire payments due during such calculation period that were subordinated in payment and liquidation to the 2008 Financings, the Loan and the 2011 Parallel Loan, less (E) the aggregate amount of all maintenance capital expenditures made during such calculation period, to the extent such expenditures were not already deducted from Net Income;

 

by

 

	
  

	
(ii)

	
all scheduled payments (including balloon payments) that fell due during such calculation period on account of principal of Long-term Debt and interest and other charges on all Financial Debt but excluding voluntary prepayments;

 

"IFC Security" means the security created by or pursuant to the Security Documents to secure all amounts owing by the Borrowers to IFC under this Agreement and the other Transaction Documents;

"Increased Costs" means the amount certified in an Increased Costs Certificate to be the net incremental costs of, or reduction in return to, IFC or any Participant in connection with the making or maintaining of the Loan or its Participation that result from:

	
  

	
(i)

	
any change in any applicable law or regulation or directive (whether or not having the force of law) or in its interpretation or application by any Authority charged with its administration; or

	
  

	
(ii)

	
compliance with any request from, or requirement of, any central bank or other monetary or other Authority;

  

-10-

  

	
  

	
which, in either case, after the date of this Agreement: (A) imposes, modifies or makes applicable any reserve, special deposit or similar requirements against assets held by, or deposits with or for the account of, or loans made by, IFC or that Participant; (B) imposes a cost on IFC as a result of IFC having made the Loan or on that Participant as a result of that Participant having acquired its Participation or reduces the rate of return on the overall capital of IFC or that Participant that it would have achieved, had IFC not made the Loan or that Participant not acquired its Participation, as the case may be; (C) changes the basis of taxation on payments received by IFC in respect of the Loan or by that Participant with respect to its Participation (otherwise than by a change in taxation of the overall net income of IFC or that Participant imposed by the jurisdiction of its incorporation or in which it books its Participation or in any political subdivision of any such jurisdiction); or (D) imposes on IFC or that Participant any other condition regarding the making or maintaining of the Loan or its Participation; but excluding any incremental costs of making or maintaining a Participation that are a direct result of that Participant having its principal office in the Country or having or maintaining a permanent office or establishment in the Country, if and to the extent that permanent office or establishment acquires that Participation;

"Increased Costs Certificate" means a certificate provided from time to time by IFC (based on a certificate to IFC from any Participant, if Increased Costs affect its Participation), certifying: (i) the circumstances giving rise to the Increased Costs; (ii) that the costs of IFC or, as the case may be, that Participant, have increased or the rate of return of either of them has been reduced; (iii) that IFC or, as the case may be, that Participant, has, in its opinion, exercised reasonable efforts to minimize or eliminate the relevant increase or reduction, as the case may be; and (iv) the amount of Increased Costs;

"Insurances" means:

	
  

	
(i)

	
all policies and contracts of insurance (and reinsurance, if any), including entries of a Mortgaged Vessel in any protection and indemnity or war risks association, which are effected in respect of such Mortgaged Vessel, her earnings or otherwise in relation to her as stated in Annex C, Section 5.05 (Insurance Covenants) and other relevant provisions of this Agreement; and

 

	
  

	
(ii)

	
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

 

"Insurance Assignment" means:

	
  

	
(i)

	
a first priority assignment of the Insurances of each Paraguayan Mortgaged Vessel among the owner of such Paraguayan Mortgaged Vessel, the Bareboat Charterer of such Paraguayan Mortgaged Vessel (if any) and the Security Trustee, provided that in respect of the First Disbursement, each assignment shall be executed in favor of the Security Trustee for the benefit of IFC as lender under the 2008 UABLPN Loan Agreement, IFC as lender under the 2008 UABLPY Loan Agreement and OFID as lender under the 2008 Parallel Loan Agreement to secure the obligations of the borrowers and the Guarantor respectively under the 2008 Financing Documents to which each is a party;

 

  

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(ii)

	
a first priority assignment of the Insurances of each Other Mortgaged Vessel among the owner of such Other Mortgaged Vessel, the Bareboat Charterer of such Other Mortgaged Vessel (if any) and the Security Trustee (for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement); and

 

	
  

	
(iii)

	
a second priority assignment of the Insurances of each Liberian Mortgaged Vessel among the owner of such Liberian Mortgaged Vessel, the Bareboat Charterer of such Liberian Mortgaged Vessel (if any) and the Security Trustee (for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement);

 

in each case to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement, and in the singular means any one of them as the context may require;

"Insurance Assignment Acknowledgements and Consents" means the letter of undertaking executed by the relevant underwriters and protection and indemnity clubs in relation to each Insurance Assignment;

"Intercreditor Agreement" means the agreement to be entered into between IFC as lender under this Agreement and OFID as a lender under the 2011 Parallel Loan Agreement setting forth the manner in which the parties thereto agree to consult with each other with respect to the exercise of their rights under the Collateral Trust Agreement and to share the proceeds of enforcement against the Collateral for the 2011 Senior Loans;

"Interest Determination Date" means except as otherwise provided in Section 2.03(d)(ii) (Interest), the second Business Day before the beginning of each Interest Period;

"Interest Payment Date" means June 15 and December 15 in each year or, in the case of any Interest Period of less than six (6) months, pursuant to Section 2.04 (Change in Interest Period), any day that is the 15th day of the month in which the relevant Interest Period ends;

"Interest Period" means each period of six (6) months or, in the circumstances referred to in Section 2.04 (Change in Interest Period), each period of three (3) months or one (1) month determined pursuant to that Section, in each case beginning on an Interest Payment Date and ending on the day immediately before the next following Interest Payment Date, except in the case of the first period applicable to each Disbursement when it means the period beginning on the date on which that Disbursement is made and ending on the day immediately before the next following Interest Payment Date;

"Interest Rate" means for any Interest Period, the rate at which interest is payable on the Loan during that Interest Period, determined in accordance with Section 2.03 (Interest);

  

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"Liabilities" means, in respect of a Person, the aggregate of all obligations of such Person to pay or repay money, including, without limitation:

	
  

	
(i)

	
Financial Debt;

 

	
  

	
(ii)

	
the amount of all liabilities of such Person (actual or contingent) under any conditional sale or a transfer with recourse or obligation to repurchase, including, without limitation, by way of discount or factoring of book debts or receivables;

 

	
  

	
(iii)

	
taxes (including deferred taxes);

 

	
  

	
(iv)

	
trade accounts incurred and payable in the ordinary course of business to trade creditors within 90 days of the date they are incurred and which are not overdue (including letters of credit or similar instruments issued for the account of such Person with respect to such trade accounts);

 

	
  

	
(v)

	
accrued expenses, including wages and other amounts due to employees and other services providers;

 

	
  

	
(vi)

	
the amount of all liabilities of such Person howsoever arising to redeem any of its shares; and

 

	
  

	
(vii)

	
to the extent (if any) not included in the definition of Financial Debt, the amount of all liabilities of any Person to the extent such Person guarantees them or otherwise obligate themselves to pay them (other than any liabilities of UABLPY in respect of the Notes);

 

"Liberian Mortgaged Vessel" means a Liberian Vessel that is subject to a Liberian Mortgage;

"Liberian Mortgages" means, collectively, the First Liberian Mortgages and the Second Liberian Mortgages, and in the singular means any one of them as the context may require;

"Liberian Vessel" means a pushboat or barge owned by an UABLPN Borrower, a Borrower, a Guarantor Subsidiary or the Guarantor that is registered under the law and flag of Liberia, together with all ancillary equipment and parts;

"LIBOR" means the British Bankers' Association ("BBA") interbank offered rates for deposits in Dollars which appear on the relevant page of the Reuters Service (currently page LIBOR01) or, if not available, on the relevant pages of any other service (such as Bloomberg Financial Markets Service) that displays such BBA rates; provided that if the BBA for any reason ceases (whether permanently or temporarily) to publish interbank offered rates for deposits in Dollars, "LIBOR" shall mean the rate determined pursuant to Section 2.03(d) (Interest);

"Lien" means any mortgage, pledge, charge, assignment, hypothecation, security interest, title retention, preferential right, trust arrangement, right of set-off, counterclaim or banker's lien, privilege or priority of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;

  

-13-

  

"Loan" means the loan specified in Section 2.01(a) (The Loan) or, as the context requires, its principal amount from time to time outstanding;

"Long-term Debt" means that part of Financial Debt whose final maturity falls due more than one year after the date it is incurred (including the current maturities thereof);

"Major Guarantor Subsidiary" means a Guarantor Subsidiary or a group of Guarantor Subsidiaries which by itself or on an aggregate basis owns Collateral or accounts for 5% or more of the Guarantor's total assets or total revenues;

"Marine Financial" means Marine Financial Investment Corp., a corporation organized and existing under the laws of the Republic of Panama;

"Market Disruption Event" means that, before the close of business in London on the Interest Determination Date for the relevant Interest Period, the cost to IFC, or Participants whose Participations in the Loan represent in the aggregate 30% or more of the outstanding principal amount of the Loan (as notified to IFC by such Participants), of funding the Loan or such Participations (as applicable) would be in excess of LIBOR;

"Material Adverse Effect" means, with respect to a Person (including the Borrowers, the Guarantor, Ultrapetrol or another Guarantor Subsidiary or Major Guarantor Subsidiary), a material adverse effect on (i) such Person's assets or properties; (ii) such Person's prospects or financial condition; (iii) the implementation of the Project, the Financial Plan or the carrying on of such Person's business or operations; or (iv) the ability of such Person to comply with its obligations under this Agreement, or under any other Transaction Document;

"Minimum Required Security Coverage Ratio" means, collectively, the relevant First Ranking Security Coverage Ratio and the Second Ranking Security Coverage Ratio;

"Mortgage" means a First Paraguayan Mortgage, a First Other Mortgage and a Second Liberian Mortgage, and in the singular means any one of them as the context may require;

"Mortgaged Vessels" means, collectively, the Paraguayan Mortgaged Vessels, the Other Mortgaged Vessels and the Liberian Mortgaged Vessels, and in the singular means any one of them as the context may require;

"Net Income" means, for any Financial Year, the excess (if any) of gross income over total expenses (provided that income taxes shall be treated as part of total expenses) appearing in the audited financial statements for such calculation period;

"Non-Cash Items" means for any Financial Year, the net aggregate amount (which may be a positive or negative number) of all non-cash "income" (as a negative item) and non-cash "expense" (as a positive item) which (under accrual accounting) were added or subtracted in calculating Net Income during that calculation period, including, without limitation, equity earnings in Subsidiaries, asset revaluations, depreciation, amortization, deferred taxes and provisions for severance pay of staff and workers;

  

-14-

  

"Notes" means the 9% first preferred ship mortgage notes due 2014, issued by Ultrapetrol, or such notes that may be issued in substitution or exchange thereof by Ultrapetrol as a result of refinancing or rescheduling of such notes, provided that any new notes in substitution or exchange for the existing Notes shall be subject to an Acceptable Refinancing of the Notes;

"Obstructive Practice" has the meaning assigned to it in Annex D;

"OFID" means the OPEC Fund for International Development;

"Oceanpar" means Oceanpar S.A., a corporation organized and existing under the laws of Paraguay;

"Other Financing Documents" means, collectively, (i) the Collateral Trust Agreement; (ii) the Intercreditor Agreement; (iii) the 2011 Parallel Loan Documents; (iv) the Shareholder Loan Agreements; (v) the Subordination Agreement; and (iv) the 2008 Financing Documents; and in the singular means any one of them as the context may require;

"Other Mortgaged Vessel" means an Other Vessel that is subject to a First Other Vessel Mortgage;

"Other Vessel" means a pushboat or barge  owned by a Borrower, the Guarantor or any other Guarantor Subsidiary that is registered under the law and flag of a country other than Paraguay or Liberia, together with all ancillary equipment and parts;

"Paraguayan Mortgaged Vessel" means a Paraguayan Vessel that is subject to a First Paraguayan Mortgage;

"Paraguayan Vessel" means a pushboat or barge owned by a Borrower, the Guarantor or any other Guarantor Subsidiary that is registered under the law and flag of Paraguay, together with all ancillary equipment and parts;

"Parfina" means Parfina S.A., a corporation organized and existing under the laws of Paraguay;

"Participant" means any Person who acquires a Participation;

"Participation" means the interest of any Participant in the Loan, or as the context requires, in a Disbursement;

"Participation Agreement" means an agreement entitled "Participation Agreement" between IFC and a Participant pursuant to which the Participant acquires a Participation;

"Peak Debt Service Coverage Ratio" means the ratio obtained by dividing:

	
  

	
(i)

	
the aggregate, for the financial year most recently ended prior to the relevant date of calculation for which audited financial statements are available, of (A) Net Income for that financial year, (B) Non-Cash Items, (C) the amount of all payments that were due during that financial year on account of interest and other charges on Financial Debt (to the extent deducted from Net Income), and

 

  

-15-

  

(D) the amount of all charter hire payments due during that financial year that were subordinated in payment and liquidation to the 2008 Financings, the Loan and the 2011 Parallel Loan;

 

by

 

	
  

	
(ii)

	
the aggregate of (A) the highest aggregate amount, in any financial year after the financial year described in clause (i) above until the final scheduled maturity of the 2008 Financings, the Loan and the 2011 Parallel Loan of all scheduled payments (including balloon payments) falling due on account of principal of Long-term Debt and interest and other charges on all Financial Debt and (B) without double counting any payment already counted in the preceding sub-clause (A), any payment required to be made to any debt service account in such financial year under the terms of any agreement providing for Financial Debt;

 

where, for the purposes of clause (b) above:

	
  

	
(x)

	
subject to sub-clause (y), for the computation of interest payable during any period for which the applicable rate is not yet determined, that interest shall be computed at the rate in effect at the time of the relevant date of calculation;

	
  

	
(y)

	
interest on Short-term Debt in such financial year shall be computed by reference to the aggregate amount of interest thereon paid during the financial year in which the relevant date of calculation falls up to the end of the period covered by the latest quarterly financial statements prepared by the Borrowers multiplied by a factor of 4, 2 or 4/3 depending on whether the computation is made by reference to the financial statements for the first quarter, the first two quarters or the first three quarters, respectively;

"Performance Standards" means IFC's Performance Standards on Social & Environmental Sustainability, dated April 30, 2006, copies of which have been delivered to and receipt of which has been acknowledged by the Borrowers and the Guarantor and incorporated herein by reference;

"Permitted Liens" means:

	
  

	
(i)

	
Liens created by the Security Documents;

 

	
  

	
(ii)

	
Liens for unpaid but not overdue master's and crew's wages in accordance with usual maritime practice;

 

	
  

	
(iii)

	
Liens for salvage;

 

	
  

	
(iv)

	
Liens arising by operation of law for not more than two (2) months' prepaid hire under any charter or other contract of employment in relation to a Mortgaged Vessel not prohibited by this Agreement or the 2008 Financing Documents;

 

  

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(v)

	
Liens for master's disbursements incurred in the ordinary course of trading and any other Lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Mortgaged Vessel, provided that such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant owner or bareboat charterer of such Mortgaged Vessel in good faith by appropriate steps);

 

	
  

	
(vi)

	
any Lien created in favor of a plaintiff or defendant by any action of the court or tribunal before whom such action is brought as security for costs and expenses where the relevant owner or bareboat charterer of such Mortgaged Vessel is prosecuting or defending such proceedings or arbitration in good faith by appropriate steps and such Lien does not (and is not likely to) result in any sale, forfeiture or loss of a Mortgaged Vessel;

 

	
  

	
(vii)

	
Liens arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which reserves, as appropriate under the Accounting Standards, have been made; and

 

	
  

	
(viii)

	
Liens securing the 2008 Financings;

 

"Person" means any natural person, corporation, company, partnership, firm, voluntary association, joint venture, trust, unincorporated organization, Authority or any other entity whether acting in an individual, fiduciary or other capacity;

"Potential Event of Default" means any event or circumstance which would, with notice, lapse of time, the making of a determination or any combination thereof, become an Event of Default;

"Project" means the investment program in 2011-2013 by the Guarantor and its Subsidiaries for (i) the construction and acquisition of 64 additional barges; (ii) the modification to 9 existing pushboats necessary to replace their engines; (iii) the re-bottoming of 50 existing barges; and (iv) the construction and acquisition of additional pushboats and ancillary equipment;

"Project Documents" means the Bareboat Charters, if any;

"Prospective Debt Service Coverage Ratio" means, in respect of a Person, the ratio obtained by dividing:

	
  

	
(i)

	
the aggregate, for the Financial Year most recently ended prior to the relevant date of calculation for which audited financial statements are available or for the last 4 fiscal quarters prior to the relevant date of calculation, where applicable, of (A) Net Income for that calculation period, (B) Non-Cash Items, (C) the amount of all payments that were due during that calculation period on account of interest and other charges on Financial Debt (to the extent deducted from Net Income) and (D) the amount of all charter hire payments due during that calculation period that were subordinated in payment and liquidation to the 2008 Financings, the Loan and the 2011 Parallel Loan;

 

  

-17-

  

 

by

 

	
  

	
(ii)

	
the aggregate of (A) all scheduled payments (including balloon payments) that fall due during such calculation period in which the relevant date of calculation falls on account of principal of Long-term Debt and interest and other charges on all Financial Debt and (B) without double counting any payment already counted in the preceding sub-clause (A), any payment made or required to be made to any debt service account under the terms of any agreement providing for Financial Debt but excluding voluntary prepayments;

 

where, for the purposes of clause (ii) above:

 

	
  

	
(x)

	
subject to sub-clause (y) below, for the computation of interest payable during any period for which the applicable rate is not yet determined, that interest shall be computed at the rate in effect at the time of the relevant date of calculation; and

	
  

	
(y)

	
interest on Short-term Debt payable in such calculation period in which the relevant date of calculation falls shall be computed by reference to the aggregate amount of interest thereon paid during that Financial Year up to the end of the period covered by the latest quarterly financial statements prepared by the Borrowers multiplied by a factor of 4, 2 or 4/3 depending on whether the computation is made by reference to the financial statements for the first quarter, the first two quarters or the first three quarters, respectively;

"Relevant Spread" means 3.65% per annum;

"Responsible Carrier Program" means the framework of voluntary standards of conduct and practices established in 1994 by the American Waterways Organization for developing company-specific safety and environmental programs to improve marine safety and environmental protection in the tugboat, towboat and barge industry;

"Sanctionable Practice" means any Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice, or Obstructive Practice, as those terms are defined herein and interpreted in accordance with the Anti-Corruption Guidelines attached to this Agreement as Annex D;

"Second Liberian Mortgages" means:

	
  

	
(i)

	
a second preferred Liberian fleet mortgage over one or more of the Liberian Vessels, executed by UABLPN as owner in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

 

	
  

	
(ii)

	
a second preferred Liberian fleet mortgage over one or more of the Liberian Vessels, executed by Eastham Barges as owner in favor of the Security Trustee

 

  

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for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement; and

 

	
  

	
(iii)

	
a second preferred Liberian fleet mortgage over one or more of the Liberian Vessels, executed by Marine Financial as owner in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

 

and in the singular means any one of them as the context may require;

 

"Second Ranking Security Coverage Ratio" means the ratio obtained by dividing (i) the aggregate Fair Market Value of the Liberian Mortgaged Vessels by (ii) the outstanding amount of the 2011 Senior Loans, such ratio to be at all times equal to or higher than 3.0;

 

"Security Documents" means, collectively, the documents providing for the IFC Security consisting of:

 

	
  

	
(i)

	
the Bareboat Charter Assignments and the Bareboat Charter Assignment Acknowledgements and Consents;

 

	
  

	
(ii)

	
the Debt Service Reserve Account Pledge;

 

	
  

	
(iii)

	
the Insurance Assignments and the Insurance Assignment Acknowledgments and Consents;

 

	
  

	
(iv)

	
the Mortgages;

 

	
  

	
(v)

	
the Shares Pledge; and

 

	
  

	
(vi)

	
the Shareholder Loan Agreement Assignments and the Shareholder Loan Agreement Assignment Acknowledgments and Consents;

 

and in the singular means any one of them as the context may require;

"Security Increment" means additional vessels that shall be added as Collateral for the 2011 Senior Loans so as to meet any shortfall in the Minimum Required Security Coverage Ratio, such additional vessels to be added in  the following priority: (i) newly manufactured vessels offered as Collateral which are registered with countries acceptable to IFC; (ii) pushboats which are registered with countries acceptable to IFC; and (iii) Liberian registered vessels, if there are any available, except when such a priority of assets imposes a significant cost to the Guarantor compared to other assets available for mortgage, as determined by IFC;

"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Security Trustee notifies the Borrowers that:

  

-19-

  

	
  

	
(i)

	
all amounts which have become due for payment by the Borrowers or the Guarantor under the Transaction Documents have been paid;

 

	
  

	
(ii)

	
no amount is owing or has accrued (without yet having become due for payment) under any Transaction Document;

 

	
  

	
(iii)

	
neither the Borrowers nor the Guarantor has any future or contingent liability under any provision of this Agreement or another Transaction Document;

 

	
  

	
(iv)

	
none of the Security Trustee or IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement believes that there is a significant risk that any payment or transaction under a Transaction Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or the Guarantor or in any present or possible future proceeding relating to a Transaction Document or any asset covered (or previously covered) by IFC Security created by a Transaction Document; and

