Date July 2008 PARAGON SHIPPING INC. as Borrower - and - THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 as Lenders - and - HSH NORDBANK AG as Agent and as Security Trustee - and - HSH NORDBANK AG as Swap Bank LOAN AGREEMENT relating to a...
Date July
2008
as
Borrower
- and
-
THE
BANKS AND FINANCIAL INSTITUTIONS
listed
in Schedule 1
as
Lenders
- and
-
HSH
NORDBANK AG
as Agent
and as Security Trustee
- and
-
HSH
NORDBANK AG
as Swap
Bank
__________________________________
__________________________________
relating
to a loan facility of up to US$51,500,000
to
finance part of the purchase price of a 58,500 dwt
Supramax
bulk carrier m.v “NIKOLAOS” (tbn “FRIENDLY SEAS”)
XXXXXX
XXXXXX & XXXXXXXX
Piraeus
INDEX
| Clause |
Page
|
|
|
1
|
INTERPRETATION
|
1
|
|
2
|
FACILITY
|
19
|
|
3
|
POSITION
OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS
|
19
|
|
4
|
DRAWDOWN
|
20
|
|
5
|
INTEREST
|
21
|
|
6
|
INTEREST
PERIODS
|
23
|
|
7
|
DEFAULT
INTEREST
|
24
|
|
8
|
REPAYMENT
AND PREPAYMENT
|
25
|
|
9
|
CONDITIONS
PRECEDENT
|
26
|
|
10
|
REPRESENTATIONS
AND WARRANTIES
|
27
|
|
11
|
GENERAL
UNDERTAKINGS
|
29
|
|
12
|
CORPORATE
UNDERTAKINGS
|
34
|
|
13
|
INSURANCE
|
35
|
|
14
|
SHIP
COVENANTS
|
41
|
|
15
|
SECURITY
COVER
|
46
|
|
16
|
PAYMENTS
AND CALCULATIONS
|
47
|
|
17
|
APPLICATION
OF RECEIPTS
|
50
|
|
18
|
APPLICATION
OF EARNINGS
|
51
|
|
19
|
EVENTS
OF DEFAULT
|
53
|
|
20
|
FEES
AND EXPENSES
|
57
|
|
21
|
INDEMNITIES
|
58
|
|
22
|
NO
SET-OFF OR TAX DEDUCTION
|
60
|
|
23
|
ILLEGALITY,
ETC
|
60
|
|
24
|
INCREASED
COSTS
|
61
|
|
25
|
SET
OFF
|
62
|
|
26
|
TRANSFERS
AND CHANGES IN LENDING OFFICES
|
63
|
|
27
|
VARIATIONS
AND WAIVERS
|
66
|
|
28
|
NOTICES
|
67
|
|
29
|
SUPPLEMENTAL
|
68
|
|
30
|
LAW
AND JURISDICTION
|
69
|
| SCHEDULE 1 LENDERS AND COMMITMENTS |
70
|
|
| SCHEDULE 2 DRAWDOWN NOTICE |
71
|
|
| SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS |
72
|
|
| SCHEDULE 4 TRANSFER CERTIFICATE |
75
|
|
| SCHEDULE 5 DESIGNATION NOTICE |
79
|
|
| SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE |
80
|
|
| SCHEDULE 7 MANDATORY COST FORMULA |
81
|
|
| EXECUTION PAGES |
84
|
|
THIS LOAN AGREEMENT is made
on July
2008
BETWEEN:
|
(1)
|
PARAGON SHIPPING INC. a
corporation incorporated in the Xxxxxxxx Islands whose registered office
is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The
Xxxxxxxx Xxxxxxx XX 00000 as Borrower;
|
|
(2)
|
THE BANKS AND FINANCIAL
INSTITUTIONS listed in Schedule 1, as Lenders;
|
|
(3)
|
HSH NORDBANK AG acting
through its office at Xxxxxxx-Xxxxxxxxx-Xxxxx 00, X-00000, Xxxxxxx,
Xxxxxxx, as Agent;
|
|
(4)
|
HSH NORDBANK AG acting
through its office at Xxxxxxx-Xxxxxxxxx-Xxxxx 00, X-00000, Xxxxxxx,
Xxxxxxx, as Security Trustee;
and
|
|
(5)
|
HSH NORDBANK AG acting
through its office at Martensdamm, X-00000, Xxxx, Xxxxxxx, as Swap
Bank.
|
WHEREAS
|
(A)
|
The
Lenders have agreed to make available to the Borrower a term loan facility
in an amount of up to the lesser of (a) US$51,500,000 and (b) 65 per cent.
of the Market Value of the Ship on delivery (as determined pursuant to the
valuations referred to in paragraph 7 of Schedule 3, Part B) to finance
part of the purchase price of the Ship. The Borrower will
on-lend the Loan to the Owner to assist it in financing the acquisition of
the Ship.
|
|
(B)
|
The
Swap Bank has agreed to enter into interest rate swap transactions with
the Borrower from time to time to hedge the Borrower’s exposure under this
Agreement to interest rate
fluctuations.
|
|
(C)
|
The
Lenders and the Swap Bank have agreed to share pari passu in the security
to be granted to the Security Trustee pursuant to this
Agreement.
|
IT IS AGREED as
follows:
|
1
|
INTERPRETATION
|
|
1.1
|
Definitions. Subject
to Clause 1.5, in this Agreement:
|
“Advance” means the principal
amount of each borrowing by the Borrower under this Agreement;
|
|
“Affected Lender” has the
meaning given in Clause 5.5;
|
|
|
“Agency and Trust Deed”
means the agency and trust deed executed or to be executed between the
Borrower, the Lenders, the Swap Bank, the Agent and the Security Trustee
in such form as the Lenders may approve or
require;
|
|
|
“Agent” means HSH
Nordbank AG and any of its successors including, without limitation, any
successor appointed under clause 5 of the Agency and Trust
Deed;
|
“Applicable Accounts” means, as at the
date of calculation or, as the case may be, in respect of an accounting period,
the annual audited consolidated accounts and financial statements of the Group
or the quarterly unaudited accounts and financial statements of the Group, in
each case, which the Borrower is obliged to deliver to the Agent pursuant to
Clause 11.6;
“Approved Broker” means each of
X. Xxxxxxxx & Company Limited of London, England, Xxxxx Xxxxxxxx Xxxxxx X.X.
of Paris, France, X.X. Xxxxxx Shipbrokers A.S. of Oslo, Norway, Arrow Sale &
Purchase (UK) Ltd. of London, England, Xxxxxxx Xxxxxx & Xxxxx of London,
England, Fearnley AS of Oslo, Norway and Maersk Shipbrokers of Copenhagen,
Denmark;
|
|
“Approved Flag” means the
Xxxxxxxx Islands flag, the Liberian flag, the Cayman Islands flag or such
other flag as the Agent may, in its sole and absolute discretion, approve
as the flag on which the Ship shall be
registered;
|
|
|
“Approved Flag State”
means the Xxxxxxxx Islands, Liberia, the Cayman Islands or any other
country in which the Agent, may in its sole and absolute discretion,
approve that the Ship be
registered;
|
“Approved Manager” means
Allseas Marine S.A. a corporation organised and existing under the laws of the
Republic of Liberia, having its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx and maintaining a ship management office at 00 Xxxxxxxxx Xxxxxx, 000 00
Xxxxx, Xxxxxx or any other company which the Agent may, with the authorisation
of the Majority Lenders, approve from time to time as the technical and/or
commercial manager of the Ship;
|
|
“Availability Period”
means the period commencing on the date of this Agreement and ending
on:
|
|
|
(a)
|
30
December 2008 or such later date as the Agent may, with the authorisation
of all the Lenders, agree with the Borrower;
or
|
|
|
(b)
|
if
earlier, the date on which the Total Commitments are fully borrowed,
cancelled or terminated;
|
“Borrower” means Paragon
Shipping Inc., a corporation incorporated in the Xxxxxxxx Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, The Xxxxxxxx Xxxxxxx XX 00000;
|
|
“Business Day” means a
day on which banks are open in London, Athens, Hamburg and any other city
in which a Lender is incorporated or maintains its lending office and, in
respect of a day on which a payment is required to be made under a Finance
Document, also in New York City;
|
“Charterparty Assignment” means
an assignment of the rights of the Owner under any Initial Charterparty and any
Future Charterparty executed or to be executed by the Owner in favour of the
Security Trustee, in each case, in such form as the Lenders may approve or
require and, in the plural, means all of them;
“Commitment” means, in relation
to a Lender, the amount set opposite its name in the Schedule 1 or, as the case
may require, the amount specified in the relevant Transfer Certificate, as that
amount may be reduced, cancelled or terminated in accordance with this Agreement
(and “Total Commitments”
means the aggregate of the Commitments of all the Lenders);
“Compliance Certificate” means
a certificate in the form set out in Schedule 6 (or in any other form which the
Agent approves or reasonably requires) to be provided at the times and in the
manner set out in Clauses 12.5 and 12.10;
“Confirmation” and “Early Termination Date”, in
relation to any continuing Designated Transaction, have the meanings given in
the Master Agreement;
2
“Contract
Price” means the contract price payable for the Ship pursuant
to the MOA being the amount of $79,250,000;
|
|
“Contractual Currency”
has the meaning given in Clause
21.5;
|
|
|
“Contribution” means, in
relation to a Lender, the part of the Loan which is owing to that
Lender;
|
|
|
“Creditor Party” means
the Agent, the Security Trustee, the Swap Bank or any Lender, whether as
at the date of this Agreement or at any later
time;
|
|
|
“Debt Service Reserve
Account” means an account in the name of the Owner, with the Agent
in Hamburg designated “FRIENDLY SEAS” - Debt Service Reserve Account”, or
any other account (with that or another office of the Agent) which is
designated by the Agent as the Debt Service Reserve Account for the
purposes of this Agreement and, in the plural means all of
them;
|
|
|
“Debt Service Reserve Account
Pledge” means, in relation to the Debt Service Reserve Account, a
pledge agreement creating security in favour of the Security Trustee in
such form as the Lenders may approve or
require
|
|
|
“Deed of Covenant” means
if the Ship which is registered on the Cayman Islands flag, a deed of
covenant collateral to the Mortgage to be executed in favour of the
Security Trustee by the Owner in such form as the Lenders may approve or
require;
|
“Designated Transaction” means
a Transaction which fulfils the following requirements:
|
|
(a)
|
it
is entered into by the Borrower pursuant to the Master Agreement with the
Swap Bank which, at the time the Transaction is entered into, is also a
Lender;
|
|
|
(b)
|
its
purpose is the hedging of the Borrower’s exposure under this Agreement to
fluctuations in LIBOR arising from the funding of the Loan (or any part
thereof) for a period expiring no later than the Final Maturity Date;
and
|
|
|
(c)
|
it
is designated by the Borrower, by delivery by the Borrower to the Agent of
a notice of designation in the form set out in Schedule 5, as a Designated
Transaction for the purposes of the Finance
Documents;
|
“Dollars” and “$” means the lawful currency
for the time being of the United States of America;
|
|
“Drawdown Date” means the
date requested by the Borrower for the Loan to be made, or (as the context
requires) the date on which the Loan is actually
made;
|
|
|
“Drawdown Notice” means a
notice in the form set out in Schedule 2 (or in any other form which the
Agent approves or reasonably
requires);
|
|
|
“Earnings” means all
moneys whatsoever which are now, or later become, payable (actually or
contingently) to the Owner or the Security Trustee and which arise out of
the use or operation of the Ship, including (but not limited
to):
|
|
|
(a)
|
all
freight, hire and passage moneys, compensation payable to the Owner or the
Security Trustee in the event of requisition of the Ship for hire,
remuneration for salvage and towage services, demurrage and detention
moneys and damages for breach (or payments for variation or termination)
of any charterparty or other contract for the employment of the
Ship;
|
3
|
|
(b)
|
all
moneys which are at any time payable under Insurances in respect of loss
of earnings; and
|
|
|
(c)
|
if
and whenever the Ship is employed on terms whereby any moneys falling
within paragraphs (a) or (b) above are pooled or shared with any other
person, that proportion of the net receipts of the relevant pooling or
sharing arrangement which is attributable to the
Ship;
|
|
|
“Earnings Account” means
an account in the name of the Owner, with the Agent in Hamburg designated
“FRIENDY SEAS” - Earnings Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the
Earnings Account for the purposes of this Agreement and, in the plural
means all of them;
|
“Earnings Account Pledge”
means, in relation to the Earnings Account, a pledge agreement creating security
in favour of the Security Trustee in such form as the Lenders may approve or
require;
|
|
“Environmental Claim”
means:
|
|
|
(a)
|
any
claim by any governmental, judicial or regulatory authority which arises
out of an Environmental Incident or an alleged Environmental Incident or
which relates to any Environmental Law;
or
|
|
|
(b)
|
any
claim by any other person which relates to an Environmental Incident or to
an alleged Environmental Incident,
|
|
|
and
“claim” means a
claim for damages, compensation, fines, penalties or any other payment of
any kind whether or not similar to the foregoing; an order or direction to
take, or not to take, certain action or to desist from or suspend certain
action; and any form of enforcement or regulatory action, including the
arrest or attachment of any asset;
|
|
|
“Environmental Incident”
means:
|
|
|
(a)
|
any
release of Environmentally Sensitive Material from the Ship;
or
|
|
|
(b)
|
any
incident in which Environmentally Sensitive Material is released from a
vessel other than the Ship and which involves a collision between the Ship
and such other vessel or some other incident of navigation or operation,
in either case, in connection with which the Ship is actually or
potentially liable to be arrested, attached, detained or injuncted and/or
the Ship or the Owner and/or any operator or manager is at fault or
allegedly at fault or otherwise liable to any legal or administrative
action; or
|
|
|
(c)
|
any
other incident in which Environmentally Sensitive Material is released
otherwise than from the Ship and in connection with which the Ship is
actually or potentially liable to be arrested and/or where the Owner
and/or any operator or manager of the Ship is at fault or allegedly at
fault or otherwise liable to any legal or administrative
action;
|
|
|
“Environmental Law” means
any law relating to pollution or protection of the environment, to the
carriage of Environmentally Sensitive Material or to actual or threatened
releases of Environmentally Sensitive
Material;
|
|
|
“Environmentally Sensitive
Material” means oil, oil products and any other substance
(including any chemical, gas or other hazardous or noxious substance)
which is (or is capable of being or becoming) polluting, toxic or
hazardous;
|
|
|
“Event of Default” means
any of the events or circumstances described in Clause
19.1;
|
4
|
|
“Fee Letter” means a
letter issued or to be issued by the Borrower to the Agent in which the
Borrower agrees to pay certain fees to the Agent in connection with this
Agreement;
|
“Final Maturity Date” means the
earlier of (a) date falling 120 months after the Drawdown Date and (b) 30
September 2018;
|
|
“Finance Documents”
means:
|
|
|
(a)
|
this
Agreement;
|
|
|
(b)
|
the
Master Agreement;
|
|
|
(c)
|
the
Agency and Trust Deed;
|
|
|
(d)
|
the
Fee Letter;
|
|
|
(e)
|
the
Guarantee;
|
|
|
(f)
|
the
Master Agreement Assignment;
|
|
|
(g)
|
the
Mortgage;
|
|
|
(h)
|
the
General Assignment;
|
|
|
(i)
|
any
Deed of Covenant;
|
|
|
(j)
|
the
Retention Account Pledge;
|
|
|
(k)
|
the
Earnings Account Pledge;
|
|
|
(l)
|
the
Debt Service Reserve Account
Pledge;
|
|
|
(m)
|
any
Charterparty Assignment;
|
|
|
(n)
|
the
Management Agreement Assignment;
|
|
|
(o)
|
the
Manager’s Undertaking; and
|
|
|
(p)
|
any
other document (whether creating a Security Interest or not) which is
executed at any time by the Borrower, the Owner or any other person as
security for, or to establish any form of subordination or priorities
arrangement in relation to, any amount payable to the Lenders and/or the
Swap Bank under this Agreement or any of the documents referred to in this
definition;
|
|
|
“Financial Indebtedness”
means, in relation to a person (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;
|
5
|
|
(d)
|
under
a financial lease, a deferred purchase consideration arrangement or any
other agreement having the commercial effect of a borrowing or raising of
money by the debtor;
|
|
|
(e)
|
under
any 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
(e) if the references to the debtor referred to the other
person;
|
“Financial Year” means, in
relation to the Group, each period of 1 year commencing on 1 January in respect
of which its consolidated accounts are or ought to be prepared;
“First Class Underwriter”
means any underwriter rated with at least BBB by either Standard & Poors or
Moodys;
“Fleet Vessels” means,
together, all of the vessels (including, but not limited to, the Ship) from time
to time owned by members of the Group;
“Future
Charterparty” means, any time charterparty or contract of
affreightment in respect of the Ship (other than an Initial Charterparty) of at
least 11 consecutive months in duration or any bareboat charter and any
guarantee of such charter (if such a guarantee is provided to the Owner) or
other contract of employment in respect of the Ship to be entered into by the
Owner and a charterer approved by the Agent in form and substance satisfactory
to the Agent;
“GAAP” means generally accepted
accounting principles as from time to time in effect in the United States of
America;
|
|
“General Assignment”
means a general assignment of the Earnings, the Insurances and any
Requisition Compensation of the Ship in such form as the Lenders may
approve or require;
|
“Group” means the Borrower and
its subsidiaries (whether direct or indirect and including, but not limited to,
the Owner) from time to time during the Security Period and “member of the Group” shall be
construed accordingly;
|
|
“Guarantee” means a
guarantee to be given by the Owner in favour of the Security Trustee
guaranteeing the obligations of the Borrower under (inter alia) this
Agreement, the Master Agreement and the other Finance Documents in such
form as the Lenders shall approve or require and in the plural means all
of them;
|
|
|
“IACS” means the
International Association of Classification
Societies;
|
|
|
“Initial Charterparty”
means each of:
|
|
|
(a)
|
the
time charter entered or to be entered into between the Owner and Irika
Shipping S.A. for a duration of at least 1 year, at a daily charter hire
rate of at least $55,000 and on such other terms as shall be acceptable in
all respects to the Agent; and
|
|
|
(b)
|
the
time charter entered or to be entered into between the Owner and Deiulemar
Spa (or any other company acceptable to the Lenders in their discretion)
for a duration of at least 5 years (commencing as from the termination of
the time charter referred to in paragraph (a) above), at a net daily
charter hire rate of at least $33,750 on such other terms as shall be
acceptable in all respects to the
Agent,
|
and in
the plural means both of them;
6
“Initial Market
Value” means the Market Value of the Ship determined pursuant
to the valuations referred to in paragraph 7 of Schedule 3, Part B;
“Insurances” means:
|
|
(a)
|
all
policies and contracts of insurance, including entries of the Ship in any
protection and indemnity or war risks association, which are effected in
respect of the Ship, her Earnings or otherwise in relation to her;
and
|
|
|
(b)
|
all
rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a
premium;
|
“Interest Period” means a
