Contract

Exhibit 10.1

Private & Confidential
LPG INVESTMENTS INC.
as Borrower

And

ABN AMRO BANK N.V.
as Arranger


with


ABN AMRO BANK N.V., SINGAPORE BRANCH
as Agent


ABN AMRO BANK N.V., SINGAPORE BRANCH
as Security Agent


ABN AMRO BANK N.V., SINGAPORE BRANCH
as KEXIM Agent


guaranteed by
DRYSHIPS INC.
VLGC ALPHA OWNING LTD
VLGC BETA OWNING LTD
VLGC GAMMA OWNING LTD
and
VLGC DELTA OWNING LTD







FACILITIES AGREEMENT
Loan Facilities of up to $150,000,000
 
 


Contents
Clause Page
1
Definitions and interpretation
1
2
The Facilities
30
3
Purpose
30
4
Conditions of Utilisation
31
5
Utilisation
33
6
Repayment
36
7
Illegality, prepayment and cancellation
37
8
Interest
44
9
Interest Periods
45
10
Changes to the calculation of interest
45
11
Fees
46
12
Tax gross-up and indemnities
49
13
Increased Costs
53
14
Other indemnities
54
15
Mitigation by the Lenders
58
16
Costs and expenses
58
17
Guarantee and indemnity
60
18
Representations
64
19
Information undertakings
71
20
Financial covenants
75
21
General undertakings
79
22
Dealings with Ships
85
23
Condition and operation of Ships
87
24
Insurance
91
25
Minimum security value
94
26
Chartering undertakings
97
27
Bank accounts
98
28
Business restrictions
102
29
Hedging Contracts
105



Contents
Clause Page
30
Events of Default
106
31
Position of Hedging Provider
110
32
Changes to the Lenders
112
33
Changes to the Obligors/Restriction on Debt Purchase Transactions
117
34
Roles of Agent, Security Agent, KEXIM Agent and Arranger
119
35
Conduct of business by the Finance Parties
142
36
Sharing among the Finance Parties
144
37
Payment mechanics
146
38
Set-off
150
39
Notices
150
40
Calculations and certificates
152
41
Partial invalidity
152
42
Remedies and waivers
152
43
Amendments and grant of waivers
152
44
Counterparts
155
45
Confidentiality
155
46
Governing law
158
47
Enforcement
158
Schedule 1 The original parties
159
Schedule 2 Ship information
164
Schedule 3 Conditions precedent
168
Schedule 4 Utilisation Request
174
Schedule 5 Selection Notice
175
Schedule 6 Form of Transfer Certificate
176
Schedule 7 Form of Compliance Certificate
179
Schedule 8 Form of Notifiable Debt Purchase Transaction Notice
181
Schedule 9 Table of Repayment Instalments
183



THIS AGREEMENT is dated 22 June 2017, and made between:
(1)
LPG INVESTMENTS INC. as borrower (the Borrower);
(2)
DRYSHIPS INC. as parent (the Parent);
(3)
THE ENTITIES specified in Schedule 2 (Ship information) as owners (the Owners);
(4)
ABN AMRO BANK N.V., as arranger (the Arranger);
(5)
THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The original parties) as commercial facility lenders (the Original Commercial Facility Lenders);
(6)
THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The original parties) as KEXIM facility lenders (the Original KEXIM Facility Lenders);
(7)
THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The original parties) as KEXIM covered facility lenders (the Original KEXIM Covered Facility Lenders);
(8)
ABN AMRO BANK N.V., SINGAPORE BRANCH as agent of the KEXIM Covered Facility Lenders (the KEXIM Agent);
(9)
ABN AMRO BANK N.V., as hedging provider (the Hedging Provider);
(10)
ABN AMRO BANK N.V., SINGAPORE BRANCH, as agent for the other Finance Parties (the Agent); and
(11)
ABN AMRO BANK N.V., SINGAPORE BRANCH, as security agent for the other Finance Parties (the Security Agent).
IT IS AGREED as follows:
SECTION 1 - INTERPRETATION
1
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Agreement and (unless otherwise defined in the relevant Finance Document) the other Finance Documents:
Account means any bank account (including without limitation, the Earnings Accounts, the Debt Service Reserve Account and the Retention Account), deposit or certificate of deposit opened, made or established in accordance with clause 27 (Bank accounts).
Account Bank means, in relation to any Account, ABN AMRO Bank N.V., acting through its office at 93 Coolsingel, 3012 AE Rotterdam, The Netherlands or any other bank or financial institution approved by the Majority Lenders and KEXIM at the request of the Borrower.
Account Holder(s) means, in relation to any Account, the Obligor(s) in whose name(s) that Account is held.
Account Security means, in relation to an Account, a deed or other instrument by the relevant Account Holder(s) in favour of the Security Agent and/or the other Finance Parties in an agreed form conferring a Security Interest over that Account.
Accounting Reference Date means 31 December or such other date as may be approved by the Majority Lenders.
1