 

	
  

	
(v)

	
IFC has no further obligation to make any Disbursement under this Agreement and OFID has no further obligation to make any Disbursement under the 2011 Parallel Loan Agreement;

 

"Security Trustee" means Wilmington Trust, National Association, a national banking association formed under the laws of the United States of America, with offices at 1220 North Market Street, Suite 202, Wilmington, Delaware 19801, United States of America, or such other institution as may be agreed per the terms of the Collateral Trust Agreement;

"Share Retention Agreement" means the agreement made among Ultrapetrol, the Shareholders, the Guarantor, the Borrowers and IFC pursuant to which (i) Ultrapetrol and the Shareholders undertake to maintain direct and indirect shareholdings in the Guarantor and (ii) the Guarantor undertakes to maintain direct and indirect shareholdings in the Borrowers;

"Shareholder Loan" means the loan provided under a Shareholder Loan Agreement;

"Shareholder Loan Agreement" means one or more agreements, each in form and substance satisfactory to IFC, providing for (i) a loan to the Guarantor, or any Guarantor Subsidiary (including the Borrowers), by Ultrapetrol or any of Ultrapetrol's Subsidiaries or (ii) a loan to any of the Borrowers by the Guarantor;

"Shareholder Loan Agreement Assignment" means an assignment executed by the relevant lender in respect of its rights under any Shareholder Loan Agreement, such assignment to be in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID under the 2011 Parallel Loan to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

"Shareholder Loan Agreement Assignment Acknowledgement and Consent" means an acknowledgement and consent executed by the intercompany borrower under and with respect to each Shareholder Loan Agreement Assignment;

  

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"Shareholders" means UP River (Holdings) Limited, a corporation organized and existing under the laws of Bahamas, and UPB (Panama) Inc., a corporation organized and existing under the laws of the Republic of Panama, or any other shareholders of the Guarantor;

"Shareholders' Equity" means the aggregate of:

	
  

	
(i)

	
the amount paid up on the share capital of a Person;

 

	
  

	
(ii)

	
the amount standing to the credit of the reserves of such Person (including, without limitation, any share premium account, capital redemption reserve funds and any credit balance on the accumulated profit and loss account); and

 

	
  

	
(iii)

	
any Shareholder Loan provided by Ultrapetrol or the Shareholders that is subordinated in payment and liquidation to the 2008 Financings, the Loan and the 2011 Parallel Loan;

 

after deducting from that aggregate (A) any debit balance on the profit and loss account or impairment of the issued share capital of the relevant Person (except to the extent that deduction with respect to that debit balance or impairment has already been made), (B) amounts set aside for dividends or taxation (including deferred taxation), (C) amounts attributable to capitalized items such as goodwill, trademarks, deferred charges, licenses, patents and other intangible assets and (D) loans or advances to, deposits (except commercial bank deposits) or investments in, direct or indirect shareholders of the relevant Person;

"Shares Pledge" means a first priority pledge of all of the share capital of Riverpar made by the Thurston and Cedarino in favor of the Security Trustee for the benefit of IFC as lender under this Agreement and OFID as lender under the 2011 Parallel Loan Agreement to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

"Short-term Debt" means all Financial Debt other than Long-term Debt;

"Subordination Agreement" means the agreement made among Ultrapetrol, the Shareholders, the Guarantor and IFC providing, inter alia, for the subordination at the times and in the circumstances therein described of payments by the Guarantor and its Subsidiaries (including the Borrowers) to Ultrapetrol and the Shareholders (including payments in respect of vessels chartered to the Guarantor by other Ultrapetrol subsidiaries and repayment of any shareholder loans) to payment obligations of the Guarantor and the Borrowers under the UABL Guarantee Agreement and 2011 Senior Loan Agreements, respectively; provided that the Guarantor may make payments (i) of up to US$500,000 in aggregate per fiscal quarter to Ultrapetrol for the purchase of goods and services necessary to the Guarantor's operations; and (ii) to Ultrapetrol for the purchases of assets and services included in the Project;

"Subsidiary" means with respect to any Person, any entity:

	
  

	
(i)

	
over 50% of whose capital is owned, directly or indirectly, by that Person;

 

  

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(ii)

	
for which that Person may nominate or appoint a majority of the members of the board of directors or other body performing similar functions; or

 

	
  

	
(iii)

	
which is otherwise effectively controlled by that Person;

 

"Taxes" means any present or future taxes, withholding obligations, duties and other charges of whatever nature levied by any Authority;

"Thurston" means Thurston Shipping Inc., a corporation organized and existing under the laws of Panama;

"Transaction Documents" means collectively (i) this Agreement; (ii) the UABL Guarantee Agreement; (iii) the Ultrapetrol Guarantee Agreement; (iv) the Other Financing Documents; (v) the Project Documents; (vi) the Security Documents and (vii) the Share Retention Agreement, and in the singular means any one of them as the context may require;

"UABL Guarantee Agreement" means the agreement entitled "Guarantee Agreement" dated the date of this Agreement between the Guarantor and IFC, pursuant to which, inter alia, the Guarantor unconditionally and irrevocably guarantees the obligations of the Borrowers under this Agreement;

"UABLPN" means UABL Barges (Panama) Inc., a corporation organized and existing under the laws of the Republic of Panama;

"UABLPN Borrowers" means, collectively, UABLPN, UABLTS, Marine Financial and Eastham Barges and in the singular means any one of them as the context may require;

"UABLTS" means UABL Towing Services S.A., a corporation organized and existing under the laws of the Republic of Panama;

"Ultrapetrol" means Ultrapetrol (Bahamas) Limited, a corporation organized and existing under the laws of the Bahamas;

"Ultrapetrol Guarantee Agreement" means the agreement entitled "Enforcement Shortfall Guarantee Agreement" dated the date of this Agreement between Ultrapetrol and IFC, pursuant to which Ultrapetrol unconditionally and irrevocably guarantees the payment of any Enforcement Shortfall Amount, provided that Ultrapetrol shall be required to pay such Enforcement Shortfall Amount only in the event that (i) IFC is unable to enforce the First Priority Paraguayan Mortgages or First Other Vessel Mortgages, or (ii) enforcement proceedings in respect of the First Priority Paraguayan Mortgages or First Other Vessel Mortgages have been initiated but the realization of the underlying Collateral has not been achieved and payment has not been made to IFC within 18 months of the initiation of such enforcement proceedings;

"Ultrapetrol Group" means Ultrapetrol and its Subsidiaries;

"World Bank" means the International Bank for Reconstruction and Development, an international organization established by Articles of Agreement among its member countries; and

  

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"YPF S.A." means a company organized under the laws of Argentina or any other supplier that provides fuel for the Vessels owned by any of the Guarantor Subsidiaries.

Section 1.02.  Financial Calculations. (a) All financial calculations to be made under, or for the purposes of, this Agreement and any other Transaction Document shall be made in accordance with the Accounting Standards and, except as otherwise required to conform to any provision of this Agreement, shall be calculated from the then most recently issued quarterly financial statements and on a rolling last twelve month basis (where applicable) which the Borrowers is obligated to furnish to IFC under Section 5.03 (a) (Reporting Requirements) or, as the case may be, the Guarantor is required to provide to IFC under Section 6.03 (a) (Reporting Covenants) of the UABL Guarantee Agreement.

(b)           Where quarterly financial statements from the last quarter of a Financial Year are used for the purpose of making certain financial calculations, at IFC's option, those calculations may instead be made from the audited financial statements for such Financial Year.

(c)           If a financial calculation is to be made under or for the purposes of this Agreement or any other Transaction Document on a Consolidated Basis, that calculation shall be made by reference to the sum of all amounts of similar nature reported in the relevant financial statements of each of the entities whose accounts are to be consolidated with the accounts of the Borrowers or the Guarantor, as the case may be, plus or minus the consolidation adjustments customarily applied to avoid double counting of transactions among any of those entities, including the Borrowers and the Guarantor, as the case may be.

Section 1.03.  Interpretation.  In this Agreement, unless the context otherwise requires:

(a)           headings are for convenience only and do not affect the interpretation of this Agreement;

(b)           words importing the singular include the plural and vice versa;

(c)           a reference to an Annex, Article, party, Schedule or Section is a reference to that Article or Section of, or that Annex, party or Schedule to, this Agreement;

(d)           a reference to a document includes an amendment or supplement to, or replacement or novation of, that document but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement; and

(e)           a reference to a party to any document includes that party's successors and permitted assigns.

Section 1.04.  Business Day Adjustment.  (a) When an Interest Payment Date is not a Business Day, then such Interest Payment Date shall be automatically changed to the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

(b)           When the day on or by which a payment (other than a payment of principal or interest) is due to be made is not a Business Day, that payment shall be made on or by the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

  

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ARTICLE II

 

The Loan

 

Section 2.01.  The Loan.  Subject to the provisions of this Agreement, IFC agrees to lend, and the Borrowers agree to borrow, on a joint and several basis, the Loan of up to $15,000,000.

Section 2.02.  Disbursement Procedure.  (a)  The Borrowers may request Disbursements by delivering to IFC, at least 10 Business Days prior to the proposed date of disbursement, a Disbursement request substantially in the form of Schedule 2.

(b)           Each Disbursement shall be made by IFC for credit to the Borrowers' account at such a bank as the Borrowers shall indicate, or to any other Person or account as the Borrowers shall indicate that is acceptable to IFC, all as specified by the Borrowers in the relevant Disbursement request.

(c)           Each Disbursement (other than the last one) shall be made in an amount of not less than $3,000,000.

(d)           The Borrowers shall deliver to IFC a receipt, substantially in the form of Schedule 3, within 5 Business Days following each Disbursement.

Section 2.03.  Interest.  Subject to the provisions of Section 2.05 (Default Rate Interest), the Borrowers shall pay interest on the Loan in accordance with this Section 2.03 (Interest):

(a)           During each Interest Period, the Loan (or, with respect to the first Interest Period for each Disbursement, the amount of that Disbursement) shall bear interest at the applicable Interest Rate for that Interest Period.

(b)           Interest on the Loan shall accrue from day to day, be prorated on the basis of a 360-day year for the actual number of days in the relevant Interest Period and be payable in arrears on the Interest Payment Date immediately following the end of that Interest Period; provided that with respect to any Disbursement made less than 15 days before an Interest Payment Date, interest on that Disbursement shall be payable commencing on the second Interest Payment Date following the date of that Disbursement.

(c)           Subject to Section 2.04 (Change in Interest Period), the Interest Rate for any Interest Period shall be the rate which is the sum of: (i) the Relevant Spread; and (ii) LIBOR on the Interest Determination Date for that Interest Period for 6 months (or, in the case of the first Interest Period for any Disbursement, for 1 month, 2 months, 3 months or 6 months, whichever period is closest to the duration of the relevant Interest Period (or, if two periods are equally close, the longer one)) rounded upward to the nearest three decimal places.

(d)           If, for any Interest Period, IFC cannot determine LIBOR by reference to the Reuters Service or any other service that displays BBA rates, IFC shall notify the Borrowers and shall instead determine LIBOR:

 

	
  

	
(i)

	
on the second Business Day before the beginning of the relevant Interest Period by calculating the arithmetic mean (rounded upward to the nearest three decimal

 

  

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places) of the offered rates advised to IFC on or around 11:00 a.m., London time, for deposits in Dollars and otherwise in accordance with Section 2.03(c)(ii), by any four (4) major banks active in Dollars in the London interbank market, selected by IFC; provided that if less than four quotations are received, IFC may rely on the quotations so received if not less than two (2); or

 

	
  

	
(ii)

	
if less than two (2) quotations are received from the banks in London in accordance with subsection (i) above, on the first day of the relevant Interest Period, by calculating the arithmetic mean (rounded upward to the nearest three decimal places) of the offered rates advised to IFC on or around 11:00 a.m., New York time, for loans in Dollars and otherwise in accordance with Section 2.03(c)(ii), by a major bank or banks in New York, New York selected by IFC.

 

(e)           Subject to any alternative basis agreed as contemplated by Section 2.03(f) below, if a Market Disruption Event occurs in relation to all or any part of the Loan for any Interest Period, IFC shall promptly notify the Borrowers of such event and the relevant Interest Rate for the relevant portion of the Loan for that Interest Period shall be the rate which is the sum of:

 

	
  

	
(i)

	
the Relevant Spread; and

 

	
  

	
(ii)

	
either (A) the rate which expresses as a percentage rate per annum the cost to IFC (or the relevant Participant as notified to IFC as soon as practicable and in any event not later than the close of business on the first day of the relevant Interest Period) of funding the Loan or such Participation (as applicable) from whatever source it may reasonably select or (B) at the option of IFC (or any such Participant, as applicable), LIBOR for the relevant period as determined in accordance with Section 2.03(c)(ii) above.

 

	
  

	
(f)

	
(i)

	
If a Market Disruption Event occurs in relation to all or any part of the Loan and IFC or the Borrowers so require, within 5 Business Days of the notification by IFC pursuant to Section 2.03(e) above, IFC and the Borrowers shall enter into good faith negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest applicable to the Loan.

 

	
  

	
(ii)

	
Any alternative basis agreed pursuant to paragraph (i) above shall take effect in accordance with its terms and be binding on each party hereto.

 

	
  

	
(iii)

	
If agreement cannot be reached, the Borrowers may prepay the relevant portion of the Loan in accordance with Section 2.07(A) but without any prepayment premium.

 

(g)           On each Interest Determination Date for any Interest Period, IFC shall determine the Interest Rate applicable to that Interest Period and promptly notify the Borrowers of those rates.

 

(h)           The determination by IFC, from time to time, of the applicable Interest Rate shall be final and conclusive and bind the Borrowers (unless the Borrowers shows to IFC's satisfaction that the determination involves manifest error).

  

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Section 2.04.  Change in Interest Period.  Without prejudice to the provisions of Section 2.05 (Default Rate Interest), if at any time the Borrowers fail to pay any amount of principal of, or interest on, the Loan when due (whether at stated maturity or upon acceleration), and any part of that amount remains unpaid on the third Business Day immediately preceding any Interest Payment Date falling after that amount became due, then:

(a)           IFC may elect that the duration of the Interest Period commencing on that Interest Payment Date and, subject to Section 2.04(c), any subsequent Interest Period shall be either 3 months or 1 month and shall notify the Borrowers of that election in the notice referred to in Section 2.03(e) (Interest);

(b)           the Interest Rates applicable to any Interest Period which is 3 months or 1 month shall be determined in accordance with Section 2.03 (Interest) in all respects, except that any reference in Section 2.03(c)(ii) (Interest) to 6 months shall be deemed to be a reference to 3 months or, as the case may be, 1 month; and

(c)           unless an Event of Default or Potential Event of Default has occurred and is continuing, IFC shall reinstate Interest Periods of 6 months as of the first Interest Payment Date which is June 15 or December 15 falling at least 3 Business Days after the payment default is remedied in full and shall inform the Borrowers of that reinstatement in the notice referred to in Section 2.03(e) (Interest).

Section 2.05.  Default Rate Interest.  (a) Without limiting the remedies available to IFC under this Agreement or otherwise (and to the maximum extent permitted by applicable law), if the Borrowers fail to make any payment of principal or interest (including interest payable pursuant to this Section) or any other payment provided for in Section 2.08 (Fees) when due as specified in this Agreement (whether at stated maturity or upon acceleration), the Borrowers shall pay interest on the amount of that payment due and unpaid at the rate which shall be the sum of 2% per annum plus the Interest Rate in effect from time to time.

(b)           Interest at the rate referred to in Section 2.05(a) shall accrue from the date on which payment of the relevant overdue amount became due until the date of actual payment of that amount (as well after as before judgment), and shall be payable on demand or, if not demanded, on each Interest Payment Date falling after any such overdue amount became due.

Section 2.06.  Repayment.  (a) Subject to Section 1.04 (Business Day Adjustment), the Borrowers shall repay the Loan on the following Interest Payment Dates and in the following amounts:

	  	
Interest Payment Date

	
Principal Amount Due

	  	
June 15, 2013

	
$882,353

	  	
December 15, 2013

	
$882,353

	  	
June 15, 2014

	
$882,353

	  	
December 15, 2014

	
$882,353

	  	
June 15, 2015

	
$882,353

	  	
December 15, 2015

	
$882,353

	  	
June 15, 2016

	
$882,353

	  	
December 15, 2016

	
$882,353

	  	
June 15, 2017

	
$882,353

	  	
December 15, 2017

	
$882,353

  

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June 15, 2018

	
$882,353

	  	
December 15, 2018

	
$882,353

	  	
June 15, 2019

	
$882,353

	  	
December 15, 2019

	
$882,353

	  	
June 15, 2020

	
$882,353

	  	
December 15, 2020

	
$882,353

	  	
June 15, 2021

	
$882,352

 (b)           Upon each Disbursement, the amount disbursed shall be allocated for repayment on each of the respective dates for repayment of principal set out in the table in Section 2.06(a) in amounts which are pro rata to the amounts of the respective installments shown opposite those dates in that table (with IFC adjusting those allocations as necessary so as to achieve whole numbers in each case).

(c)           Any principal amount of the Loan repaid under this Section 2.06(a) may not be re-borrowed.

Section 2.07A.  Voluntary Prepayment  Without prejudice to Section 2.11(b) (Increased Costs), Section 2.15 (Taxes), Section 2.17 (Illegality of Participation) and Section 5.05 (Insurance Covenants):

(a)           the Borrowers may prepay on any Interest Payment Date all or any part of the Loan, on not less than 30 days prior written notice to IFC, but only if: (i) the Borrowers simultaneously pay all accrued interest and Increased Costs (if any) on the amount of the Loan to be prepaid, together with the prepayment premium specified in Section 2.07A(b), and all other amounts then due and payable under this Agreement, including the amount payable under Section 2.12 (Unwinding Costs), if the prepayment is not made on an Interest Payment Date; (ii) for a partial prepayment, that prepayment is an amount not less than $2,000,000; and (iii) if requested by IFC, the Borrowers deliver to IFC, prior to the date of prepayment, evidence satisfactory to IFC that all necessary Authorizations with respect to the prepayment have been obtained and each of such Authorizations is in full force and effect.

(b)           On the date of any prepayment of the Loan in accordance with Section 2.07A(a), the Borrowers shall pay a prepayment premium consisting of an amount in Dollars equal to the relevant percentage of the amount to be prepaid, such percentage being determined as follows: (i) on or prior to June 15, 2013, two per cent (2%); and (ii) thereafter, one per cent (1%).  The determination by IFC of the prepayment premium shall be final and conclusive and bind the Borrowers (unless the Borrowers show, to the satisfaction of IFC, that such determination involved manifest error).

(c)           Amounts of principal prepaid under this Section shall be applied by IFC to the then outstanding installments of principal of the Loan in inverse order of maturity.

(d)           Upon delivery of a notice in accordance with Section 2.07A(a), the Borrowers shall make the prepayment in accordance with the terms of that notice.

(e)           Any principal amount of the Loan prepaid under this Section 2.07A may not be re-borrowed.

Section 2.07B.  Mandatory Prepayment  Without prejudice to Section 2.11 (Increased Costs), Section 2.15 (Taxes), Section 2.17 (Illegality of Participation) and Section 5.05 (Insurance Covenants):

  

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(a)           If the Borrowers prepay any other long-term loans other than a Shareholder Loan allowed to be prepaid hereunder subject to the requirements of subsection (b) below, IFC shall have the right to require prepayment of the Loan, on a pro-rata basis to the other long-term loan(s) prepaid, provided that if the pro rata prepayment for the Loan would be less than $2,000,000 the Borrowers shall prepay the Loan in an amount of two million Dollars ($2,000,000).  Such prepayment shall be subject to the prepayment premium set forth in Section 2.07A(b) and the 30 days prior written notice to IFC for any prepayment under this Section 2.07B(a).

(b)           If the Guarantor declares or pays dividends, repays shareholder loans or makes loans, advances, deposits (except commercial bank deposits) with or investments in other persons (including Ultrapetrol) at any time during which the cumulative contribution from internal cash generation, shareholder loans or equity from July 1, 2011 until (and including) the date on which any such proposed payment is to be made is less than US$76.0 million, IFC will have the right to require the Borrowers to prepay an equal amount of the Loan.

(c)           Prepayment under Section 2.07B(b) shall not be subject to a prepayment premium or the 30 day prior written notice requirement pursuant to Section 2.07 (A).  Any prepayment under Section 2.07B will be applied by IFC pro-rata to the remaining repayment installments of the Loan.

(d)           Any principal amount of the Loan prepaid under this Section 2.07B may not be re-borrowed.

Section 2.08.  Fees.  (a)  The Borrowers shall pay to IFC a commitment fee (i) at the rate of 0.75% per annum on that part of the Loan that from time to time has not been disbursed or canceled, beginning to accrue on the date of this Agreement; (ii) pro rated on the basis of a 360-day year for the actual number of days elapsed; and (iii) payable semi-annually, in arrears, on each Interest Payment Date, the first such payment to be due on December 15, 2011.