period determined in accordance with Clause 6;
|
|
“ISM Code”
means:
|
|
|
(a)
|
‘The
International Management Code for the Safe Operation of Ships and for
Pollution Prevention’, currently known or referred to as the ‘ISM Code’,
adopted by the Assembly of the International Maritime Organisation by
Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994
into chapter IX of the International Convention for the Safety of Life at
Sea 1974 (SOLAS 1974); and
|
|
|
(b)
|
all
further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of
the International Maritime Organisation or any other entity with
responsibility for implementing the ISM Code, including without
limitation, the ‘Guidelines on implementation or administering of the
International Safety Management (ISM) Code by Administrations’ produced by
the International Maritime Organisations pursuant to Resolution A.788(19)
adopted on 25 November 1995,
|
|
|
as
the same may be amended, supplemented or replaced from time to
time;
|
|
|
“ISM Code Documentation”
includes:
|
|
|
(a)
|
the
document of compliance (DOC) and safety management certificate (SMC)
issued pursuant to the ISM Code in relation to the Ship within the periods
specified by the ISM Code; and
|
|
|
(b)
|
all
other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Agent may require;
and
|
|
|
(c)
|
any
other documents which are prepared or which are otherwise relevant to
establish and maintain the Ship’s or the compliance of its Owner with the
ISM Code which the Agent may
require;
|
|
|
“ISM SMS” means the
safety management system for the Ship which is required to be developed,
implemented and maintained under the ISM
Code;
|
“ISPS Code” means the
International Ship and Port Facility Security Code constituted pursuant to
resolution A.924(22) of the International Maritime Organisation (“IMO”) now set
out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as
amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of
the IMO on Maritime Security in December 2002 and includes any amendments or
extensions to it and any regulation issued pursuant to it but shall only apply
insofar as it is applicable law in the Ship’s flag state and any jurisdiction on
which such Ship is operated;
7
|
|
“ISPS Code Documentation”
includes:
|
|
|
(a)
|
the
International Ship Security Certificate issued pursuant to the ISPS Code
in relation to the Ship within the period specified in the ISPS Code;
and
|
|
|
(b)
|
all
other documents and data which are relevant to the ISPS Code and its
implementation and verification which the Agent may
require;
|
|
|
“Lender” means, subject
to Clause 26.6:
|
|
|
(a)
|
a
bank or financial institution listed in Schedule 1 and acting through its
branch indicated in Schedule 1 (or through another branch notified to the
Borrower under Clause 26.14) unless it has delivered a Transfer
Certificate or Certificates covering the entire amounts of its Commitment
and its Contribution; and
|
|
|
(b)
|
the
holder for the time being of a Transfer
Certificate;
|
“Leverage Ratio” means, at any
relevant time, the ratio (expressed as a percentage) of:
|
|
(a)
|
the
Total Liabilities (including, without limitation, all amounts outstanding
from time to time under this Agreement, the Master Agreement and the other
Finance Documents) less the aggregate of all cash deposits maintained by
the Group which are free of Security
Interests;
|
|
|
(b)
|
the
aggregate Market Value of all the Fleet
Vessels;
|
“LIBOR” means, for an Interest
Period:
|
|
(a)
|
the
rate per annum equal to the offered quotation for deposits in Dollars for
a period equal to, or as near as possible equal to, the relevant Interest
Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m.
(London time) on the second Business Day prior to the commencement of that
Interest Period (and, for the purposes of this Agreement, “REUTERS BBA
Page LIBOR 01” means the display designated as “REUTERS BBA Page LIBOR 01”
on the Reuters Money News Services or such other page as may replace
REUTERS BBA Page LIBOR 01 on that service for the purpose of displaying
rates comparable to that rate or on such other service as may be nominated
by the British Bankers’ Association for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for Dollars);
or
|
|
|
(b)
|
if
no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum
determined by the Agent to be the arithmetic mean of the rates per annum
notified to the Agent by each Lender to be the rate per annum at which
deposits in Dollars are offered to that Lender by leading banks in the
London Interbank Market at or about 11.00 a.m. (London time) on the second
Business Day prior to the commencement of that Interest Period for a
period equal to that Interest Period and for delivery on the first
Business Day of it;
|
|
|
“Loan” means the
principal amount for the time being outstanding under this
Agreement;
|
|
|
“Major Casualty” means
any casualty to the Ship in respect of which the claim or the aggregate of
the claims against all insurers, before adjustment for any relevant
franchise or deductible, exceeds $500,000 or the equivalent in any other
currency;
|
8
“Majority Lenders”
means:
|
|
(a)
|
before
the Loan is advanced, Lenders whose Commitments total at least 66 2/3 per
cent. of the Total Commitments; and
|
|
|
(b)
|
after
the Loan is advanced, Lenders whose Contributions total 66 2/3 per cent.
of the Loan;
|
“Manager’s Undertaking” means a
letter of undertaking executed or to be executed by the Approved Manager in
favour of the Security Trustee in such form as the Lenders may approve or
require agreeing certain matters in relation to the management of the Ship and
subordinating the rights of the Approved Manager against the Ship and the Owner
to the rights of the Creditor Parties under the Finance Documents and, if
applicable, assigning the Approved Manager’s interest in the Insurances of the
Ship in favour of the Security Trustee;
“Management Agreement” means an
agreement made or to be made between the Owner and the Approved Manager in
respect of the commercial and technical management of the Ship;
“Management Agreement
Assignment” means the assignment of the Owner’s rights and interests
under the Management Agreement in such form as the Lenders may approve or
require;
“Mandatory Cost” means the percentage
rate per annum calculated by the Agent in accordance with Schedule
7;
“Margin” means, subject to
Clause 5.14 and 5.15, at all times when the Loan is:
|
|
(a)
|
equal
to, or less than, 50 per cent. of the Market Value of the Ship, 1.25 per
cent. per annum; and
|
|
|
(b)
|
greater
than 50 per cent. of the Market Value of the Ship, 1.30 per cent. per
annum;
|
“Margin Calculation Date” has
the meaning given to it in Clause 5.14;
“Margin Review
Date” has the meaning given to it in Clause 5.15;
“Market Value” means, in
relation to the Ship and each Fleet Vessel, the market value thereof calculated
in accordance with Clause 15.4;
“Market Value Adjusted Net
Worth” means Paid-Up Capital plus General Reserves plus Retained Earnings
adjusted to reflect the difference between the book values of the Fleet Vessels
and the Market Values of all Fleet Vessels at any relevant time;
“Market Value Adjusted Total
Assets” means, at any time, Total Assets adjusted to reflect
the difference between the book values of all Fleet Vessels and the aggregate
Market Value of all Fleet Vessels and lease transactions relating to any Fleet
Vessels;
“Master Agreement” means the
master agreement (on the 1992 ISDA (Multicurrency - Crossborder) form) made
between the Borrower and the Swap Bank and includes all Designated Transactions
from time to time entered into and Confirmations from time to time exchanged
under the master agreement;
“Master Agreement Assignment”
means the assignment of the Master Agreement in such form as the Lenders may
approve or require;
9
“MOA” means the memorandum of
agreement, dated 11 June 2008 and made between the Seller and the Owner on terms
and conditions acceptable to the Agent;
“Mortgage” means the first
preferred or, as the case may be, priority ship mortgage on the Ship under the
Approved Flag executed by the Owner in favour of the Security Trustee, each in
such form as the Lenders may approve or require;
|
|
“Negotiation Period” has
the meaning given in Clause 5.8;
|
“Notifying Lender” has the
meaning given in Clause 23.1 or Clause 24.1 as the context
requires;
“Owner” means, Paloma Marine
S.A., a corporation incorporated in Liberia having its registered office at 00
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, being a corporation which is a direct or
indirect wholly-owned subsidiary of the Borrower;
“Paid-Up Capital”, “General Reserves” and “Retained Earnings” have the meanings
ascribed to them in the Applicable Accounts;
“Payment Currency” has the
meaning given in Clause 21.5;
|
|
“Permitted Security
Interests” means:
|
|
|
(a)
|
Security
Interests created by the Finance
Documents;
|
|
|
(b)
|
liens
for unpaid crew’s wages in accordance with usual maritime
practice;
|
|
|
(c)
|
liens
for salvage;
|
|
|
(d)
|
liens
arising by operation of law for not more than 2 months’ prepaid hire
under any charter in relation to the Ship not prohibited by this
Agreement;
|
|
|
(e)
|
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 the Ship, provided such
liens do not secure amounts more than 30 days overdue (unless the
overdue amount is being contested by the Owner in good faith by
appropriate steps) and subject, in the case of liens for repair or
maintenance, to
Clause 14.13(h);
|
|
|
(f)
|
any
Security Interest created in favour of a plaintiff or defendant in any
action of the court or tribunal before whom such action is brought as
security for costs and expenses where the Owner is prosecuting or
defending such action in good faith by appropriate steps;
and
|
|
|
(g)
|
Security
Interests arising by operation of law in respect of taxes which are not
overdue for payment other than taxes being contested in good faith by
appropriate steps and in respect of which appropriate reserves have been
made;
|
|
|
“Pertinent Jurisdiction”,
in relation to a company, means:
|
|
|
(a)
|
England
and Wales;
|
|
|
(b)
|
the
country under the laws of which the company is incorporated or
formed;
|
|
|
(c)
|
a
country in which the company's central management and control is or has
recently been exercised;
|
10
|
|
(d)
|
a
country in which the overall net income of the company is subject to
corporation tax, income tax or any similar
tax;
|
|
|
(e)
|
a
country in which assets of the company (other than securities issued by,
or loans to, related companies) having a substantial value are situated,
in which the company maintains a permanent place of business, or in which
a Security Interest created by the company must or should be registered in
order to ensure its validity or priority;
and
|
|
|
(f)
|
a
country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which would
have such jurisdiction if their assistance were requested by the courts of
a country referred to in paragraphs (b) or (c)
above;
|
|
|
“Potential Event of
Default” means an event or circumstance which, with the giving of
any notice, the lapse of time, a determination of the Majority Lenders
and/or the satisfaction of any other condition, would constitute an Event
of Default;
|
|
|
“Relevant Person” has the
meaning given in Clause 19.9;
|
“Requisition Compensation”
includes all compensation or other moneys payable by reason of any act or event
such as is referred to in paragraph (b) of the definition of “Total
Loss”;
“Retention Account” means an
account in the name of the Borrower with the Agent in Hamburg designated
“Paragon Shipping Inc. - Retention Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the Retention
Account for the purposes of this Agreement;
|
|
“Retention Account
Pledge” means a pledge agreement creating security in favour of the
Security Trustee in respect of the Retention Account in such form as the
Lenders may approve or require;
|
|
|
“Secured Liabilities”
means all liabilities which the Borrower, the Security Parties or any of
them have, at the date of this Agreement or at any later time or times,
under or by virtue of the Finance Documents or any judgment relating to
the Finance Documents; and for this purpose, there shall be disregarded
any total or partial discharge of these liabilities, or variation of their
terms, which is effected by, or in connection with, any bankruptcy,
liquidation, arrangement or other procedure under the insolvency laws of
any country;
|
“Security Interest”
means:
|
|
(a)
|
a
mortgage, charge (whether fixed or floating) or pledge, any maritime or
other lien or any other security interest of any
kind;
|
|
|
(b)
|
the
rights of the plaintiff under an action in rem in which the
vessel concerned has been arrested or a writ has been issued or similar
step taken; and
|
|
|
(c)
|
any
arrangement entered into by a person (A) the effect of which is to place
another person (B) in a position which is similar, in economic terms, to
the position in which B would have been had he held a security interest
over an asset of A; but (c) does not apply to a right of set off or
combination of accounts conferred by the standard terms of business of a
bank or financial institution;
|
|
|
“Security Party” means
the Owner, the Approved Manager and any other person (except a Creditor
Party) who, as a surety or mortgagor, as a party to any subordination or
priorities arrangement, or in any similar capacity, executes a document
falling within the final paragraph of the definition of “Finance
Documents”;
|
11
|
|
“Security Period” means
the period commencing on the date of this Agreement and ending on the date
on which the Agent notifies the Borrower, the Security Parties and the
Lenders that:
|
|
|
(a)
|
all
amounts which have become due for payment by the Borrower or any Security
Party under the Finance Documents have been
paid;
|
|
|
(b)
|
no
amount is owing or has accrued (without yet having become due for payment)
under any Finance Document;
|
|
|
(c)
|
neither
the Borrower nor any Security Party has any future or contingent liability
under Clause 20, 21 or 22 below or any other provision of this Agreement
or another Finance Document; and
|
|
|
(d)
|
the
Agent, the Security Trustee and the Majority Lenders do not consider that
there is a significant risk that any payment or transaction under a
Finance Document would be set aside, or would have to be reversed or
adjusted, in any present or possible future bankruptcy of the Borrower or
a Security Party or in any present or possible future proceeding relating
to a Finance Document or any asset covered (or previously covered) by a
Security Interest created by a Finance
Document;
|
|
|
“Security Trustee” means
HSH Nordbank AG and any of its successors including, without limitation,
any successor appointed under clause 5 of the Agency and Trust
Deed;
|
“Seller” means
Cruising International S.A., a company incorporated in Panama whose registered
office is at Xxxxxxx X. Xx Xxxxx Street, P.N. Xxxxxxxx XX Building, 8th Floor,
Panama, Republic of Panama;
“Ship” means the supramax bulk
carrier of 58,500 metric tons deadweight currently named “NIKOLAOS” and
registered in the name of the Seller under the Panamanian flag to be purchased
by the Owner pursuant to the MOA and registered in the name of the which is
Owner under an Approved Flag with the name “FRIENDLY SEAS”;
“Swap Account” means an account
in the name of the Borrower with the Agent in Hamburg designated “Paragon
Shipping Inc. - Swap Account”, or any other account (with that or another office
of the Agent) which is designated by the Agent as the Swap Account for the
purposes of this Agreement;
“Swap Bank” means HSH Nordbank
AG acting through its office at Xxxxxxx-Xxxxxxxxx-Xxxxx 00, X-00000, Xxxxxxx,
Xxxxxxx;
“Swap Exposure” means, as at
any relevant date, the amount certified by the Swap Bank to the Agent to be the
aggregate net amount in Dollars which would be payable by the Borrower to the
Swap Bank under (and calculated in accordance with) section 6(e) (Payments on
Early Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Designated
Transactions entered into between the Borrower and the Swap Bank;
“Total Assets” means, as at the
relevant date, the aggregate value of all trade debtors and the value of all
stock (valued in accordance with GAAP) and all other investments and other
tangible and intangible assets of the Group properly included in the Applicable
Accounts as “fixed assets” in accordance with GAAP but excluding any assets held
on trust;
|
|
“Total
Liabilities” means, as at any date, the total
liabilities (but excluding any amount in respect of Total Shareholder’s
Equity) of the Group determined in accordance with, and as shown in, the
most recent Accounting
Information;
|
12
|
|
“Total Loss”
means:
|
|
|
(a)
|
actual,
constructive, compromised, agreed or arranged total loss of the
Ship;
|
|
|
(b)
|
any
expropriation, confiscation, requisition or acquisition of the Ship,
whether for full consideration, a consideration less than her proper
value, a nominal consideration or without any consideration, which is
effected by any government or official authority or by any person or
persons claiming to be or to represent a government or official authority,
excluding a requisition for hire for a fixed period not exceeding one year
without any right to an extension;
|
|
|
(c)
|
any
condemnation of the Ship by any tribunal or by any person or person
claiming to be a tribunal;
|
|
|
(d)
|
any
arrest, capture, seizure or detention of the Ship (including any hijacking
or theft) unless she is within 30 days redelivered to the full control the
Owner;
|
|
|
“Total Loss Date”
means:
|
|
|
(a)
|
in
the case of an actual loss of the Ship, the date on which it occurred or,
if that is unknown, the date when the Ship was last heard
of;
|
|
|
(b)
|
in
the case of a constructive, compromised, agreed or arranged total loss of
the Ship, the earliest of:
|
|
|
(i)
|
the
date on which a notice of abandonment is given to the insurers;
and
|
|
|
(ii)
|
the
date of any compromise, arrangement or agreement made by or on behalf of
the Owner, with the Ship's insurers in which the insurers agree to treat
the Ship as a total loss; and
|
|
|
(c)
|
in
the case of any other type of total loss, on the date (or the most likely
date) on which it appears to the Agent that the event constituting the
total loss occurred;
|
|
|
“Transaction” has the
meaning given in the Master
Agreement;
|
|
|
“Transfer
Certificate” has the meaning given in Clause 26.2;
and
|
|
|
“Trust Property” has the
meaning given in clause 3.1 of the Agency and Trust
Deed.