Advance means each of Advance A, Advance B, Advance C and Advance D and:
(a)
in relation to Ship A, it means Advance A;
(b)
in relation to Ship B, it means Advance B;
(c)
in relation to Ship C, it means Advance C; or
(d)
in relation to Ship D, it means Advance D,
and Advances means any or all of them.
Advance A means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship A made or (as the context may require) to be made available in relation to Ship A, and comprising a Commercial Facility Advance, a KEXIM Facility Advance and a KEXIM Covered Facility Advance, each in the Relevant Percentage of such Advance, or (as the context may require) the outstanding principal amount of such borrowing.
Advance B means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship B made or (as the context may require) to be made available in relation to Ship B, and comprising a Commercial Facility Advance, a KEXIM Facility Advance and a KEXIM Covered Facility Advance, each in the Relevant Percentage of such Advance, or (as the context may require) the outstanding principal amount of such borrowing.
Advance C means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship C made or (as the context may require) to be made available in relation to Ship C, and comprising a Commercial Facility Advance, a KEXIM Facility Advance and a KEXIM Covered Facility Advance, each in the Relevant Percentage of such Advance, or (as the context may require) the outstanding principal amount of such borrowing.
Advance D means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship D made or (as the context may require) to be made available in relation to Ship D, and comprising a Commercial Facility Advance, a KEXIM Facility Advance and a KEXIM Covered Facility Advance, each in the Relevant Percentage of such Advance, or (as the context may require) the outstanding principal amount of such borrowing.
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
Agent includes any person who may be appointed as such under clause 34.12 (Resignation of the Agent).
Approved Brokers means each of Clarksons Platou AS, Arrow Sale & Purchase (UK) Limited of London, Fearnleys NS of Oslo, Simpson Spense and Young of London, Barry, Rogliano & Salles, Braemar Seascope Valuations Limited of London and Lorentzen & Stemoco of Oslo or any other independent firm of shipbrokers agreed in writing from time to time between the Borrower, the Agent (acting on the instructions of the Majority Lenders) and KEXIM.
Approved Exchange means NYSE or NASDAQ or any other reputable stock exchange agreed by the Borrower and the Majority Lenders.
Approved Flag State means each of Malta, Republic of the Marshall Islands, Republic of Liberia, Hellenic Republic and Republic of Cyprus.
Auditors means one of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche or another firm which is approved, provided such approval is permitted by law.
Basel II Accord means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in
2


June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of the Basel Ill Accord.
Basel II Approach means, in relation to any Finance Party, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by that Finance Party (or any of its Affiliates) for the purposes of implementing or complying with the Basel II Accord.
Basel II Regulation means:
(a)
any law or regulation implementing the Basel II Accord (including the relevant provisions of directive 2013/36/EU (CRD IV) and regulation 575/2013 (CRR) of the European Union) to the extent only that such law or regulation re-enacts and/or implements the requirements of the Basel II Accord but excluding any provision of such law or regulation implementing the Basel III Accord; and
(b)
any Basel II Approach adopted by a Finance Party or any of its Affiliates.
Basel III Accord means, together:
(a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
Basel Ill Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel III Regulation (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).
Basel III Regulation means any law or regulation implementing the Basel III Accord (including the relevant provisions of CRD IV and CRR) save and to the extent that it re-enacts a Basel II Regulation.
Break Costs means the amount (if any) by which:
(a)
the interest (but excluding Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in an Advance or Unpaid Sum to the last day of the current Interest Period in respect of that Advance or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(a)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
Builder means, in relation to a Ship, the person specified as such in Schedule 2 (Ship information) in respect of such Ship.
3


Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Amsterdam, Athens, Singapore and New York and (for any other purpose except fixing an Interest Period or interest rate under this Agreement) also Seoul.
Change of Control occurs if at any time before and until an IPO is completed, without the prior written consent of the Majority Lenders and KEXIM:
(a)
any Owner ceases to be a direct wholly-owned Subsidiary of the Borrower; or
(b)
the Borrower ceases to be a direct wholly-owned Subsidiary of the Parent unless a Spin-off has occurred but no Spin-off Change of Control has occurred; or
(c)
the Permitted Holders cease to control, directly or indirectly, the Parent; or
(d)
the Permitted Holders cease to own legally and beneficially, either directly or indirectly, at least 50% of either of (i) the issued and outstanding share capital, or (ii) the issued and outstanding voting share capital, of the Parent; or
(e)
a person or persons acting in concert (other than the Permitted Holders):
(i)
own legally and/or beneficially, either directly or indirectly, more than 50% of the aggregate issued share capital of, or more than 50% of the aggregate issued voting share capital of, the Parent; and/or
(ii)
have the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Parent.
Charged Property means all of the assets of the Obligors which from time to time are, or are expressed or intended to be, the subject of the Security Documents.
Charter means, in relation to a Ship, the charter commitment for that Ship, details of which are provided in Schedule 2 (Ship information) as it may be amended from time to time and Charters means all of them.
Charter Assignment means, in relation to a Ship and its Charter Documents, an assignment by the relevant Owner of its interest in such Charter Documents in favour of the Security Agent in the agreed form.
Charter Documents means, in relation to a Ship, the Charter (if any) of that Ship, any documents supplementing it and any guarantee or security (including any Charter Guarantee for that Ship) given by any person for the relevant Charterer's obligations under it.
Charter Guarantee means, in relation to a Ship, the charter guarantee for that Ship, details of which are provided in Schedule 2 (Ship information) as it may be amended from time to time.
Charter Guarantor means, in relation to a Ship, the charter guarantor named in Schedule 2 (Ship information) as charter guarantor of that Ship.
Charterer means, in relation to a Ship, the charterer named in Schedule 2 (Ship information) as charterer of that Ship.
Classification means, in relation to a Ship, the highest classification available to vessels of this type (being on the date of this Agreement the classification specified in respect of such Ship in Schedule 2 (Ship information)) with the relevant Classification Society or another classification approved by the Majority Lenders as its classification, at the request of the relevant Owner.
Classification Society means, in relation to a Ship, the classification society specified in respect of such Ship in Schedule 2 (Ship information) or another classification society (being a member of the International Association of Classification Societies (IACS) or, if such association no longer
4


exists, any similar association nominated by the Agent) approved by the Majority Lenders as its Classification Society, at the request of the relevant Owner.
Code means the US Internal Revenue Code of 1986.
Commercial Facility means the term loan facility made available by the Commercial Facility Lenders under this Agreement as described in clause 2 (The Facilities).
Commercial Facility Advance means an advance of the Commercial Facility Commitments forming part of an Advance, being the Relevant Percentage, in relation to the Commercial Facility, of an Advance.
Commercial Facility Commitment means:
(a)
in relation to an Original Commercial Facility Lender, the amount set opposite its name under the heading "Commercial Facility Commitment" in Schedule 1 (The original parties) and the amount of any other Commercial Facility Commitment transferred to it under this Agreement; and
(b)
in relation to any other Commercial Facility Lender, the amount of any Commercial Facility Commitment transferred to it under this Agreement,
to the extent:
(i)
not cancelled, reduced or transferred by it under this Agreement; and
(ii)
not deemed to be zero pursuant to clause 33.3 (Disenfranchisement on Debt Purchase Transactions entered into by Parent Affiliates).
Commercial Facility Lender means:
(a)
the Original Commercial Facility Lenders; and
(b)
any bank, financial institution, trust, fund or other entity which has become a Party as a Commercial Facility Lender in accordance with clause 32 (Changes to the Lenders),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Commercial Loan means a loan made or to be made under the Commercial Facility or the principal amount outstanding for the time being of that loan.
Commitment means, in relation to a Lender, its Commercial Facility Commitment, KEXIM Facility Commitment and its KEXIM Covered Facility Commitment.
Compliance Certificate means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate) or otherwise approved.
Confidential Information means all information relating to an Obligor, the Group, the Finance Documents or the Facilities of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facilities from either:
(a)
any Group Member or any other Obligor or any of its advisors; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Group Member or any other Obligor or any of their respective advisers,
5


