Document:

Exhibit
10.11

 

	
   

  	
   

  	
  

  
	
   

  	
   

  	
   

  
	
  25 June 2004

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shipping

  
	
  Top Tankers Inc

  	
   

  	
  Shipping
  Business Centre

  
	
  109-111 Messogion Ave.

  Politia Centre

  	
   

  	
  5-10
  Great Tower Street

  London EC3P 3HX

  
	
  Building Cl

  	
   

  	
   

  
	
  Athens 11526

  	
   

  	
  Telephone:
  +44 (0)20 7833 2121

  
	
  Greece

  	
   

  	
  Facsimile:
  +44 (0)20 7615 0116

  
	
   

  	
   

  	
  www.rbs.co.uk

  
	
   

  	
   

  	
   

  

Attention: Mr E Pistiolis

 

 

 

Dear Sirs

 

Further to recent discussions relating
to the proposed Initial Public Offering by Top Tankers Inc. on the Nasdaq and
related acquisition of ten double-hull tanker vessels from Sovcomflot, we have
pleasure in confirming that The Royal Bank of Scotland plc (the “Bank”) is
prepared to offer a loan facility on the following principal terms and
conditions: -

 

1.             BORROWERS

 

The Borrowers shall comprise sixteen
single-purpose companies, each a wholly-owned subsidiary of Top Tankers Inc.
and incorporated in a jurisdiction acceptable to the Bank, having joint and
several liability in respect of the loan facility referred to below:-

 

a)      Ten
newly-formed companies to be nominated and accepted by the Bank each as an
owner of a “Purchased Ship” as per the attached table ‘B’

 

b)      Rupel
Shipping Company Inc.

 

c)      Gramos
Shipping Company Inc.

 

d)      Litochoro
Shipping Company Limited

 

e)      Olympos
Shipping Company Ltd

 

f)       Helidona
Shipping Company Ltd

 

g)      Mytikas
Shipping Company Ltd

 

Each Borrower in b) to g)
above is an owner of a ship as detailed in attached table ‘A’, which ships
shall hereinafter be collectively known together with the Purchased Ships as
the “Ships”.

 

2.             LOAN AMOUNT

 

Up to US$197,000,000 (United States
Dollars One Hundred and Ninety Seven Million only) to be drawn in up to sixteen
tranches, no later than 30 September 2004 (the “Loan”).  In the event that the Loan is not fully
drawn down by the above date, such undrawn amount will automatically be
cancelled by the Bank and the commitment will be reduced to zero although the
Borrower may request the Bank 10 consider extending this date on such terms as
the Bank may agree.

 

1

 

3.             PURPOSE

 

a)             To
assist to the extent of approximately US$107,268,750 in the acquisition of the
Purchased Ships by the Borrowers referred to in paragraph 1 (a) above, at an
aggregate contract price of US$251,200,000. 
To be  drawn in up to ten
tranches.

 

b)            To refinance
the existing liabilities of the Borrowers referred to in paragraph 1(b), (c)
and (d) above currently maintained with the Bank, in an aggregate amount of
approximately US$49,681,250.  To be
drawn in up to three tranches.

 

c)             To
refinance the existing liabilities of the Borrowers referred to in paragraph
1(e) and (f) above currently maintained with Piraeus Bank, in an aggregate
amount of approximately US$9,650,000. 
To be drawn in up to two tranches.

 

d)            To
refinance the existing liabilities of the Borrower referred to in paragraph
l(g) above currently maintained with HSH Nordbank, in an amount of
approximately US$30,400,000.  To be
drawn  in one tranche.

 

4.             REPAYMENT AND PREPAYMENT OF THE
LOAN

 

The Loan will be repayable by 16
consecutive semi-annual instalments of US$10,000,000, together with a balloon
instalment of US$37,000,000 payable simultaneously with the last such
instalment.  The first such instalment
will be payable six months after the final drawdown of the Loan, but not later
than 31 March 2005.

 

Notwithstanding the above, the
Borrowers shall have the option, to defer the payment of up to two of the first
ten scheduled instalments subject to the following conditions:

 

(a)           Only
non-consecutive instalments may be deferred;

 

(b)           No
event of default shall be likely to occur, shall have occurred or be continuing;

 

(c)           Full
compliance by the Borrowers of all commercial and financial covenants contained
in paragraphs 9(c), 9(e) and 10 hereof and in the formal documentation to be
executed in accordance with paragraph 11 hereof;

 

(d)           One
month’s notice in writing to the Bank shall be provided of the Borrowers’
intention to defer the next scheduled instalment;

 

(e)           Each
instalment deferred shall be added to the remaining scheduled instalments,
other than the balloon instalment which instalment shall not be increased, on a
pro rata basis.  The amount of each
increased instalment shall be advised to the Borrowers in writing by the Bank
as soon as possible but in any event prior to the next scheduled instalment;

 

(f)            The
Borrowers shall pay to the Bank a fee of 1% of any instalment to be deferred
which fee shall be payable at the time of giving notice as per (d) above;

 

(g)           In
addition to the voluntary prepayment option below, the Borrowers may prepay any
deferred instalments so that the scheduled instalments shall revert to the
amounts stated in the above paragraph. 
Such prepayments may be made at any time subject to 14 days’ notice to
the Bank and the payment of related breakage costs, if any;

 

2

 

(h)           If, at
any time, the Borrowers shall have declared the option to defer instalments as
above, then the Bank shall apply an  ‘Earnings
Recapture’ mechanism whereby any instalment or instalments deferred shall be prepaid
in full or in part by the Borrower according to the level of net income (“net
income” is defined as earnings before depreciation and amortisation) made by
the Borrowers and the Corporate Guarantor. 
The net income shall be determined by reference to the financial
information to be provided by the Corporate Guarantor under paragraph 10 of
this letter and any net income amount stated therein in excess of US$20,300,000
per annum shall be applied in reduction of the deferred instalments.