|
|
1.2
|
Construction of certain
terms. In this
Agreement:
|
|
|
“approved” means, for the
purposes of Clause 13, approved in writing by the
Agent;
|
|
|
“asset” includes every
kind of property, asset, interest or right, including any present, future
or contingent right to any revenues or other
payment;
|
|
|
“company” includes any
partnership, joint venture and unincorporated
association;
|
“consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;
|
|
“contingent liability”
means a liability which is not certain to arise and/or the amount of which
remains unascertained;
|
|
|
“document” includes a
deed; also a letter, fax or telex;
|
13
|
|
“excess risks” means, in
relation to the Ship, the proportion of claims for general average,
salvage and salvage charges not recoverable under the hull and machinery
policies in respect of the Ship in consequence of her insured value being
less than the value at which the Ship is assessed for the purpose of such
claims;
|
|
|
“expense” means any kind
of cost, charge or expense (including all legal costs, charges and
expenses) and any applicable value added or other
tax;
|
|
|
“law” includes any form
of delegated legislation, any order or decree, any treaty or international
convention and any regulation or resolution of the Council of the European
Union, the European Commission, the United Nations or its Security
Council;
|
|
|
“legal or administrative
action” means any legal proceeding or arbitration and any
administrative or regulatory action or
investigation;
|
|
|
“liability” includes
every kind of debt or liability (present or future, certain or
contingent), whether incurred as principal or surety or
otherwise;
|
|
|
“months” shall be
construed in accordance with Clause
1.3;
|
|
|
“obligatory insurances”
means, in relation to the Ship, all insurances effected, or which the
Borrower and/or the Owner is obliged to effect, under Clause 13 below or
any other provision of this Agreement or another Finance
Document;
|
|
|
“parent company” has the
meaning given in Clause 1.4;
|
|
|
“person” includes any
company; any state, political sub-division of a state and local or
municipal authority; and any international
organisation;
|
|
|
“policy”, in relation to
any insurance, includes a slip, cover note, certificate of entry or other
document evidencing the contract of insurance or its
terms;
|
|
|
“protection and indemnity
risks” means the usual risks covered by a protection and indemnity
association managed in London, including pollution risks and the
proportion (if any) of any sums payable to any other person or persons in
case of collision which are not recoverable under the hull and machinery
policies by reason of the incorporation therein of clause 1 of the
Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time
Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause
(1/10/71) or any equivalent
provision;
|
“regulation” includes any
regulation, rule, official directive, request or guideline (either having the
force of law or compliance with which is reasonable in the ordinary course of
business of the party concerned) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;
|
|
“subsidiary” has the
meaning given in Clause 1.4;
|
“successor” includes any person
who is entitled (by assignment, novation, merger or otherwise) to any other
person’s rights under this Agreement or any other Finance Document (or any
interest in those rights) or who, as administrator, liquidator or otherwise, is
entitled to exercise those rights; and in particular references to a successor
include a person to whom those rights (or any interest in those rights) are
transferred or pass as a result of a merger, division, reconstruction or other
reorganisation of it or any other person;
|
|
“tax” includes any
present or future tax, duty, impost, levy or charge of any kind which is
imposed by any state, any political sub-division of a state or any local
or municipal authority (including any such imposed in connection with
exchange controls), and any connected penalty, interest or fine;
and
|
14
|
|
“war risks” means the
risks according to Institute War and Strike Clauses (Hull Time) (1/10/83)
or (1/11/95), or equivalent conditions, including, but not limited to risk
of mines, blocking and trapping, missing vessel, confiscation, vandalism,
sabotage and malicious mischief and all risks excluded from the standard
form of English or other marine
policy.
|
|
1.3
|
Meaning of “month”. A
period of one or more “months” ends on the day in the relevant calendar
month numerically corresponding to the day of the calendar month on which
the period started (“the
numerically corresponding day”),
but:
|
|
(a)
|
on
the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day;
or
|
|
(b)
|
on
the last Business Day in the relevant calendar month, if the period
started on the last Business Day in a calendar month or if the last
calendar month of the period has no numerically corresponding
day;
|
and “month” and “monthly” shall be construed
accordingly.
|
1.4
|
Meaning of “subsidiary”. A
company (S) is a subsidiary of another company (P)
if:
|
|
(a)
|
a
majority of the issued shares in S (or a majority of the issued shares in
S which carry unlimited rights to capital and income distributions) are
directly owned by P or are indirectly attributable to P;
or
|
|
(b)
|
P
has direct or indirect control over a majority of the voting rights
attached to the issued shares of S;
or
|
|
(c)
|
P
has the direct or indirect power to appoint or remove a majority of the
directors of S; or
|
|
(d)
|
P
otherwise has the direct or indirect power to ensure that the affairs of S
are conducted in accordance with the wishes of
P;
|
and any company of which S is a
subsidiary is a parent company of S.
|
1.5
|
General
Interpretation.
|
|
(a)
|
In
this Agreement:
|
|
|
(i)
|
references
to, or to a provision of, a Finance Document or any other document are
references to it as amended or supplemented, whether before the date of
this Agreement or otherwise;
|
|
|
(ii)
|
references
to, or to a provision of, any law include any amendment, extension,
re-enactment or replacement, whether made before the date of this
Agreement or otherwise; and
|
|
|
(iii)
|
words
denoting the singular number shall include the plural and vice
versa.
|
|
(b)
|
Clauses
1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
intention appears.
|
|
(c)
|
References
in Clause 1.1 to a document being in the form of a particular Appendix or
Schedule include references to that form with any modifications to that
form which the Agent (with the authorisation of the Majority Lenders in
the case of substantial modifications) approves or reasonably
requires.
|
|
(d)
|
The
clause headings shall not affect the interpretation of this
Agreement.
|
15
|
2
|
FACILITY
|
|
2.1
|
Amount and purpose of
facility. Subject to the other provisions of this
Agreement, the Lenders shall make available to the Borrower a loan
facility in a single advance in an amount not exceeding the lesser
of:
|
|
(a)
|
$51,500,000;
and
|
|
(b)
|
65
per cent. of the Initial Market Value of the
Ship.
|
The Loan
shall be used to assist the Owner to finance part of the Contract Price of the
Ship.
|
2.2
|
Lenders' participations in
Loan. Subject to the other provisions of this Agreement,
each Lender shall participate in the Loan in the proportion which, as at
the Drawdown Date, its Commitment bears to the Total
Commitments.
|
|
2.3
|
Purpose of the
Loan. The Borrower undertakes with each Creditor Party
to use the Loan only for the purpose stated in the preamble to this
Agreement and Clause 2.1.
|
|
2.4
|
Determination of
tranches. The Agent may divide the Loan into tranches,
and shall advise the Borrower in writing of the amount of each tranche and
the Borrower agrees and acknowledges that such determination shall be
final and binding on the Borrower save in the case of manifest
error.
|
|
3
|
POSITION
OF THE LENDERS, THE SWAP BANK AND THE MAJORITY
LENDERS
|
|
3.1
|
Interests of Lenders and Swap
Bank several. The rights of the Lenders and the Swap
Bank under this Agreement and the Master Agreement are several;
accordingly:
|
|
(a)
|
each
Lender shall be entitled to xxx for any amount which has become due and
payable by the Borrower to it under this Agreement;
and
|
|
(b)
|
the
Swap Bank shall be entitled to xxx for any amount which has become due and
payable by the Borrower to it under the Master
Agreement.
|
without
joining the Agent, the Security Trustee, any other Lender or the Swap Bank as
additional parties in the proceedings.
|
3.2
|
Proceedings by individual
Lender or Swap Bank. However, without the prior consent
of the Majority Lenders, neither a Lender nor the Swap Bank may bring
proceedings in respect of:
|
|
(a)
|
any
other liability or obligation of the Borrower or a Security Party under or
connected with a Finance Document or the Master Agreement;
or
|
|
(b)
|
any
misrepresentation or breach of warranty by the Borrower or a Security
Party in or connected with a Finance Document or the Master
Agreement.
|
|
3.3
|
Obligations
several. The obligations of the Lenders under this
Agreement and of the Swap Bank under the Master Agreement are several; and
a failure of a Lender to perform its obligations under this Agreement or
of the Swap Bank to perform its obligations under the Master Agreement
shall not result in:
|
|
(a)
|
the
obligations of the other Lenders being increased;
nor
|
16
|
(b)
|
the
Borrower, any Security Party or any other Creditor Party being discharged
(in whole or in part) from its obligations under any Finance
Document;
|
|
|
and
in no circumstances shall a Lender or the Swap Bank have any
responsibility for a failure of another Lender or the Swap Bank to perform
its obligations under this Agreement or the Master
Agreement.
|
|
3.4
|
Parties bound by certain
actions of Majority Lenders. Every Lender, the Swap
Bank, the Borrower and each Security Party shall be bound
by:
|
|
(a)
|
any
determination made, or action taken, by the Majority Lenders under any
provision of a Finance Document;
|
|
(b)
|
any
instruction or authorisation given by the Majority Lenders to the Agent or
the Security Trustee under or in connection with any Finance
Document;
|
|
(c)
|
any
action taken (or in good faith purportedly taken) by the Agent or the
Security Trustee in accordance with such an instruction or
authorisation.
|
|
3.5
|
Reliance on action of
Agent. However, the Borrower and each Security
Party:
|
|
(a)
|
shall
be entitled to assume that the Majority Lenders have duly given any
instruction or authorisation which, under any provision of a Finance
Document, is required in relation to any action which the Agent has taken
or is about to take; and
|
|
(b)
|
shall
not be entitled to require any evidence that such an instruction or
authorisation has been given.
|
|
3.6
|
Construction. In
Clauses 3.4 and 3.5 references to action taken include (without
limitation) the granting of any waiver or consent, an approval of any
document and an agreement to any
matter.
|
|
4
|
DRAWDOWN
|
|
4.1
|
Request for the
Loan. Subject to the following conditions, the Borrower
may request the Loan to be advanced by ensuring that the Agent
receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg
time) 3 Business Days prior to the intended Drawdown
Date.
|
|
4.2
|
Availability. The
conditions referred to in Clause 4.1 are
that:
|
|
(a)
|
a
Drawdown Date has to be a Business Day during the Availability
Period;
|
|
(b)
|
the
Loan shall not exceed 65 per cent. of the Initial Market Value of the Ship
and shall be applied in financing part of the Contract Price of the Ship;
and
|
|
(c)
|
the
Loan shall not exceed the Total
Commitments.
|
|
4.3
|
Notification to Lenders of
receipt of a Drawdown Notice. The Agent shall promptly
notify the Lenders that it has received a Drawdown Notice and shall inform
each Lender of:
|
|
(a)
|
the
amount of the Loan and the Drawdown
Date;
|
|
(b)
|
the
amount of that Lender's participation in the Loan;
and
|
17
|
(c)
|
the
duration of the first Interest Period applicable to the
Loan.
|
|
4.4
|
Drawdown Notice
irrevocable. A Drawdown Notice must be signed by a
director of the Borrower; and once served, a Drawdown Notice cannot be
revoked without the prior consent of the Agent, acting on the authority of
the Majority Lenders.
|
|
4.5
|
Lenders to make available
Contributions. Subject to the provisions of this
Agreement, each Lender shall, on and with value on the Drawdown Date, make
available to the Agent for the account of the Borrower the amount due from
that Lender on the Drawdown Date under Clause
2.2.
|
|
4.6
|
Disbursement of the
Loan. Subject to the provisions of this Agreement, the
Agent shall on the Drawdown Date pay to the Borrower the amounts which the
Agent receives from the Lenders under Clause 4.5; and that payment to the
Borrower shall be made:
|
|
(a)
|
to
the account which the Borrower specifies in the Drawdown Notice;
and
|
|
(b)
|
in
the like funds as the Agent received the payments from the
Lenders.
|
|
4.7
|
Disbursement of Loan to third
party. The payment by the Agent under Clause 4.6
to a third party specified in the Drawdown Notice shall
constitute the advancing of the Loan and the Borrower shall thereupon
become indebted, as principal and direct obligor, to each Lender in an
amount equal to that Lender's
Contribution.
|
|
5
|
INTEREST
|
|
5.1
|
Payment of normal
interest. Subject to the provisions of this Agreement,
interest on the Loan and each part thereof in respect of each Interest
Period shall be paid by the Borrower on the last day of that Interest
Period.
|
|
5.2
|
Normal rate of
interest. Subject to the provisions of this Agreement,
the rate of interest on the Loan and each part thereof in respect of an
Interest Period shall be the aggregate of (i) the applicable Margin, (ii)
the Mandatory Cost (if any) and (iii)
LIBOR.
|
|
5.3
|
Payment of accrued
interest. In the case of an Interest Period longer than
3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest
Period.
|
|
5.4
|
Notification of Interest
Periods and rates of normal interest. The Agent shall
notify the Borrower and each Lender
of:
|
|
(a)
|
each
rate of interest; and
|
|
(b)
|
the
duration of each Interest Period;
|
as soon as reasonably practicable after
each is determined.
|
5.5
|
Market
disruption. The following provisions of this Clause 5
apply if:
|
|
(a)
|
no
rate is quoted on Reuters BBA Page LIBOR 01 and at least half of the total
number of Lenders at any time do not, before 1.00 p.m. (Hamburg time) on
the second Business Day before the commencement of an Interest Period,
provide quotations to the Agent in order to fix LIBOR;
or
|
18
|
(b)
|
at
least one Business Day before the start of an Interest Period, Lenders
having Contributions together amounting to more than 50 per cent. of the
Loan notify the Agent that LIBOR fixed by the Agent would not accurately
reflect the cost to those Lenders of funding their respective
Contributions (or any part of them) during the Interest Period in the
London Interbank Dollar Market at or about 11.00 a.m. (London time) on the
second Business Day before the commencement of the Interest Period;
or
|
|
(c)
|
at
least one Business Day before the start of an Interest Period, the Agent
is notified by a Lender (the “Affected Lender”) that
for any reason it is unable to obtain Dollars in the London Interbank
Market in order to fund its Contribution (or any part of it) during the
Interest Period.
|
|
5.6
|
Notification of market
disruption. The Agent shall promptly notify the Borrower
and each of the Lenders stating the circumstances falling within Clause
5.5 which have caused its notice to be
given.
|
|
5.7
|
Suspension of
drawdown. If the Agent's notice under Clause 5.6 is
served before the Loan is made:
|
|
(a)
|
in
a case falling within paragraphs (a) or (b) of Clause 5.5, the Lenders'
obligations to advance the Loan;
|
|
(b)
|
in
a case falling within paragraph (c) of Clause 5.5, the Affected Lender's
obligation to participate in the
Loan;
|
|
|
shall
be suspended while the circumstances referred to in the Agent's notice
continue.
|
|
5.8
|
Negotiation of alternative rate
of interest. If the Agent’s notice under Clause 5.6 is
served after the Loan is advanced, the Borrower, the Agent and the Lenders
or (as the case may be) the Affected Lender shall use reasonable
endeavours to agree, within the 30 days after the date on which the Agent
serves its notice under Clause 5.6 (the “Negotiation Period”), an
alternative interest rate or (as the case may be) an alternative basis for
the Lenders or (as the case may be) the Affected Lender to fund or
continue to fund their or its Contribution to the Loan during the Interest
Period concerned.