(b)           The Borrowers shall also pay to IFC:

	
  

	
(i)

	
a front-end fee on the Loan of $300,000, to be paid on the earlier of (x) the date which is 30 days after the date of this Agreement and (y) the date immediately preceding the date of the first Disbursement;

	
  

	
(ii)

	
an arranger fee of equal to the higher of (A) 0.5% of the amount of the 2011 Parallel Loan and (B) $35,000, to be paid on or before the date the 2011 Parallel Loan Agreement is executed; and

	
  

	
(iii)

	
if the Borrowers and IFC agree to restructure all or part of the Loan, the Borrowers and IFC shall negotiate in good faith an appropriate amount to compensate IFC for the additional work of IFC staff required in connection with such restructuring.

Section 2.09.  Currency and Place of Payments.  (a)  The Borrowers shall make all payments of principal, interest, fees, and any other amount due to IFC under this Agreement in Dollars, in same day funds, to the account of IFC at Citibank N.A., 111 Wall Street, New York, New York, U.S.A., ABA # 021000089 for credit to IFC's account number 36085579, or at such other bank or account in New York as IFC from time to time designates.  Payments must be received in IFC's designated account no later

  

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than 1:00 p.m. New York time; and the Borrowers hereby irrevocably agree that IFC may deem any payment, or part thereof, that is received after that time as made on the next Business Day and accordingly interest will accrue on any Participant's pro rata share of that payment with respect to which IFC is unable to make same day remittance to that Participant.

(b)           The tender or payment of any amount payable under this Agreement (whether or not by recovery under a judgment) in any currency other than Dollars shall not novate, discharge or satisfy the obligation of the Borrowers to pay in Dollars all amounts payable under this Agreement except to the extent that (and as of the date when) IFC actually receives funds in Dollars in the account specified in, or pursuant to, Section 2.09(a).

 

(c)           The Borrowers shall indemnify IFC against any losses resulting from a payment being received or an order or judgment being given under this Agreement in any currency other than in Dollars or any place other than the account specified in, or pursuant to, Section 2.09(a). The Borrowers shall, as a separate obligation, pay such additional amount as is necessary to enable IFC to receive, after conversion to Dollars at a market rate and transfer to that account, the full amount due to IFC under this Agreement in Dollars and in the account specified in, or pursuant to, Section 2.09(a).

(d)           Notwithstanding the provisions of Section 2.09(a) and Section 2.09(b), IFC may require the Borrowers to pay (or reimburse IFC) for any Taxes, fees, costs, expenses and other amounts payable under Section 2.15(a) (Taxes) and Section 2.16(a) (Expenses) in the currency in which they are payable, if other than in Dollars.

Section 2.10.  Allocation of Partial Payments.  If at any time IFC receives less than the full amount then due and payable to it under this Agreement, IFC may allocate and apply the amount received in any way or manner and for such purpose or purposes under this Agreement as IFC in its sole discretion determines, notwithstanding any instruction that the Borrower may give to the contrary.

Section 2.11.  Increased Costs.  On each Interest Payment Date, the Borrower shall pay, in addition to interest, the amount which IFC from time to time notifies to the Borrower in an Increased Costs Certificate as being the aggregate Increased Costs of IFC and each Participant accrued and unpaid prior to that Interest Payment Date.

Section 2.12.  Unwinding Costs.   (a)  If IFC or any Participant incurs any cost, expense or loss as a result of the Borrowers: (i) failing to borrow in accordance with a request for Disbursement made pursuant to Section 2.02 (Disbursement Procedure); (ii) failing to prepay in accordance with a notice of prepayment; (iii) prepaying all or any portion of the Loan on a date other than an Interest Payment Date; or (iv) after acceleration of the Loan, paying all or a portion of the Loan on a date other than an Interest Payment Date;  then the Borrowers shall immediately pay to IFC the amount that IFC from time to time notifies to the Borrowers as being the amount of those costs, expenses and losses incurred.

(b)           For the purposes of this Section, "costs, expenses or losses" include any premium, penalty or expense incurred to liquidate or obtain third party deposits, borrowings, hedges or swaps in order to make, maintain, fund or hedge all or any part of any Disbursement or prepayment of the Loan, or any payment of all or part of the Loan upon acceleration.

Section 2.13.  Suspension or Cancellation by IFC.  (a)  IFC may, by notice to the Borrowers, suspend the right of the Borrowers to Disbursements or cancel the undisbursed portion of the Loan in

  

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whole or in part: (i) if the first Disbursement has not been made by March 31, 2012, or such other date as the parties agree; (ii) if any Event of Default has occurred and is continuing or if the Event of Default specified in Section 6.02(f) (Events of Default) is, in the reasonable opinion of IFC, imminent; (iii) if any event or condition has occurred which has or can be reasonably expected to have a Material Adverse Effect; or (v) on or after December 31, 2012.

(b)           Upon the giving of any such notice, the right of the Borrowers to any further Disbursement shall be suspended or canceled, as the case may be.  The exercise by IFC of its right of suspension shall not preclude IFC from exercising its right of cancellation, either for the same or any other reason specified in Section 2.13(a) and shall not limit any other provision of this Agreement.  Upon any cancellation the Borrowers shall, subject to paragraph (c) of this Section 2.13, pay to IFC all fees and other amounts accrued (whether or not then due and payable) under this Agreement up to the date of that cancellation.

(c)           In the case of partial cancellation of the Loan pursuant to paragraph (a) of this Section 2.13, or Section 2.14(a), interest on the amount then outstanding of the Loan remains payable as provided in Section 2.03 (Interest).

(d)           Any portion of the Loan that is cancelled under this Section 2.13 may not be reinstated or disbursed.

Section 2.14.  Cancellation by the Borrowers.  (a) The Borrowers may, by notice to IFC, irrevocably request IFC to cancel the undisbursed portion of the Loan on the date specified in that notice (which shall be a date not earlier than 30 days after the date of that notice).

(b)           IFC shall, by notice to the Borrowers, cancel the undisbursed portion of the Loan effective as of that specified date if: (i) subject to Section 2.13(c), IFC has received all fees and other amounts accrued (whether or not then due and payable) under this Agreement up to such specified date; and (ii) if any amount of the Loan is then outstanding, IFC is reasonably satisfied that the Borrowers have sufficient long-term funding available, on terms satisfactory to IFC, to generate sufficient cash flow to pay and repay all amounts payable under this Agreement.

(c)           Any portion of the Loan that is cancelled under this Section 2.14 may not be reinstated or disbursed.

Section 2.15.  Taxes.  (a)  The Borrowers shall pay or cause to be paid all Taxes (other than taxes, if any, payable on the overall income of IFC) on or in connection with the payment of any and all amounts due under this Agreement that are now or in the future levied or imposed by any Authority of the Country or by any organization of which the Country is a member or any jurisdiction through or out of which a payment is made.

(b)           All payments of principal, interest, fees and other amounts due under this Agreement shall be made without deduction for or on account of any Taxes.

(c)           If the Borrowers are prevented by operation of law or otherwise from making or causing to be made those payments without deduction, the principal or (as the case may be) interest, fees or other amounts due under this Agreement shall be increased to such amount as may be necessary so that IFC

  

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receives the full amount it would have received (taking into account any Taxes payable on amounts payable by the Borrowers under this subsection) had those payments been made without that deduction.

(d)           If Section 2.15(c) applies and IFC so requests, the Borrowers shall deliver to IFC official tax receipts evidencing payment (or certified copies of them) within 30 days of the date of that request.

(e)           Section 2.15(a) and Section 2.15(b) do not apply to Taxes which directly result from a Participant having its principal office in the Country or having or maintaining a permanent office or establishment in the Country, if and to the extent that such permanent office or establishment acquires the relevant Participation.

Section 2.16.  Expenses.  (a)  The Borrowers shall pay or, as the case may be, reimburse IFC or its assignees any amount paid by them on account of, all taxes (including stamp taxes), duties, fees or other charges payable on or in connection with the execution, issue, delivery, registration or notarization of the Transaction Documents and any other documents related to this Agreement or any other Transaction Document.

(b)           The Borrower shall pay to IFC or as IFC may direct:

	
  

	
(i)

	
the reasonable fees and expenses of IFC's technical and market consultants and the public accountants incurred in connection with the investment by IFC provided for under this Agreement;

	
  

	
(ii)

	
the reasonable fees and expenses of IFC's New York, Panamanian, Liberian, Paraguayan and Bahamian counsels and, if needed, Chilean, Spanish and Argentine counsels incurred in connection with:

 

	
  

	
(A)

	
the preparation of the investment by IFC provided for under this Agreement and any other Transaction Document;

	
  

	
(B)

	
the preparation and/or review, execution and, where appropriate, translation and registration of the Transaction Documents and any other documents related to them;

	
  

	
(C)

	
the giving of any legal opinions required by IFC under this Agreement and any other Transaction Document;

	
  

	
(D)

	
the administration by IFC of the investment provided for in this Agreement or otherwise in connection with any amendment, supplement or modification to, or waiver under, any of the Transaction Documents;

	
  

	
(E)

	
the registration (where appropriate) and the delivery of the evidences of indebtedness relating to the Loan and its disbursement;

	
  

	
(F)

	
the occurrence of any Event of Default or Potential Event of Default;

	
  

	
(G)

	
the creation of additional IFC Security as needed to meet the applicable Minimum Required Security Coverage Ratio; and

 

  

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(H)

	
the release of the IFC Security in whole following repayment or prepayment in full of the Loan or for the partial release of the IFC Security, should there be an excess of the Minimum Required Security Coverage Ratio, in the latter case, subject to the requirements for such partial release as set forth herein;

	
  

	
(iii)

	
up to an aggregate of $15,000 for reimbursement of costs incurred by the Participants, if any;

	
  

	
(iv)

	
the costs and expenses incurred by IFC in relation to efforts to enforce or protect its rights under any Transaction Document, or the exercise of its rights or powers consequent upon or arising out of the occurrence of any Event of Default or Potential Event of Default, including legal and other professional consultants' fees on a full indemnity basis;

	
  

	
(v)

	
up to an aggregate of $15,000 per annum for reimbursement of supervision expenses for the Loan starting on the fiscal year immediately following the full repayment or full prepayment, as the case may be, of the 2008 UABLPY Loan and 2008 UABLPN Loan;

 

	
  

	
(v)

	
any Taxes levied on or with respect to the proceeds of enforcement of any part of the IFC Security; and

 

	
  

	
(vi)

	
the fees and expenses of the Security Trustee, including, without limitation, all legal fees and expenses and other costs incurred by the Security Trustee in connection with the performance and exercise of its rights, powers, authorities, discretions and duties and other obligations under the Transaction Documents, to which it is a party.

Section 2.17.  Illegality of Participation.  If, after the date of this Agreement, any change made in any applicable law or regulation or official directive (or its interpretation or application by any Authority charged with its administration) (herein the "Relevant Change") makes it unlawful for any Participant to continue to maintain or to fund its Participation:

(a)           the Borrowers shall, upon request by IFC (but subject to any applicable Authorization having been obtained), on the earlier of (x) the next Interest Payment Date and (y) the date that IFC advises the Borrowers is the latest day permitted by the Relevant Change, prepay in full that part of the Loan that IFC advises corresponds to that Participation;

(b)           concurrently with the prepayment of the part of the Loan corresponding to the Participation affected by the Relevant Change, the Borrower shall pay all accrued interest, Increased Costs (if any) on that part of the B Loan (and, if that prepayment is not made on an Interest Payment Date, any amount payable in respect of the prepayment under Section 2.12 (Unwinding Costs));

(c)           the Borrowers agree to take all reasonable steps to obtain, as quickly as possible after receipt of IFC's request for prepayment, the Authorization referred to in Section 2.17(a) if any such Authorization is then required; and

  

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(d)           the Borrowers shall have no further right to disbursement of the undisbursed portion of the Loan corresponding to that Participation after it has received IFC's request for prepayment under this Section.

 

ARTICLE III

 

Representations and Warranties

 

Section 3.01.  Representations and Warranties.  Each of the Borrowers represents and warrants that:

(a)           Organization and Authority.

	
  

	
(i)

	
Each of the Borrowers is a corporation duly incorporated, validly existing and in good standing under the laws of the Republic of Paraguay;

	
  

	
(ii)

	
Each of the Borrowers is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where failure to so qualify or be licensed would not result in a Material Adverse Effect; and

	
  

	
(iii)

	
Each of the Borrowers has the corporate power and has obtained all required Authorizations to own or lease and operate its assets, conduct its business as presently conducted and as proposed to be conducted and to enter into, and comply with its obligations under, the Transaction Documents to which it is a party or will, in the case of any Transaction Document not executed as at the date of this Agreement, when that Transaction Document is executed, have the corporate power to enter into, and comply with its obligations under, that Transaction Document;

(b)           Validity.  Each Transaction Document to which a Borrower is a party has been, or will be, duly authorized and executed by the Borrower party thereto and constitutes, or will when executed constitute, a valid and legally binding obligation of such Borrower, enforceable in accordance with its terms and none of the Project Documents has been, or will be, amended or modified except as permitted under this Agreement;

(c)           No Conflict.  Neither the making of any Transaction Document to which either Borrower is a party nor (when all the Authorizations referred to in Section 4.01(d) (Conditions of Disbursement) have been obtained) the compliance with its terms will conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default or require any consent under, any indenture, mortgage, agreement or other instrument or arrangement to which a Borrower is a party or by which it is bound, or violate any of the terms or provisions of such Borrower's Constitutive Documents or any Authorization, judgment, decree or order or any statute, rule or regulation applicable to such Borrower;

(d)           Status of Authorizations.  To the best of the Borrowers' knowledge, after due inquiry:

  

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(i)

	
the Authorizations specified in Annex B are all the Authorizations (other than Authorizations that are of a routine nature and are obtained in the ordinary course of business) needed by the Borrowers to conduct their business, carry out the Project and execute, and comply with its obligations under, this Agreement and each of the other Transaction Documents to which each is or will be a party;

	
  

	
(ii)

	
all Authorizations specified in Section (1) of Annex B have been obtained and are in full force and effect;

	
  

	
(iii)

	
except as specified in Annex B, no notice to or filing, recording or registration with, any Authority or any other Authorization is required for: (A) the due execution, delivery and performance by the Borrowers of this Agreement and each of the other Transaction Documents to which each is or will be a party or for the consummation of the transactions contemplated thereby; (B) the grant by a Borrower of any Lien granted or to be granted by it pursuant to any Security Document to which it is or will be a party; or (C) the perfection or maintenance of any such Lien (including the first ranking nature thereof); and

	
  

	
(iv)

	
except for rights that can reasonably be expected to be obtained on commercially reasonable terms at the time required, the Project Documents contain all rights that are necessary for the conduct of the business of the Borrowers as contemplated by the Transaction Documents;

(e)           No Amendments to Constitutive Documents.  Each Borrower's Constitutive Documents have not been amended since each Borrower was incorporated;

(f)           No Immunity.  Neither Borrower nor any of such Borrower's property enjoys any right of immunity from set-off, suit or execution with respect to its assets or its obligations under any Transaction Document;

(g)           Financial Condition.  Since December 31, 2010, neither Borrower has:

	
  

	
(i)

	
suffered any change that has a Material Adverse Effect or incurred any substantial loss or liability; or

	
  

	
(ii)

	
undertaken or agreed to undertake any substantial obligation other than as previously advised to IFC in writing;

(h)           Financial Statements.  The balance sheet of each Borrower for the period ending on December 31, 2010:

	
  

	
(i)

	
has been prepared in accordance with the Accounting Standards, and gives a true and fair view of the financial condition of each of the Borrowers as of the date as of which it was prepared and the results of the Borrowers' operations during the period then ended;

	
  

	
(ii)

	
disclose all liabilities (contingent or otherwise) of the Borrowers, and the reserves, if any, for such liabilities and all unrealized or anticipated liabilities

  

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and losses arising from commitments entered into by the Borrowers (whether or not such commitments have been disclosed in such financial statements); and

	
  

	
(iii)

	
except as set forth therein, neither of the Borrowers has incurred any Financial Debt or any contractual commitment not in the ordinary course of its business or any liabilities (contingent or otherwise) or losses except in relation to the purchase of Paraguayan Vessels in connection with the Project;

(i)           Material Agreements.  The Borrowers are not parties to, or committed to enter into, any contract which would or might affect the judgment of a prospective investor;

(j)           Title to Assets and Liens.

	
  

	
(i)

	
Each of the Borrowers has good and marketable title to all of the assets purported to be owned by it and possesses a valid leasehold interest in all assets which it purports to lease, in all cases free and clear of all Liens, and no contracts or arrangements, conditional or unconditional, exist for the creation by the Borrowers of any Lien, except for Permitted Liens and Liens in respect of the Notes;

	
  

	
(ii)

	
The provisions of the Security Documents are effective to create, in favor of the Security Trustee for the benefit of IFC, legal, valid and enforceable Liens on or in all of the Collateral covered by the IFC Security; and

	
  

	
(iii)

	
all recordings and filings have been or will be made in all public offices, all necessary consents have been or will be obtained and all other action has been or will be taken so that the Lien created by each Security Document constitutes a perfected Lien on the Collateral with the priority specified in the Security Documents;

(k)           Taxes.  All tax returns and reports of the Borrowers required by law to be filed have been duly filed and all Taxes, fines, obligations, fees and other governmental charges upon the Borrowers, or its properties, or its income or assets, which are due and payable or to be withheld, have been paid or withheld, other than those presently payable without penalty or interest in relation to which adequate reserves have been made in accordance with the Accounting Standards;

(l)           Litigation.

	
  

	
(i)

	
Neither Borrower is engaged in nor, to the best of its knowledge after due inquiry, is threatened by, any litigation, arbitration or administrative proceeding, the outcome of which could reasonably be expected to have a Material Adverse Effect; and

	
  

	
(ii)

	
No judgment or order has been issued which has or may reasonably be expected to have a Material Adverse Effect;

(m)           Compliance with Law.  To the best of the Borrowers' knowledge and belief after due inquiry, neither Borrower is in violation of any statute or regulation of any Authority;

  

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(n)           Environmental Matters.  To the best of the Borrowers' knowledge and belief, after due inquiry, neither Borrower has received or is aware of either (i) any existing or threatened complaint, order, directive, claim, citation or notice from any Authority or (ii) any material written communication from any Person concerning the Project's failure to comply with any matter covered by the Applicable S&E law which failure has, or could reasonably be expected to have, a Material Adverse Effect or a material adverse impact on the implementation or operation of the Project in accordance with the Performance Standards;

(o)           Labor Matters.  There are no ongoing or, to the best knowledge of the Borrowers after due inquiry, threatened, strikes, slowdowns or work stoppages by employees of the Borrowers or any contractor with respect to the Project;

(p)           U.N. Resolutions.  Neither Borrower has entered into any transaction nor engaged in any activity prohibited by any resolution of the United Nations Security Council under Chapter VII of the United Nations Charter, nor has any Borrower entered into any transaction with a Person that is on the World Bank Listing of Ineligible Firms (see www.worldbank.org/debarr);

(q)           Sanctionable Practices.  Neither Borrower has nor has any of its Affiliates, nor has any Person acting on its behalf, committed, with respect to the Project or any transaction contemplated by this Agreement or any other Transaction Document, any Sanctionable Practice;

(r)            Principal Place of Business.  Each Borrower has its principal place of business and its chief executive office at Benjamin Constant 835 e/Montevideo y Ayolas, Edif. Jacaranda, 1st Floor, Asuncion, Paraguay; and

(s)            No Material Omissions.  No representation, warranty or statement made or certificate, document or financial statement provided by the Borrowers in or pursuant to this Agreement or any other Transaction Document, or in any other document furnished in connection herewith or therewith is untrue or incomplete in any material respect or contains any misrepresentation of a material fact or omits any fact or matter necessary to make any such representation, warranty or statement herein or therein not misleading.

 

Section 3.02.  IFC Reliance.  Each of the Borrowers acknowledges that it makes the representations and warranties in Section 3.01 (Representations and Warranties) with the intention of inducing IFC to enter into this Agreement and that IFC enters into this Agreement on the basis of, and in full reliance on, each of such representations and warranties.