 

(i)            Upon
the prepayment in full of one or both deferred instalments, the Borrowers shall
retain the option to defer a further scheduled instalment or instalments as per
the above conditions.

 

(j)            A
maximum of US$20,000,000 may be deferred at any time.

 

Voluntary prepayment, will be permitted
in whole or part subject to a minimum of fourteen (14) days’ notice and to
payment of interest breakage costs (if any) and the interest margin on the
amount prepaid for the balance of any then current Interest Period; partial
prepayment shall be made in multiples of US$500,000.  All voluntary prepayments, including prepayment arising from the
sale or total loss proceeds of a Ship, will be applied against instalments
(including the balloon instalment) pro-rata.

 

5.             INTEREST RATE AND PERIODS

 

(a)           The interest rate on the Loan will be 1% per annum (the
“Interest Margin”, subject to paragraph 9 (c) hereof) over US$ LIBOR for
interest periods of three, six or twelve months (as, subject to availability,
selected by the Borrower) or other agreed (in our absolute discretion) interest
periods (the “Interest Period”); interest shall be payable on the last day of
each Interest Period and, where any Interest Period exceeds six months,
interest will also be payable six-monthly during such Interest Period.  Each repayment instalment shall have a
matching Interest Period where the Interest Period selected or agreed would not
otherwise achieve this.  For the
avoidance of doubt, all tranches after the first tranche shall be consolidated.

 

The
Borrowers shall additionally compensate the Bank for any cost to the Bank
incurred in complying with reserve asset or capital adequacy requirements or
other regulations howsoever imposed from time to time in relation to the making
or maintaining of the Loan.

 

(b)           The Borrowers may, at their option, enter into an interest
hedging arrangement with the Bank to fix the interest rate in respect of all or
part of the Loan.  In this respect the
Borrowers will be required (as a condition precedent thereof and in addition to
the Documentation referred to in paragraph 11) to enter into ISDA documentation
and, if required by the Bank, a security deed in support thereof in terms
satisfactory to the Bank and other relevant provisions which will be
incorporated into the Documentation.

 

6.             FEES

 

A
fee of 0.75% flat on the amount of the Loan (i.e. US$1,477,500) will be payable
on the date of signing the loan agreement.

 

3

 

A
commitment fee of 0.25% per annum (calculated on a 360 day year basis) shall
accrue on the amount of the undrawn balance of the Loan from the date of this
letter and will be payable one month in arrears and on the date of drawdown of
the Loan or on the latest permitted date for drawdown, whichever is the
earlier.

 

7.             OPERATING ACCOUNT

 

The
Borrowers shall open an operating account (the “Operating Account”) with the
Bank to which the earnings of the Ships shall be credited.

 

Interest
and instalments will be debited to the Operating Account, which will bear
interest at the Bank’s rate for comparable deposits.

 

8.             SECURITY

 

As
security for the obligations of the Borrowers (including but not limited to any
interest hedging arrangement entered into as contemplated in paragraph 5(b)
hereof), the Bank will require:

 

A
Loan Agreement between the Bank and the Borrowers drafted in accordance with
the provisions of English Law to be dated not later than 31 August 2004,
to be supported by:

 

(a)           A first priority mortgage and assignment of earnings,
insurances and requisition compensation over each Ship under a flag acceptable
to the Bank in its absolute discretion.

 

(b)           The Corporate Guarantee of Top Tankers Inc (the ‘‘Corporate
Guarantor”).  The Corporate Guarantor
shall be the legal and beneficial owner of the entire authorised share capital
of the Borrowers.

 

(c)           A right of set-off and first charge over the Operating
Account.

 

9.             OTHER TERMS AND CONDITIONS

 

(a)           Prior to the first notice of drawdown of the Loan the Bank
will require (amongst other things):-

 

(i)            Evidence that the Corporate
Guarantor has successfully completed an Initial Public Offering on the Nasdaq,
generating net proceeds (after costs and expenses) of not less than
US$146,000,000.

 

(ii)           Evidence satisfactory in all respects (in the Bank’s
absolute discretion) confirming that at least 20% of the issued share capital
of the Corporate Guarantor, is vested in the ownership of the Pistiolis family.

 

(b)           Prior to each drawdown of the
Loan (including the first) the Bank will require (amongst other things):-

 

(i)            An acceptable valuation of the
Ship(s), determined in accordance with paragraph 9 (c) below, to ensure
compliance with the minimum security requirement detailed in paragraph 9 (c)
below.

 

(ii)           Details of insurances effected in respect of the Ship(s) as
required pursuant to paragraph 9 (d) below.

 

4

 

(iii)          Evidence of compliance with the ISM Code and the existence
of a valid Safety Management Certificate for the Ship(s) and Document of
Compliance pursuant to the ISM Code.