|
|
5.9
|
Application of agreed
alternative rate of interest. Any alternative interest
rate or an alternative basis which is agreed during the Negotiation Period
shall take effect in accordance with the terms
agreed.
|
|
5.10
|
Alternative rate of interest in
absence of agreement. If an alternative interest rate or
alternative basis is not agreed within the Negotiation Period, and the
relevant circumstances are continuing at the end of the
Negotiation Period, then the Agent shall, with the agreement of each
Lender or (as the case may be) the Affected Lender, set an interest period
and interest rate representing the cost of funding of the Lenders or (as
the case may be) the Affected Lender in Dollars or in any available
currency of their or its Contribution to the Loan plus the Mandatory Cost
(if any) and the applicable Margin; and the procedure provided for by this
Clause 5.10 shall be repeated if the relevant circumstances are continuing
at the end of the interest period so set by the
Agent.
|
|
5.11
|
Notice of
prepayment. If the Borrower does not agree with an
interest rate set by the Agent under Clause 5.10, the Borrower may give
the Agent not less than 15 Business Days' notice of its intention to
prepay the Loan at the end of the interest period set by the
Agent.
|
|
5.12
|
Prepayment; termination of
Commitments. A notice under Clause 5.11 shall be
irrevocable; the Agent shall promptly notify the Lenders or (as the case
may require) the Affected Lender of the Borrower’s notice of intended
prepayment; and:
|
19
|
(a)
|
on
the date on which the Agent serves that notice, the Total Commitments or
(as the case may require) the Commitment of the Affected Lender shall be
cancelled; and
|
|
(b)
|
on
the last Business Day of the interest period set by the Agent, the
Borrower shall prepay (without premium or penalty) the Loan or, as the
case may be, the Affected Lender's Contribution, together with accrued
interest thereon at the applicable rate plus the applicable Margin and the
Mandatory Cost (if any).
|
|
5.13
|
Application of
prepayment. The provisions of Clause 8 shall apply in
relation to the prepayment.
|
|
5.14
|
Determination of
Margin. The Lender shall calculate the Market Value on
the Drawdown Date and every 6 months thereafter (each a “Margin Calculation
Date”) for the purposes of calculating the applicable Margin and
shall advise the Borrower in writing of the applicable Margin which will
apply for the 6-month period commencing on the relevant Margin Calculation
Date Provided
that in respect of each Margin Calculation Date other
than the first applicable Margin Calculation Date, the Lenders shall only
be obliged to advise the Borrowers of the Margin which will apply for the
Interest Period commencing on the relevant applicable Margin Calculation
Date if that Margin will be different to the Margin which applied
immediately prior to the relevant Margin Calculation
Date.
|
For the
purposes of calculating the Market Value of the Ship pursuant to this Clause
5.14, it shall be determined no more than 30 days prior to the relevant Margin
Calculation Date. The valuations of the Ship are to be provided to the Agent at
least 5 Business Days prior to the Margin Calculation Date.
|
5.15
|
Review of
Margin. The Agent (acting upon the instalments of all
the Lenders) and the Borrower each acknowledge and agree that they shall
renegotiate the Margin in good faith on or prior to the date falling on
the third anniversary of the Drawdown Date (the “Margin Review
Date”). If the Agent and the Borrower shall agree a
revised Margin, such Margin shall apply as from the Margin Review Date in
substitution of the initial Margin. If the Agent and the Borrower are
unable to agree a revised Margin, the provisions of 8.8(c) shall
apply.
|
|
6
|
INTEREST
PERIODS
|
|
6.1
|
Commencement of Interest
Periods. The first Interest Period applicable to the
Loan shall commence on the Drawdown Date and each subsequent Interest
Period shall commence on the expiry of the preceding Interest
Period.
|
|
6.2
|
Duration of normal Interest
Periods. Subject to Clause 6.3, each Interest Period in
respect of the Loan shall be:
|
|
(a)
|
3,
6 or 12 months as notified by the Borrower to the Agent not later than
11.00 a.m. (Hamburg time) 3 Business Days before the commencement of the
Interest Period; or
|
|
(b)
|
3
months, if the Borrower fails to notify the Agent by the time specified in
paragraph (a) above; or
|
|
(c)
|
such
other period as the Agent may, with the Majority Lenders' authority, agree
with the Borrower.
|
20
|
7
|
DEFAULT
INTEREST
|
|
7.1
|
Payment of default interest on
overdue amounts. The Borrower shall pay interest in
accordance with the following provisions of this Clause 7 on any amount
payable by the Borrower under any Finance Document which the Agent, the
Security Trustee or the other designated payee does not receive on or
before the relevant date, that is:
|
|
(a)
|
the
date on which the Finance Documents provide that such amount is due for
payment; or
|
|
(b)
|
if
a Finance Document provides that such amount is payable on demand, the
date on which the demand is served;
or
|
|
(c)
|
if
such amount has become immediately due and payable under Clause 19.4, the
date on which it became immediately due and
payable.
|
|
7.2
|
Default rate of
interest. Interest shall accrue on an overdue amount
from (and including) the relevant date until the date of actual payment
(as well after as before judgment) at the rate per annum determined by the
Agent to be 2 per cent. above:
|
|
(a)
|
in
the case of an overdue amount of principal, the higher of the rates set
out at paragraphs (a) and (b) of Clause 7.3;
or
|
|
(b)
|
in
the case of any other overdue amount, the rate set out at paragraph (b) of
Clause 7.3.
|
|
7.3
|
Calculation of default rate of
interest. The rates referred to in Clause 7.2
are:
|
|
(a)
|
the
rate applicable to the overdue principal amount immediately prior to the
relevant date (but only for any unexpired part of any then current
Interest Period);
|
|
(b)
|
the
aggregate of the Mandatory Cost (if any) and the applicable Margin plus,
in respect of successive periods of any duration (including at call) up to
3 months which the Agent may select from time to
time:
|
|
|
(i)
|
LIBOR;
or
|
|
|
(ii)
|
if
the Agent determines that Dollar deposits for any such period are not
being made available to a Lender or (as the case may be) Lenders by
leading banks in the London Interbank Market in the ordinary course of
business, a rate from time to time determined by the Agent by reference to
the cost of funds to the Agent from such other sources as the Agent may
from time to time determine.
|
|
7.4
|
Notification of interest
periods and default rates. The Agent shall promptly
notify the Lenders and the Borrower of each interest rate determined by
the Agent under Clause 7.3 and of each period selected by the Agent for
the purposes of paragraph (b) of that Clause; but this shall not be taken
to imply that the Borrower is liable to pay such interest only with effect
from the date of the Agent's
notification.
|
|
7.5
|
Payment of accrued default
interest. Subject to the other provisions of this
Agreement, any interest due under this Clause shall be paid on the last
day of the period by reference to which it was determined; and the payment
shall be made to the Agent for the account of the Creditor Party to which
the overdue amount is due.
|
|
7.6
|
Compounding of default
interest. Any such interest which is not paid at the end
of the period by reference to which it was determined shall thereupon be
compounded.
|
21
|
7.7
|
Application to Master
Agreement. For the avoidance of doubt, this Clause 7
does not apply to any amount payable under the Master Agreement in respect
of any continuing Designated Transaction as to which section 2(e) (Default
Interest; Other Amounts) of the Master Agreement shall
apply.
|
|
8
|
REPAYMENT
AND PREPAYMENT
|
|
8.1
|
Amount of repayment
instalments. The Borrower shall repay the Loan
by:
|
|
(a)
|
forty
(40) equal consecutive three-monthly instalments as
follows:
|
|
|
(i)
|
in
the case of the first to the fourth instalment (inclusive), in the amount
of $2,625,000 each;
|
|
|
(ii)
|
in
the case of the fifth to the twenty-fourth instalment (inclusive), in the
amount of $875,000 each;
|
|
|
(iii)
|
in
the case of the twenty-fifth to the fortieth instalment (inclusive), in
the amount of $375,000; and
|
|
(b)
|
a
balloon instalment in the amount of
$17,500,000;
|
|
8.2
|
Repayment
dates. The first instalment shall be repaid on the date
falling 3 months after the Drawdown Date and the last instalment, together
with the said balloon instalment on the Final Maturity
Date.
|
|
8.3
|
Final Maturity
Date. On the Final Maturity Date, the Borrower shall
additionally pay to the Agent for the account of the Creditor Parties all
principal and other sums then accrued or owing under any Finance
Document.
|
|
8.4
|
Voluntary
prepayment. Subject to the following conditions, the
Borrower may prepay the whole or any part of the Loan on the last day of
an Interest Period.
|
|
8.5
|
Conditions for voluntary
prepayment. The conditions referred to in Clause 8.4 are
that:
|
|
(a)
|
any
partial prepayment to be applied against the Loan shall be $1,000,000 or a
higher multiple thereof;
|
|
(b)
|
the
Agent has received from the Borrower at least 10 days' prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made (such date shall be the last day of an Interest
Period); and
|
|
(c)
|
the
Borrower has provided evidence satisfactory to the Agent that any consent
required by the Borrower or any Security Party in connection with the
prepayment has been obtained and remains in force, and that any
requirement relevant to this Agreement which affects the Borrower or any
Security Party has been complied
with.
|
|
8.6
|
Effect of notice of
prepayment. A prepayment notice may not be withdrawn or
amended without the consent of the Agent, given with the authority of the
Majority Lenders, and the amount specified in the prepayment notice shall
become due and payable by the Borrower on the date for prepayment
specified in the prepayment notice.
|
|
8.7
|
Notification of notice of
prepayment. The Agent shall notify the Lenders promptly
upon receiving a prepayment notice, and shall provide any Lender which so
requests with a copy of any document delivered by the Borrower under
Clause 8.5(c).
|
22
|
8.8
|
Mandatory
prepayment. The Borrower shall be obliged to prepay the
Loan in full in the following
circumstances:
|
|
(a)
|
if
the Ship is sold, on or before the date on which the sale is completed by
delivery of the Ship to the buyer;
or
|
|
(b)
|
if
the Ship becomes a Total Loss, on the earlier of the date falling 120 days
after the relevant Total Loss Date and the date of receipt by the Security
Trustee of the proceeds of insurance relating to such Total Loss;
or
|
|
(c)
|
if
the Agent and the Borrower do not agree to a revised Margin pursuant to
Clause 5.15, on the date falling 45 days after the date on which the Agent
proposes the revised Margin to the Borrower pursuant to Clause
5.15.
|
|
8.9
|
Amounts payable on
prepayment. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 21 below or
otherwise) in respect of the amount prepaid and, if the prepayment is not
made on the last day of an Interest Period together with any sums payable
under Clause 21.1(b) but without premium or
penalty.
|
|
8.10
|
Application of partial
prepayment. Each partial prepayment made pursuant to
Clause 8.4, shall be applied first against the balloon instalment and
thereafter against the then outstanding repayment instalments in inverse
order of maturity.
|
|
8.11
|
Reborrowing. No
amount prepaid in respect of the Loan may be
reborrowed.
|
|
8.12
|
Unwinding of Designated
Transactions. On or prior to any repayment or prepayment
of the Loan under this Clause 8 or any other provision of this Agreement,
the Borrower shall wholly or partially reverse, offset, unwind or
otherwise terminate one or more of the continuing Designated Transactions
to the extent necessary to ensure that the notional principal amount of
the continuing Designated Transactions thereafter remaining does not
exceed the amount of the Loan following such repayment or
prepayment.
|
|
8.13
|
Prepayment of Swap
Benefit. If a Designated Transaction is terminated in
circumstances where the Swap Bank would be obliged to pay an amount to the
Borrower under the Master Agreement, the Borrower hereby agrees that such
payment shall be applied in prepayment of the Loan and authorises the Swap
Bank to pay such amount to the Agent for such
purpose.
|
|
9
|
CONDITIONS
PRECEDENT
|
|
9.1
|
Documents, fees and no
default. Each Lender's obligation to contribute to the
Loan is subject to the following conditions
precedent:
|
|
(a)
|
that,
on or before the date of this Agreement, the Agent receives the documents
described in Part A of Schedule 3 in a form and substance satisfactory to
the Agent and its lawyers;
|
|
(b)
|
that,
on or before the Drawdown Date, the Agent receives the documents described
in Part B of Schedule 3 in form and substance satisfactory to the Agent
and its lawyers;
|
|
(c)
|
that
on or before the Drawdown Date, the Agent is satisfied the Borrower has
entered into such Designated Transactions to ensure compliance with its
obligations under Clause 11.18;
|
23
|
(d)
|
that,
on or before the service of the Drawdown Notice, the Agent receives all
accrued commitment fee and all other fees referred to in Clause 20.1 which
are payable at that time and has received payment of the expenses referred
to in Clause 20.2;
|
|
(e)
|
that
both at the date of each Drawdown Notice and at each Drawdown
Date:
|
|
|
(i)
|
no
Event of Default or Potential Event of Default has occurred and is
continuing or would result from the borrowing of
Loan;
|
|
|
(ii)
|
the
representations and warranties in Clause 10 and those of the Borrower or
any Security Party which are set out in the other Finance Documents would
be true and not misleading if repeated on each of those dates with
reference to the circumstances then existing;
and
|
|
|
(iii)
|
none
of the circumstances contemplated by Clause 5.5 has occurred and is
continuing;
|
|
(f)
|
that,
if the ratio set out in Clause 15.1 were applied immediately following the
making of the Loan, the Borrower would not be obliged to provide
additional security or prepay part of the Loan under that Clause;
and
|
|
(g)
|
that
at each Drawdown Date the Agent has received, and found to be acceptable
to it, any further opinions, consents, agreements and documents in
connection with the Finance Documents which the Agent may, with the
authorisation of the Majority Lenders, request by notice to the Borrower
prior to the Drawdown Date.
|
|
9.2
|
Waiver of conditions
precedent. If the Majority Lenders, at their discretion,
permit the Loan to be borrowed before certain of the conditions referred
to in Clause 9.1 are satisfied, the Borrower shall ensure that those
conditions are satisfied within 5 Business Days after the Drawdown Date
relative to the Loan (or such longer period as the Agent may, with the
authority of the Majority Lenders,
specify).
|
|
10
|
REPRESENTATIONS
AND WARRANTIES
|
|
10.1
|
General. The
Borrower represents and warrants to each Creditor Party as
follows.
|
|
10.2
|
Status. The
Borrower is duly incorporated and validly existing and in good standing
under the laws of the Xxxxxxxx
Islands.
|
|
10.3
|
Share capital and
ownership. The Borrower has an authorised share capital
divided into 150,000,000 registered shares of $0.001 each, all of which
shares have been issued each fully
paid.
|
|
10.4
|
Corporate
power. The Borrower has the corporate capacity, and has
taken all corporate action and obtained all consents necessary for
it:
|
|
(a)
|
to
execute the Finance Documents to which it is a party;
and
|
|
(b)
|
to
borrow under this Agreement, to enter into Designated Transactions under
the Master Agreement and to make all the payments contemplated by, and to
comply with, those Finance Documents to which the Borrower is a
party.
|
|
10.5
|
Consents in
force. All the consents referred to in Clause 10.4
remain in force and nothing has occurred which makes any of them liable to
revocation.
|
24
|
10.6
|
Legal validity; effective
Security Interests. The Finance Documents to which the
Borrower is a party, do now or, as the case may be, will, upon execution
and delivery (and, where applicable, registration as provided for in the
Finance Documents):
|
|
(a)
|
constitute
the Borrower's legal, valid and binding obligations enforceable against
the Borrower in accordance with their respective terms;
and
|
|
(b)
|
create
legal, valid and binding Security Interests enforceable in accordance with
their respective terms over all the assets to which they, by their terms,
relate
|
subject to any relevant insolvency laws
affecting creditors' rights generally.
|
10.7
|
No third party Security
Interests. Without limiting the generality of Clause
10.6, at the time of the execution and delivery of each Finance
Document:
|
|
(a)
|
the
Borrower will have the right to create all the Security Interests which
that Finance Document purports to create;
and
|
|
(b)
|
no
third party will have any Security Interest (except for Permitted Security
Interests) or any other interest, right or claim over, in or in relation
to any asset to which any such Security Interest, by its terms,
relates.
|
|
10.8
|
No
conflicts. The execution by the Borrower of each Finance
Document to which it is a party, and the borrowing by the Borrower of the
Loan, and its compliance with each Finance Document to which it is a party
will not involve or lead to a contravention
of:
|
|
(a)
|
any
law or regulation; or
|
|
(b)
|
the
constitutional documents of the Borrower;
or
|
|
(c)
|
any
contractual or other obligation or restriction which is binding on the
Borrower or any of its assets.
|
|
10.9
|
No withholding
taxes. All payments which the Borrower is liable to make
under the Finance Documents may be made without deduction or withholding
for or on account of any tax payable under any law of any Pertinent
Jurisdiction.
|
|
10.10
|
No
default. No Event of Default or Potential Event of
Default has occurred and is
continuing.