 

ARTICLE IV

 

Conditions of Disbursement

 

           Section 4.01.  Conditions of Disbursement.  The obligation of IFC to make a Disbursement is subject to the fulfillment prior to or concurrently with the making of that Disbursement of the following conditions:

(a)           Transaction Documents.  The following Transaction Documents, each in form and substance satisfactory to IFC, shall have been entered into by all parties to them and have become (or, as

  

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the case may be, remain) unconditional and fully effective in accordance with their respective terms (except for this Agreement having become unconditional and fully effective, if that is a condition of any of those agreements), and IFC shall have received a copy of each of those agreements to which it is not a party:

(i)           In respect of the first Disbursement:

 

	
  

	
(A)

	
this Agreement;

 

	
  

	
(B)

	
the UABL Guarantee Agreement and the Ultrapetrol Guarantee Agreement;

	
  

	
(C)

	
each of the Other Financing Documents, provided that execution of (i) the Shareholder Loan Agreements shall not be required if there are no Shareholder Loans in existence after the application of the proceeds of such Disbursement and (ii) the 2011 Parallel Loan Documents and the Intercreditor Agreement (if any) shall not be required if at the time of the first Disbursement the 2011 Parallel Loan Agreement is not ready to be executed;

	
  

	
(D)

	
each of the Project Documents in respect of assets that are being financed by the proceeds of such Disbursement;

	
  

	
(E)

	
the Debt Service Reserve Account Pledge;

	
  

	
(F)

	
the Share Retention Agreement;

	
  

	
(G)

	
if there are any Shareholder Loan Agreements, a Shareholder Loan Agreement Assignment and a Shareholder Loan Agreement Assignment Acknowledgement and Consent in respect of each such Shareholder Loan Agreement;

	
  

	
(H)

	
the Bareboat Charter Assignments and the Bareboat Charter Assignment Acknowledgements and Consents in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement;

	
  

	
(I)

	
the Insurance Assignments and the Insurance Assignment Acknowledgments and Consents in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement, provided that, within 120 calendar days from the First Disbursement, the Insurance Assignments and the Insurance Assignment Acknowledgments and Consents executed to secure obligations under the 2008 Financing Documents shall be released as collateral security for such financings, and new Insurance Assignments and Insurance Assignment Acknowledgments and Consents shall have been executed as collateral security to secure the Borrowers' obligations under this

  

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Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

	
  

	
(J)

	
the Mortgages in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement, provided that, within 120 calendar days from the First Disbursement, the First Paraguayan Mortgage executed to secure obligations under the 2008 Financing Documents shall be either released as collateral security for such financings, and a new First Paraguayan Mortgage shall have been executed and registered as collateral security to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement, or such First Paraguayan Mortgage shall have been amended to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement;

	
  

	
(K)

	
the Shares Pledge; and

	
  

	
(L)

	
the 2011 Parallel Loan Documents (if entered into) and the Intercreditor Agreement (if entered into).

	
  

	
(ii)

	
In respect of all Disbursements other than the first Disbursement:

	
  

	
(A)

	
the 2011 Parallel Loan Documents (if entered into) and the Intercreditor Agreement (if any);

	
  

	
(B)

	
each of the Project Documents in respect of assets that are being financed by the proceeds of such Disbursement;

	
  

	
(C)

	
if there are any Shareholder Loan Agreements that have not been previously assigned, a Shareholder Loan Agreement Assignment in respect of such Shareholder Loan Agreements;

	
  

	
(D)

	
the Bareboat Charter Assignments and the Bareboat Charter Assignment Acknowledgements and Consents in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement;

	
  

	
(E)

	
the Insurance Assignments and the Insurance Assignment Acknowledgments and Consents in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement; and

	
  

	
(F)

	
the Mortgages in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement;

(b)           Constitutive Documents.

  

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(i)

	
In respect of the first Disbursement, each of the Borrowers, the Guarantor, Ultrapetrol, the Bareboat Charterer and the UABLPN Borrowers shall have delivered to IFC a copy, certified by an Authorized Representative, of such Person's Constitutive Documents and all amendments thereto through the date of such certification and IFC shall have determined, in its reasonable judgment, that such Constitutive Documents are not inconsistent with the provisions of any Transaction Document and do not have or may not reasonably be expected to have a Material Adverse Effect; and

	
  

	
(ii)

	
In respect of all Disbursements other than the first Disbursement, an Authorized Representative of each of the Borrowers, the Guarantor, Ultrapetrol, the Bareboat Charterer and the UABLPN Borrowers shall have delivered to IFC a certification that either (A) there has been no amendment of such Person's Constitutive Documents since the date of the first Disbursement, or (B) such Person's Constitutive Documents have been amended and IFC shall have received a copy of such amendment and determined, in its reasonable judgment, that such Constitutive Documents, as amended, are not inconsistent with the provisions of any Transaction Document and do not have or may not reasonably be expected to have a Material Adverse Effect;

(c)           Security.  The IFC Security which is required to be created and perfected in connection with the relevant Disbursement ( including for avoidance of doubt any Security Increment required on or prior to the date of such Disbursement) shall have been duly created and perfected as first or, as the case may be, second priority security interests in all Collateral and rights subject to the Security Documents; provided that, it is understood by IFC that the registration of First Paraguayan Mortgages will not have been completed on the date that such mortgages are filed, but provisions of sub-section (y) below shall apply for delivery of such registration evidence;

(d)           Authorizations.  Each of the Borrowers, the Guarantor, Ultrapetrol, the Bareboat Charterer and the UABLPN Borrowers has obtained, and provided to IFC, copies, certified by an Authorized Representative, of all Authorizations listed in Annex B, and such other Authorizations not listed in Annex B that may become necessary for:

	
  

	
(i)

	
the Loan;

	
  

	
(ii)

	
the business of each such Person as it is presently carried on and is contemplated to be carried on;

	
  

	
(iii)

	
the Project and the implementation of the Financial Plan;

	
  

	
(iv)

	
the due execution, delivery, validity and enforceability of, and performance by each such Person of its obligations under, this Agreement and the other Transaction Documents, and any other documents necessary or desirable for the implementation of any of those agreements or documents; and

	
  

	
(v)

	
the remittance to IFC or its assigns in Dollars of all monies payable with respect to the Transaction Documents;

  

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and all those Authorizations shall be in full force and effect;

(e)           Legal Opinions.  IFC shall have received such legal opinions, in form and substance satisfactory to IFC, with respect to any matters (including the creation and perfection of any Security Increment, if applicable) relating to the relevant Disbursement and such other matters relating to the transactions contemplated by this Agreement as IFC may reasonably request, from:

	
  

	
(i)

	
IFC's special counsels in New York (including as to matters of Liberian law as applicable), Panama, Paraguay, Spain, The Bahamas and any other jurisdiction which IFC may reasonably determine is appropriate (including without limitation the jurisdiction of incorporation of any Bareboat Charterer); and

	
  

	
(ii)

	
Counsel for the Borrowers, the Guarantor, Ultrapetrol or, as applicable, the relevant Bareboat Charterer, concurring (other than in the case of New York and Liberian law) with the opinions of IFC's special counsels in the relevant jurisdictions;

(f)           Financial Certifications.

	
  

	
(i)

	
Each of the Borrowers shall have provided IFC with satisfactory evidence that, as of the last audited financial statements of such Borrower, it is in compliance with the provisions of Section 5.01(d) (Affirmative Covenants) of this Loan Agreement and the Guarantor is in compliance with the provisions of Section 6.01(c) (Affirmative Covenants) of the UABL Guarantee Agreement; and

	
  

	
(ii)

	
IFC shall have received a certification from an Authorized Representative of the Borrowers, confirmed by the CFO of the Guarantor, that, as on a date within sixty (60) days prior to the date of the first Disbursement, each of the Borrowers is in compliance with the provisions of Section 5.01(d) (Affirmative Covenants);

(g)           Insurance.  IFC shall have received in respect of all vessels being mortgaged pursuant to a Mortgage in connection with such Disbursement:

	
  

	
(i)

	
Copies, certified by an Authorized Representative of the relevant owner of such vessel of all cover notes and certificates of entry in respect of all insurance policies required to be obtained pursuant to Section 5.05 (Insurance Covenants) and Annex C;

	
  

	
(ii)

	
A certification of the insurers or insurance brokers confirming that such policies are in full force and effect and all premiums then due and payable under those policies have been paid; and

	
  

	
(iii)

	
An opinion in form and substance satisfactory to IFC from an independent marine insurance broker as to such matters as IFC may request regarding the insurances effected or proposed to be effected as required by Section 5.05 (Insurance Covenants) and Annex C;

  

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(h)           Fees.  IFC shall have received the fees which Section 2.08 (Fees) requires to be paid before the date of the relevant Disbursement;

(i)           Legal Fees and Expenses.  IFC shall have received reimbursement of all invoiced fees and expenses of IFC's counsel as provided in Section 2.16(b) (Expenses) (ii) or confirmation that those fees and expenses have been paid directly to that counsel;

(j)           Authorization of Auditors.  IFC shall have received a copy of a valid authorization to the Auditors referred to in Section 5.01(e) (Affirmative Covenants);

(k)           Incumbency.  IFC shall have received from each of the Borrowers, the Guarantor, Ultrapetrol, any Shareholder, any Bareboat Charterer and any other party to a Transaction Documents (other than IFC, OFID and the Security Trustee) executing a Transaction Document in connection with such Disbursement a valid Certificate of Incumbency and Authority in the form of Schedule 1 hereto duly executed by an Authorized Representative of such party;

(l)           Appointment of Agent.  In respect of the first Disbursement only, each of the Borrowers, the Guarantor and Ultrapetrol shall have delivered to IFC valid evidence, substantially in the form of Schedule 4, of acceptance of the appointment of an agent for service of process pursuant to Section 7.05 (Applicable Law and Jurisdiction) and such appointment shall be valid until at least 3 months after repayment of the Loan;

(m)           Environmental Matters.

	
  

	
(i)

	
The Guarantor shall have delivered to IFC the Action Plan, in form and substance acceptable to IFC;

	
  

	
(ii)

	
The Guarantor's existing EH&S Management System shall be acceptable to IFC;

	
  

	
(iii)

	
IFC shall have received a certificate from an Authorized Representative of the Guarantor that the Borrowers, the Guarantor, and all other Guarantor Subsidiaries are in compliance with all environmental and social requirements; and

	
  

	
(iv)

	
The parties shall have agreed the final format of the Annual Monitoring Report.

(n)           No Default.  IFC shall have received a certificate from an Authorized Representative of the Borrowers and the Guarantor that no Event of Default and no Potential Event of Default has occurred and is continuing;

(o)           Use of Proceeds.  IFC shall have received a certificate from an Authorized Representative of the Borrowers that the proceeds of that Disbursement:

	
  

	
(i)

	
are, at the date of the relevant request, needed by the Borrowers for the purpose of the Project, or will be needed for that purpose within 3 months of that date, or are for the repayment of Shareholder Loans made by the Guarantor to the Borrowers or by Ultrapetrol to the Guarantor, as evidenced in the Guarantor's most recently published audited Consolidated financial statements and the

  

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amount outstanding is confirmed by the Guarantor's and the Borrowers' chief financial officer as of the date of the Disbursement, provided that the Guarantor remains in compliance with the equity contribution requirements of Section 4.01(z) after such repayment; and

	
  

	
(ii)

	
are not in reimbursement of, or to be used for, expenditures in the territories of any country that is not a member of the World Bank or for goods produced in or services supplied from any such country;

(p)           No Material Adverse Effect.  IFC shall have received a certificate from an Authorized Representative of the Borrowers and the Guarantor that since the date of this Agreement nothing has occurred which has or can reasonably be expected to have a Material Adverse Effect;

(q)           No Material Loss or Liability.   IFC shall have received a certificate from an Authorized Representative of the Borrowers and the Guarantor that since the date of this Agreement none of the Borrowers, the Guarantor or any other Guarantor Subsidiary has incurred any material loss or liability (except such liabilities as may be incurred in accordance with Section 5.02 (Negative Covenants));

(r)           Representations and Warranties.  IFC shall have received a certificate from an Authorized Representative of the Borrowers, the Guarantor and Ultrapetrol that the representations and warranties made in Article III of this Agreement , Article V of the UABL Guarantee Agreement  and Article V of the Ultrapetrol Guarantee Agreement are true and correct in all material respects on and as of the date of that Disbursement with the same effect as if those representations and warranties had been made on and as of the date of that Disbursement;

(s)           No Violations.  IFC shall have received a certificate from an Authorized Representative of the Borrowers and the Guarantor that after giving effect to that Disbursement, neither the Borrowers or the Guarantor would be in violation of:

	
  

	
(i)

	
its Constitutive Documents;

	
  

	
(ii)

	
any provision contained in any Transaction Document to which such Person is a party (including this Agreement) or by which such Person is bound; or

	
  

	
(iii)

	
any law, rule, regulation, Authorization or agreement or other document binding on such Person directly or indirectly limiting or otherwise restricting such Person's borrowing power or authority or its ability to borrow or ability to guarantee, as the case may be;

(t)           Financial Ratios.  IFC shall have received a certificate from an Authorized Representative of the Guarantor certifying that its Historical Debt Service Coverage Ratio, calculated on a Consolidated Basis, is not less than 1.3;

(u)           Pro-Rata Disbursement.  If the 2011 Parallel Loan Agreement has been executed, the Disbursement is made pro rata with the disbursement of the 2011 Parallel Loan;

(v)           Debt Service Reserve Account.  In respect of the first Disbursement only, IFC shall have received evidence satisfactory to it of the establishment of the Debt Service Reserve Account and with

  

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respect to all Disbursements (including the first Disbursement based on the amount requested to be disbursed) that the Borrowers have funded the Debt Service Reserve Account as required by Section 5.01(j) (Affirmative Covenants) up to the date of the such Disbursement;

(w)           Goodstanding.  IFC shall have received (i) a copy of a certificate of goodstanding of the Guarantor and Ultrapetrol issued by its jurisdiction of incorporation and dated as of a date reasonably near the date of such Disbursement, certifying that each of the Guarantor and Ultrapetrol is duly incorporated and in goodstanding under the laws of its jurisdiction of incorporation and (ii) an opinion of the Borrowers' Paraguayan counsel opining as to the goodstanding of each of the Borrowers;

(x)           Fair Market Value; Minimum Required Security Coverage Ratio.

	
  

	
(i)

	
Not more than 30 days prior to the proposed date of a Disbursement, IFC shall have received a valuation of the Fair Market Value of each Mortgaged Vessel on or before the date of such Disbursement; and

	
  

	
(ii)

	
After giving effect to such Disbursement the aggregate Fair Market Value of the Mortgaged Vessels shall be not less than the Minimum Required Security Coverage Ratio required by Section 5.01(i) (Affirmative Covenants);

(y)           Mortgage Registration.  With respect to each Mortgaged Vessel being financed by the relevant Disbursement IFC shall have received in form and substance satisfactory to it:

	
  

	
(i)

	
A copy of a Certificate of Ownership and Encumbrance (or similar documentation) relating to each Paraguayan Mortgaged Vessel issued by Ships Registry, General Bureau of Public Registries (Registro De Buques, Direccíon General De Los Registros Publicos), Naval General Bureau (Prefectura Nacional Naval) and General Bureau Of National Merchant Marina (Direccíon General De La Marina Mercante Nacional) in the Republic of Paraguay that evidences the registration of (A) title to such Paraguayan Vessel in the name of its owner and (B) the First Paraguayan Mortgage in respect of such Paraguayan Mortgaged Vessel, provided that a copy of such Certificate of Ownership and Encumbrance (or similar documentation) shall be delivered to IFC no later than one hundred twenty (120) days following the date of the relevant Disbursement;

	
  

	
(ii)

	
A copy of the Certificate of Ownership and Encumbrance ( or its equivalent in the relevant jurisdiction) relating to each Other Mortgaged Vessel issued by the appropriate registry of such Other Mortgaged Vessel and evidencing the registration of (A) title to such Other Vessel in the its owner and (B) the First Other Vessel Mortgage in respect of such Other Mortgaged Vessel;

	
  

	
(iii)

	
A copy of the Certificate of Ownership and Encumbrance relating to each Liberian Mortgaged Vessel issued by the Deputy Commissioner's Office and evidencing the registration of (A) title to such Liberian Vessel in the name of a UABLPN Borrower and (B) the First and Second Liberian Mortgages in respect of such Liberian Mortgaged Vessel; and

  

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(iv)

	
A copy, certified as true by an Authorized Representative of the relevant Borrower, of the Bareboat Charter, if any, between such Borrower and a Bareboat Charterer for each Paraguayan Mortgaged Vessel which shall have been entered into by all parties thereto and shall have become unconditional and fully effective in accordance with its terms; and

(z)           Equity Contribution.  IFC shall have received evidence satisfactory to it, certified by the Chief Financial Officer of the Guarantor, that $25,000,000 in cash has been contributed as equity to the Guarantor in the form of internal cash generation or new subordinated Shareholder Loans and such proceeds have been applied to the aggregate cost of the Project.

Section 4.02.  The Borrowers' Certification.  The Borrowers shall deliver to IFC with respect to each request for Disbursement:

(a)           certifications, in the form included in Schedule 2; and

(b)           such evidence as IFC may reasonably request of the proposed utilization of the proceeds of that Disbursement or the utilization of the proceeds of any prior Disbursement.

Section 4.03.  Conditions for IFC Benefit.  The conditions in Section 4.01 (Conditions of Disbursement) and Section 4.02 (the Borrowers' Certification) are for the benefit of IFC and may be waived only by IFC in its sole discretion.

 

ARTICLE V

 

Particular Covenants

 

Section 5.01.  Affirmative Covenants.  At all times during the Security Period, unless IFC otherwise agrees, the Borrowers shall:

(a)           Corporate Existence; Conduct of Business.  Maintain its corporate existence, comply with its Constitutive Documents, and implement the Project and conduct its business with due diligence and efficiency and in accordance with sound operating, financial and business practices;

(b)           Use of Proceeds.  Cause the financing specified in the Financial Plan to be applied exclusively to the Project;

 

(c)           Compliance with Laws; Taxes:

	
  

	
(i)

	
conduct its business in compliance, in all material respects, with all applicable requirements of law; and

	
  

	
(ii)

	
file by the date due all returns, reports and filings in respect of Taxes required to be filed by it and pay, when due, all Taxes due and payable by it;

(d)           Accounting and Financial Management.  Maintain an accounting and control system, management information system and books of account and other records, which together adequately give

  

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a fair and true view of the financial condition of the Borrowers and the results of its operations in conformity with the Accounting Standards;

(e)           Auditors.

	
  

	
(i)

	
maintain Auditors acceptable to IFC as auditors of the Borrowers;

	
  

	
(ii)

	
irrevocably authorize, in the form of Schedule 5, the Auditors (whose fees and expenses shall be for the account of the Borrowers) to communicate directly with IFC at any time regarding the Borrowers' financial statements (both audited and unaudited), accounts and operations, and provide to IFC a copy of that authorization; and

	
  

	
(iii)

	
no later than 30 days after any change in Auditors, issue a similar authorization to the new Auditors and provide a copy thereof to IFC;

(f)           Access.  Upon IFC's request, and with reasonable prior notice to the Borrowers, permit representatives of IFC and the CAO, during normal office hours, to:

	
  

	
(i)

	
visit any of the sites and premises where the business of the Borrowers is conducted;

	
  

	
(ii)

	
inspect any of the Borrowers' sites, facilities, plants and equipment;

	
  

	
(iii)

	
have access to the Borrowers' books of account and all records; and

	
  

	
(iv)

	
have access to those employees, agents, contractors and subcontractors of the Borrowers who have or may have knowledge of matters with respect to which IFC seeks information;

provided that (i) no such reasonable prior notice shall be necessary if an Event of Default or Potential Event of Default is continuing or if special circumstances so require and (ii) in the case of the CAO, such access shall be for the purpose of carrying out the CAO's Role;

(g)           Environmental Matters.

	
  

	
(i)

	
Action Plan and Performance Standards.  Ensure that the design, construction, operation, maintenance, management and monitoring of the Project's sites, plants, equipment, operations and facilities are undertaken in compliance with (A) the Action Plan and (B) the applicable requirements of the Performance Standards;

	
  

	
(ii)

	
Environmental, Health and Safety Management System.  Ensure the continuing operation of the Guarantor's and each Borrowers' existing EH&S Management System to assess and manage the social and environmental performance of their operations in conformity with the standards of conduct known as the Responsible Carrier Program as applicable having regard to (A) conditions in,

  

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and laws and regulations of the countries in which the Borrowers' operations are conducted, (B) the Performance Standards and (C) Applicable S&E Law; and

	
  

	
(iii)

	
Performance Standards and Applicable S&E Law.  Ensure compliance with the Performance Standards and Applicable S&E Law; and require that its agents, contractors and subcontractors follow the Guarantor's environmental, social, health and safety procedures in accordance to the services being performed;

	
  

	
(h)

	
Authorizations.

	
  

	
(i)

	
Obtain and maintain in force (and where appropriate, renew in a timely manner) all Authorizations, including without limitation the Authorizations specified in Annex B, which are necessary for the implementation of the Project, the carrying out of the Borrowers' business and operations generally and the compliance by the Borrowers with all its obligations under the Transaction Documents; and

	
  

	
(ii)

	
Comply with all the conditions and restrictions contained in, or imposed on the Borrowers by, those Authorizations;

(i)           Security Coverage Ratio; Further Assurances.

(i)           Maintain:

	
  

	
(A)

	
at all times the first priority or second priority, as the case may be, Lien of each of the Security Documents;

 

	
  

	
(B)

	
a First Ranking Security Coverage Ratio equal to or higher than 3.0 at all times prior to and including the Acceptable Notes Refinancing Date and at all times thereafter 1.6; and

 

	
  

	
(C)

	
a Second Ranking Security Coverage Ratio equal to or higher than 3.0 at all times,

 

provided that if at any time after the Acceptable Notes Refinancing Date, should there be an excess of the Minimum Required Security Coverage Ratio at any time, the Borrowers shall have the right to request that the Creditor Parties, as lenders of the 2011 Senior Loans, consent to the release of Collateral with respect to such excess, if any, and  the Creditor Parties' consent to such release shall not be unreasonably withheld or delayed to the extent such release is possible and can be effected without prejudice to the Liens created by the Security Documents over the remaining Collateral.