 

(c)           The aggregate value (determined as set out below) of the
Ships from time to time following delivery shall at all times be not less than
130% of the aggregate of (i) the outstanding principal amount of the Loan, and
(ii) the notional cost or actual cost (if any), as determined by the Bank, of
terminating any interest rate swap or other product entered into by the
Borrower as contemplated, in paragraph 5(b) hereof, failing which other
security acceptable to the Bank (in its absolute discretion) shall be provided
or the Loan shall be prepaid to the extent necessary to comply with this
requirement.

 

In
addition to the above, the Bank will assess the value of the Ships on a
quarterly basis, with a view to determining the Interest Margin for the ensuing
quarter.  The Interest Margin on the
Loan will be determined as follows:

 

i)              Loan
to aggregate value of the Ships less than or equal to 60% - Interest Margin will be 1%.

ii)             Loan to aggregate value of the
Ships greater than 60% but less than or equal to 70% - Interest Margin will be
1.125%.

iii)            Loan to aggregate value of the
Ships greater than 70% - Interest Margin will be 1.25%.

 

The
value of the Ships will be determined by a written valuation from one of
Clarksons, Braemar Seascope or Fearnleys AS (the “Approved Brokers”) obtained
by the Bank.  One such valuation per
annum will be at the expense of the Borrowers. 
Within ten days of being advised of such valuation, the Borrowers have
the right to obtain a written valuation from another Approved Broker (addressed
to the Bank and at the expense of the Borrowers) and, if the Borrowers exercise
such option, the value of the Ships shall be determined to be the average of
the two valuations.

 

(d)           The Ships shall be insured for marine, war and protection
and indemnity risks (without any exclusions), including maximum available
protection and indemnity cover for pollution risks, with brokers, underwriters
and clubs and on terms acceptable to the Bank (details must be provided in good
time prior to notice of drawdown).  All
such insurances shall be subject to approval by insurance consultants nominated
by the Bank whose costs shall be reimbursed by the Borrowers on demand.

 

(e)           During the period of the Loan, the Bank shall require that
the Borrowers and/or the Corporate Guarantor maintain free cash balances with
the Bank totalling not less than i) US$10,000,000 on a monthly average basis
and ii) an absolute minimum of US$5,000,000, at all times.  Such deposits will bear interest at the
Bank’s rate for comparable deposits.

 

(f)            The Documentation will contain
indemnification from the Borrowers and the Corporate Guarantor against all
consequences of any pollution incident.

 

(g)           The Bank shall effect Mortgagees Interest insurance and
Mortgagees Additional Perils insurance for 120% of the outstanding principal
amount of the Loan from time to time, the costs of which policies shall be
reimbursed by the Borrowers on demand.

 

5

 

(h)           No Borrower will purchase any further tonnage or incur any
secured or unsecured indebtedness (other than indebtedness in respect of
advances from the Corporate Guarantor or any other Borrower incurred in the
ordinary course of business of owning or operating the Ships) without the prior
written consent of the Bank.

 

(i)            Subject to the proviso to this
paragraph, the Corporate Guarantor and/or any wholly-owned subsidiary (other
than the Borrowers) (“Non-Borrower Subsidiary”) will be permitted to incur
further indebtedness including, without limitation, for the purposes of:

 

(a)           in the case of the Corporate Guarantor, assisting any
Non-Borrower Subsidiary to acquire; or

 

(b)           in the case of any Non-Borrower Subsidiary, in acquiring,

 

further
tonnage over which such Non-Borrower Subsidiary shall be entitled to grant
mortgages, pledges, liens or other encumbrances as security for its obligations
in respect of such indebtedness.

 

The
Corporate Guarantor and/or and Non-Borrower Subsidiary will only be permitted
to incur any such further indebtedness provided that no event of default or
breach of covenant has occurred and is continuing under the Loan Agreement or
any of the security documents or would result as a consequence of incurring
such further indebtedness.  If the terms
of any future indebtedness include financial covenants different to those
detailed in paragraph 10 of this letter, the Bank reserves the right to amend
those covenants to ensure that the Bank ranks at least pari passu with any
incoming financial institution. 
Appropriate cross default provisions will be incorporated into the Loan
Agreement and the security documents to cover defaults in respect of such
further indebtedness.

 

(j)            The Corporate Guarantor will be
permitted to declare and pay dividends, provided that no event of default or
breach of covenant has occurred and is continuing or would occur as a result of
the declaration or payment of such dividend including, without limitation, the
financial covenants set out in paragraph 10 below.

 

(k)           The Corporate Guarantor will not be permitted to appoint a
Chief Executive Officer, other than Evangelos Pistiolis, without the Bank’s prior consent.

 

(l)            The rights of the equity holders
of the Corporate Guarantor and/or the Borrowers shall be legally and
effectively subordinated to any and all amounts due to the Bank under the Loan
Agreement and the other security documents. 
The equity will be non-convertible unless with the Bank’s prior or
written consent.  Further equity participation
for the Corporate Guarantor and/or the Borrowers shall be permitted to the
extent that it is legally and effectively subordinated to all amounts due to
the Bank under the Loan Agreement and the other security documents.

 

(m)          The Ships shall be managed by Top Tankers Management, a
wholly-owned subsidiary of the Corporate Guarantor, which will subcontract the
technical management of the Ships to V Ships, Unicom Management Services
(Cyprus) Ltd or any other company reasonably acceptable to the Bank.  Any manager will subordinate claims it may
have against the Borrowers, the Corporate Guarantor or the Ships to the Loan.