|
|
10.11
|
Information. All
information which has been provided in writing by or on behalf of the
Borrower or any Security Party to any Creditor Party in connection with
any Finance Document satisfied the requirements of Clause 11.5; all
audited and unaudited accounts which have been so provided satisfied the
requirements of Clause 11.7; and there has been no material adverse change
in the financial position or state of affairs of the Borrower from that
disclosed in the latest of those
accounts.
|
|
10.12
|
No
litigation. No legal or administrative action involving
the Borrower has been commenced or taken or, to the Borrower’s knowledge,
is likely to be commenced or taken.
|
|
10.13
|
No rebates
etc. There is no agreement or understanding to allow or
pay any rebate, premium, commission, discount or other benefit or payment
(howsoever described) to a third party in connection with the purchase by
the Owner, other than as disclosed to the Lenders in writing on or prior
to the date of this Agreement.
|
25
|
10.14
|
Compliance with certain
undertakings. At the date of this Agreement, the
Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and
11.13.
|
|
10.15
|
Taxes
paid. The Borrower has paid all taxes applicable to, or
imposed on or in relation to the Borrower or its
business.
|
|
10.16
|
ISM and ISPS Code
compliance. The Borrower will procure that the Owner and
the Approved Manager obtain all necessary ISM Code Documentation and ISPS
Code Documentation in connection with the Ship and comply with the ISM
Code and the ISPS Code on or before the date on which the Ship is
delivered to the Owner pursuant to the
MOA.
|
|
10.17
|
No money
laundering. Without prejudice to the generality of
Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the
performance and discharge of its obligations and liabilities under the
Finance Documents, and the transactions and other arrangements effected or
contemplated by the Finance Documents to which the Borrower is a party,
the Borrower confirms that it is acting for its own account and that the
foregoing will not involve or lead to contravention of any law, official
requirement or other regulatory measure or procedure implemented to combat
“money laundering” (as defined in Article 1 of the Directive (91/308/EEC)
of the Council of the European
Communities).
|
|
11
|
GENERAL
UNDERTAKINGS
|
|
11.1
|
General. The
Borrower undertakes with each Creditor Party to comply with the following
provisions of this Clause 11 at all times during the Security Period
except as the Agent may, with the authority of the Majority Lenders,
otherwise permit.
|
|
11.2
|
Title; negative pledge and pari
passu ranking. The Borrower
will:
|
|
(a)
|
own
(directly or indirectly) the entire beneficial interest in the Owner free
from all Security Interests and other interests and rights of every kind,
except for those created by the Finance
Documents;
|
|
(b)
|
not
create or permit to arise any Security Interest (except for Permitted
Security Interests) over any other asset, present or future (including,
but not limited to the Borrower’s rights against the Swap Bank under the
Master Agreement or all or any part of the Borrower’s interest in any
amount payable to the Borrower by the Swap Bank under the Master
Agreement); and
|
|
(c)
|
procure
that its liabilities under the Finance Documents to which it is a party do
and will rank at least pari passu with all its other present and future
unsecured liabilities, except for liabilities which are mandatorily
preferred by law.
|
|
11.3
|
No disposal of
assets. The Borrower will not transfer, lease or
otherwise dispose of:
|
|
(a)
|
all
or a substantial part of its assets, whether by one transaction or a
number of transactions, whether related or not;
or
|
|
(b)
|
any
debt payable to it or any other right (present, future or contingent
right) to receive a payment, including any right to damages or
compensation.
|
|
11.4
|
Restriction on other
liabilities or obligations to be incurred. The Borrower
will not incur, and will procure that the Owner will not, incur, any
liability or obligation except liabilities and
obligations:
|
26
|
(a)
|
under
the Finance Documents to which each is a
party;
|
|
(b)
|
under
the Master Agreement (but in such case, only in connection with Designated
Transactions); and
|
|
(c)
|
(in
the case of the Owner) incurred pursuant to the MOA and in the normal
course of its business of operating the
Ship.
|
|
11.5
|
Information provided to be
accurate. All financial and other information which is
provided in writing by or on behalf of the Borrower under or in connection
with any Finance Document will be true and not misleading and will not
omit any material fact or
consideration.
|
|
11.6
|
Provision of financial
statements. The Borrower will send to the
Agent:
|
|
(a)
|
as
soon as possible, but in no event later than 180 days after the end of
each Financial Year (commencing with the Financial Year ending 31 December
2007), the audited consolidated Financial Statements of the Group for that
Financial Year;
|
|
(b)
|
as
soon as possible, but in no event later than 90 days after the end of each
quarterly period ending on 31 March, 30 June, 30 September and 31 December
each Financial Year (commencing with the quarterly period ended 30 June
2008), the quarterly unaudited Financial Statements of the Group for that
quarterly period;
|
|
(c)
|
as
soon as possible, but in no event later than 30 days after the end of each
semi-annual period ending on 30 June and 31 December in each Financial
Year two valuations of the Ship each prepared by an Approved Broker (at
the cost of the Borrower) in accordance with Clause 15.4, which valuations
shall be used in determining the Market Value pursuant to Clause 15.1, the
Margin in accordance with Clause 5.14 and the financial covenants referred
to in Clause 12; and
|
|
(d)
|
promptly
after each request by the Agent, such further financial information about
the Borrower, the Group, the Ship and the Owner (including, but not
limited to, charter arrangements, Financial Indebtedness and operating
expenses) as the Agent may require.
|
|
11.7
|
Form of financial
statements. All accounts (audited and unaudited)
delivered under Clause 11.6 will:
|
|
(a)
|
be
prepared in accordance with all applicable laws and GAAP consistently
applied;
|
|
(b)
|
in
the case of the annual audited financial statements of the Group, be
audited by an internationally renowned auditing firm and such financial
statements shall not include any material
qualifications;
|
|
(c)
|
give
a true and fair view of the state of affairs of the Group at the date of
those accounts and of its profit for the period to which those accounts
relate; and
|
|
(d)
|
fully
disclose or provide for all significant liabilities of the
Group.
|
|
11.8
|
Shareholder, creditor and other
notices. The Borrower will send the Agent, at the same
time as they are despatched:
|
|
(a)
|
copies
of all communications which are despatched to all of the Borrower's
shareholders or creditors or any class of them;
and
|
|
(b)
|
copies
of all filings with and reports to, the US Securities and Exchange
Commission.
|
27
|
11.9
|
Consents. The
Borrower will maintain in force and promptly obtain or renew, and will
promptly send certified copies to the Agent of, all consents
required:
|
|
(a)
|
for
the Borrower to perform its obligations under any
Finance Document;
|
|
(b)
|
for
the validity or enforceability of any Finance
Document;
|
|
(c)
|
for
the Owner to continue to own and operate the
Ship;
|
and the Borrower will comply (or
procure compliance) with the terms of all such consents.
|
11.10
|
Maintenance of Security
Interests. The Borrower will, and shall procure that the
Owner shall:
|
|
(a)
|
at
its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
|
|
(b)
|
without
limiting the generality of paragraph (a) above, at its own cost, promptly
register, file, record or enrol any Finance Document with any court or
authority in all Pertinent Jurisdictions, pay any stamp, registration or
similar tax in all Pertinent Jurisdictions in respect of any Finance
Document, give any notice or take any other step which, in the opinion of
the Majority Lenders, is or has become necessary or desirable for any
Finance Document to be valid, enforceable or admissible in evidence or to
ensure or protect the priority of any Security Interest which it
creates.
|
|
11.11
|
Notification of
litigation. The Borrower will provide the Agent with
details of any legal or administrative action involving the Borrower, any
Security Party, the Approved Manager, any Ship or the Earnings or the
Insurances of the Ship as soon as such action is instituted or it becomes
apparent to the Borrower that it is likely to be instituted, unless it is
clear that the legal or administrative action cannot be considered
material in the context of any Finance
Document.
|
|
11.12
|
No amendment to Master
Agreement; Transactions. The Borrower will
not:
|
|
(a)
|
agree
to any amendment or supplement to, or waive or fail to enforce, the Master
Agreement or any of its provisions;
or
|
|
(b)
|
enter
into any Transaction pursuant to the Master Agreement except Designated
Transactions.
|
|
11.13
|
Principal place of
business. The Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
stated in Clause 28.2(a); and the Borrower will not establish,
or do anything as a result of which it would be deemed to have, a place of
business in any country other than the Xxxxxxxx
Islands.
|
|
11.14
|
Confirmation of no
default. The Borrower will, within 2 Business Days after
service by the Agent of a written request, serve on the Agent a notice
which is signed by 2 directors of the Borrower and
which:
|
|
(a)
|
states
that no Event of Default or Potential Event of Default has occurred;
or
|
|
(b)
|
states
that no Event of Default or Potential Event of Default has occurred,
except for a specified event or matter, of which all material details are
given.
|
|
|
The
Agent may serve requests under this Clause 11.14 from time to time but
only if asked to do so by a Lender or Lenders having Contributions
exceeding 10 per cent. of the Loan or Commitments exceeding 10 per cent of
the Total Commitments; and this Clause 11.14 does not affect the
Borrower’s obligations under Clause
11.15.
|
28
|
11.15
|
Notification of
default. The Borrower will notify the Agent as soon as
the Borrower becomes aware of:
|
|
(a)
|
the
occurrence of an Event of Default or a Potential Event of Default;
or
|
|
(b)
|
any
matter which indicates that an Event of Default or a Potential Event of
Default may have occurred;
|
and will thereafter keep the Agent
fully up-to-date with all developments.
|
11.16
|
Provision of further
information. The Borrower will, as soon as practicable
after receiving the request, provide the Agent with any additional
financial or other information
relating:
|
|
(a)
|
to
the Borrower, the Owner, the Ship, the Approved Manager or any other
Security Party, the Insurances or the Earnings;
or
|
|
(b)
|
to
any other matter relevant to, or to any provision of, a Finance
Document
|
which may be requested by the Agent,
the Security Trustee or any Lender at any time.
|
11.17
|
Provision of copies and
translation of documents. The Borrower will supply the
Agent with a sufficient number of copies of the documents referred to
above to provide 1 copy for each Creditor Party; and if the Agent so
requires in respect of any of those documents, the Borrower will provide a
certified English translation prepared by a translator approved by the
Agent.
|
|
11.18
|
Hedging of interest rate
risks. The Borrower shall enter into such Designated
Transactions with the Swap Bank so as to hedge all or the major part of
the interest risk under this Agreement (but in any event not less than 50
per cent. of the interest rate risk under this Agreement outstanding at
any time during the period commencing on the date of this Agreement until
not earlier than the date falling on the third anniversary of the Drawdown
Date).
|
|
11.19
|
Ownership. The
Borrower shall ensure that (a) it shall remain the direct or indirect
owner of the whole of the issued share capital of the Owner and (b) there
shall be no change in the legal and beneficial ownership of the shares in
the Owner.
|
|
11.20
|
General and administrative
costs. The Borrower shall ensure that the payment of all
the general and administrative costs of the Borrower and the Owner in
connection with the ownership and operation of the Ship (including,
without limitation, the payment of the management fees pursuant to the
Management Agreements) shall be fully subordinated to the payment
obligations of the Borrower and the Owner under this Agreement and the
other Finance Documents throughout the Security
Period.
|
|
11.21
|
Debt Service Reserve
Account.
|
|
(a)
|
The
Borrower shall ensure that there is standing to the credit of the Debt
Service Reserve Account at all times an amount of at least $500,000 and
any balance on the Debt Service Reserve Account may only be used to
discharge the Borrower’s payment liabilities under this Agreement and the
Master Agreement.
|
29
|
(b)
|
All
monies standing to the credit of the Debt Service Reserve Account shall
remain blocked thereon throughout the Security Period and may, following
(i) a failure by the Borrower to pay when due any sum representing
principal of, or interest on, the Loan and (ii) an instruction by the
Agent, be applied by the Agent in meeting the shortfall in the amount due
and payable by the Borrower (which instruction and application the
Borrower irrevocably authorise the Agent to make). Following
any application of sums from the Debt Service Reserve Account under this
Clause 11.21(b) to satisfy the payment obligation of the Borrower
hereunder, the Borrower shall, immediately credit the Debt Service Reserve
Account with such amount to ensure that the balance on the Debt Service
Reserve Account is equal to the balance maintained on the date on which
such application was made.
|
|
11.22
|
Know your
customer. The Borrower will provide to (or procure that
there is sent to) the Agent such documents and evidence as any Creditor
Party shall require in relation to the Borrower or any Security Party,
based on applicable laws and regulations and each Creditor Party’s own
internal guidelines relating to the verification of the identity and
knowledge of its customers.
|
|
12
|
CORPORATE
UNDERTAKINGS
|
|
12.1
|
General. The
Borrower also undertakes with each Creditor Party to comply with the
following provisions of this Clause 12 at all times during the Security
Period except as the Agent may, with the authority of the Majority
Lenders, otherwise permit.
|
|
12.2
|
Maintenance of
status. The Borrower will maintain its separate
corporate existence and remain in good standing under the laws of the
Xxxxxxxx Islands.
|
|
12.3
|
Negative
undertakings. The Borrower will
not:
|
|
(a)
|
change
the nature of its business; or
|
|
(b)
|
effect
any form of redemption, purchase or return of share capital;
or
|
|
(c)
|
provide
any form of credit or financial assistance
to:
|
|
|
(i)
|
a
person who is directly or indirectly interested in the Borrower's share or
loan capital; or
|
|
|
(ii)
|
any
company in or with which such a person is directly or indirectly
interested or connected;
|
|
|
or
enter into any transaction with or involving such a person or company on
terms which are, in any respect, less favourable to the Borrower than
those which it could obtain in a bargain made at arms'
length Provided that this shall
not prevent or restrict the Borrower from on-lending the Loan to the Owner
or granting credit or financial assistance to its wholly-owned direct or
indirect subsidiaries;
|
|
(d)
|
issue,
allot or grant any person a right to any shares in its capital or
repurchase or reduce its issued share
capital;
|
|
(e)
|
acquire
any shares or other securities other than US or UK Treasury bills and
certificates of deposit issued by major North American or European banks,
or enter into any transaction in a derivative other than Designated
Transactions;
|
|
(f)
|
enter
into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation.
|
30
|
12.4
|
Financial
Covenants. The Borrower shall ensure that at all
times:
|
|
(a)
|
the
Market Value Adjusted Net Worth of the Borrower shall not be less than
$150,000,000;
|
|
(b)
|
an
amount of not less than $500,000 is standing to the credit of the Debt
Service Reserve Account; and
|
|
(c)
|
the
Leverage Ratio shall not exceed
0.7:1.
|
|
12.5
|
Compliance
Check. Compliance with the undertakings contained in
Clause 12.4 shall be determined in each Financial
Year:
|
|
(a)
|
at
the time the Agent receives the audited consolidated accounts of the
Borrower and the unaudited consolidated accounts of the Group (pursuant to
Clauses 11.6(a) and 11.6(b) respectively), by reference to the unaudited
consolidated accounts in the case of the first three financial quarters in
each Financial Year and for the fourth financial quarter in each Financial
Year, initially by reference to the unaudited consolidated accounts for
the relevant fourth quarter and, once available, by reference to the
audited consolidated accounts for that Financial Year of the Group;
and
|
|
(b)
|
at
any other time as the Agent may reasonably request by reference to such
evidence as the Lenders may require to determine and calculate the
financial covenants referred to in Clause
12.4.
|
At the
same time as it delivers the consolidated accounts referred to in this Clause
12.5, the Borrower shall deliver to the Agent a Compliance Certificate
demonstrating its compliance (or not, as the case may be) with the provisions of
Clause 12.4 signed by the chief financial officer of the Borrower.
|
12.6
|
Change in accounting
expressions and policies. If, by reason of change in
format or GAAP or other relevant accounting policies, the expressions
appearing in any accounts and financial statements referred to in Clause
11.6 alter from those in the accounts and financial statements for the
Borrower for the year ended 31 December 2007, the relevant definitions
contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed
modified in such manner as the Agent, acting with the authorisation of the
Majority Lenders, shall require to take account of such different
expressions but otherwise to maintain in all respects the substance of
those provisions.
|
|
12.7
|
Subordination of rights of
Borrower. All rights which the Borrower at any time has
(whether in respect of the Loan or any other transaction) against the
Owner or its assets shall be fully subordinated to the rights of the
Creditor Parties under the Finance Documents; and in particular, the
Borrower shall not during the Security
Period:
|
|
(a)
|
claim,
or in a bankruptcy of the Owner or prove for any amount payable to the
Borrower by the Owner, whether in respect of the Loan or any other
transaction;
|
|
(b)
|
take
or enforce any Security Interest for any such amount;
or
|
|
(c)
|
claim
to set-off any such amount against any amount payable by the Borrower to
the Owner.
|
|
13
|
INSURANCE
|
|
13.1
|
General. The
Borrower also undertakes with each Creditor Party to procure that the
Owner will comply with the following provisions of this Clause 13 at all
times during the Security Period (after the Ship is owned by the Owner or
has been delivered to it under the MOA) except as the Agent may, with the
authority of the Majority Lenders, otherwise
permit.