For purposes of any Collateral release in situations where the aggregate Fair Market Value of the Collateral exceeds the Minimum Required Security Coverage Ratio the following shall apply: Paraguayan Mortgaged Vessels shall be released first, followed by Other Mortgaged Vessels before any Liberian Mortgaged Vessel is released and any release of a Liberian Mortgaged Vessel securing the 2011 Senior Loans can only be made provided that, before as well as after giving effect to the proposed release, the Borrowers remain compliant

  

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with the First Ranking Security Coverage Ratio represented by Liberian Mortgaged Vessels only as well as the Second Ranking Security Coverage Ratio.

The Creditor Parties' consent to any of the above releases, subject to the requirements above, shall not be unreasonably withheld.

	
  

	
(ii)

	
Provide additional Collateral in compliance with the requirements for the Security Increment and enter into such Security Documents as may be necessary in the reasonable discretion of IFC to create and perfect Liens to enable the Borrowers to comply with the relevant Minimum Required Security Coverage Ratio and their other obligations under the Transaction Documents, all as such matters shall be confirmed by IFC's New York and relevant local counsel;

	
  

	
(iii)

	
Enter into such Security Documents to create and perfect additional Liens in respect of any Bareboat Charter or Shareholder Loan Agreement entered into after the date of this Agreement; and

	
  

	
(iv)

	
From time to time, execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such further instruments and opinions as may reasonably be requested by IFC for perfecting or maintaining in full force and effect the IFC Security or for re-registering the IFC Security, the Security Increment or otherwise;

(j)           Debt Service Reserve Account.  Maintain a balance in the Debt Service Reserve Account of not less than the aggregate amount necessary to pay Debt Service;

(k)           Ownership of Guarantor and the Borrowers.  Ensure that (i) Ultrapetrol and the Shareholders maintain a controlling, majority, direct or indirect shareholding in the Guarantor and (ii) the Guarantor maintains a controlling, majority, direct or indirect shareholding in the Borrowers;

(l)           Barges Manufactured by Ultrapetrol.  Ensure the agreements between either of the Borrowers and Ultrapetrol, if and when executed and on an ongoing basis, providing for the purchase of barges manufactured by Ultrapetrol are entered into on the basis of arms length arrangements and otherwise acceptable to IFC (it being understood and agreed that any such agreement will be deemed acceptable to IFC if, among other key provisions thereof, the price payable by the relevant Borrower for the barges does not exceed the lesser of (A) the market value of similar barges at the same or equivalent location and (B) the average price, if any, at which Ultrapetrol has sold barges with identical or comparable specifications and features to any unrelated third party for a period of 12 consecutive months prior to the date of acquisition of such barge by such Borrower;

(m)           Shareholder Loan Agreement.  Before the making of any Shareholder Loan, enter into a Shareholder Loan Agreement and concurrently with  or within five (5) days of the entering of such agreement, also enter into a Shareholder Loan Agreement Assignment and a Shareholder Loan Assignment Acknowledgement and Consent related thereto, in each case, in form and substance satisfactory to IFC;

(n)           2011 Parallel Loan Agreement.  If at any time the 2011 Parallel Loan Documents have the benefit of any provision that is more favorable to similar provisions in this Agreement or other

  

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Transaction Documents, then if IFC so requests, this Agreement and the other Transaction Documents shall be amended or supplemented to incorporate such more favorable provision;

(o)           Debt to Equity Ratio.  On a Consolidated Basis, maintain a Debt to Equity Ratio of not more than 2.0;

(p)           Historical Debt Service Coverage Ratio.  On a Consolidated Basis, maintain a Historical Debt Service Coverage Ratio of not less than 1.2; and

(q)           First Paraguayan Mortgage and Insurance Assignments.  Within 120 calendar days of the date of the First Disbursement, cause the First Paraguayan Mortgage, Insurance Assignments and Insurance Assignment Acknowledgments and Consents executed to secure obligations under the 2008 Financing Documents shall be either amended to secure secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement or released as collateral security for such financings, and cause new First Paraguayan Mortgage, Insurance Assignments and Insurance Assignment Acknowledgments and Consents, all in form and substance acceptable to IFC, to be executed and registered as collateral security to secure the Borrowers' obligations under this Agreement and the 2011 Parallel Loan Agreement and the Guarantor's obligations under the UABL Guarantee Agreement.

Section 5.02.  Negative Covenants.  At all times during the Security Period, unless IFC otherwise agrees, the Borrowers shall not:

(a)           Distributions.  Declare or pay any dividend or make any cash distribution on its capital stock (including dividends or distributions payable in stock of the Borrowers), or purchase, redeem or otherwise acquire any stock of the Borrowers or any option over them or make a payment under any subordinated Financial Debt or Shareholder Loans unless:

	
  

	
(i)

	
in case of dividends, the proposed payment or distribution is out of retained earnings or out of any other reserves legally created for such purpose; provided that the sum of the retained earnings and such reserves is not less than zero after giving effect to such payment; and

	
  

	
(ii)

	
before and after giving effect to any such action no Event of Default or Potential Event of Default has occurred and is continuing;

(b)           Capital Expenditures.  Unless the Minimum Required Security Coverage Ratio has been satisfied, incur capital expenditures or commitments for expenditures for fixed or other non-current assets, other than those required for carrying out the Project or necessary for repairs, replacements and maintenance of satisfactory operating conditions for the Borrowers' business or operations;

(c)           Permitted Financial Debt.  Incur, assume or permit to exist any Financial Debt except:

	
  

	
(i)

	
the 2011 Senior Loans and the 2008 Financings;

	
  

	
(ii)

	
subordinated Financial Debt or Shareholder Loans;

  

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(iii)

	
up to $5,000,000 at any time for working capital purposes or export credit financing; and

	
  

	
(iv)

	
interest rate swaps related to each of the transactions listed above;

(d)           Leases.  Enter, as lessor or lessee, into any agreement or arrangement to lease any property or equipment of any kind, except such agreements or arrangements in which the aggregate lease payments on a Consolidated Basis  do not exceed $1 million in any financial year;

(e)           Derivative Transactions.  Enter into any Derivative Transaction, except hedging arrangements for fuel, currency and interest rate risk in the ordinary course of business, or assume the obligations of any party to any Derivative Transaction;

(f)           Guarantees and Other Obligations. Unless the Minimum Required Security Coverage Ratio has been satisfied, enter into any agreement or arrangement to guarantee or, in any way or under any condition, assume or become obligated for all or any part of any financial or other obligation of another Person other than those existing at the time of signing including the Notes, provided that any agreement or arrangement to guarantee is non-recourse to the Guarantor and the value of the new guarantee is limited to the value of its collateral;

(g)           Liens.  Unless the Minimum Required Security Coverage Ratio has been satisfied ,create or permit to exist any Lien on any of its properties, revenues or other assets, present or future, except for (i) Permitted Liens, (ii) the existing mortgage by UABLPY for the Notes; (iii) the existing mortgage on a pushboat owned by UABLPY in favor of YPF S.A. under the fuel supply contract between YPF S.A. and the Borrowers or any substitute contracts, (iv) liens created for the purpose of bidding for the carriage of petroleum products or performance bonds in connection therewith, and (v) Liens created under the 2008 Financing Documents;

(h)           Arm's Length Transactions.   Enter into any transaction except in the ordinary course of business on the basis of arm's-length arrangements (including, without limitation, transactions whereby the Borrowers might pay more than the ordinary commercial price for any purchase or might receive less than the full ex-works commercial price (subject to normal trade discounts) for its products);

(i)           Profit Sharing Arrangements.  Enter into any partnership, profit-sharing or royalty agreement or other similar arrangement whereby the Borrowers' income or profits are, or might be, shared with any other Person, except with other Guarantor Subsidiaries wholly-owned by the Guarantor, provided that towage agreements whereby remuneration is based on a percentage of freight earned shall not be deemed profit-sharing;

(j)           Management Contracts.  Enter into any management contract or similar arrangement whereby its business or operations are managed by any other Person, other than technical vessel management agreements;

(k)           Subsidiaries.  Form or have any Subsidiary, unless (i) before as well as after the incorporation of such Subsidiary, an Event of Default or a Potential Event of Default shall not have occurred or be continuing, and (ii) the Borrowers are in compliance with Sections 5.01(o) and (p) (Affirmative Covenants) on a Consolidated Basis;

  

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(l)           Permitted Investments.  Make or permit to exist loans or advances to, or deposits (except commercial bank deposits and other deposits and escrows made in the ordinary course of business or operations for the purchase of assets or equipment) with, other Persons or investments in any Person, except to the Guarantor unless after giving effect to the incurrence of such loans, or the making of such advances or deposits: (A) no Event of Default or Potential Event of Default shall be caused or shall have occurred and be continuing; and (B) the Borrowers is in compliance with all financial covenants in 5.01(o) and (p);

(m)           Fundamental Changes.  Change:

	
  

	
(i)

	
its Constitutive Documents in any manner which would be inconsistent with the provisions of any Transaction Document;

	
  

	
(ii)

	
its Financial Year; or

	
  

	
(iii)

	
the nature or scope of the Project;

(n)           Asset Sales.

	
  

	
(i)

	
Sell, transfer, lease or otherwise dispose of all or a substantial part of its assets, other than inventory, whether in a single transaction or in a series of transactions, related or otherwise; or

	
  

	
(ii)

	
Sell, transfer, lease or otherwise dispose of any Mortgaged Vessel or equipment thereon unless such Mortgaged Vessel or equipment is replaced by another vessel and/or equipment of substantially equivalent type, condition and value in the reasonable discretion of IFC and subjected to a Mortgage;

(o)           Amendments, Waivers, etc., of Transaction Documents.  Terminate, amend or grant any waiver with respect to any provision of any of the Transaction Documents, except for any changes to a Bareboat Charter or other lease agreement made in the ordinary course of business and on the basis of arm's-length transactions;

(p)           Prepayment of Long-Term Debt.  Prepay (whether voluntarily or involuntarily) or repurchase any Long-term Debt (other than the Loan) pursuant to any provision of any agreement or note with respect to that Long-term Debt unless:

	
  

	
(i)

	
that Long-term Debt is refinanced using new Long-term Debt on terms and conditions (as to interest rate, other costs and tenor) at least as favorable to the Borrowers as those of the Long-term Debt being refinanced; or

	
  

	
(ii)

	
the Borrowers give IFC at least thirty (30) days' advance notice of its intention to make the proposed prepayment and, if IFC so requires, the Borrowers contemporaneously prepay a proportion of the Loan, the 2008 UABLPY Loan and the UABLPN Loan (on a pro rata basis) equivalent to the proportion of the part of the Long-term Debt being prepaid, such prepayment to be made in accordance with the provisions of Section 2.07B (Mandatory Prepayment);

  

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(q)           Use of Proceeds.  Use the proceeds of any Disbursement in the territories of any country that is not a member of the World Bank or for reimbursements of expenditures in those territories or for goods produced in or services supplied from any such country;

(r)           Amendment of Action Plan.  The Borrowers shall not amend the Action Plan in any material respect without the prior written consent of IFC; or

(s)           Sanctionable Practices.  Engage in (and shall not authorize or permit any Affiliate or any other Person acting on its behalf to engage in) with respect to the Project or any transaction contemplated by this Agreement, any Sanctionable Practice.  The Borrowers further covenant that should IFC notify the Borrowers of its concerns that there has been a violation of the provisions of this Section or of Section 3.01(p) (Representations and Warranties) of this Agreement, the Borrowers shall cooperate in good faith with IFC and its representatives in determining whether such a violation has occurred, and shall respond promptly and in reasonable detail to any notice from IFC, and shall furnish documentary support for such response upon IFC's request.

Section 5.03.  Reporting Requirements.  Unless IFC otherwise agrees, the Borrowers shall:

(a)           Quarterly Financial Statements and Reports.  As soon as available but in any event within forty-five (45) days after the end of each of the first, second and third calendar quarters of each Financial Year, deliver to IFC:

	
  

	
(i)

	
two (2) copies of the Borrowers' complete unaudited financial statements for such quarter prepared in accordance with the Accounting Standards, certified by the Borrowers' chief financial officer;

	
  

	
(ii)

	
a statement of all transactions between the Borrowers and its Affiliates, and a certification by an Authorized Representative of the Borrowers that all transactions entered into by the Borrowers are on the basis of arm's-length arrangements;

	
  

	
(iii)

	
a statement of all charterhire or lease payment due or made for lease arrangements or Bareboat Charters;

	
  

	
(iv)

	
a report on any factors that have or could reasonably be expected to have a Material Adverse Effect on the Borrowers; and

	
  

	
(v)

	
a certificate from the Borrowers confirming no claims from master and crew on each vessel owned by it;

(b)           Annual Financial Statements and Reports.  As soon as available but in any event within one hundred and twenty (120) days after the end of each Financial Year, deliver to IFC:

	
  

	
(i)

	
two (2) copies of its complete and audited financial statements for that Financial Year (which are in agreement with its books of account and prepared in accordance with the Accounting Standards, together with the Auditors' audit report on them, all in form satisfactory to IFC;

  

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(ii)

	
a statement by the Borrowers of all transactions between the Borrowers and each of their Affiliates, if any, during that Financial Year, and a certification by the Borrowers' chief financial officer that those transactions were on the basis of arm's-length arrangements;

(c)           Valuations.  Within 60 days of the end of the Borrowers' Financial Year, deliver to IFC a valuation of the aggregate Fair Market Value of the Mortgaged Vessels, provided that (i) if the Prospective Debt Service Coverage Ratio of the Guarantor is less than 1.5, IFC may request at any time during the Financial Year additional valuations of the aggregate Fair Market Value of the Mortgaged Vessels, and (ii) the delivery of a valuation of the Liberian Mortgaged Vessels pursuant to the requirements of the relevant provisions of the 2008 UABLPN Loan Agreement shall also satisfy the requirements of this Section 5.03 (c) , but only with respect to valuation of the Liberian Mortgaged Vessels;

(d)           Management Letters.  Deliver to IFC, promptly following receipt, a copy of any management letter or other communication sent by the Auditors (or any other accountants retained by the Borrowers) to the Borrowers or its management in relation to the Borrowers' financial, accounting and other systems, management or accounts;

(e)           Annual Monitoring Report.  Within ninety (90) days after the end of its Financial Year, the Borrowers shall deliver to IFC an Annual Monitoring Report in the form attached as Schedule 8 confirming compliance with the Action Plan, the social and environmental covenants set forth in Sections 5.01 (Affirmative Covenants) and 5.02 (Negative Covenants) or, as the case may be, identifying any non-compliance or failure, and the actions being taken to remedy it;

(f)           Notice of Accidents, Etc.  Within three (3) Business Days after its occurrence, notify IFC of any social, labor, health and safety, security or environmental incident, accident or circumstance having, or which could reasonably be expected to have, a Material Adverse Effect or material adverse impact on the implementation or operation of the Project in accordance with the Performance Standards, specifying in each case the nature of the incident, accident, or circumstance and any effect resulting or likely to result therefrom, and the measures the Borrowers are taking or plans to take to address them and to prevent any future similar event; and keep IFC informed of the on-going implementation of those measures and plans;

(g)           Changes to Project; Material Adverse Effect.  Promptly notify IFC of any proposed change in the nature or scope of the Project or the business or operations of the Borrowers and of any event or condition that has or may reasonably be expected to have a Material Adverse Effect;

(h)           Litigation, Etc.  Promptly upon becoming aware of any litigation of administrative proceedings before any Authority or arbitral body which has or may reasonably be expected to have a Material Adverse Effect, notify IFC by facsimile of that event specifying the nature of that litigation or those proceedings and the steps the Borrowers are taking or proposes to take with respect thereto;

(i)           Default.  Promptly upon the occurrence of an Event of Default or a Potential Event of Default, notify IFC by facsimile specifying the nature of that Event of Default or Potential Event of Default and any steps the Borrowers are taking to remedy it;

  

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(j)           Insurance.  Deliver to IFC, in a timely manner, all insurance certificates, insurance reports and such other insurance-related information as IFC may reasonably request;

(k)           Amendments to Bareboat Charter or other lease arrangement.  Deliver to IFC, in a timely manner, a signed copy of any amendment made to the Bareboat Charter or other lease arrangement as such is permitted to be made by Section 5.02 (o) (Negative Covenants); and

(l)           Other Information.  Promptly provide to IFC such other information as IFC from time to time requests about each Borrower, its assets and the Project.

Section 5.04.  Shipping Covenants.  At all times during the Security Period, unless IFC otherwise agrees, each of the Borrowers shall:

(a)           Ownership of Vessels; Chartering.

	
  

	
(i)

	
Own the entire legal and beneficial interest in each of the Paraguayan Mortgaged Vessels owned by it;

	
  

	
(ii)

	
Not let that Paraguayan Mortgaged Vessel on demise charter for any period, except to the Guarantor or another Guarantor Subsidiary or Cornamusa;

	
  

	
(iii)

	
Not enter into any charter in relation to that Paraguayan Mortgaged Vessel under which more than 2 months' hire (or the equivalent) is payable in advance, except in either case with IFC's prior written consent; or

	
  

	 

	
  

	
(iv)

	
Not charter that Vessel otherwise than on bona fide arm's length terms at the time when that Paraguayan Mortgaged Vessel is fixed;

(b)           Employment of Vessels.

	
  

	
(i)

	
Not employ any Paraguayan Mortgaged Vessel in any way that might impair the value of IFC Security or in any manner contrary to any law or official requirement in any relevant jurisdiction;

	
  

	
(ii)

	
In the event of hostilities in any part of the world (whether war is declared or not), not cause or permit any Paraguayan Mortgaged Vessel to enter or trade to any zone which is declared a war zone by any government or by that Paraguayan Mortgaged Vessel's war risks insurers unless the prior written consent of IFC has been given and the Borrowers have (at their expense) effected any special, additional or modified insurance cover which the IFC may require;

(c)           Condition and Compliance with Laws and Requirements of Insurers.  Keep each Paraguayan Mortgaged Vessel, or as the case may be, shall procure that the bareboat charterer or the sub-bareboat charterer shall keep each Vessel:

	
  

	
(i)

	
in a good and safe condition and state of repairs so as to be consistent with first-class ownership and management practice;

  

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(ii)

	
in compliance with all laws and regulations applicable to vessels registered at ports in the Parana-Paraguay River System or to vessels trading to any jurisdiction to which the vessels may trade from time to time; and

	
  

	
(iii)

	
in compliance with the requirements of the insurers;

(d)           Registration.

	
  

	
(i)

	
Not do or allow to be done anything as a result of which the registration of any Paraguayan Mortgaged Vessel might be cancelled or imperiled; and

	
  

	
(ii)

	
Not change the flag or port of registry of any Paraguayan Mortgaged Vessel;

(e)           Inspection and Surveys.

	
  

	
(i)

	
Upon reasonable notice to the Borrowers, permit IFC representatives ((by surveyors or other persons appointed by it for that purpose, including representatives of the CAO) to board any Paraguayan Mortgaged Vessel at all reasonable times at the expense of the Borrowers, but without interrupting the operation and trading of that Paraguayan Mortgaged Vessel, to inspect her condition and her operating and insurance records or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections; and

	
  

	
(ii)

	
Submit each Paraguayan Mortgaged Vessel regularly to all periodical or other surveys which may be required and, if so required by IFC, provide IFC with copies of all survey reports and, if IFC shall so require, cause each Paraguayan Mortgaged Vessel to be surveyed by a surveyor appointed by IFC; all costs arising in connection with any such survey or surveys (including, but not without limitation, the fees of the relevant surveyor or firm of surveyors appointed by IFC to make such survey or surveys) shall be borne by the Borrowers;

(f)           Prevention of and Release from Arrest or Detention.

	
  

	
(i)

	
Promptly discharge in so far as the same are due and payable:

	
  

	
(A)

	
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against any Paraguayan Mortgaged Vessel, or its earnings or Insurances;

	
  

	
(B)

	
all taxes, dues and other amounts charged in respect of any Paraguayan Mortgaged Vessel, or its earnings or Insurances; and

	
  

	
(C)

	
all other outgoings whatsoever in respect of any Paraguayan Mortgaged Vessel, or its earnings or Insurances;

	
  

	
(ii)

	
Forthwith upon receiving notice of the arrest of any Paraguayan Mortgaged Vessel, or of her detention in exercise or purported exercise of any lien or claim,

  

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procure her release by providing bail or otherwise as the circumstances may require; and

	
  

	
(iii)

	
Immediately notify IFC of any arrest or detention of any Paraguayan Mortgaged Vessel, and of the steps taken to secure the release;

(g)           Requisition and Seizure.  In the event of requisition or seizure by any Authority of any Paraguayan Mortgaged Vessel, take all lawful steps as soon as possible to recover possession;

(h)           Information.