 

6

 

(n)           The Bank is required by applicable law and regulations, and
its own internal guidelines, to take due diligence steps in relation to the
opening of bank accounts and the identity of its customers.  The Bank will provide a schedule in
relation to these matters immediately after acceptance of this offer letter to
complete the necessary formalities before signing of the loan agreement.  The acceptability of the Borrowers and the
Corporate Guarantor will be dependent on such due diligence being completed and
the results being satisfactory to the Bank in all respects.

 

(o)           All out of pocket expenses (including VAT) incurred by the
Bank in connection with the loan facility shall be reimbursed by the Borrowers
on demand; such expenses shall include (but shall not be limited to) legal and
other expenses incurred by the Bank after acceptance of this letter and whether
or not any drawdown is effected.

 

10.           FINANCIAL COVENANTS

 

The
Corporate Guarantor shall promptly provide annual audited financial statements,
quarterly unaudited financial statements and such other management information
as may be reasonably required by the Bank, to be  prepared in accordance with SEC requirements, including US
GAAP, together with a certificate (in a form acceptable to the Bank) certifying
that the Corporate Guarantor is complying with the following covenants.  The certificate shall contain details of the
calculations made by the Corporate Guarantor to demonstrate to the Bank
compliance with these covenants:-

 

(a)           Adjusted Net Worth will not at any time be less than
US$150,000,000.

 

(b)           Adjusted Net Worth will at all times exceed 35% of Total
Assets.

 

(c)           EBITDA will at all times exceed 120% of the aggregate amount
of Fixed Charges.

 

(d)           Liquid
Funds shall
not at any time be less than the highest of i) US$10,000,000 or ii) US$500,000
per Fleet Vessel.

 

For
these purposes the capitalised expressions shall have the meanings set out in
Appendix ‘A’ to this letter.

 

11.           DOCUMENTATION

 

This
letter contains an outline of certain terms and conditions (it does not
constitute a legally binding commitment on the Bank) which will, inter alia, be
embodied in loan and security documentation (the “Documentation”) containing
usual provisions of the Bank relating to the London Interbank Dollar Market,
covenants and events of default acceptable to the Bank, all of which shall be
completed as a condition precedent to drawdown; such legal agreement and
security documentation shall be governed by English law (except to the extent
any security otherwise requires).  The
Documentation shall supersede this letter and all prior discussions and
negotiations in relation to the Loan.

 

The
Bank shall be entitled to obtain such legal opinions from such jurisdictions as
it may require and from lawyers appointed by it and the Borrower shall provide
such corporate and other documentation as may be required by the Bank or its
lawyers.

 

7

 

12.           ACCEPTANCE

 

This
offer will remain open for acceptance until 30 June 2004 and if no
acceptance is received by this date, the offer shall be automatically cancelled
and no longer available for acceptance. 
If the terms of this offer are acceptable, please sign the acceptance on
the enclosed copy of this letter and return it to the Bank.  This letter is in substitution of the Bank’s
offer letter dated 14 June 2004, which is hereby cancelled.

 

Yours faithfully

For THE ROYAL BANK OF SCOTLAND plc

 

 

	
  /s/ 
  ADRIAN MEADOWS

  	
   

  	
  /s/ BARRY W. MARTIN

  	
   

  
	
  ADRIAN MEADOWS

  	
  BARRY W MARTIN

  
	
  SENIOR SHIP FINANCE MANAGER

  	
  DIRECTOR, GREECE

  

 

We
hereby unconditionally and irrevocably accept the terms and conditions set out
above.

 

	
  For 

  	
  TOP TANKERS

  	
   

  	
  Name 

  	
  /s/ PISTIOLIS E. J.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signed
  

  	
  /s/ Evangelos J. Pistiolis

  	
   

  	
  Position

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date 

  	
  30/06/04

  	
   

  	
   

  	
   

  

 

[SEAL]

 

8

 

APPENDIX ‘A’

 

“Accounting Information” means
the quarterly financial statements and/or the annual audited financial statements
to be provided by the Corporate Guarantor to the Lender in accordance with
paragraph 10 of this letter;

 

“Accounting Period” means
each consecutive period of approximately three months falling during the Loan
period (ending on the last day in March, June, September and
December of each year) for which quarterly Accounting Information is
required to be delivered pursuant to paragraph 10 of this letter;

 

“Adjusted Net Worth” means, in respect of an Accounting Period, the amount of
Total Assets less Consolidated Debt:

 

“Consolidated Debt” means, in respect of an Accounting Period, the aggregate
amount of Debt due by the members of the Group (other than any such Debt owing
by any member of the Group to another member of the Group) as stated in the
then most recent Accounting Information;

 

“Consolidated Financial Indebtedness” means, in respect of each
Accounting Period, the aggregate amount of Financial Indebtedness (including
current maturities) due by the members of the Group (other than any such Financial
Indebtedness owing by any member of the Group to another member of the Group)
as stated in the then most recent Accounting Information;

 

“Current Assets” means, in respect of each Accounting Period, the aggregate
of the cash and marketable securities, trade and other receivables from persons
other than a member of the Group realisable within one year, inventories and
prepaid expenses which are to be charged to income within one year less any
doubtful debts and any discounts or allowances given as stated in the then most
recent Accounting Information;