|
31
|
13.2
|
Maintenance of obligatory
insurances. The Borrower shall procure that the Owner
keep the Ship insured at the expense of the Owner
against:
|
|
(a)
|
fire
and usual marine risks (including hull and machinery and excess
risks);
|
|
(b)
|
war
risks (including protection and indemnity war
risks);
|
|
(c)
|
in
the case of protection and indemnity war risks, in an amount equal to the
amount for which the war risks under the hull policies are
effected;
|
|
(d)
|
protection
and indemnity risks in excess of the limit of cover for oil pollution
liability risks included within the protection and indemnity risks;
and
|
|
(e)
|
any
other risks against which the Majority Lenders consider, having regard to
practices and other circumstances prevailing at the relevant time, it
would in the opinion of the Majority Lenders be reasonable for the Owner
to insure and which are specified by the Security Trustee by notice to the
Owner.
|
|
13.3
|
Terms of obligatory
insurances. The Borrower shall procure that the Owner
shall effect such insurances:
|
|
(a)
|
in
Dollars;
|
|
(b)
|
in
the case of fire and usual marine risks, in an amount on an agreed value
basis at least the greater of (i) the Market Value of the Ship and (ii) an
amount which is equal to 120 per cent. of the
Loan;
|
|
(c)
|
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 (with the international group of
protection and indemnity clubs) and the international marine insurance
market (currently $1,000,000,000);
|
|
(d)
|
in
relation to protection and indemnity risks, in respect of the full value
and tonnage of the Ship;
|
|
(e)
|
on
approved terms; and
|
|
(f)
|
through
approved brokers and with approved insurance companies and/or First Class
Underwriters or, in the case of war risks and protection and indemnity
risks, in approved war risks and protection and indemnity risks
associations.
|
|
13.4
|
Further protections for the
Creditor Parties. In addition to the terms set out in
Clause 13.3, the Borrower shall procure that the obligatory insurances
shall:
|
|
(a)
|
(except
in relation to risks referred to in Clauses 13.2(c) and (d)) 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;
|
|
(b)
|
name
the Security Trustee as sole loss payee with such directions for payment
as the Security Trustee may
specify;
|
|
(c)
|
provide
that all payments by or on behalf of the insurers under the obligatory
insurances to the Security Trustee shall be made without set-off,
counterclaim or deductions or condition
whatsoever;
|
32
|
(d)
|
provide
that the insurers shall waive, to the fullest extent permitted by English
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 in respect of the Secured Liabilities,
until the Secured Liabilities shall have been fully repaid and discharged,
except that the insurers shall not be restricted by the terms of this
paragraph (d) from making personal claims against persons (other than the
Owner or any Creditor Party) in circumstances where the insurers have
fully discharged their liabilities and obligations under the relevant
obligatory insurances;
|
|
(e)
|
provide
that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Security
Trustee;
|
|
(f)
|
provide
that the Security Trustee may make proof of loss if the Owner fails to do
so;
|
|
(g)
|
provide
that if any obligatory insurance is cancelled, or if any substantial
change is made in the coverage which adversely affects the interest of the
Security Trustee, or if any obligatory insurance is allowed to lapse for
non-payment of premium, such cancellation, charge or lapse shall not be
effective with respect to the Security Trustee for 30 days (or 7 days in
the case of war risks) after receipt by the Security Trustee of prior
written notice from the insurers of such cancellation, change or
lapse;
|
|
(h)
|
not
name any other person as an additional assured other than the Approved
Manager; and
|
|
(i)
|
if
the Security Trustee consents to there being any additional assured other
than the Borrower or the Approved Manager, the Borrower shall procure that
such party and/or person executes in favour of the Security Trustee an
assignment of that party’s and/or person’s interest in the insurances in
such terms as the Lenders may approve or
require.
|
|
13.5
|
Renewal of obligatory
insurances. The Borrower shall procure that the Owner
shall:
|
|
(a)
|
at
least 21 days before the expiry of any obligatory
insurance:
|
|
|
(i)
|
notify
the Security Trustee of the brokers (or other insurers) and any protection
and indemnity or war risks association through or with whom the Owner
proposes to renew that insurance and of the proposed terms of renewal;
and
|
|
|
(ii)
|
in
case of any substantial change in insurance cover, obtain the Security
Trustee’s approval to the matters referred to in paragraph (i)
above;
|
|
(b)
|
at
least 14 days before the expiry of any obligatory insurance, renew the
insurance in accordance with the Security Trustee’s approval pursuant to
paragraph (a); and
|
|
(c)
|
procure
that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall
promptly after the renewal notify the Security Trustee in writing of the
terms and conditions of the
renewal.
|
|
13.6
|
Copies of policies; letters of
undertaking. The Borrower shall procure that the Owner
shall ensure that all approved brokers provide the Security Trustee with
copies of all policies relating to the obligatory insurances which they
effect or renew and of a letter or letters of undertaking in a form
required by the Majority Lenders and including undertakings by the
approved brokers that:
|
|
(a)
|
they
will have endorsed on each policy, immediately upon issue, a loss payable
clause and a notice of assignment complying with the provisions of Clause
13.4;
|
33
|
(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 the Security Trustee immediately of any material change to the
terms of the obligatory insurances;
|
|
(d)
|
they
will notify 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 Owner or its agents and, in the
event of their receiving instructions to renew, they will promptly notify
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 the Ship under such obligatory insurances any premiums or
other amounts due to them or any other person whether in respect of the
Ship or otherwise, they waive any lien on the policies or, any sums
received under them, which they might have in respect of such premiums or
other amounts, and they will not cancel such obligatory insurances by
reason of non-payment of such premiums or other amounts, and will arrange
for a separate policy to be issued in respect of the Ship forthwith upon
being so requested by the Security
Trustee.
|
|
13.7
|
Copies of certificates of
entry. The Borrower shall procure that the Owner shall
ensure that any protection and indemnity and/or war risks associations in
which the Ship is entered provides the Security Trustee
with:
|
|
(a)
|
a
certified copy of the certificate of entry for the
Ship;
|
|
(b)
|
a
letter or letters of undertaking in such form as may be required by the
Majority Lenders; and
|
|
(c)
|
where
required to be issued under the terms of insurance/indemnity provided by
the Borrower's protection and indemnity association, a certified copy of
each United States of America voyage quarterly declaration (or other
similar document or documents) made by the Owner in accordance with the
requirements of such protection and indemnity association;
and
|
|
(d)
|
a
certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority.
|
|
13.8
|
Deposit of original
policies. The Borrower shall procure that the Owner
shall ensure that all policies relating to obligatory insurances are
deposited with the approved brokers through which the insurances are
effected or renewed.
|
|
13.9
|
Payment of
premiums. The Borrower shall procure that the Owner
shall punctually pay all premiums or other sums payable in respect of the
obligatory insurances and produce all relevant receipts when so required
by the Security Trustee.
|
|
13.10
|
Guarantees. The
Borrower shall procure that the Owner shall ensure that any guarantees
required by a protection and indemnity or war risks association are
promptly issued and remain in full force and
effect.
|
|
13.11
|
Restrictions on
employment. The Borrower shall procure that the Owner
shall not employ the Ship, nor permit her to be employed, outside the
cover provided by any obligatory
insurances.
|
34
|
13.12
|
Compliance with terms of
insurances. The Borrower shall procure that the Owner
shall not do or omit to do (or 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:
|
|
(a)
|
the
Owner shall take all necessary action and comply with all requirements
which may from time to time be applicable to the obligatory insurances,
and (without limiting the obligation contained in Clause 13.7(c) above)
ensure that the obligatory insurances are not made subject to any
exclusions or qualifications to which the Security Trustee has not given
its prior approval;
|
|
(b)
|
the
Owner shall not make any changes relating to the classification or
classification society or manager or operator of the Ship unless approved
by the First Class Underwriters of the obligatory
insurances;
|
|
(c)
|
the
Owner shall not make all quarterly or other voyage declarations which may
be required by the protection and indemnity risks association in which the
Ship is entered to maintain cover for trading to the United States of
America and Exclusive Economic Zone (as defined in the United States Oil
Pollution Act 1990 or any other applicable legislation);
and
|
|
(d)
|
the
Owner shall not employ the Ship, 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.
|
|
13.13
|
Alteration to terms of
insurances. The Borrower shall procure that the Owner
shall not either make or agree to any alteration to the terms of any
obligatory insurance or waive any right relating to any obligatory
insurance without the prior written consent of the Security
Trustee.
|
|
13.14
|
Settlement of
claims. The Borrower shall procure that the Owner shall
not settle, compromise or abandon any claim under any obligatory insurance
for Total Loss or for a Major Casualty, and shall 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.
|
|
13.15
|
Provision of copies of
communications. The Borrower shall procure that the
Owner shall provide the Security Trustee, at the time of each such
communication, copies of all written communications between the Owner
and:
|
|
(a)
|
the
approved brokers; and
|
|
(b)
|
the
approved protection and indemnity and/or war risks associations;
and
|
|
(c)
|
the
approved insurance companies and/or First Class Underwriters, which relate
directly or indirectly to:
|
|
|
(i)
|
the
Owner’s obligations relating to the obligatory insurances including,
without limitation, all requisite declarations and payments of additional
premiums or calls; and
|
|
|
(ii)
|
any
credit arrangements made between the Owner and any of the persons referred
to in paragraphs (a) or (b) above relating wholly or partly to the
effecting or maintenance of the obligatory
insurances.
|
35
|
13.16
|
Provision of
information. In addition, the Borrower shall procure
that the Owner shall promptly provide the Security Trustee (or any persons
which it may designate) with any information which the Security Trustee
(or any such designated person) requests for the purpose
of:
|
|
(a)
|
obtaining
or preparing any report from an independent marine insurance broker as to
the adequacy of the obligatory insurances effected or proposed to be
effected; and/or
|
|
(b)
|
effecting,
maintaining or renewing any such insurances as are referred to in Clause
13.17 below or dealing with or considering any matters relating to any
such insurances
|
|
|
and
the Borrower shall, forthwith upon demand, indemnify the Security Trustee
in respect of all fees and other expenses incurred by or for the account
of the Security Trustee in connection with any such report as is referred
to in paragraph (a) above.
|
|
13.17
|
Mortgagee's interest and
additional peril insurances. The Security Trustee shall
be entitled from time to time to effect, maintain and renew all or any of
the following insurances in such amounts, on such terms, through such
insurers and generally in such manner as the Majority Lenders may from
time to time consider appropriate:
|
|
(a)
|
a
mortgagee's interest marine insurance in an amount equal to 120 per cent.
of the Loan, providing for the indemnification of the Security Trustee for
any losses under or in connection with any Finance Document which directly
or indirectly result from loss of or damage to the Ship or a liability of
the Ship or of the Owner, being a loss or damage which is prima facie
covered by an obligatory insurance but in respect of which there is a
non-payment (or reduced payment) by the First Class Underwriters by reason
of, or on the basis of an allegation
concerning:
|
|
|
(i)
|
any
act or omission on the part of the Owner, of any operator, charterer,
manager or sub-manager of the Ship or of any officer, employee or agent of
the Owner or of any such person, including any breach of warranty or
condition or any non-disclosure relating to such obligatory
insurance;
|
|
|
(ii)
|
any
act or omission, whether deliberate, negligent or accidental, or any
knowledge or privity of the Owner, any other person referred to in
paragraph (i) above, or of any officer, employee or agent of the Owner or
of such a person, including the casting away or damaging of the Ship
and/or the Ship being unseaworthy;
and/or
|
|
|
(iii)
|
any
other matter capable of being insured against under a mortgagee's interest
marine insurance policy whether or not similar to the
foregoing;
|
|
(b)
|
a
mortgagee's interest additional perils policy in an amount not less than
110 per cent. of the Loan, providing for the indemnification of the
Security Trustee against, among other things, any possible losses or other
consequences of any Environmental Claim, including the risk of
expropriation, arrest or any form of detention of the Ship, the imposition
of any Security Interest over the Ship and/or any other matter capable of
being insured against under a mortgagee's interest additional perils
policy whether or not similar to the
foregoing
|
|
|
and
the Borrower shall upon demand fully indemnify the Security Trustee in
respect of all premiums and other 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.
|
36
|
13.18
|
Review of insurance
requirements. The Majority Lenders shall be entitled to
review the requirements of this Clause 13 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 the Majority Lenders, significant
and capable of affecting the Owner or the Ship and their insurance
(including, without limitation, changes in the availability or the cost of
insurance coverage or the risks to which the Owner may be subject), and
may appoint insurance consultants in relation to this review at the cost
of the Borrower.
|
|
13.19
|
Modification of insurance
requirements. The Security Trustee shall notify the
Borrower of any proposed modification under Clause 13.18 to the
requirements of this Clause 13 which the Majority Lenders consider
appropriate in the circumstances, and such modification shall take effect
on and from the date it is notified in writing to the Borrower as an
amendment to this Clause 13 and shall bind the Borrower
accordingly.
|
|
13.20
|
Compliance with mortgagee's
instructions. The Security Trustee shall be entitled
(without prejudice to or limitation of any other rights which it may have
or acquire under any Finance Document) to require the Ship to remain at
any safe port or to proceed to and remain at any safe port designated by
the Security Trustee until the Owner implements any amendments to the
terms of the obligatory insurances and any operational changes required as
a result of a notice served under Clause
13.19.
|
|
14
|
SHIP
COVENANTS
|
|
14.1
|
General. The
Borrower also undertakes with each Creditor Party to procure that the
Owner shall comply with the following provisions of this Clause 14 at all
times during the Security Period (after the Ship has been delivered to it
under the MOA) except as the Agent, with the authority of the Majority
Lenders, may otherwise permit.
|
|
14.2
|
Ship's name and
registration. The Borrower shall procure that the Owner
shall keep the Ship registered in its ownership under an Approved Flag;
shall not do or allow to be done anything as a result of which such
registration might be cancelled or imperilled; and shall not change the
name or port of registry of the
Ship.
|
|
14.3
|
Repair and
classification. The Borrower shall procure that the
Owner shall keep the Ship in a good and safe condition and state of
repair:
|
|
(a)
|
consistent
with first-class ship ownership and management
practice;
|
|
(b)
|
so
as to maintain the highest class with a first-class classification society
which is a member of IACS acceptable to the Agent (the borrower
acknowledges and agrees that China Classification Society and the Russian
Maritime Register of Shipping are not considered acceptable by the Agent
for the purposes of this Agreement) free of overdue recommendations and
conditions of such classification society;
and
|
|
(c)
|
so
as to comply with all laws and regulations applicable to vessels
registered at ports in the relevant Approved Flag State or to vessels
trading to any jurisdiction to which the Ship may trade from time to time,
including but not limited to the ISM Code, the ISPS Code, the ISM Code
Documentation and the ISPS Code
Documentation.
|
|
14.4
|
Classification society
undertaking. The Borrower shall procure that the Owner
shall instruct the classification society referred to in Clause 14.3 (and
procure that the classification society undertakes with the Security
Trustee):
|
|
(a)
|
to
send to the Security Trustee, following receipt of a written request from
the Security Trustee, certified true copies of all original class records
and any other related records held by the classification society in
relation to the Ship;
|
37
|
(b)
|
to
allow the Security Trustee (or its agents), at any time and from time to
time, to inspect the original class and related records of the Owner and
the Ship at the offices of the classification society and to take copies
of them;
|
|
(c)
|
to
notify the Security Trustee immediately in writing if the classification
society:
|
|
|
(i)
|
receives
notification from the Owner or any person that the Ship's classification
society is to be
changed; or
|
|
|
(ii)
|
becomes
aware of any facts or matters which may result in or have resulted in a
change, suspension, discontinuance, withdrawal or expiry of the Ship's
class under the rules or terms and conditions of the Owner’s or the Ship's
membership of the classification
society;
|
|
(d)
|
following
receipt of a written request from the Security
Trustee:
|
|
|
(i)
|
to
confirm that the Owner is not in default of any of its contractual
obligations or liabilities to the classification society and, without
limiting the foregoing, that it has paid in full all fees or other charges
due and payable to the classification
society; or
|
|
|
(ii)
|
if
the Owner is in default of any of its contractual obligations or
liabilities to the classification society, to specify to the Security
Trustee in reasonable detail the facts and circumstances of such default,
the consequences thereof, and any remedy period agreed or allowed by the
classification society.
|
|
14.5
|
Modification. The
Borrower shall procure that the Owner shall not make any modification or
repairs to, or replacement of, the Ship or equipment installed on her
which would or might materially alter the structure, type or performance
characteristics of the Ship or materially reduce her
value.
|
|
14.6
|
Removal of
parts. The Borrower shall procure that the Owner shall
not remove any material part of the Ship, or any item of equipment
installed on, the Ship unless 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 Security
Interest or any right in favour of any person other than the Security
Trustee and becomes on installation on the Ship the property of the Owner
and subject to the security constituted by the Mortgage and if applicable,
the Deed of Covenant, relative to the Ship Provided that the Owner
may install equipment owned by a third party if the equipment can be
removed without any risk of damage to the
Ship.