	
  

	
(i)

	
Promptly provide IFC with any information which it may reasonably request regarding:

	
  

	
(A)

	
amounts due to the master and crew of any Paraguayan Mortgaged Vessel;

	
  

	
(B)

	
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of any Paraguayan Mortgaged Vessel and any payments made in respect of that Paraguayan Mortgaged Vessel; and

	
  

	
(C)

	
any towages and salvages; and

	
  

	
(ii)

	
Upon IFC's request, give IFC information on any Paraguayan Mortgaged Vessel with respect to employment, position, state of repair, copies of all charterparties and other contracts of employment, and copies of deck and engine logs;

(i)           Legal Proceedings and Arbitration.  Notify IFC immediately of any legal proceedings or arbitration involving the Borrowers or any Paraguayan Mortgaged Vessel (i) where a claim exceeds $500,000 or (ii) the proceedings relate to any alleged or actual breach of any Applicable S&E Law;

(j)           Contracts.  Perform and enforce the performance by charterers and shippers of all agreements and contracts relating to any Paraguayan Mortgaged Vessel; and

(k)           No Material Changes; Removal of Parts.  Save as contemplated by the Project:

	
  

	
(i)

	
not make any material change in the structure, type or speed of any Paraguayan Mortgaged Vessel unless such change enhances the value of such vessel;

	
  

	
(ii)

	
not remove any material part of, or any item of equipment installed on, any Paraguayan Mortgaged Vessel unless (A) the removal does not reduce its Fair Market Value, (B) that removal is required to comply with safety regulations, or (C) the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Lien or any right in favor of any person other than the Security Trustee and becomes on installation on the Paraguayan Mortgaged Vessel;

  

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provided that the Borrowers may install equipment owned by a third party on any Paraguayan Mortgaged Vessel if the equipment can be removed without any risk of damage to such Paraguayan Mortgaged Vessel.

Section 5.05.  Insurance Covenants.  The Borrowers undertake with IFC to comply with the following provisions of this Section 5.05 (Insurance Covenants) at all times during the Security Period except as IFC may otherwise permit:

(a)           Obligatory Insurances.  Each of the Borrowers shall insure and keep insured, with financially sound and reputable insurers, all its assets and business under insurances as specified in Annex C and any insurance required by law;

(b)           Renewal of Obligatory Insurances.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it:

	
  

	
(i)

	
at least 21 days before the expiry of any obligatory insurance effected by it, notify IFC of the brokers and any protection and indemnity or war risks association through or with whom the Borrowers propose to renew that insurance and of the proposed terms of renewal; and

	
  

	
(ii)

	
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall notify IFC in writing of the terms and conditions of the renewal promptly after the renewal.

(c)           Hull and Machinery, War Risk and Increased Value Coverage; Letters of Undertaking.  With respect to hull and machinery, war risk and increased value coverage, each of the Borrowers in respect of each Mortgaged Vessel owned by it shall ensure that the brokers for such coverage provide IFC with true and correct copies of (i) all cover notes and/or certificates of entry and, if requested by IFC, pro forma copies of all policies relating to such insurances which they are to effect or renew and (ii) a letter or letters of undertaking in a form acceptable to IFC and provided that this is not inconsistent with market practice such letter or letters of undertaking shall include undertakings by such brokers that:

	
  

	
(A)

	
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment in an agreed form and complying with the provisions of paragraph (c)(ii) of Annex C;

	
  

	
(B)

	
they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

	
  

	
(C)

	
they will advise IFC and/or the Security Trustee immediately of any material change to the terms of the obligatory insurances;

	
  

	
(D)

	
they will notify IFC and/or the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the such Borrower or its agents and, in the event of their receiving instructions to renew,

  

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they will promptly notify IFC and/or the Security Trustee of the terms of the instructions; and

	
  

	
(E)

	
they will not set off against any sum recoverable in respect of a claim relating to such Mortgaged Vessel under such obligatory insurances any premiums or other amounts due to them or any other Person in respect of any vessel not subject to a Mortgage or premiums due for other insurances, they waive any lien on the policies relating to such Mortgaged Vessel or, any sums received under them, which they might have in respect of premiums or other amounts due to them or any other Person in respect of any vessel not subject to a Mortgage or premiums due for such other insurances, and they will not cancel such obligatory insurances by reason of non-payment of premiums or other amounts due to them or any other Person in respect of any vessel not subject to a Mortgage or premiums due for such other insurances, and will arrange for a separate policy to be issued in respect of that  Mortgaged Vessel forthwith upon being so requested by IFC and/or the Security Trustee.

(d)           Protection and Indemnity Coverage; Letters of Undertaking.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it ensure that any protection and indemnity and/or war risks associations in which such Mortgaged Vessel is entered provides IFC with:

	
  

	
(i)

	
a copy of the certificate of entry for that Mortgaged Vessel; and

(ii)           a letter or letters of undertaking in agreed form;

(e)           Deposit of Original Policies for Hull and Machinery, War Risk and Increased Value Coverage.  With respect to hull and machinery, war risk and increased value coverage, each of the Borrowers shall in respect of each Mortgaged Vessel owned by it ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

(f)           Payment of Premiums.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it punctually pay or cause to be paid all premiums or other sums payable in respect of the obligatory insurances effected for such Mortgaged Vessel and produce all relevant receipts when so required by IFC.

(g)           Guarantees.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

(h)           Compliance With Terms of Insurances.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

	
  

	
(i)

	
Each of the Borrowers shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory

  

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insurances, and ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which IFC has not given its prior approval;

	
  

	
(ii)

	
Each of the Borrowers shall not make any changes relating to the manager or operator of such Mortgaged Vessel unless approved by the underwriters of the obligatory insurances; and

	
  

	
(iii)

	
Each of the Borrowers shall not employ such Mortgaged Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

(i)           Alteration to Terms of Insurances.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it not make nor agree to any material alteration to the terms of any obligatory insurance (unless in the opinion of IFC such alteration is consistent with general market practice or relates to increased value) nor waive any material right relating to any obligatory insurance.

(j)           Settlement of Claims.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

(k)           Provision of Copies of Communications.  Each of the Borrowers shall in respect of each Mortgaged Vessel owned by it provide IFC at the time of each such communication, with copies of all written communications between such Borrower and:

	
  

	
(i)

	
the approved brokers;

 

	
  

	
(ii)

	
the approved protection and indemnity and/or war risks associations; and

 

	
  

	
(iii)

	
the approved insurance companies and/or underwriters,

which relate, in each case directly or indirectly to either any actual or threatened termination or material adverse change in the terms of any of the obligatory insurances or any recovery which, under the terms of any loss payable clause as referred to in paragraph (c) of Annex C, shall or may be payable to IFC.

(l)           Provision of Information.  In addition, each of the Borrowers shall in respect of each Mortgaged Vessel owned by it promptly provide IFC (or any persons which it may designate) with any information which IFC (or any such designated person) requests from time to time for the purpose of:

	
  

	
(i)

	
obtaining or preparing any report from an independent marine insurance broker as to the obligatory insurances effected or proposed to be effected; and/or

	
  

	
(ii)

	
effecting, maintaining or renewing any such insurances as are referred to in Annex C or dealing with or considering any matters relating to any such insurances,

  

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and each of the Borrowers shall, forthwith upon demand, indemnify IFC in respect of all fees and other expenses incurred by or for the account of IFC in connection with any such report as is referred to in paragraph (i) above.

(m)           Review of Insurance Requirements.  IFC may review the requirements of this Section 5.05 (Insurance Covenants) from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of IFC significant and capable of affecting the Borrowers or the Mortgaged Vessels and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject.)

(n)           Modification of Insurance Requirements.  IFC shall notify the Borrowers of any proposed modification under 5.05 (m) to the requirements of this Section 5.05 (Insurance Covenants) which IFC, may reasonably consider appropriate in the circumstances and, after consultation and taking full account of the Borrowers' opinions, such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Section 5.05 (Insurance Covenants) and shall bind the Borrowers accordingly.

(o)           Compliance with Instructions.  Upon notice to the Borrowers, the Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Transaction Document) to require any Mortgaged Vessel to remain at any safe port or to proceed to and remain at any safe port designated by IFC until the Borrowers implement any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Section 5.05 (n) (Modification of Insurance Covenants).

	
  

	
(p)

	
Application of Proceeds.

	
  

	
(i)

	
At its discretion, IFC may remit the proceeds of any insurance paid to it (via the Security Trustee) to the Borrowers to repair or replace the relevant damaged assets or may apply those proceeds towards any amount payable to IFC under this Agreement, including to repay or prepay all or any part of the Loan in accordance with Section 2.07B (Mandatory Prepayment), provided that there shall be no minimum amount or notice period for any such prepayment; and

	
  

	
(ii)

	
Each of the Borrowers shall use any insurance proceeds it receives (whether from IFC, the Security Trustee on behalf of IFC or directly from the insurers) for loss of or damage to any asset solely to replace or repair that asset or apply towards the Project unless otherwise directed by IFC.

 

ARTICLE VI

 

Events of Default

 

Section 6.01.  Acceleration after Default.  If any Event of Default occurs and is continuing (whether it is voluntary or involuntary, or results from operation of law or otherwise), IFC may, by notice to the Borrowers, require the Borrowers to repay the Loan or such part of the Loan as is specified in that notice.  On receipt of any such notice, the Borrowers shall immediately repay the Loan (or that part of the Loan specified in that notice) and pay all interest accrued on it, the prepayment premium specified in

  

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Section 2.07A (Voluntary Prepayment) on the amount of the Loan whose payment is accelerated and any other amounts then payable under this Agreement.  The Borrowers waive any right they might have to further notice, presentment, demand or protest with respect to that demand for immediate payment.

Section 6.02.  Events of Default.  It shall be an Event of Default if:

(a)           Failure to Pay Principal or Interest.  The Borrowers fail to pay when due any part of the principal of, or interest on, the Loan and such failure continues for a period of five (5) days;

(b)           Failure to Pay Other IFC Loans.  The Borrowers fail to pay when due any part of the principal of, or interest on, any loan from IFC to the Borrowers other than the Loan and any such failure continues for the relevant grace period allowed for in the agreement providing for that loan;

(c)           Failure to Comply with Obligations.  The Borrowers fail to comply with any of their obligations under this Agreement or any other Transaction Document or any other agreement between the Borrowers and IFC (other than for the payment of the principal of, or interest on, the Loan), and any such failure continues for a period of thirty (30) days after the date on which IFC notifies the Borrowers of that failure;

(d)           Failure by Other Parties to Comply with Obligations.  Any party to a Transaction Document (other than IFC or the Borrowers) fails to observe or perform any of its obligations under that Transaction Document, and any such failure continues for a period of thirty (30) days after the date on which IFC notifies the Borrowers of that failure, provided that in the case of a breach of Section 6.01(k) of the UABL Guarantee Agreement, the grace period shall be 90 days so long as the Guarantor Historical Debt Service Coverage Ratio is not less than 1.2;

 

 

(e)           Misrepresentation.  Any representation or warranty made in Article III or by any other party to a Transaction Document or in connection with the execution of, or any request (including a request for Disbursement) under, this Agreement or any other Transaction Document is found to be incorrect in any material respect;

(f)           Expropriation, Nationalization, Etc.  Any Authority condemns, nationalizes, seizes, or otherwise expropriates all or any substantial part of the property or other assets of the Borrowers, Ultrapetrol, the Guarantor or any Major Guarantor Subsidiary, or its respective capital stock, or assumes custody or control of that property or other assets or of the business or operations of the Borrowers, Ultrapetrol, the Guarantor or such Major Guarantor Subsidiary or of its respective capital stock, or takes any action for the dissolution or disestablishment of the Borrowers or Ultrapetrol or the Guarantor or such Major Guarantor Subsidiary or any action that would prevent the Borrowers, Ultrapetrol, the Guarantor, such Major Guarantor Subsidiary or their respective officers from carrying on all or a substantial part of its business or operations;

(g)           Involuntary Proceedings.  A decree or order by a court of competent jurisdiction is entered against the Borrowers, Ultrapetrol, the Guarantor or any Major Guarantor Subsidiary:

	
  

	
(i)

	
adjudging such Person bankrupt or insolvent;

  

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(ii)

	
approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of, or with respect to, such Person under any applicable law;

	
  

	
(iii)

	
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such Person or of any substantial part of its property or other assets; or

	
  

	
(iv)

	
ordering the winding up or liquidation of its affairs;

or any petition is filed seeking any of the above and is not dismissed within thirty (30) days;

(h)           Voluntary Proceedings.  Any of the Borrowers, Ultrapetrol, the Guarantor or any Major Guarantor Subsidiary:

	
  

	
(i)

	
requests a moratorium or suspension of payment of Liabilities from any court;

	
  

	
(ii)

	
institutes proceedings or takes any form of corporate action to be liquidated, adjudicated bankrupt or insolvent;

	
  

	
(iii)

	
consents to the institution of bankruptcy or insolvency proceedings against it;

	
  

	
(iv)

	
files a petition or answer or consent seeking reorganization or relief under any applicable law, or consents to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such Person or of any substantial part of its property;

	
  

	
(v)

	
makes a general assignment for the benefit of creditors; or

	
  

	
(vi)

	
admits in writing its inability to pay its Liabilities generally as they become due or otherwise becomes insolvent;

(i)           Attachment.  An attachment or analogous process is levied or enforced upon or against any of the assets of any of the Borrowers or more than 5% of the assets of the Guarantor or any UABLPN Borrower and either is not discharged within sixty (60) days unless it is being contested in good faith by the affected party and the attachment is simply recorded with no effect either on the freedom of the attached assets to navigate or their earning capacity or on the free disposition of such earnings or replaced by a bond, guarantee or other substitute collateral provided by the insurers of such Person;

(j)           Analogous Events to Bankruptcy.  Any other event occurs with respect to any of the Borrowers, Ultrapetrol, the Guarantor or any Major Guarantor Subsidiary which under any applicable law would have an effect analogous to any of those events listed in Section 6.02(g), Section 6.02(h) and Section 6.02(i);

(k)           Cross-Default.

  

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(i)

	
Any of the Borrowers, the Guarantor or any Major Guarantor Subsidiary fails to make any payment in respect of any of its Liabilities (other than the Loan) or to perform any of its obligations under any agreement pursuant to which there is outstanding any Liabilities, and any such failure continues for more than any applicable period of grace or any such Liability becomes prematurely due and payable or is placed on demand;

	
  

	
(ii)

	
An Event of Default has occurred and is continuing under any 2008 Financing Documents, any 2008 Transaction Documents or any 2011 Parallel Loan Document;

	
  

	
(iii)

	
The Guarantor breaches any of its obligations under the UABL Guarantee Agreement or Ultrapetrol breaches any of its obligations under the Ultrapetrol Guarantee Agreement;

	
  

	
(iv)

	
Any Guarantor Subsidiary (other than the Borrowers) breaches any of its obligations under a 2008 Financing Document or a 2008 Transaction Document to which it is a party;

(l)           Failure to Maintain Authorizations.  Any Authorization necessary for any of the Borrowers, Ultrapetrol, the Guarantor or a Major Guarantor Subsidiary to perform and observe their obligations under any Transaction Document, or to carry out the Project, is not obtained when required or is rescinded, terminated, lapses or otherwise ceases to be in full force and effect, including with respect to the remittance to IFC or its assignees, in Dollars, of any amounts payable under any Transaction Document, and is not restored or reinstated within thirty (30) days of notice by IFC to the Borrowers, Ultrapetrol, the Guarantor or the relevant Major Guarantor Subsidiary, as the case may be, requiring that restoration or reinstatement, provided that such failure to maintain, renew or restore an authorization shall not be an Event of Default under this Section should the relevant Authorization not be material, with the understanding that an Authorization will always be deemed material if related to matters required for, related to or associated with (i) due organization or corporate existence, (ii) any Mortgaged Vessel, or (iii) assets representing more than 5% of the Guarantor's assets at any time;

(m)           Revocation, Etc., of Security Documents.  Any Security Document or any of its provisions:

	
  

	
(i)

	
is revoked, terminated or ceases to be in full force and effect or ceases to provide the security intended, without, in each case, the prior consent of IFC;

	
  

	
(ii)

	
becomes unlawful or is declared void; or

	
  

	
(iii)

	
is repudiated or its validity or enforceability is challenged by any Person and any such repudiation or challenge continues for (A) a period of thirty (30) days during which period such repudiation or challenge has no effect; or (B) such shorter period as ends immediately before such repudiation or challenge becomes effective;

(n)           Revocation, etc., of Transaction Documents.  Any Transaction Document (other than a Security Document) or any of its provisions:

  

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(i)

	
is revoked, terminated or ceases to be in full force and effect without, in each case, the prior consent of IFC, and that event, if capable of being remedied, is not remedied to the satisfaction of IFC within thirty (30) days of IFC's notice to the Borrowers; or

	
  

	
(ii)

	
becomes unlawful or is declared void; or

	
  

	
(iii)

	
is repudiated or the validity or enforceability of any of its provisions at any time is challenged by any Person and such repudiation or challenge is not withdrawn within thirty (30) days of IFC's notice to the Borrowers requiring that withdrawal; provided that no such notice shall be required or, as the case may be, the notice period shall terminate if and when such repudiation or challenge becomes effective; or

(o)           Notes.  There occurs the enforcement of any collateral, security interest or guarantee created by or given, as the case may be, by the Borrowers or any Guarantor Subsidiary securing the repayments of the Notes and all amount due to holders of the Notes.

Section 6.03.  Bankruptcy.  If any of the Borrowers, Ultrapetrol, the Guarantor or a Major Guarantor Subsidiary is liquidated or declared bankrupt, the Loan, all interest accrued on it and any other amounts payable under this Agreement will become immediately due and payable without any presentment, demand, protest or notice of any kind, all of which the Borrowers waive.

 

ARTICLE VII

 

Miscellaneous

 

Section 7.01.  Saving of Rights.  (a)   The rights and remedies of IFC in relation to any misrepresentation or breach of warranty on the part of the Borrowers shall not be prejudiced by any investigation by or on behalf of IFC into the affairs of the Borrowers, by the execution or the performance of this Agreement or by any other act or thing which may be done by or on behalf of IFC in connection with this Agreement and which might, apart from this Section, prejudice such rights or remedies.

(b)           No course of dealing or waiver by IFC in connection with any condition of Disbursement of the Loan under this Agreement shall impair any right, power or remedy of IFC with respect to any other condition of Disbursement, or be construed to be a waiver thereof; nor shall the action of IFC with respect to any Disbursement affect or impair any right, power or remedy of IFC with respect to any other Disbursement.

(c)           Unless otherwise notified to the Borrowers by IFC and without prejudice to the generality of Section 7.01 (b) (Saving of Rights), the right of IFC to require compliance with any condition under this Agreement that may be waived by IFC with respect to any Disbursement is expressly preserved for the purposes of any subsequent Disbursement.

  

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(d)           No course of dealing and no failure or delay by IFC in exercising, in whole or in part, any power, remedy, discretion, authority or other right under this Agreement or any other agreement shall waive or impair, or be construed to be a waiver of, such or any other power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its additional or future exercise; nor shall the action of IFC with respect to any default, or any acquiescence by it therein, affect or impair any right, power or remedy of IFC with respect to any other default.

Section 7.02.  Notices.  Any notice, request or other communication to be given or made under this Agreement shall be in writing.  Subject to Section 5.03 (h) and (i) (Reporting Requirements) and Section 7.05 (Enforcement), any such communication may be delivered by hand, airmail, facsimile or established courier service to the party's address specified below or at such other address as such party notifies to the other party from time to time, and will be effective upon receipt.

For the Borrowers:

Benjamin Constant 835 e/Montevideo y Ayolas

Edif. Jacaranda

1st Floor

Asuncion, Paraguay

Facsimile: +595 21 445 415 ext. 103

with a copy to:

Ravenscroft Ship Management Inc.

3251 Ponce de Leon Blvd.

Coral Gables, Florida 33134

Facsimile: +305-507-2001

For IFC:

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Facsimile:                      +1 (202) 974-4318

Attention:                      Director, Infrastructure and Natural Resources Department

	
  

	
With a copy (in the case of communications relating to payments) sent to the attention of the Director, Department of Financial Operations, at:

Facsimile:  202-522-7419.

Section 7.03.  English Language.  (a)  All documents to be provided or communications to be given or made under this Agreement shall be in the English language.

  

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(b)           To the extent that the original version of any document to be provided, or communication to be given or made, to IFC under this Agreement or any other Transaction Document is in a language other than English, that document or communication shall be accompanied by an English translation certified by an Authorized Representative to be a true and correct translation of the original.  IFC may, if it so requires, obtain an English translation of any document or communication received in a language other than English at the cost and expense of the Borrowers.  IFC may deem any such English translation to be the governing version between the Borrowers and IFC.

Section 7.04.  Term of Agreement.  This Agreement shall continue in force until all monies payable under it have been fully paid in accordance with its provisions.

Section 7.05.  Applicable Law and Jurisdiction.

(a)           This Agreement shall be governed by and construed in accordance with the laws of the State of New York, United States of America.

(b)           For the exclusive benefit of IFC, the Borrowers irrevocably agree that any legal action, suit or proceeding arising out of or relating to this Agreement or any other Transaction Document to which a Borrower is a party may be brought in the courts of the United States of America located in the Southern District of New York or in the courts of the State of New York located in the Borough of Manhattan.  By the execution of this Agreement, the Borrowers irrevocably submit to the jurisdiction of any such court in any such action, suit or proceeding.  Final judgment against the Borrowers in any such action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, including Paraguay, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law.

(c)           Nothing in this Agreement shall affect the right of IFC to commence legal proceedings or otherwise sue the Borrowers in Paraguay or any other appropriate jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings and other legal papers upon the Borrowers in any manner authorized by the laws of any such jurisdiction.

(d)           The Borrowers hereby irrevocably designate, appoint and empower CT Corporation System, with offices currently located at 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its authorized agent solely to receive for and on its behalf service of any summons, complaint or other legal process in any action, suit or proceeding IFC may bring in the State of New York in respect of this Agreement.