 

“Debt”
means in relation to any member of the Group (the “debtor”):

 

(a)           Financial Indebtedness of the debtor;

 

(b)           liability for any credit to the debtor from a supplier of
goods or services or under any instalment purchase or payment plan or other
similar arrangement;

 

(c)           contingent liabilities of the debtor (including without
limitation any taxes or other payments under dispute) which have been or, under
GAAP, should be recorded in the notes to the Accounting Information;

 

(d)           deferred tax of the debtor; and

 

(e)           liability under a guarantee, indemnity or similar obligation
entered into by the debtor in respect of a liability of another person who is
not a member of the Group which would fall within (a) to (d) if the references
to the debtor referred to the other person;

 

“EBITDA”
means, in respect of an Accounting Period, the aggregate amount of consolidated
pre-tax profits of the Group before extraordinary or exceptional items,
depreciation, interest, renatals under finance leases and similar charges
payable as stated in the then most recent Accounting, Information;

 

9

 

“Financial Indebtedness”
means, in relation to any member of the Group (the “debtor”), a
liability of the debtor:

 

(a)           for
principal, interest or any other sum payable in respect of any moneys borrowed
or raised by the debtor;

 

(b)           under
any loan stock, bond, note or other security issued by the debtor;

 

(c)           under
any acceptance credit, guarantee or letter of credit facility made available to
the debtor;

 

(d)           under
a financial lease, a deferred purchase consideration arrangement (in each case,
other than in respect of assets or services obtained on normal commercial terms
in the ordinary course of business) or any other agreement having the
commercial effect of a borrowing or raising of money by the debtor;

 

(e)           under
any foreign exchange transaction, interest or currency swap or any other kind
of derivative transaction entered into by the debtor or, if the agreement under
which any such transaction is entered into requires netting of mutual
liabilities, the liability of the debtor for the net amount; or

 

(f)            under
a guarantee, indemnity or similar obligation entered into by the debtor in
respect of a liability of another person which would fall within (a) to (c) if
the references to the debtor referred to the other person;

 

“Fixed Charges”
means, in respect of an Accounting Period, the aggregate of Interest Expenses
and the portion of Consolidated Financial Indebtedness (other than balloon
repayments) falling due during that period, as stated in the then most recent
Accounting Information;

 

“Fleet Vessels” means
any vessel (including, but not limited to, the Ships) from time to time owned
by any member of the Group (each a “Fleet Vessel”);

 

“GAAP” means
accounting principles, concepts, bases and policies generally adopted and
accepted in the United States of America consistently applied;

 

“Group” means
the Corporate Guarantor and its subsidiaries (whether direct or indirect and
including, but not limited to, the Borrowers) from time to time during the
Security Period and “member of the Group” shall
be construed accordingly;

 

“Interest Expenses”
means, in respect of an Accounting Period, the aggregate on a consolidated
basis of all interest incurred by any member of the Group (excluding any
amounts owing by one member of the Group to another member of the Group) and
any net amounts payable under interest rate hedge agreements;

 

10

 

“Liquid Funds”
means, in respect of an Accounting Period:

 

(a)           cash
in hand or held with banks or other financial institutions of the Corporate
Guarantor and/or any other member of the Group in Dollars or another currency
freely convertible into Dollars, which is free of any Security Interest (other
than a Permitted Security Interest and other than ordinary bankers’ liens which
have not been enforced or become capable of being enforced);

 

(b)           any
other short-term financial investments which is free of any Security Interest
(other than a  Permitted Security
Interest)

 

as stated in the then most recent
Accounting Information;

 

“Tangible Fixed Assets” means, in respect of an Accounting Period, the value (less
depreciation computed in accordance with GAAP) on a consolidated basis of all
tangible fixed assets of the Group as stated in the then most recent Accounting
Information; and

 

“Total Assets”
means, in respect of an Accounting Period, the aggregate of Current Assets and
Tangible Fixed Assets”.

 

11

 

	
  Owning Company

  	
   

  	
  Name

  	
   

  	
  DWT

  	
   

  	
  Vessel Type

  	
   

  	
  Hull

  	
   

  	
  Year

  Built

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TABLE A

  	
   

  	
  ‘Existing
  Ships’

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rupel
  Shipping Company Inc.

  	
   

  	
  Fearless

  	
   

  	
  44,646

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
  Gramos Shipping Company Inc.

  	
   

  	
  Faithful

  	
   

  	
  45,000

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
  Litochoro Shipping Company Ltd.

  	
   

  	
  Endless

  	
   

  	
  135,915

  	
   

  	
  Oil Tanker 

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
  Olympos Shipping Company Ltd.

  	
   

  	
  Med Prologue

  	
   

  	
  29,999

  	
   

  	
  Products Tanker

  	
   

  	
  Single

  	
   

  	
  19?5

  	
   

  
	
  Helldona Shipping Company Ltd.

  	
   

  	
  Yapi

  	
   

  	
  29,999

  	
   

  	
  Products Tanker

  	
   

  	
  Single

  	
   

  	
  1989

  	
   

  
	
  Mytikas Shipping Company Ltd.