|
|
14.7
|
Surveys. The
Borrower shall procure that the Owner shall submit the Ship regularly to
all periodical or other surveys which may be required for classification
purposes and, if so required by the Majority Lenders, provide the Security
Trustee (at the expense of the Borrower) with copies of all survey
reports.
|
|
14.8
|
Inspection. The
Borrower shall procure that the Owner shall permit the Security Trustee
(by surveyors or other persons appointed by it for that purpose) to board
the Ship at all reasonable times to inspect her condition or to satisfy
themselves about proposed or executed repairs and shall afford all proper
facilities for such inspections Provided that so long as
no Event of Default has occurred and is continuing at the relevant time
and the Ship is found to be in a satisfactory condition (in the opinion of
the Security Trustee) the Borrower shall be obliged to pay the fees and
expenses of one inspection of the Ship in any calendar
year.
|
38
|
14.9
|
Prevention of and release from
arrest. The Borrower shall procure that the Owner shall
promptly discharge:
|
|
(a)
|
all
liabilities which give or may give rise to maritime or possessory liens on
or claims enforceable against the Ship, her Earnings or her
Insurances;
|
|
(b)
|
all
taxes, dues and other amounts charged in respect of the Ship, her Earnings
or her Insurances; and
|
|
(c)
|
all
other outgoings whatsoever in respect of the Ship, her Earnings or her
Insurances
|
|
|
and,
forthwith upon receiving notice of the arrest of the Ship, or of her
detention in exercise or purported exercise of any lien or claim, the
Owner shall forthwith procure her release by providing bail or otherwise
as the circumstances may require.
|
|
14.10
|
Compliance with laws
etc. The Borrower shall procure that the Owner and the
Approved Manager shall:
|
|
(a)
|
comply,
or procure compliance with the ISM Code, the ISPS Code, all Environmental
Laws and all other laws or regulations relating to the Ship, its
ownership, operation and management or to the business of the
Owner;
|
|
(b)
|
not
employ the Ship nor allow her employment in any manner contrary to any law
or regulation in any relevant jurisdiction including but not limited to
the ISM Code and the ISPS Code; and
|
|
(c)
|
in
the event of hostilities in any part of the world (whether war is declared
or not), not cause or permit the Ship to enter or trade to any zone which
is declared a war zone by any government or by the Ship's war risks
insurers unless the prior written consent of the Majority Lenders has been
given and the Owner has (at its expense) effected any special, additional
or modified insurance cover which the Majority Lenders may
require.
|
|
14.11
|
Provision of
information. The Borrower shall procure that the Owner
shall promptly provide the Security Trustee with any information which the
Majority Lenders request regarding:
|
|
(a)
|
the
Ship, her employment, position and
engagements;
|
|
(b)
|
the
Earnings and payments and amounts due to the master and crew of the
Ship;
|
|
(c)
|
any
expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship and any payments made in
respect of the Ship;
|
|
(d)
|
any
towages and salvages;
|
|
(e)
|
its
compliance or the compliance of the Ship with the ISM Code and the ISPS
Code,
|
|
|
and,
upon the Security Trustee's request, provide copies of any current charter
relating to the Ship and of any current charter guarantee, and copies of
the ISM Code Documentation and the ISPS Code
Documentation.
|
|
14.12
|
Notification of certain
events. The Borrower shall procure that the Owner shall
immediately notify the Security Trustee by letter
of:
|
|
(a)
|
any
casualty which is or is likely to be or to become a Major
Casualty;
|
39
|
(b)
|
any
occurrence as a result of which the Ship has become or is, by the passing
of time or otherwise, likely to become a Total
Loss;
|
|
(c)
|
any
requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
|
|
(d)
|
any
arrest or detention of the Ship, any exercise or purported exercise of any
lien on the Ship or her Earnings or any requisition of the Ship for
hire;
|
|
(e)
|
any
intended dry docking of the Ship;
|
|
(f)
|
any
Environmental Claim made against the Owner or in connection with the Ship,
or any Environmental Incident;
|
|
(g)
|
any
claim for breach of the ISM Code or the ISPS Code being made against the
Owner, the Approved Manager or otherwise in connection with the Ship;
or
|
|
(h)
|
any
other matter, event or incident, actual or threatened, the effect of which
will or could lead to the ISM Code or the ISPS Code not being complied
with
|
|
|
and
the Borrower shall keep the Security Trustee advised in writing on a
regular basis and in such detail as the Security Trustee shall require of
the Owner’s, the Approved Manager’s or any other person's
response to any of those events or
matters.
|
|
14.13
|
Restrictions on chartering,
appointment of managers etc. The Borrower shall procure
that the Owner shall not:
|
|
(a)
|
let
the Ship on demise charter for any
period;
|
|
(b)
|
other
than pursuant to an Initial Charterparty, enter into any time or
consecutive voyage charter in respect of the Ship for a term which
exceeds, or which by virtue of any optional extensions may exceed, 11
months;
|
|
(c)
|
change
the terms on which the Ship is employed or the identity of the person by
whom the Ship is employed;
|
|
(d)
|
enter
into any charter in relation to the Ship under which more than 2 months'
hire (or the equivalent) is payable in
advance;
|
|
(e)
|
charter
the Ship otherwise than on bona fide arm's length terms at the time when
the Ship is fixed;
|
|
(f)
|
appoint
a manager of the Ship other than the Approved Manager or agree to any
alteration to the terms of the Approved Manager’s
appointment;
|
|
(g)
|
de-activate
or lay up the Ship; or
|
|
(h)
|
put
the Ship into the possession of any person for the purpose of work being
done upon her in an amount exceeding or likely to exceed $500,000 (or the
equivalent in any other currency) unless that person has first given to
the Security Trustee and in terms satisfactory to it a written undertaking
not to exercise any lien on the Ship or her Earnings for the cost of such
work or otherwise.
|
|
14.14
|
Notice of
Mortgage. The Borrower shall procure that the Owner
shall keep the Mortgage applicable to the Ship registered against the Ship
as a valid first priority or first preferred mortgage, carry on board the
Ship a certified copy of the Mortgage and place and maintain in a
conspicuous place in the navigation room and the Master's cabin of the
Ship a framed printed notice stating that the Ship is mortgaged by the
Owner to the Security Trustee.
|
40
|
14.15
|
Sharing of
Earnings. The Borrower shall procure that the Owner
shall not:
|
|
(a)
|
enter
into any agreement or arrangement for the sharing of any
Earnings;
|
|
(b)
|
enter
into any agreement or arrangement for the postponement of any date on
which any Earnings are due; the reduction of the amount of any Earnings or
otherwise for the release or adverse alteration of any right of the Owner
to any Earnings; or
|
|
(c)
|
enter
into any agreement or arrangement for the release of, or adverse
alteration to, any guarantee or Security Interest relating to any
Earnings.
|
|
14.16
|
Charterparty
Assignment. Once the Owner enters into the second
Initial Charterparty and if the Owner enters into any Future Charterparty
in respect of the Ship the Borrower will procure that the Owner shall, at
the request of the Agent, execute in favour of the Security Trustee a
Charterparty Assignment in respect of that Initial Charterparty or, as the
case may be, Future Charterparty, and shall deliver to the Agent such
other documents equivalent to those referred to at paragraphs 3, 4 and 5
of Schedule 3, Part A as the Agent may
require.
|
|
15
|
SECURITY
COVER
|
|
15.1
|
Provision of additional
security cover; prepayment of Loan. The Borrower
undertakes with each Creditor Party that if the Agent notifies the
Borrower that:
|
|
(a)
|
the Market
Value of the Ship; plus
|
|
(b)
|
the
net realisable value of any additional security previously provided under
this Clause 15;
|
|
|
is
below 133 per cent. of the Loan, the Borrower will on the first Business
Day after the date on which the Agent's notice is served prepay in
accordance with Clause 8 such part (at least) of the Loan as will
eliminate the shortfall.
|
If the
Borrower satisfies the Majority Lenders that it is unable to make the prepayment
of the Loan required pursuant to this Clause 15.1, the Agent (acting upon the
instructions of the Majority Lenders) may (in its sole and absolute discretion)
agree instead to accept within 14 days after the date on which its notice is
served, additional security from the Borrower or a third party which, in the
opinion of the Majority Lenders, has a net realisable value at least equal to
the shortfall and which, if it consists of or includes a Security Interest,
covers such asset or assets and is documented in such terms as the Agent may,
with authorisation from the Majority Lenders, approve or require.
|
15.2
|
Meaning of additional
security. In Clause 15.1 “security” means a
Security Interest over an asset or assets (including, without limitation a
vessel (whether securing the Borrower’s liabilities under the Finance
Documents or a guarantee in respect of those liabilities), or a guarantee,
letter of credit, cash deposit or other security acceptable to the
Majority Lenders (in their sole and absolute discretion) in respect of the
Borrower’s liabilities under the Finance
Documents.
|
|
15.3
|
Requirement for additional
documents. The Borrower shall not be deemed to have
complied with Clause 15.1 (i) above until the Agent has received in
connection with the additional security certified copies of documents of
the kinds referred to in paragraphs 3, 4 and 5 of Schedule 4, Part A and
such legal opinions in terms acceptable to the Majority Lenders from such
lawyers as they may select.
|
|
15.4
|
Valuation of
Ship. The market value of the Ship at any date is that
shown by taking the arithmetic mean of two valuations each
prepared:
|
41
|
(a)
|
as
at a date not more than 30 days
previously;
|
|
(b)
|
in
the case of the first valuation, by an Approved Broker appointed by the
Borrower and, in the case of the second valuation, by an Approved Broker
appointed by the Agent;
|
|
(c)
|
with
or without physical inspection of the Ship (as the Agent may
require);
|
|
(d)
|
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
|
|
(e)
|
after
deducting the estimated amount of the usual and reasonable expenses which
would be incurred in connection with the
sale,
|
Provided that if
the two valuations provided pursuant to this Clause 15.4 differ by more than 15
per cent., a third valuation shall be obtained from a third Approved Broker
appointed by the Agent and prepared on the basis described in paragraphs (a),
(c), (d) and (e) of this Clause 15.4 and the Market Value of the Ship shall be
the arithmetic mean of the three valuations obtained pursuant to this Clause
15.4.
|
15.5
|
Value of additional
security. The net realisable value of any additional
security which is provided under Clause 15.1 and which consists of a
Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause
15.4.
|
|
15.6
|
Valuations
binding. Any valuation under Clause 15.1(i), 15.4 or
15.5 shall be binding and conclusive as regards the Borrower, as shall be
any valuation which the Majority Lenders make of a security which does not
consist of or include a Security
Interest.
|
|
15.7
|
Provision of
information. The Borrower shall promptly provide the
Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5
with any information which the Agent or the Approved Broker or expert may
request for the purposes of the valuation; and, if the Borrower fails to
provide the information by the date specified in the request, the
valuation may be made on any basis and assumptions which the Approved
Broker or the Majority Lenders (or the expert appointed by them) consider
prudent.
|
|
15.8
|
Payment of valuation
expenses. Without prejudice to the generality of the
Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower
shall, on demand, pay the Agent the amount of the fees and expenses of any
Approved Broker instructed by the Agent under this
Clause.
|
|
16
|
PAYMENTS
AND CALCULATIONS
|
|
16.1
|
Currency and method of
payments. All payments to be
made:
|
|
(a)
|
by
the Lenders to the Agent; or
|
|
(b)
|
by
the Borrower to the Agent, the Security Trustee or any
Lender
|
|
|
under
a Finance Document shall be made to the Agent or to the Security Trustee,
in the case of an amount payable to
it:
|
|
|
(i)
|
by
not later than 11.00 a.m. (London time) on the due
date;
|
|
|
(ii)
|
in
same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Agent shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement);
|
42
|
|
(iii)
|
to
the account of the Agent at JPMorgan Chase Bank, New York (Account No
000-0-000000 SWIFT Code: CHASUS 33 under reference “Paragon Shipping Inc.
- US$51.5m facility”), or to such other account with such other bank as
the Agent may from time to time notify to the Borrower and the other
Creditor Parties; and
|
|
|
(iv)
|
in
the case of an amount payable to the Security Trustee, to such account as
it may from time to time notify to the Borrower and the other Creditor
Parties.
|
|
16.2
|
Payment on non-Business
Day. If any payment by the Borrower under a Finance
Document would otherwise fall due on a day which is not a Business
Day:
|
|
(a)
|
the
due date shall be extended to the next succeeding Business Day;
or
|
|
(b)
|
if
the next succeeding Business Day falls in the next calendar month, the due
date shall be brought forward to the immediately preceding Business
Day
|
|
|
and
interest shall be payable during any extension under paragraph (a) at the
rate payable on the original due
date.
|
|
16.3
|
Basis for calculation of
periodic payments. All interest and commitment fee and
any other payments under any Finance Document which are of an annual or
periodic nature shall accrue from day to day and shall be calculated on
the basis of the actual number of days elapsed and a 360 day
year.
|
|
16.4
|
Distribution of payments to
Creditor Parties. Subject to Clauses 16.5, 16.6 and
16.7:
|
|
(a)
|
any
amount received by the Agent under a Finance Document for distribution or
remittance to a Lender, the Swap Bank or the Security Trustee shall be
made available by the Agent to that Lender or, as the case may be, the
Swap Bank or the Security Trustee by payment, with funds having the same
value as the funds received, to such account as the Lender, the Swap Bank
or the Security Trustee may have notified to the Agent not less than 5
Business Days previously; and
|
|
(b)
|
amounts
to be applied in satisfying amounts of a particular category which are due
to the Lenders or the Swap Bank generally shall be distributed by the
Agent to each Lender or the Swap Bank pro rata to the amount in that
category which is due to it.
|
|
16.5
|
Permitted deductions by
Agent. Notwithstanding any other provision of this
Agreement or any other Finance Document, the Agent may, before making an
amount available to a Lender or the Swap Bank, deduct and withhold from
that amount any sum which is then due and payable to the Agent from that
Lender or the Swap Bank under any Finance Document or any sum which the
Agent is then entitled under any Finance Document to require that Lender
or the Swap Bank to pay on demand.
|
|
16.6
|
Agent only obliged to pay when
monies received. Notwithstanding any other provision of
this Agreement or any other Finance Document, the Agent shall not be
obliged to make available to the Borrower or any Lender or the Swap Bank
any sum which the Agent is expecting to receive for remittance or
distribution to the Borrower or that Lender or the Swap Bank until the
Agent has satisfied itself that it has received that
sum.
|
|
16.7
|
Refund to Agent of monies not
received. If and to the extent that the Agent makes
available a sum to the Borrower or a Lender or the Swap Bank, without
first having received that sum, the Borrower or (as the case may be) the
Lender or the Swap Bank concerned shall, on
demand:
|
|
(a)
|
refund
the sum in full to the Agent; and
|
43
|
(b)
|
pay
to the Agent the amount (as certified by the Agent) which will indemnify
the Agent against any funding or other loss, liability or expense incurred
by the Agent as a result of making the sum available before receiving
it.
|
|
16.8
|
Agent may assume
receipt. Clause 16.7 shall not affect any claim which
the Agent has under the law of restitution, and applies irrespective of
whether the Agent had any form of notice that it had not received the sum
which it made available.
|
|
16.9
|
Creditor Party
accounts. Each Creditor Party shall maintain accounts
showing the amounts owing to it by the Borrower and each Security Party
under the Finance Documents and all payments in respect of those amounts
made by the Borrower and any Security
Party.
|
|
16.10
|
Agent's memorandum
account. The Agent shall maintain a memorandum account
showing the amounts advanced by the Lenders and all other sums owing to
the Agent, the Security Trustee and each Lender from the Borrower and each
Security Party under the Finance Documents and all payments in respect of
those amounts made by the Borrower and any Security
Party.
|
|
16.11
|
Accounts prima facie
evidence. If any accounts maintained under Clauses 16.9
and 16.10 show an amount to be owing by the Borrower or a Security Party
to a Creditor Party, those accounts shall, absent manifest error, be prima
facie evidence that that amount is owing to that Creditor
Party.