(e)           As long as this Agreement remains in force, the Borrowers shall maintain a duly appointed and authorized agent to receive for and on its behalf service of any summons, complaint or other legal process in any action, suit or proceeding IFC may bring in New York, New York, United States of America, with respect to this Agreement.  The Borrowers shall keep IFC advised of the identity and location of such agent.

(f)           The Borrowers also irrevocably consent, if for any reason their authorized agent for service of process of summons, complaint and other legal process in any action, suit or proceeding is not present in New York, New York, to the service of such papers being made out of the courts of the United States of America located in the Southern District of New York and the courts of the State of New York located in the Borough of Manhattan by mailing copies of the papers by registered United States air mail,

  

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postage prepaid, to the Borrowers, at their address specified pursuant to Section 7.02 (Notices).  In such a case, IFC shall also send by facsimile, or have sent by facsimile, a copy of the papers to the Borrowers.

(g)           Service in the manner provided in Sections 7.05 (d), (e) and (f) (Applicable Law and Jurisdiction) in any action, suit or proceeding will be deemed personal service, will be accepted by the Borrowers as such and will be valid and binding upon the Borrowers for all purposes of any such action, suit or proceeding.

(h)           The Borrowers irrevocably waive to the fullest extent permitted by applicable law:

	
  

	
(i)

	
any objection which they may have now or in the future to the laying of the venue of any action, suit or proceeding in any court referred to in this Section;

	
  

	
(ii)

	
any claim that any such action, suit or proceeding has been brought in an inconvenient forum;

	
  

	
(iii)

	
their right of removal of any matter commenced by IFC in the courts of the State of New York to any court of the United States of America; and

	
  

	
(iv)

	
any and all rights to demand a trial by jury in any such action, suit or proceeding brought against such party by IFC.

(i)           To the extent that a Borrower may be entitled in any jurisdiction to claim for itself or its assets immunity in respect of its obligations under this Agreement or any other Transaction Document to which it is a party, from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, each of the Borrowers irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.

(j)           The Borrowers hereby acknowledge that IFC shall be entitled under applicable law, including the provisions of the International Organizations Immunities Act, to immunity from a trial by jury in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby brought against IFC in any court of the United States of America.  The Borrowers hereby waive any and all rights to demand a trial by jury in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement, brought against IFC in any forum in which IFC is not entitled to immunity from a trial by jury.

(k)           To the extent that the Borrowers may, in any action, suit or proceeding brought in any of the courts referred to in Section 7.05 (b) (Applicable Law and Jurisdiction) or a court of the Country or elsewhere arising out of or in connection with this Agreement or any other Transaction Document to which a Borrower is a party, be entitled to the benefit of any provision of law requiring IFC in such action, suit or proceeding to post security for the costs of the Borrowers, or to post a bond or to take similar action, the Borrowers hereby irrevocably waive such benefit, in each case to the fullest extent now or in the future permitted under the laws of the Country or, as the case may be, the jurisdiction in which such court is located.

  

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Section 7.06.  Disclosure of Information.  (a)  IFC may disclose any documents or records of, or information about, this Agreement or any other Transaction Document, or the assets, business or affairs of the Borrowers, the Guarantor or any Guarantor Subsidiary to:

	
  

	
(i)

	
its outside counsel, auditors and rating agencies,

	
  

	
(ii)

	
any Person who intends to purchase a participation in a portion of the Loan, provided that such Person has entered into a suitable non-disclosure agreement, and

	
  

	
(iii)

	
any other Person as IFC may deem appropriate in connection with any proposed sale, transfer, assignment or other disposition of IFC's rights under this Agreement or any Transaction Document or otherwise for the purpose of exercising any power, remedy, right, authority, or discretion relevant to this Agreement or any other Transaction Document.

(b)           The Borrowers acknowledge and agree that, notwithstanding the terms of any other agreement between the Borrowers and IFC, a disclosure of information by IFC in the circumstances contemplated by Section 7.06 (a) (Disclosure of Information) does not violate any duty owed to the Borrowers under this Agreement or under any such other agreement.

(c)           The Borrowers, the Guarantor and Ultrapetrol may disclose the contents of the Transaction Documents as may be required by law or by the rules of the exchange on which such Person's securities are quoted.

Section 7.07.  Successors and Assignees.  This Agreement binds and benefits the respective successors and assignees of the parties. However, the Borrowers may not assign or delegate any of their rights or obligations under this Agreement without the prior consent of IFC.

Section 7.08.  Amendments, Waivers and Consents.  Any amendment or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of an amendment, signed by the parties.

Section 7.09.  Counterparts.  This Agreement may be executed in several counterparts, each of which is an original, but all of which together constitute one and the same agreement.

Section 7.10.  Joint and Several.  The Borrowers acknowledge and agree that all of their obligations under or in connection with this Loan Agreement and any other Transaction Document to which such Borrower is a party are joint and several.

 

 

  

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed in their respective names as of the date first above written.

	  	
UABL PARAGUAY S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	
Name:

	
Leonard J. Hoskinson

	  	
Title:

	
Attorney-in-Fact

	  	  	  
	  	  	  
	  	
RIVERPAR S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	
Name:

	
Leonard J. Hoskinson

	  	
Title:

	
Attorney-in-Fact

	  	  	  
	  	  	  
	  	
INTERNATIONAL FINANCE CORPORATION

	  	  
	  	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  	  

Signature Page - Loan Agreement

  

 

  

ANNEX A

Page 1 of 1

PROJECT COST AND FINANCIAL PLAN

 

 

	
ESTIMATED PROJECT COST

	 	
US$000

	 	 	
%

	 
	
New barge acquisition (64 x US$1.1 Million)

	 	 	70,000	 	 	 	69.3	 
	
Acquisition of pushboats/tugboats and ancillary equipment

	 	 	15,000	 	 	 	14.9	 
	
Additional bottom replacement and pushboat re-engining

	 	 	16,000	 	 	 	15.8	 
	
TOTAL PROJECT COST

	 	 	101,000	 	 	 	100.0	 
	  	 	 	 	 	 	 	 	 
	
FINANCIAL PLAN

	 	 	 	 	 	 	 	 
	
IFC Loan

	 	 	15,000	 	 	 	14.9	 
	
2011 Parallel Loan

	 	 	10,000	 	 	 	9.9	 
	
Internal Cash Generation and new Shareholders' Loan(s)

	 	 	76,000	 	 	 	75.2	 
	
TOTAL SOURCES OF FINANCING

	 	 	101,000	 	 	 	100.0	 

  

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ANNEX B

Page 1 of 2

PROJECT AUTHORIZATIONS

Section 1 - Authorizations Already Obtained

	
  

	
(a)

	
authorizations relating to the business of the Borrowers, the Guarantor and each Guarantor Subsidiary (other than the Borrowers) as it is presently carried on and as it is contemplated to be carried on;

	
  

	
(b)

	
resolutions of the board of directors of each of the Borrowers authorizing the execution and performance by the Borrowers of this Agreement and the other Transaction Documents to which each of the Borrowers is a party; and

	
  

	
(c)

	
resolutions of the board of directors of each of Ultrapetrol, the Guarantor and each Guarantor Subsidiary (other than the Borrowers) authorizing the execution and performance by each of Ultrapetrol, the Guarantor and each Guarantor Subsidiary (other than the Borrowers) of the Transaction Documents to which each is a party.

Section 2 - Authorizations to be Obtained Prior to or Concurrently with a Disbursement for Purposes of Sections 4.01 (Conditions of Disbursement)

	
  

	
(a)

	
Certificate of Registry of each Paraguayan Mortgaged Vessel under the Paraguayan flag;

 

	
  

	
(b)

	
Certificate of Registry  (or equivalent) of each Other Mortgaged Vessel under the law and flag of its registry;

 

	
  

	
(c)

	
Consent of the Security Trustee to the Second Liberian Mortgages.

 

  

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ANNEX C

Page 1 of 1

INSURANCE REQUIREMENTS

(a)           Maintenance of Obligatory Insurances.  Each of the Borrowers shall keep each Mortgaged Vessel owned by it insured, at its expense, against:

	
  

	
(i)

	
fire and usual marine risks (including hull and machinery and excess risks);

	
  

	
(ii)

	
war risks;

	
  

	
(iii)

	
protection and indemnity risks; and

	
  

	
(iv)

	
any other risks (excluding loss of earnings insurance) against which IFC may advise, having regard to practices and other circumstances prevailing at the relevant time, that it would be reasonable for the Borrowers to insure, as specified by IFC by notice to the Borrowers.

(b)           Terms of Obligatory Insurances.  Each of the Borrowers shall effect such Insurances:

(i)           in Dollars;

	
  

	
(ii)

	
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis (including increased value) equal at all times to the greater of (A) the Fair Market Value of such Mortgaged Vessel and (B) an amount which, when added to the amounts of such insurance on the other Mortgaged Vessels, is 110% of the aggregate outstanding principal amount due and owing by the Borrowers under this Agreement;

	
  

	
(iii)

	
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry;

	
  

	
(iv)

	
in relation to protection and indemnity risks in respect of the full tonnage of each Mortgaged Vessel;

	
  

	
(v)

	
on terms approved by IFC; and

	
  

	
(vi)

	
through brokers and with insurance companies and/or underwriters approved by IFC acting or, in the case of war risks and protection and indemnity risks, in war risks and protection and indemnity risks associations, at all times with reputable international brokers, companies, underwriters and mutual insurance associations.

  

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(c)           Further Protections for IFC.  In addition to the terms set out in paragraph (b) above, the Borrowers shall procure that the obligatory insurances shall:

	
  

	
(i)

	
if so required by IFC and in so far as obtainable on reasonable commercial terms (except in relation to risks referred to in paragraphs (b)(iii) and (iv)) name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

	
  

	
(ii)

	
in relation to risks referred to in paragraphs (b)(iii) and (iv), name (or be amended to name) the Security Trustee and IFC as co-assureds under a Misdirected Arrows clause;

	
  

	
(iii)

	
name the Security Trustee as loss payee in accordance with the loss payable clauses attached as exhibits to the Insurance Assignment in respect of such Mortgaged Vessel;

	
  

	
(iv)

	
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee in respect of such Mortgaged Vessel shall be made without set-off, counterclaim or deductions or condition whatsoever except as permitted by Section 5.05(c)(ii)(E) (Insurance Covenants);

	
  

	
(v)

	
provide that the insurers shall waive, to the fullest extent permitted by law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee under the Security Documents, until the Loan shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (iv) from making personal claims against persons (other than the Borrowers, IFC or the Security Trustee) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

	
  

	
(vi)

	
provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by IFC or the Security Trustee in respect of the Mortgaged Vessels (but in no case shall IFC have double insurance for the same risks);

	
  

	
(vii)

	
provide that the Security Trustee may make proof of loss if the Borrowers fails to do so; and

	
  

	
(viii)

	
provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of IFC or the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to IFC or the Security Trustee for 15 days (or 7 days in the

  

-73-

  

case of war risks) after receipt by IFC and the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

(d)           Reinsurance.  In respect of any reinsurance relating to any Mortgaged Vessel for which there is a legal obligation to place the primary insurance in the local market where the such Mortgaged Vessel operates or in which such Mortgaged Vessel is registered or in which a bareboat charter agreement in respect thereof is registered, such primary insurance shall contain a "cut-through" clause acceptable to IFC if permitted by applicable laws of such place if obtainable from reinsurers on normal commercial terms.

(e)           Mortgagee's Interest Insurance.  In respect of the Mortgaged Vessels, the Borrowers shall subscribe and thereafter maintain and renew, at its sole expense, in an amount not less than 110 percent of the Loan, on such terms, through such insurers and generally in such manner as IFC and/or the Security Trustee may from time to time consider appropriate, a mortgagee's interest marine insurance with a 360 day waiting period clause covering the Mortgaged Vessels and providing for the indemnification of IFC for any losses under or in connection with any Security Document which directly or indirectly result from loss of or damage to any Mortgaged Vessel covered by such insurance or a liability of any such Mortgaged Vessel or of the Borrowers or the operator thereof, being a loss or damage which is prima facie covered by an obligatory insurance under paragraph (a) above but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning, among other things:

	
  

	
(i)

	
any act or omission on the part of the Borrowers, of any operator, charterer, manager or sub-manager of any such Mortgaged Vessel or of any officer, employee or agent of the Borrowers or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance; and/or

	
  

	
(ii)

	
any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of the Borrowers, any other person referred to in paragraph (A) above, or of any officer, employee or agent of the Borrowers or of such a person, including the casting away or damaging of any such Mortgaged Vessel and/or any such Mortgaged Vessel being unseaworthy.

The Borrowers shall upon demand fully indemnify IFC and/or the Security Trustee in respect of all premiums and other reasonable expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

  

-74-

  

ANNEX D

Page 1 of 4

ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS

The purpose of these Guidelines is to clarify the meaning of the terms "Corrupt Practices", "Fraudulent Practices", "Coercive Practices", "Collusive Practices" and "Obstructive Practices" in the context of IFC operations.

1.           Corrupt Practices

A "Corrupt Practice" is the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.

           Interpretation

	
  

	
A.

	
Corrupt practices are understood as kickbacks and bribery.  The conduct in question must involve the use of improper means (such as bribery) to violate or derogate a duty owed by the recipient in order for the payor to obtain an undue advantage or to avoid an obligation.  Antitrust, securities and other violations of law that are not of this nature are excluded from the definition of corrupt practices.

	
  

	
B.

	
It is acknowledged that foreign investment agreements, concessions and other types of contracts commonly require investors to make contributions for bona fide social development purposes or to provide funding for infrastructure unrelated to the project. Similarly, investors are often required or expected to make contributions to bona fide local charities. These practices are not viewed as Corrupt Practices for purposes of these definitions, so long as they are permitted under local law and fully disclosed in the payor's books and records. Similarly, an investor will not be held liable for corrupt or fraudulent practices committed by entities that administer bona fide social development funds or charitable contributions.

  

-75-

  

	
  

	
ANNEX D

	
  

	
Page 2 of 4

	
  

	
C.

	
In the context of conduct between private parties, the offering, giving, receiving or soliciting of corporate hospitality and gifts that are customary by internationally-accepted industry standards shall not constitute corrupt practices unless the action violates applicable law.

	
  

	
D.

	
Payment by private sector persons of the reasonable travel and entertainment expenses of public officials that are consistent with existing practice under relevant law and international conventions will not be viewed as Corrupt Practices.

	
  

	
E.

	
The World Bank Group does not condone facilitation payments.  For the purposes of implementation, the interpretation of "Corrupt Practices" relating to facilitation payments will take into account relevant law and international conventions pertaining to corruption.

2.           Fraudulent Practices

A "Fraudulent Practice" is any action or omission, including misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial benefit or to avoid an obligation.

           Interpretation

	
  

	
A.

	
An action, omission, or misrepresentation will be regarded as made recklessly if it is made with reckless indifference as to whether it is true or false.  Mere inaccuracy in such information, committed through simple negligence, is not enough to constitute a "Fraudulent Practice" for purposes of this Agreement.

	
  

	
B.

	
Fraudulent Practices are intended to cover actions or omissions that are directed to or against a World Bank Group entity.  It also covers Fraudulent Practices directed to or against a World Bank Group member country in connection with the award or implementation of a government contract or concession in a project financed by the World Bank Group.  Frauds on other third parties are not condoned but are not specifically sanctioned in IFC, MIGA,

  

-76-

  

	
  

	
ANNEX D

	
  

	
Page 3 of 4

	
  

	
or PRG operations.  Similarly, other illegal behavior is not condoned, but will not be considered as a Fraudulent Practice for purposes of this Agreement.

3.           Coercive Practices

A "Coercive Practice" is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party.

           Interpretation

	
  

	
A.

	
Coercive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice.

	
  

	
B.

	
Coercive Practices are threatened or actual illegal actions such as personal injury or abduction, damage to property, or injury to legally recognizable interests, in order to obtain an undue advantage or to avoid an obligation. It is not intended to cover hard bargaining, the exercise of legal or contractual remedies or litigation.

4.           Collusive Practices

A "Collusive Practice" is an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.

Interpretation

Collusive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice.

  

-77-

  

	
  

	
ANNEX D

	
  

	
Page 4 of 4

5.           Obstructive Practices

An "Obstructive Practice" is (i) deliberately destroying, falsifying, altering or concealing of evidence material to the investigation or making of false statements to investigators, in order to materially impede a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice, and/or threatening, harassing or intimidating any party to prevent it from disclosing its knowledge of matters relevant to the investigation or from pursuing the investigation, or (ii) acts intended to materially impede the exercise of IFC's access to contractually required information in connection with a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice  .

Interpretation

Any action legally or otherwise properly taken by a party to maintain or preserve its regulatory, legal or constitutional rights such as the attorney-client privilege, regardless of whether such action had the effect of impeding an investigation, does not constitute an Obstructive Practice.

General Interpretation

A person should not be liable for actions taken by unrelated third parties unless the first party participated in the prohibited act in question.

  

-78-

  

ANNEX E

Page 1 of 2

ENVIRONMENTAL AND SOCIAL ACTION PLAN

	
Issue

	
Actions

	
Timing

	
Responsible / Cost

 

	
PS1 – Social and Environmental Assessment and Management System

	
1.- ESHS Management System (SMS).

Existing SMS is an operational system that includes a generic environmental and health and safety policy and procedures immersed within operational systems, manuals and procedure. These needs to be upgraded to fully meet PS1 and international good practice.

 

 

	
1.1.- UABL will evaluate options to strengthen, as necessary, an ESHS organizational structure that defines roles, responsibilities, and appropriate authority to independently manage Quality Assurance, Environmental, Social and Health and Safety from operations.

	
Evaluation performed six months after First Disbursement (FD).

 

 

 

 

 

 

 

 

 

	
Executive Director / Operations Manager.

	
1.2.- The SMS will be updated to reflect the new structure and a stand-alone Integrated Quality, Environmental, Social and Health and Safety System, and corresponding manuals, plans and procedures will be developed.

 

	
Within a year of FD.

 

 

 

	
Executive Director / Operations Manager.

	
PS2 – Labor and Working Conditions

	
2.- Internal Grievance Mechanism.

UABL has a formal mechanisms to receive, attend, respond, and document internal grievances from employees.  However, this mechanisms is hardly used.

 

 

	
2.1.- Launch an internal awareness campaign to assure this grievance mechanism is understood and effectively used by internal stakeholders, as applicable.

	
At most 6 months after First Disbursement.

 

 

	
HHRR Manager

 

  

-79-

  

SCHEDULE 1

Page 1 of 2

FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY

(See Section 1.01 and Section 4.01(k) of the Loan Agreement)

[the Borrowers' / Guarantor's / Ultrapetrol's / any Shareholder's / Bareboat Charterer's Letterhead]

[Date]

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Attention:  Director, ____________ Department

Ladies and Gentlemen:

Certificate of Incumbency and Authority

With reference to the Loan Agreement between you and UABL Paraguay S.A. and Riverpar S.A. (the "Borrowers") dated December 2, 2011 (the "Loan Agreement"), I, the undersigned [name of office] of [Name of Party], ("[l]"), duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the persons, each of whom are, and will continue to be, authorized:

[[(a)]           to sign on behalf of the Borrowers the requests for the disbursement of funds provided for in Section 2.02 of the Loan Agreement;]1

[(a)][(b)]                      to sign the certifications provided for in Sections 4.01 [and 4.02]2 of the Loan Agreement; and

  

1 Include only for Borrowers.

  

2 Include only for Borrowers.

  

-80-

  

SCHEDULE 1

Page 2 of 2

[(b)] [(c)]                      to take any other action required or permitted to be taken, done, signed or executed under the Loan Agreement or any other agreement to which IFC and [l] may be parties.

	
Name*

	  	
Office

	  	
Specimen Signature

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

You may assume that any such person continues to be so authorized until you receive written notice from an Authorized Representative that they, or any of them, is no longer so authorized.

	  	
Yours truly,

	  	  
	  	
[Name of Entity]

	  	  	  
	  	
By

	  
	  	  	
[Title]

	  	  	  
	  	  	  

 

 

___________

*    Designations may be changed at any time by issuing a new Certificate of Incumbency and Authority authorized by the Board of Directors of  the relevant entity where applicable.

  

-81-

  

SCHEDULE 2

Page 1 of 3

FORM OF REQUEST FOR DISBURSEMENT

(See Section 2.02 and Section 4.03 of the Loan Agreement)

[the Borrowers' Letterhead]

[Date]

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Attention:  [Director, ____________ Department]

Ladies and Gentlemen:

Investment No. ____

Request for Loan Disbursement No. [    ]*

1.           Please refer to the Loan Agreement (the "Loan Agreement") dated December 2, 2011 between UABL Paraguay S.A. and Riverpar S.A. (the "Borrowers") and International Finance Corporation ("IFC"). Terms defined in the Loan Agreement have their defined meanings whenever used in this request.

2.           The Borrowers irrevocably request the disbursement on ____________, ____ (or as soon as practicable thereafter) of the amount of ____________ (____________) under the Loan (the "Disbursement") in accordance with the provisions of Section 2.02 of the Loan Agreement.  You are requested to pay such amount as follows: [insert payment instructions]

 

 

 

 

 

  

*           Each to be numbered in series.