  	
   

  	
  Limitless

  	
   

  	
  136,055

  	
   

  	
  Oil Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1993

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TABLE B

  	
   

  	
  ‘Purchased
  Ships’

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Timeless

  	
   

  	
  154,970

  	
   

  	
  Oil Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
  Companies to be

  	
   

  	
  Flawless

  	
   

  	
  154,970

  	
   

  	
  Oil Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
  nominated by Top
  Tankers Inc.

  	
   

  	
  Restless

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
  and accepted by
  the Bank

  	
   

  	
  Spotless

  	
   

  	
  47,094

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
  in its sole
  discretion.

  	
   

  	
  Doubtless

  	
   

  	
  47,076

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
   

  	
   

  	
  Victorious

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1991

  	
   

  
	
   

  	
   

  	
  Relentless

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
   

  	
   

  	
  Sovereign

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
   

  	
   

  	
  Invincible

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992

  	
   

  
	
   

  	
   

  	
  Vanguard

  	
   

  	
  47,084

  	
   

  	
  Products Tanker

  	
   

  	
  Double/Double

  	
   

  	
  1992Exhibit 10.9†

 

AGREEMENT 

DAVCO RESTAURANTS, INC.

 

December 18, 1997

 

This Agreement
(the “Agreement”) between DavCo Restaurants, Inc. (“DRI”) and Coca-Cola USA
Fountain (“CCF”), an operating unit of The Coca-Cola Company, sets forth the
terms and conditions of certain programs related to the availability and
marketing of CCF’s Fountain Beverages in restaurants and other outlets owned or
operated by DRI or its subsidiaries.

 

SCOPE OF AGREEMENT

 

This Agreement
will apply to all outlets where Fountain Beverages are served that are owned or
operated by:

 

•                                          DRI,

 

•                                          its
current subsidiaries (namely, Midwest DavCo Food, Inc. (“MDF”), Southern
Hospitality Corporation (“SHC”), and FriendCo Restaurants, Inc. (“FriendCo”)),
and

 

•                                          subsidiaries
formed or acquired by DRI after this Agreement is signed,

 

including any
such outlets that are opened or acquired by DRI or any of its current or future
subsidiaries (collectively, the “Subsidiaries”) after this Agreement is signed.
All outlets to which this Agreement applies are referred to as “Covered
Outlets.” This Agreement will not apply to any outlets outside the fifty United
States and may not be assigned to a third party without CCF’s approval.

 

Unless
specifically stated otherwise in the program descriptions, the programs
described in this Agreement are in addition to those made available (i) to DRI,
MDF and SHC pursuant to their respective Wendy’s Franchisee Marketing
Agreements with CCF, (the “Wendy’s Franchisee Agreement”) and (ii) to FriendCo
pursuant to its Marketing Agreement with CCF, all of which have the same date
as this Agreement.

 

TERM

 

The term of
this Agreement began January 1, 1997 and will continue through December 31,
2004 or until DRI and the Subsidiaries have purchased the Volume Commitment of
CCF’s Fountain Syrups, whichever occurs last. When used in this Agreement, the
term “Year” means each calendar year during the Term.

 

DEFINITIONS

 

“Beverages”
means all soft drinks and other non-alcoholic flavored waters, punches and
ades, whether carbonated or non-carbonated, but does not include tea, brewed
coffee, juices, juice

 

†Marked portions
of the exhibit have been omitted based upon a request for confidential
treatment. The omitted material has been filed with the Securities and Exchange
Commission.

 

 

containing
drinks, sports drinks, frozen beverages, unflavored carbonated and
non-carbonated water and dairy beverages (the “Excluded Beverages”).

 

“Fountain
Beverages” are those Beverages that are dispensed from post-mix or pre-mix
Beverage dispensers, bubblers, or similar equipment.

 

“Competitive
Beverages” and “Competitive Fountain Beverages” mean, respectively, any
Beverage or Fountain Beverage that is not marketed under a brand name or
trademark owned by or licensed for use to The Coca-Cola Company.

 

“Fountain
Syrup” means the post-mix syrup used to prepare Fountain Beverages, but does
not include other forms of concentrate or syrup for frozen Beverages that is
purchased from a full service supplier of frozen Beverages to which CCF
provides marketing funds.

 

BEVERAGE AVAILABILITY

 

DRI will serve
in its Covered Outlets and will cause the Subsidiaries to serve in their
Covered Outlets a core brand set of Fountain Beverages that consists of
Coca-Cola® classic, diet Coke® and Sprite®, and the remaining products will be
jointly selected by DRI and CCF.  CCF’s
Fountain Beverages will be the only Fountain Beverages served in the Covered
Outlets.

 

DRI agrees
that if it should, during the Term, consider the possibility of selling
Beverages packaged in bottles or cans or any Excluded Beverage in Fountain or
frozen form or in bottles or cans, it will allow The Coca-Cola Company the
opportunity to present to it a program regarding the sale and marketing of such
beverages prior to any similar presentation by any other potential supplier.
Further, DRI agrees that, during the Term, it will not enter into a contract
regarding the sale and/or marketing of such beverages with a third party upon
terms and conditions more favorable to such third party than those offered to
The Coca-Cola Company.

 

DRI currently
anticipates the acquisition of Exxon convenience/petroleum outlets and/or “dual
concept” Exxon/Wendy’s outlets located in the mid-Atlantic region of the U.S.
DRI agrees that any such outlets will be considered Covered Outlets for
purposes of this Agreement and agrees further that CCF’s Fountain Beverages
will be the only Fountain Beverages served in such outlets.

