[Code of Federal Regulations]

[Title 46, Volume 8]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 46CFR356.23]



[Page 346]

 

                           TITLE 46--SHIPPING

 

    CHAPTER II--MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

 

PART 356_REQUIREMENTS FOR VESSELS OF 100 FEET OR GREATER IN REGISTERED 

LENGTH TO OBTAIN A FISHERY ENDORSEMENT TO THE VESSEL'S DOCUMENTATION--

 

                           Subpart D_Mortgages

 

Sec.  356.23  Restrictive loan covenants approved for use by lenders.



    (a) We approve the following standard loan covenants, which may 

restrict the activities of the borrower without the lender's consent and 

which may be included in loan agreements or other documents between an 

owner of a Fishing Industry Vessel and an unrelated lender that is using 

an approved Mortgage Trustee to hold the mortgage and debt instrument 

for the benefit of the lender and that is not exempted under Sec.  

356.19(d) from MARAD review of its loan and mortgage covenants, so long 

as the lender's consent is not unreasonably withheld:

    (1) Borrower cannot sell part or all of its assets;

    (2) Borrower cannot merge, consolidate, reorganize, dissolve, or 

liquidate;

    (3) Borrower cannot undertake new borrowing or contingent 

liabilities;

    (4) Borrower cannot insure, guaranty or become otherwise liable for 

debt obligations of any other entity, Person, etc.;

    (5) Borrower cannot Charter or lease a vessel that is collateral for 

the loan;

    (6) Borrower cannot incur liens, except any permitted liens that may 

be set forth in the loan or other financing documents;

    (7) Borrower must limit its investments to marketable investments 

guaranteed by the United States or a State, or commercial paper with the 

highest rating of a generally recognized rating service;

    (8) Borrower cannot make structural alterations or any other major 

alteration to the vessel;

    (9) Borrower, if in arrears in its debt obligations to the lender, 

cannot make dividend payments on its capital stock; and,

    (10) Borrower, if in arrears in its debt obligations to the lender, 

cannot make excessive contributions to pension plans, make payment of 

employee bonuses, or make excessive contributions to stock option plans, 

or provide other major fringe benefits in terms of dollar amount to its 

employees, officers, and directors, such as loans, etc.

    (b) The mortgage may not include covenants that allow the Mortgagee 

to operate the vessel except as provided for in Sec.  356.25.



[65 FR 44877, July 19, 2000, as amended at 68 FR 5581, Feb. 4, 2003]