  

-82-

  

SCHEDULE 2

Page 2 of 3

3.           For the purpose of Sections 4.01 and 4.02 of the Loan Agreement, the Borrowers certify as follows:

(a)           no Event of Default and no Potential Event of Default has occurred and is continuing;

(b)           the proceeds of the Disbursement are at the date of this request needed by the Borrowers for the purpose of the Project, or will be needed for such purpose within three (3) months of such date;

(c)           since the date of the Loan Agreement nothing has occurred which has or could reasonably be expected to have a Material Adverse Effect;

(d)           since the date of the Loan Agreement none of the Borrowers, the Guarantor or any other Guarantor Subsidiary has incurred any material loss or liability (except such liabilities as may be incurred in accordance with Section 5.02 of the Loan Agreement);

(e)           the representations and warranties made in Article III of the Loan Agreement and Article V of the UABL Guarantee Agreement are true on the date of this request and will be true on the date of Disbursement with the same effect as if such representations and warranties had been made on and as of each such date;

(f)           the proceeds of the Disbursement are not in reimbursement of, or to be used for, expenditures in the territories of any country that is not a member of the World Bank or for goods produced in or services supplied from any such country;

(g)           after giving effect to the Disbursement, none of the Borrowers or the Guarantor will be in violation of:

	
  

	
(i)

	
its Constitutive Documents;

	
  

	
(ii)

	
any provision contained in any document to which such Person is a party (including the Loan Agreement) or by which such Person is bound; or

	
  

	
(iii)

	
any law, rule, regulation, Authorization or agreement or other document binding on such Person directly or indirectly, limiting or otherwise restricting such Person's borrowing power or authority or its ability to borrow.

  

-83-

  

SCHEDULE 2

	
  

	
Page 3 of 3

The above certifications are effective as of the date of this Request for Disbursement and shall continue to be effective as of the date of the Disbursement.  If any of these certifications is no longer valid as of or prior to the date of the requested Disbursement, the Borrowers undertake to immediately notify IFC.

	  	
Yours truly,

	  	  
	  	
UABL PARAGUAY S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

	  	  	  
	  	  	  
	  	  	  
	  	
RIVERPAR S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

	  	  	  
	  	  	  

Copy to:     Director, Department of Financial Operations

    International Finance Corporation

  

-84-

  

SCHEDULE 3

Page 1 of 1

FORM OF DISBURSEMENT RECEIPT

(See Section 2.02 of the Loan Agreement)

[the Borrowers' Letterhead]

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Attention:  Director, Department of Financial Operations

Ladies and Gentlemen:

Investment No. ____

Disbursement Receipt No. [    ]*

We, UABL Paraguay S.A. and Riverpar S.A., hereby acknowledge receipt on the date hereof, of the sum of ___________  (___) disbursed to [l] by International Finance Corporation ("IFC") under the Loan of __________ (___) provided for in the Loan Agreement dated December 2, 2011 between us and International Finance Corporation.

	  	
Yours truly,

	  	  
	  	
UABL PARAGUAY S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative**

	  	  	  
	  	  	  
	  	  	  
	  	
RIVERPAR S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative**

	  	  	  
	  	  	  

  

*           To correspond with number of the Disbursement request.  See Schedule 2.

  

**   As named in the Borrowers'  Certificate of Incumbency and Authority (see Schedule 1).

  

-85-

  

SCHEDULE 4

Page 1 of 2

FORM OF ACCEPTANCE OF SERVICE OF PROCESS LETTER

[Letterhead of Agent for Service of Process] (See Section 4.01 (l) of the Loan Agreement)

[Date]

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C.  20433

Attention:  _______________

Re:  [Country/_________]

Dear Sirs:

Reference is made to Section ____ of the Loan Agreement dated December 2, 2011 (the "Loan Agreement") between UABL Paraguay S.A. and Riverpar S.A. (the "Borrowers") and International Finance Corporation ("IFC").  Unless otherwise defined herein, capitalized terms used here­in shall have the meaning specified in the Loan Agreement.

Pursuant to Section ___ of the Loan Agreement, each of the Borrowers have irrevocably designated and appointed the undersigned, CT Corporation System, with offices currently located at 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its authorized agent to receive for and on its behalf service of process in any legal action or proceeding with respect to the Loan Agreement in the courts of the United States of America for the Southern District of New York or in the courts of the State of New York located in the Borough of Manhattan.

The undersigned hereby informs you that it has irrevocably accepted that appointment as process agent as set forth in Section [_] of the Loan Agreement, from _______ until ___________ and agrees with you that the undersigned (i) shall inform IFC promptly in writing of any change of its address in New York, (ii) shall perform its obligations as such process agent in accordance with the relevant provisions of Section ______ of the Loan Agreement and (iii) shall forward promptly to the Borrowers any legal process received by the undersigned in its capacity as process agent.

As process agent, the undersigned and its successor or successors agree to discharge the above-mentioned obligations and will not refuse fulfillment of such obligations as provided under Section [_] of the Loan Agreement.

	  	
Very truly yours,

	  	
CT Corporation System

	  	  
	  	  
	  	
By:

	  
	  	  	
Title:

cc: the Borrowers

  

-86-

  

SCHEDULE 5

Page 1 of 2

FORM OF LETTER TO GUARANTOR'S AUDITORS

(See 5.01(e) of

the Loan Agreement)

[the Borrowers' Letterhead]

[Date]

[NAME OF AUDITORS]

[ADDRESS]

Ladies and Gentlemen:

We hereby authorize and request you to give to International Finance Corporation of 2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, United States of America ("IFC"), all such information as IFC may reasonably request with regard to the financial statements (both audited and unaudited), accounts and operations of the undersigned companies and UABL Limited.  We have agreed to supply that information and those statements under the terms of a Loan Agreement between the undersigned company and IFC dated December 2, 2011 (the "Loan Agreement").  For your information we enclose a copy of the Loan Agreement.

We authorize and request you to send two copies of the audited accounts of the undersigned company to IFC to enable us to satisfy our obligation to IFC under Section 5.03 (b) (i) of the Loan Agreement. When submitting the same to IFC, please also send, at the same time, a copy of your full report on such accounts in a form reasonably acceptable to IFC.

Please note that under Section 5.03 (c) of the Loan Agreement, we are obliged to provide IFC with a copy of any management letter or other communication sent by you to the undersigned company or its management in relation to such company's financial, accounting and other systems, management or accounts.

  

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SCHEDULE 5

Page 2 of 2

Please also submit each such communication and report to IFC with the audited accounts.

For our records, please ensure that you send to us a copy of every letter that you receive from IFC immediately upon receipt and a copy of each reply made by you immediately upon the issue of that reply.

	  	
Yours truly,

	  	  
	  	
UABL PARAGUAY S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

	  	  	  
	  	  	  
	  	  	  
	  	
RIVERPAR S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

Enclosure

cc:           Director

[Name of Department]

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

  

-88-

  

SCHEDULE 6

Page 1 of 2

FORM OF BORROWERS' CERTIFICATION

ON DISTRIBUTION OF DIVIDENDS

(See Section 5.02 (a) of the Loan Agreement)

[the Borrowers' Letterhead]

International Finance Corporation                                                                                                                     [Date]

2121 Pennsylvania Avenue, N.W.

Washington, D.C.  20433

Attention:  _______________                                                                                     Re:  [Country/_________]

Dear Sirs:

1.           Please refer to the Loan Agreement (the "Loan Agreement") dated December 2, 2011 between UABL Paraguay S.A. and Riverpar S.A. (the "Borrowers") and International Finance Corporation ("IFC").  Terms defined in the Loan Agreement have their defined meanings whenever used in this request.

2.           This is to inform you that the Borrowers plan a distribution of dividends to its shareholders in the aggregate amount of ______________ (______), such distribution to commence on or about _________, ___.  Pursuant to Section 5.02 (a) of the Loan Agreement, the Borrowers hereby certify that, as at the date hereof:

	
  

	
(a)

	
the proposed payment or distribution is out of retained earnings or out of any other reserves legally created for such purpose; provided always that the sum of the retained earnings and such reserves is not less than zero after giving effect to such payment; and

	
  

	
(c)

	
both before and after giving effect to the proposed distribution no Event of Default or Potential Event of Default has occurred and is continuing;

 

 

  

-89-

  

SCHEDULE 6

Page 2 of 2

3.           The Borrowers undertake not to give effect to the proposed distribution or any part thereof if, at the time of so doing or after giving effect to it, the Borrowers could not certify the matters in section 2 of this certification.

	  	
Yours truly,

	  	  
	  	
UABL PARAGUAY S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

	  	  	  
	  	  	  
	  	  	  
	  	
RIVERPAR S.A.

	  	  
	  	  	  
	  	
By:

	  
	  	  	
Authorized Representative

  

-90-

  

SCHEDULE 7

Page 1 of 1

ACCEPTABLE BROKERS

(See Section 1.01 of the Loan Agreement)

	
  

	
1.

	
Cooper Brothers S.R.L.

	
  

	
Viamonte 464 Piso 10

	
  

	
Buenos Aires, Argentina

	
  

	
Attn: Gustavo Cassiau

	
  

	
Phone: +54(11)4311-3121/ 13

	
  

	
Fax: +54(11)4312-2545

	
  

	
2.

	
Atlantic Shipping Brokers Inc. D.B.A. Southport Atlantic

	
  

	
1 13 80 Prosperity Farms Road, Suite 104

	
  

	
Palm Beach Gardens, Florida 33410

	
  

	
Attn: Arthur Beckrnann

	
  

	
Phone: +1(561)775-3323

	
  

	
Fax: +1(561) 775-7539

	
  

	
3.

	
Merrill Marine Remarketing & Capital Group

	
  

	
1 1722 Studt Avenue

	
  

	
St. Louis, Missouri 63 141

	
  

	
Attn: Pete Merrill

	
  

	
Phone: +1 (314) 569-2400

	
  

	
Fax: +1(314) 569-4049

  

-91-

  

SCHEDULE 8

Page 1 of 1

ENVIRONMENTAL AND SOCIAL PERFORMANCE

ANNUAL MONITORING REPORT (AMR)

 

Paraguay

Ultrapretrol

UABL III

Project [l]

Reporting Period: (month/year) through (month/year)

amr completion date: (day/month/year)

 

	Introduction

 

The Annual Monitoring Report

This Annual Monitoring Report ("AMR") is being delivered by the undersigned, Ultrapetrol Ltda. / UABL (the "Company") in connection with the Loan Agreement dated December 2, 2011 (as amended, supplemented or modified and in effect from time to time, the "Loan Agreement") between the Company and International Finance Corporation ("IFC").  This document comprises IFC's preferred format for environmental and social performance reporting.

IFC's Investment Agreement requires designated Ultrapetrol / UABL personnel to complete and submit annual environmental and social monitoring reports no later than ______ (___) days after the end of the Company's fiscal year.

  

-92-

  

 

	

IFC Contact Information

 

If you have any questions regarding the AMR or wish to discuss completion of the AMR please contact the following Investment Officer or Environmental and Social (E&S) Specialist.

	
Investment

	
     Name: Gonzalo Arauz

	  	
E&S Specialist

	
     Name: Pablo Cardinale

	
Officer

	
     Phone: +54 11 4114 7232

	  	  	
     Phone: +55-11-3525-6342

	  	
     Email: garauz@ifc.org

	  	  	
     Email: pcardinale@ifc.org

	  	  	  	  	  

	
1

	
ENVIRONMENTAL AND SOCIAL MANAGEMENT

	  	  
	
1.1

	
AMR Preparer

	  	  

	
Name and Title:

	  
	  	  
	
Phone:

	  
	  	  
	
Email:

	  

	
I certify that the data contained in this AMR completely and accurately represents Company operations during this reporting period.

	  
	  
	
Ultrapetrol Ltda. / UABL Employee Name

	
Signature

	  
	  

	  
	
Name of Third Party Organization and

	
Signature

	
Representative Certifying This Document

	  

	
1.2

	
Environmental Responsibility Chart

	  	  

Please name the individuals in the company who hold responsibility for environmental and social performance (e.g. Environment Manager, Occupational Health and Safety Manager, Community Relations Manager) and give their contact information (Name, Address, Telephone Number, Fax Number, E-mail Address).

	
1.3

	
Compliance with IFC's requirements 3

	  	  

Is the Company currently in compliance with IFC's requirements pursuant to the Loan Agreement?  If no, explain.

  

3 See all IFC Performance Standards and EHS Guidelines at  http://www.ifc.org/ifcext/enviro.nsf/Content/EnvSocStandards.

  

-93-

  

For reference, the applicable Performance Standards4 are:

	
  

	
·

	
PS 1: Social and Environmental Assessment and Management Systems

	
  

	
·

	
PS 2: Labor and Working Conditions

	
  

	
·

	
PS 3: Pollution Prevention and Abatement

	
  

	
·

	
PS 4: Community Health, Safety and Security

The applicable IFC Environmental, Health and Safety guidelines are:

	
  

	
·

	
IFC General Environmental, Health and Safety Guidelines dated April 2007; and

	
  

	
·

	
IFC Environmental, Health, and Safety Guidelines for Shipping, dated April 2007

	
  

	
·

	
IFC Environmental, Health, and Safety Guidelines for Ports, Harbors, and Terminals, dated April 2007

	
  

	
·

	
IFC Environmental, Health, and Safety Guidelines for Crude Oil and Petroleum Product Terminals, dated April 2007

	
1.4

	
Summary of Current Operations

	  	  

	
Describe the status of the Project's implementation during the reporting period, including key milestones.

	  
	  
	  
	  

	
Describe any significant changes since the last report in the Company or in the day-to day operations of the Project that may affect Environmental, Social, Health and Safety (ESHS) performance.

	  
	  
	  
	  

	
Describe any management initiatives (e.g. ISO 14001, ISO 9001, OHSAS 18001, or any other Quality/ESHS certifications).

	  
	  
	  
	  

	
Describe the Company's approach and progress on implementing ESHS management across all Project activities.

	  
	  
	  
	  
	
Except for specific ongoing improvements and corrective measures as defined in the environmental permits, is the Company currently in compliance with applicable national and local ESHS laws and regulations?  If no, explain.

	  
	  
	  
	  

 

  

-94-

  

	
Have any Governmental Authorities inspected or reviewed the Company's environmental compliance?  If so, please describe.

	  
	  
	  
	  

	
Discuss Governmental Approvals received and any difficulties or issues related to Governmental Approvals.

	  
	  
	  
	  

	
2

	
LABOR AND OCCUPATIONAL HEALTH AND SAFETY PERFORMANCE (OHS)

	  	  
	
2.1

	
Labor

	  	  

	
Describe any changes to the Company's labor/human resources policy and procedures during the reporting period.

	  
	  
	  
	  

	
Describe the Project's labor force at the end of the reporting period, including a quantitative summary of staff directly employed and number of contract workers regularly present at the Company's facilities but employed through an agent or subcontractor, and key reasons for changes during the period.  Please summarize employees by gender.

	  
	  
	  
	  

	
Describe any unions or other workers' organizations that represent staff at the Company's facilities (both employees and contract staff), and any new collective bargaining agreements, strikes or other labor disputes/actions, or grievances reported, and actions taken by the Company.

	  
	  
	  
	  

	
Please provide a summary of the number and type of grievances received through the Company's employee grievance redress mechanism and the responses provided

	  
	  
	  
	  

	
2.2

	
Occupational Health and Safety

	  	  

	
Please list any reports submitted to any National government authorities, e.g. labor, spill, OHS, fire and safety inspections, compliance monitoring, emergency exercises, as well as comments received and corrective actions taken.  National government authorities monitoring and inspections with subsequent actions taken shall also be summarized and reported.

	  
	  
	  
	  

  

-95-

  

	
Please provide a summary of the number and type of grievances received through the Company's employee grievance redress mechanism and the responses provided

	  
	  
	  
	  

	
Describe the status of worker health and safety programs and training.  Provide a quantitative summary of work-related accidents affecting the Company or its contractors, including a discussion of trends, response measures taken, and other actions taken to reduce accidents.  Provide a summary of on-going implementation measures relating to any accidents reported in a previous reporting year.

	  
	  
	  
	  

	
Provide a summary of any significant accidents, fires, or explosions, spills or other major accidental releases to the environment.  Include response measures taken and any improvements made to equipment or procedures as a result.  Provide a summary of on-going implementation measures relating to any significant accidents reported in a previous reporting year.

	  
	  
	  
	  

	
Describe any other events5 that may have caused damage, brought about injuries or fatalities or other health problems, attracted the attention of outside parties, affected project labor or adjacent populations, affected cultural property, etc.  Attach photographs, newspaper articles, or other supporting information that would be useful for IFC to understand the incident and associated environmental and social issues.

	  
	  
	  
	  

	
1.

	
Statistics (Total Amounts)

 

	  	
This reporting period

	
Reporting period

1 year ago

	
Reporting period

2 years ago

	
Report Total numbers for each parameter

	
 

 

 

Company employees

	
 

 

 

Contractor employees

	
 

 

 

Company employees

	
 

 

 

Contractor employees

	
 

 

 

Company employees

	
 

 

 

Contractor employees

	
Employees

	  	  	  	  	  	  
	
Man-hours worked

	  	  	  	  	  	  
	
Fatalities

	  	  	  	  	  	  
	
Non-fatal injuries6

	  	  	  	  	  	  
	
Lost workdays7

	  	  	  	  	  	  

  

5 Examples of significant incidents follow.  Chemical and/or hydrocarbon materials spills; fire, explosion or unplanned releases; industrial injuries; fatalities including transportation; ecological damage/destruction; local population disruption; disruption of emissions or effluent treatment; legal/administrative notice of violation; penalties, fines, or increase in pollution charges; negative media attention; chance cultural finds; labor unrest or disputes.

  

6 Incapacity to work for at least one full workday beyond the day on which the accident or illness occurred.

  

7 Lost workdays are the number of workdays (consecutive or not) beyond the date of injury or onset of illness that the employee was away from work or limited to restricted work activity because of an occupational injury or illness.

  

-96-

  

	
Vehicle collisions8

	  	  	  	  	  	  
	
Spills

	  	  	  	  	  	  
	
Incidence9

	  	  	  	  	  	  

	
Please provide information regarding progress of the activities, measures and processes implemented by UABL to mitigate impacts and reduced risks related to increased vehicular traffic flows generated by UABL's terminals and shipyards.

	  
	  
	  
	  

	
3

	
POLLUTION AND ABATEMENT

	  	  

Provide summaries of any inspections or testing by the regulatory agencies or by the Company during the reporting period.  Documents prepared for reporting to Government agencies can supplement or substitute as appropriate.  The Company should provide summaries of inspections and testing, as available, for the following:

	
  

	
Ø

	
Air emissions (NOx, SOx, PM, etc.)10

	
  

	
Ø

	
Ambient air quality

	
  

	
Ø

	
Sanitary effluent discharges

	
  

	
Ø

	
Ambient noise (exterior to the facilities)

	
  

	
Ø

	
Workplace noise

	
  

	
Ø

	
Workplace air quality

	
  

	
Ø

	
Non-hazardous solid and liquid waste management

	
  

	
Ø

	
Hazardous materials management

	
  

	
Ø

	
Hazardous waste management

	
  

	
Ø

	
Wastewater management at maintenance areas and vessels

	  
	  
	  

 

 

 

  

-97-

  

 

 

	
Please discuss any actions taken to maintain PM emissions levels from vessels at the lowest level economically achievable.

	  
	  
	  
	  

	
Please provide information regarding utilization of low sulfur fuel oil for vessels to ensure compliance with IMO Standards (i.e. percentage of total fuel used, samples of Fuel Recording Books –MARPOL-, etc).

	  
	  
	  
	  

	
Greenhouse Gas ("GHG") emissions – Report on the Project's estimated GHG emissions (as tons equivalent of CO2) for the reporting period and the trend over time as efficiency or fuel quality improvements are implemented for the Company's fleet.

	  
	  
	  
	  

	
Monitoring parameter that exceeds IFC/IMO standards and local regulations

	
Cause for monitoring parameter exceedance

	
Corrective action plan

	
Completion date

	
Cost

	
% Complete/ Status

	  	  	  	  	  	  
	  	  	  	  	  	  

	
4

	
COMMUNITY ENGAGEMENT

	  	  

	
Discuss how the Company consults and informs communities in its area of influence, and the mechanisms in place for the public to contact the Company with complaints or concerns (i.e., grievance procedures).  Describe any significant grievances received during the reporting period and how they were processed and resolved.

	  
	  
	  
	  

	
Describe any Company support for host community development projects and local government initiatives, including local employment (if any)

	  
	  
	  
	  

  

8 Vehicle Collision: When a vehicle (device used to transport people or things) collides (comes together with violent force) with another vehicle or inanimate or animate object(s) and results in injury (other than the need for First Aid) or death.

  

9 Calculate incidence using the following equation: incidence= total lost workdays/ 100,000 man-hours worked.

Use the total lost workdays to calculate the incidence for this reporting period, reporting periods 1 year ago and 2 years ago, as required above.

  

10 For guidance on emissions standards for vessels see IFC's EHS Guidelines for Shipping and IMO standards.

  

-98-

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