 

VOLUME COMMITMENT

 

DRI agrees
that the Covered Outlets will purchase [ * ] gallons of CCF’s Fountain Syrup
during the Term (the “Volume Commitment”). This Term Volume Commitment will be
increased by CCF if DRI or any Subsidiary acquires, after the execution of this
Agreement, additional Covered Outlets to which this Agreement will apply.

 

MARKETING PROGRAM

 

The following
marketing programs will be provided to assist DRI and the Subsidiaries in
promoting the sale of CCF’s Fountain Beverages in the Covered Outlets:

 

2

 

Research and Testing
Fund.

 

Research and Testing Funds in the maximum amount of $ [ * ] will be
provided to support mutually agreed upon research and testing programs that
relate to the sale of Fountain Beverages in the Covered Outlets. Funding will
be paid to DRI as approved expenses are incurred. CCF currently anticipates
that funds will be used according to the following schedule:

 

	
  Year

  	
   

  	
  Amount

  	
   

  
	
  1997

  	
   

  	
  [ * ]

  	
   

  
	
  1998

  	
   

  	
   

  	
   

  
	
  1999

  	
   

  	
   

  	
   

  
	
  2000

  	
   

  	
   

  	
   

  
	
  2001

  	
   

  	
   

  	
   

  
	
  2002

  	
   

  	
   

  	
   

  
	
  2003

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
   

  	
   

  

 

Mr. PiBB® Incentive
Program.

 

Beginning in Year Two, the Covered Outlets. will be eligible to
participate in CCF’s Mr. PiBB® “Buy 10, Get One Free” Incentive Program.
For every ten (10) Bag-in-Box containers of Mr. PiBB® Fountain Syrup purchased,
CCF will reimburse DRI or the applicable Subsidiary for its cost of purchasing
the eleventh Bag-in-Box container of Mr. PiBB®. Such payments will be made
semiannually and will be based on CCF’s then-current published chain account
price list, which is subject to change from time to time, less a discount of
two percent (2%) and less the amount of Marketing Allowances (as defined in the
Wendy’s Franchisee Agreements and FriendCo’s Marketing Agreement) paid by CCF
in connection with DRI’s or a Subsidiary’s purchase of such eleventh Bag-in-Box
container.

 

Mr. PiBB® Brand
Development Fund.

 

In Year Two only, CCF will provide funding of up to $ [ * ] for each
Covered Outlet operated under the Wendy’s or Friendly’s tradestyles which, as
of April 1, 1998, serves Mr. PiBB®. This fund is provided to offset the cost of
developing and implementing promotional programs featuring Mr. PiBB®.  To qualify for funding, DRI and the
applicable Subsidiaries must perform certain mutually agreed upon brand
development activities which may include, without limitation, crew incentive
programs and the development and continuous utilization of customized
merchandising for Mr. PiBB®. Funding will be paid to DRI or its designee as
expenses for agreed upon activities are incurred.

 

Lemonade Brand
Development Fund.

 

In Year Two only, CCF will provide to DRI funds in the maximum amount
of $ [ * ] to support the introduction of Original Style Lemonade from the
Makers of Minute Maid® (“MMOSL”) throughout the Covered Outlets. To qualify for
funding, DRI and the Subsidiaries must introduce MMOSL in all Covered Outlets
and perform certain

 

3

 

mutually agreed upon brand development activities which may include,
without limitation, crew incentive programs and other promotional activities
designed to increase consumer awareness of MMOSL and the development and
continuous utilization of customized merchandising for MMOSL. Funding will be
paid to DRI or its designee as expenses for agreed upon activities are
incurred.

 

Supplemental Funding.

 

[ * ]

 

Merchandising Fund.

 

CCF will provide $ [ * ] to support DRI’s and SHC’s development and
purchase of mutually agreed upon merchandising materials featuring CCF’s
trademarks and logos during 1997 and 1998. These materials may include, without
limitation, illuminated pick-up window banner stands and illuminated Fountain
Beverage merchandisers. Funding will be used by CCF to pay suppliers for goods
and services utilized in connection with the development and purchase of
approved materials.

 

EQUIPMENT

 

Equipment Purchase
Options.

 

In the event DRI, SHC and MDF elect to purchase the CCF-owned Fountain
Beverage dispensing equipment which will be loaned to them for their “Wendy’s
Outlets” (i.e., any Covered Outlet operated under the Wendy’s tradestyle,
including dual concept Exxon/Wendy’s outlets) pursuant to their respective
Wendy’s Franchisee Agreements, they may purchase such equipment directly from
CCF or finance the purchase of such equipment through Coca-Cola Financial
Corporation (“CCFC”). If equipment is purchased directly through CCF, CCF will,
at DRI’s or the applicable Subsidiaries’ direction, issue an invoice for
payment or deduct the purchase price of the equipment from the first two (2)
payments of Marketing Allowances due, pursuant to the Wendy’s Franchisee
Agreements, to DRI or the applicable Subsidiary subsequent to the equipment
sale.

 

Any obligation to extend credit to DRI, SHC or MDF is subject to
approval of the applicable entity’s credit and such entity’s acceptance of
CCF’s or CCFC’s then-current terms and conditions of lending.