|
|
17
|
APPLICATION
OF RECEIPTS
|
|
17.1
|
Normal order of
application. Except as any Finance Document may
otherwise provide, any sums which are received or recovered by any
Creditor Party under or by virtue of any Finance Document shall be
applied:
|
|
(a)
|
FIRST:
in or towards satisfaction of any amounts then due and payable under the
Finance Documents and the Master Agreement in the following order and
proportions:
|
|
|
(i)
|
first,
in or towards satisfaction pro rata of all amounts then due and payable to
the Creditor Parties under the Finance Documents other than those amounts
referred to at paragraphs (ii) and (iii) (including, but without
limitation, all amounts payable by the Borrower under Clauses 20, 21 and
22 of this Agreement or by the Borrower or any Security Party under any
corresponding or similar provision in any other Finance Document or in the
Master Agreement);
|
|
|
(ii)
|
secondly,
in or towards satisfaction pro rata of any and all amounts of interest or
default interest payable to the Creditor Parties under the Finance
Documents and the Master Agreement (and, for this purpose, the
expression “interest” shall include
any net amount which the Borrower shall have become liable to pay or
deliver under section 2(e) (Obligations) of the Master Agreement but shall
have failed to pay or deliver to the Swap Bank at the time of application
or distribution under this Clause 17);
and
|
|
|
(iii)
|
thirdly,
in or towards satisfaction pro rata of the Loan and the Swap Exposure of
the Swap Bank (in the case of the latter, calculated as at the actual
Early Termination Date applying to each particular Designated Transaction,
or if no such Early Termination Date shall have occurred, calculated as if
an Early Termination Date occurred on the date of application or
distribution hereunder);
|
44
|
(b)
|
SECONDLY:
in retention of an amount equal to any amount not then due and payable
under any Finance Document or the Master Agreement but which the Agent, by
notice to the Borrower, the Security Parties and the other Creditor
Parties, states in its opinion will or may become due and payable in the
future and, upon those amounts becoming due and payable, in or towards
satisfaction of them in accordance with the provisions of Clause 17.1(a);
and
|
|
(c)
|
THIRDLY:
any surplus shall be paid to the Borrower or to any other person appearing
to be entitled to it.
|
|
17.2
|
Variation of order of
application. The Agent may, with the authorisation of
the Majority Lenders and the Swap Bank by notice to the Borrower, the
Security Parties and the other Creditor Parties provide for a different
manner of application from that set out in Clause 17.1 either as regards a
specified sum or sums or as regards sums in a specified category or
categories.
|
|
17.3
|
Notice of variation of order of
application. The Agent may give notices under Clause
17.2 from time to time; and such a notice may be stated to apply not only
to sums which may be received or recovered in the future, but also to any
sum which has been received or recovered on or after the third Business
Day before the date on which the notice is
served.
|
|
17.4
|
Appropriation rights
overridden. This Clause 17 and any notice which the
Agent gives under Clause 17.3 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or any Security
Party.
|
|
18
|
APPLICATION
OF EARNINGS
|
|
18.1
|
Payment of
Earnings. The Borrower undertakes with each Creditor
Party to ensure that throughout the Security
Period:
|
|
(a)
|
(subject
only to provisions of the relevant General Assignment), all the Earnings
of the Ship are paid to the Earnings Account;
and
|
|
(b)
|
all
payments by the Swap Bank to a Borrower under a Designated Transaction are
paid to the Swap Account.
|
|
18.2
|
Retentions. The
Borrower undertakes with each Creditor Party to ensure that there shall be
transferred to the Retention Account out of the aggregate Earnings
received in the Earnings Accounts during the preceding calendar
month:
|
|
(a)
|
one-third
of the amount of each repayment instalment falling due under Clause 8.1 at
that time; and
|
|
(b)
|
in
each calendar month of the Security Period commencing on the date falling
1 month after the first Drawdown Date and on the same day in each
subsequent month, there is transferred to the Retention Account out of the
aggregate Earnings received in the Earnings Accounts during the preceding
calendar month the relevant fraction of the amount of interest on the Loan
which is payable on the next due date for payment of interest for the Loan
under this Agreement.
|
The
“relevant fraction” in
paragraph (b) above, is a fraction of which the numerator is 1 and the
denominator the number of months comprised in the then current Interest Period
applicable to the Loan (or, if the current Interest Period ends after the next
date for payment of interest under this Agreement, the number of months from the
later of the commencement of the current Interest Period or the last due date
for payment of interest to the next date for payment of interest under this
Agreement).
45
|
18.3
|
Shortfall in
Earnings. If the aggregate Earnings received are
insufficient in any month for the required amount to be transferred to the
Retention Account under Clause 18.2, the Borrower shall make up the amount
of the insufficiency on demand from the Agent; but, without thereby
prejudicing the Agent's right to make such demand at any time, the Agent
may, if so authorised by the Majority Lenders, permit the Borrower to make
up all or part of the insufficiency by increasing the amount of any
transfer under Clause 18.2 from the Earnings received in the next or
subsequent months.
|
|
18.4
|
Application of
retentions. Until an Event of Default occurs, the Agent
shall on each due date for the payment of interest under this Agreement
distribute to the Lenders in accordance with Clause 16.4 so much of the
then balance on the Retention Account as
equals:
|
|
(a)
|
any
repayment instalment due in accordance with Clause 8.1 on that interest
payment date; and
|
|
(b)
|
the
amount of interest payable on that interest payment date in
discharge of the Borrower's liability for that repayment instalment or
that interest.
|
|
18.5
|
Interest accrued on Retention
Account. Any credit balance on the Retention Account
shall bear interest at the rate from time to time offered by the Agent to
its customers for Dollar deposits of similar amounts and for periods
similar to those for which such balances appear to the Agent likely to
remain on the Retention Account.
|
|
18.6
|
Release of accrued
interest. Interest accruing under Clause 18.5 shall be
released to the Borrower on each interest payment date unless an Event of
Default or a Potential Event of Default has occurred or the then credit
balance on the Retention Account is less than what would have been the
balance had the full amount required by Clause 18.2 (and Clause 18.3, if
applicable) been transferred in that and each previous
month.
|
|
18.7
|
Location of
accounts. The Borrower shall
promptly:
|
|
(a)
|
comply,
and ensure that the Owner complies, with any requirement of the Agent as
to the location or re-location of any Earnings Account, the Swap Account
or the Retention Account;
|
|
(b)
|
execute,
and ensure that the Owner executes, any documents which the Agent
specifies to create or maintain in favour of the Security Trustee a
Security Interest over (and/or rights of set-off, consolidation or other
rights in relation to) the Earnings Accounts (or any of them), the Swap
Account and the Retention Account.
|
|
18.8
|
Debits for expenses
etc. The Agent shall be authorised by the Borrower (but
not obliged) from time to time to debit the Earnings Account without prior
notice in order to discharge any amount due and payable under Clause 20 or
21 to a Creditor Party or payment of which any Creditor Party has become
entitled to demand under Clause 20 or
21.
|
|
18.9
|
Borrower’ obligations
unaffected. The provisions of this Clause 18 do not
affect:
|
|
(a)
|
the
liability of the Borrower to make payments of principal and interest on
the due dates; or
|
|
(b)
|
any
other liability or obligation of the Borrower or any Security Party under
any Finance Document.
|
46
|
19
|
EVENTS
OF DEFAULT
|
|
19.1
|
Events of
Default. An Event of Default occurs
if:
|
|
(a)
|
the
Borrower or any Security Party fails to pay when due or (if so payable) on
demand any sum payable under a Finance Document or under any document
relating to a Finance Document; or
|
|
(b)
|
any
breach occurs of Clause 9.2, 11.2, 11.3, 11.4, 11.6, 11.19, 11.20, 12.2,
12.3, 12.4, 12.5, 13.2, 15.1 or 18.1;
or
|
|
(c)
|
any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach covered by paragraphs (a) or (b)
above) if, in the opinion of the Majority Lenders, such default is capable
of remedy, and such default continues unremedied 10 days after written
notice from the Agent requesting action to remedy the same;
or
|
|
(d)
|
(subject
to any applicable grace period specified in the Finance Document) any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach covered by paragraphs (a), (b) or
(c) above); or
|
|
(e)
|
any
representation, warranty or statement made by, or by an officer of, the
Borrower or a Security Party in a Finance Document or in a Drawdown Notice
or any other notice or document relating to a Finance Document is untrue
or misleading when it is made; or
|
|
(f)
|
any
of the following occurs in relation to any Financial Indebtedness of a
Relevant Person:
|
|
|
(i)
|
any
Financial Indebtedness of a Relevant Person is not paid when due or, if so
payable, on demand; or
|
|
|
(ii)
|
any
Financial Indebtedness of a Relevant Person becomes due and payable or
capable of being declared due and payable prior to its stated maturity
date as a consequence of any event of default;
or
|
|
|
(iii)
|
a
lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or owner or
becomes capable of being terminated as a consequence of any termination
event; or
|
|
|
(iv)
|
any
overdraft, loan, note issuance, acceptance credit, letter of credit,
guarantee, foreign exchange or other facility, or any swap or other
derivative contract or transaction, relating to any Financial Indebtedness
of a Relevant Person ceases to be available or becomes capable of being
terminated as a result of any event of default, or cash cover is required,
or becomes capable of being required, in respect of such a facility as a
result of any event of default; or
|
|
|
(v)
|
any
Security Interest securing any Financial Indebtedness of a Relevant Person
becomes enforceable; or
|
|
(g)
|
any
of the following occurs in relation to a Relevant
Person:
|
|
|
(i)
|
a
Relevant Person becomes, in the opinion of the Majority Lenders, unable to
pay its debts as they fall due; or
|
47
|
|
(ii)
|
any
assets of a Relevant Person are subject to any form of execution,
attachment, arrest, sequestration or distress in respect of a sum of, or
sums aggregating, $100,000 or more or the equivalent in another currency;
or
|
|
|
(iii)
|
any
administrative or other receiver is appointed over any asset of a Relevant
Person; or
|
|
|
(iv)
|
a
Relevant Person makes any formal declaration of bankruptcy or any formal
statement to the effect that it is insolvent or likely to become
insolvent, or a winding up or administration order is made in relation to
a Relevant Person, or the members or directors of a Relevant Person pass a
resolution to the effect that it should be wound up, placed in
administration or cease to carry on business, save that this paragraph
does not apply to a fully solvent winding up of a Relevant Person other
than the Borrower which is, or is to be, effected for the purposes of an
amalgamation or reconstruction previously approved by the Majority Lenders
and effected not later than 3 months after the commencement of the winding
up; or
|
|
|
(v)
|
a
petition is presented in any Pertinent Jurisdiction for the winding up or
administration, or the appointment of a provisional liquidator, of a
Relevant Person unless the petition is being contested in good faith and
on substantial grounds and is dismissed or withdrawn within 30 days of the
presentation of the petition; or
|
|
|
(vi)
|
a
Relevant Person petitions a court, or presents any proposal for, any form
of judicial or non-judicial suspension or deferral of payments,
reorganisation of its debt (or certain of its debt) or arrangement with
all or a substantial proportion (by number or value) of its creditors or
of any class of them or any such suspension or deferral of payments,
reorganisation or arrangement is effected by court order, contract or
otherwise; or
|
|
|
(vii)
|
any
meeting of the members or directors of a Relevant Person is summoned for
the purpose of considering a resolution or proposal to authorise or take
any action of a type described in paragraphs (iii), (iv), (v) or (vi)
above; or
|
|
|
(viii)
|
in
a Pertinent Jurisdiction other than England, any event occurs or any
procedure is commenced which, in the opinion of the Majority Lenders, is
similar to any of the foregoing; or
|
|
(h)
|
the
Borrower or any Security Party ceases or suspends carrying on or changes
the nature of its business or a part of its business which, in the opinion
of the Majority Lenders, is material in the context of this Agreement;
or
|
|
(i)
|
it
becomes unlawful in any Pertinent Jurisdiction or
impossible:
|
|
|
(i)
|
for
the Borrower or any Security Party to discharge any liability under a
Finance Document or to comply with any other obligation which the Majority
Lenders consider material under a Finance Document;
or
|
|
|
(ii)
|
for
the Agent, the Security Trustee, the Lenders or the Swap Bank to exercise
or enforce any right under, or to enforce any Security Interest created
by, a Finance Document; or
|
|
(j)
|
any
consent necessary to enable the Owner to own, operate or charter the Ship
or to enable the Borrower or any Security Party to comply with any
provision which the Majority Lenders consider material of a Finance
Document is not granted, expires without being renewed, is revoked or
becomes liable to revocation or any condition of such a consent is not
fulfilled; or
|
48
|
(k)
|
it
appears to the Majority Lenders that, without their prior written consent,
a change has occurred or probably has occurred after the date of this
Agreement in the legal or beneficial ownership of any of the shares in the
Owner or in the ultimate control of the voting rights attaching to any of
those shares; or
|
|
(l)
|
any
provision which the Majority Lenders consider material of a Finance
Document proves to have been or becomes invalid or unenforceable, or a
Security Interest created by a Finance Document proves to have been or
becomes invalid or unenforceable or such a Security Interest proves to
have ranked after, or loses its priority to, another Security Interest or
any other third party claim or interest;
or
|
|
(m)
|
the
security constituted by a Finance Document is in any way imperilled or in
jeopardy; or
|
|
(n)
|
an
Event of Default (as defined in Section 14 of the Master Agreement)
occurs;
|
|
(o)
|
the
Master Agreement is terminated, cancelled, suspended, rescinded or revoked
or otherwise ceases to remain in full force and effect for any reason
except with the consent of the Agent, acting with the authorisation of the
Majority Lenders; or
|
|
(p)
|
any
other event occurs or any other circumstances arise or develop including,
without limitation:
|
|
|
(i)
|
a
change in the financial position, state of affairs or prospects of any
Security Party; or
|
|
|
(ii)
|
any
accident or other event involving any Ship or another vessel owned,
chartered or operated by a Relevant
Person;
|
|
|
in
the light of which the Majority Lenders consider that there is a
significant risk that the Borrower or any Security Party is, or will later
become, unable to discharge its liabilities under the Finance Documents as
they fall due.
|
|
19.2
|
Actions following an Event of
Default. On, or at any time after, the occurrence of an
Event of Default:
|
|
(a)
|
the
Agent may, and if so instructed by the Majority Lenders, the Agent
shall:
|
|
|
(i)
|
serve
on the Borrower a notice stating that the Commitments and all other
obligations of each Lender to the Borrower under this Agreement are
terminated; and/or
|
|
|
(ii)
|
serve
on the Borrower a notice stating that the Loan, all accrued interest and
all other amounts accrued or owing under this Agreement are immediately
due and payable or are due and payable on demand;
and/or
|
|
|
(iii)
|
take
any other action which, as a result of the Event of Default or any notice
served under paragraph (i) or (ii) above, the Agent and/or the Lenders are
entitled to take under any Finance Document or any applicable law;
and/or
|
|
(b)
|
the
Security Trustee may, and if so instructed by the Agent, acting with the
authorisation of the Majority Lenders, the Security Trustee shall take any
action which, as a result of the Event of Default or any notice served
under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent
and/or the Lenders and/or the Swap Bank are entitled to take under any
Finance Document or any applicable
law.
|
49
|
19.3
|
Termination of
Commitments. On the service of a notice under paragraph
(a)(i) of Clause 19.2, the Commitments and all other obligations of each
Lender to the Borrower under this Agreement shall
terminate.
|
|
19.4
|
Acceleration of
Loan. On the service of a notice under paragraph (a)(ii)
of Clause 19.2, the Loan, all accrued interest and all other amounts
accrued or owing from the Borrower or any Security Party under this
Agreement and every other Finance Document shall become immediately due
and payable or, as the case may be, payable on
demand.
|
|
19.5
|
Multiple notices; action
without notice. The Agent may serve notices under
paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different
dates and it and/or the Security Trustee may take any action referred to
in that Clause if no such notice is served or simultaneously with or at
any time after the service of both or either of such
notices.
|
|
19.6
|
Notification of Creditor
Parties and Security Parties. The Agent shall send to
each Lender, the Security Trustee and each Security Party a copy of the
text of any notice which the Agent serves on the Borrower under Clause
19.2; but the notice shall become effective when it is served on the
Borrower, and no failure or delay by the Agent to send a copy of the text
of the notice to any other person shall invalidate the notice or provide
the Borrower or any Security Party with any form of claim or
defence.
|
|
19.7
|
Lender's rights
unimpaired. Nothing in this Clause shall be taken to
impair or restrict the exercise of any right given to individual Lenders
under a Finance Document or the general law; and, in particular, this
Clause is without prejudice to Clause
3.1.
|
|
19.8
|
Exclusion of Creditor Party
Liability. No Creditor Party, and no receiver or manager
appointed by the Security Trustee, shall have any liability to the
Borrower or a Security Party:
|
|
(a)
|
for
any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or
delay to exercise such a right or to enforce such a Security Interest;
or
|
|
(b)
|
as
mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in
such a Security Interest or for any reduction (however caused) in the
value of such an asset;
|
|
|
except
that this does not exempt a Creditor Party or a receiver or manager from
liability for losses shown to have been caused by the gross negligence or
the wilful misconduct of such Creditor Party's own officers and employees
or (as the case may be) such receiver's or manager's own partners or
employees.
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19.9
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Relevant
Persons. In this Clause 19 “a Relevant Person” means
the Borrower, a Security Party and any other member of the Group; but
excluding any company which is dormant and the value of whose gross assets
is $50,000 or less.
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19.10
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Position of Swap
Bank. Neither the Agent nor the Security Trustee shall
be obliged, in connection with any action taken or proposed to be taken
under or pursuant to the foregoing provisions of this Clause 19, to have
any regard to the requirements of the Swap Bank except to the extent that
the Swap Bank is also a Lender.
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19.11
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