 

CCF agrees to pass along to DRI or the applicable Subsidiary any
warranties offered by the equipment manufacturer that may be transferred to a
subsequent purchaser. However, any used equipment sold by CCF pursuant to this
Agreement will be sold subject to the provisions of the Equipment Sales
Agreement attached as Exhibit “A” hereto, ON AN “AS IS,” “WHERE IS”
BASIS, AND CCF MAKES NO GUARANTEE OR WARRANTY WHATSOEVER, INCLUDING ANY
WARRANTIES OF QUANTITY, QUALITY, CONDITION, SALABILITY, MERCHANTABILITY, OR FITNESS
FOR

 

4

 

A PARTICULAR PURPOSE. DRI acknowledges that CCF has patent or other
proprietary rights in certain dispensers, valves and/or components that may be
part of the equipment to be sold to DRI, SHC and/or MDF. Accordingly, DRI
agrees that all proprietary equipment shall be sold subject to the Proprietary
Equipment Repurchase provisions of the Equipment Sales Agreement.

 

FriendCo Equipment
Survey.

 

CCF agrees to survey all Covered Outlets owned by FriendCo and to
provide FriendCo with an evaluation of the dispensing equipment currently
installed in such outlets.

 

SERVICE PROGRAM

 

[ * ]

 

TERMINATION

 

Once this
Agreement is signed by both parties, it may be terminated before the scheduled
expiration date only in the following circumstances:

 

(i)                                     Either
party may terminate the Agreement if the other party fails to comply with a
material term or condition of this Agreement and does not remedy the failure
within ninety (90) days after receiving written notice (the “Cure Period”).
Termination will be effective thirty (30) days after the end of the Cure
Period.

 

(ii)                                  Either
party may terminate this Agreement without cause after giving twelve months’
prior written notice.

 

(iii)                               CCF
will terminate this Agreement if a controlling interest in the stock or assets
of DRI is acquired by a third party, or if there is any other transfer of a
substantial portion of the stock or assets of DRI that is not in the ordinary
course of business. This provision shall not be construed to give CCF the right
to terminate this Agreement solely because DRI becomes a privately-held
corporation or is a party to a merger in which DRI is the surviving entity.

 

If this
Agreement is terminated before its expiration date for any reason, DRI must
return any dispensing equipment owned by CCF. Additionally, unless the
agreement is terminated by CCF without cause, DRI will pay the following
damages at the time of termination:

 

(i)                                     All
prepaid but unearned funding; plus

 

(ii)                                  Interest
on such amount at the rate of one percent per month, accrued from the date the
unearned funds were paid or costs were incurred.

 

5

 

DISPUTE RESOLUTION

 

If a dispute
arises out of or relates to this Agreement or the breach hereof, and if said
dispute cannot be settled through direct discussions, the parties agree to
attempt to settle the dispute in an amicable manner by mediation administered
by the American Arbitration Association under its Commercial Mediation Rules.
Thereafter, any unresolved controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration brought under the terms of this agreement shall be conducted in the
following manner: CCF shall appoint one person as an arbitrator and DRI shall
appoint one person as an arbitrator. The two arbitrators so chosen shall select
a third impartial arbitrator within ten (10) days of the date on which the
second arbitrator is selected. If the arbitrators selected by the parties are
unable or fail to agree upon the third arbitrator, such arbitrator shall be
selected by the American Arbitration Association. The three arbitrators shall
determine all questions presented to them by majority vote. The decision of a
majority of the arbitrators shall be final and conclusive on the parties
hereto.

 

AUTHORITY

 

DRI represents
and warrants that it has the unrestricted right and is authorized to enter into
this Agreement, to receive the funding described herein, and to cause the
Covered Outlets to perform the activities required to earn such funding.

 

ACQUISITION OF SUBSIDIARIES

 

In the event
DRI divests itself of any Subsidiary, the programs described herein will not be
assignable or transferable to the party acquiring the Subsidiary and may not be
disclosed to the acquiring parry.

 

WAIVER

 

The failure by
either party to seek redress for the breach of, or to insist upon the strict
performance of, any term, clause or provision of this Agreement, shall not
constitute a waiver of such breach or performance, unless such waiver shall be
in writing and signed by the party waiving performance. Any waiver so signed
shall not constitute a waiver of any other different or subsequent breach.

 

CONFIDENTIALITY

 

Neither party
shall disclose to any third party without the prior written consent of the
other party, any information concerning this Agreement or the transactions
contemplated hereby, except for disclosure to any employees, attorneys,
accountants and consultants involved in assisting with the negotiation and closing
of the contemplated transactions, or unless such disclosure is required by law.
A party that makes a permitted disclosure must obtain assurances from the party
to whom disclosure is made that such party will keep confidential the
information disclosed.

 

6

 

TRADEMARKS

 

Neither DRI
nor CCF shall make use of any of the other party’s trademarks or logos without
the prior written consent of that party, and all use of the other party’s
trademarks shall inure to the benefit of that party.

 

Agreed to this
18th day of December, 1997.

 

	
  COCA-COLA
  FOUNTAIN

  	
   

  	
  DAVCO
  RESTAURANTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Thomas M. Ludwick

  	
   

  	
  By:

  	
  /s/
  Ronald D. Kirstien

  	
   

  
	
   

  	
  Thomas M.
  Ludwick

  Vice President

  Wendy’s International Account Team

  	
   

  	
   

  	
  Ronald D.
  Kirstien

  Chairman of the Board

  	
   

  

 

7

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