in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of clause 45 (Confidentiality); or
(ii)
is identified in writing at the time of delivery as non-confidential by any Group Member or any other Obligor or any of its advisers; or
(iii)
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
Confirmation shall have, in relation to any Hedging Transaction, the meaning given to it in the Hedging Master Agreement.
Constitutional Documents means, in respect of an Obligor, such Obligor's memorandum and articles of association, articles of incorporation, by-laws or other constitutional documents including as referred to in any certificate relating to an Obligor delivered pursuant to Schedule 3 (Conditions precedent).
Contract means, in relation to a Ship, the shipbuilding contract specified in Schedule 2 (Ship information) between the relevant Builder and the relevant Owner relating to the purchase of such Ship thereunder and Contracts means all of them.
Contract Documents means, in relation to a Ship, the Contract for that Ship and any other guarantee or security given to any person for the Builder's obligations under the relevant Contract.
Contract Price means, in relation to each of Ship A, Ship B, Ship C and Ship D, the purchase price of that Ship payable under the Contract for such Ship, being on the date of this Agreement in the amount specified in Schedule 2 (Ship Information) in respect of the relevant Ship.
CRD IV means the directive 2013/36/EU of the European Union on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
CRR means the regulation 575/2013 of the European Union on prudential requirements for credit institutions and investment firms.
Debt Purchase Transaction means, in relation to a person, a transaction where such person:
(a)
purchases by way of assignment or transfer;
(b)
enters into any sub-participation in respect of; or
(c)
enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,
any Commitment or amount outstanding under this Agreement.
Debt Service Reserve Account means any Account designated as a "Debt Service Reserve Account" under clause 27 (Bank accounts).
Deed of Covenant means, in relation to a Ship in respect of which the Mortgage is in account current form, a first deed of covenant (including a first assignment of its interest in the Ship's
6


Insurances, Earnings and Requisition Compensation) in respect of such Ship by the relevant Owner in favour of the Security Agent and/or any of the other Finance Parties in the agreed form.
Default means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of them) be an Event of Default.
Defaulting Lender means any Lender:
(a)
which has failed to make its participation in an Advance available or has notified the Agent that it will not make its participation in an Advance available by the Utilisation Date of that Advance in accordance with clause 5.4 (Lenders' participation);
(b)
which has otherwise rescinded or repudiated a Finance Document; or
(c)
with respect to which an Insolvency Event has occurred and is continuing,
unless, in the case of paragraph (a) above:
(i)
its failure to pay is caused by:
(A)
administrative or technical error; or
(B)
a Payment Disruption Event, and payment is made within 3 Business Days of its due date; or
(ii)
the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.
Delivery means, in relation to each Ship, the delivery and acceptance of that Ship by the relevant Owner under the relevant Contract.
Delivery Date means, in relation to a Ship, the date on which its Delivery occurs.
Disposal Repayment Date means, in relation to:
(a)
a Total Loss of a Mortgaged Ship, the applicable Total Loss Repayment Date; or
(b)
a sale of a Mortgaged Ship (including a reversal of sale by the relevant Owner returning the relevant Ship to the relevant Builder under any relevant provisions of the relevant Contract, if applicable) by the relevant Owner, the earlier of:
(i)
the date upon which such sale is completed by the transfer of title to the purchaser; and
(ii)
the date of payment of all or part (excluding any deposit) of the relevant purchase price.
Earnings means, in relation to a Ship and a person, all money at any time payable to that person for or in relation to the use or operation of such Ship including (without limitation) freight, hire and passage moneys, money payable to that person for the provision of services by or from such Ship or under any charter commitment, requisition for hire compensation, remuneration for salvage and towage services, demurrage and detention moneys, moneys payable in respect of general average contributions and damages for breach and payments for termination or variation of any charter commitment.
Earnings Account means any Account designated as an "Earnings Account" under clause 27 (Bank accounts) and Earnings Accounts means all of them.
7


Environmental Claims means:
(a)
enforcement, clean-up, removal or other governmental or regulatory action or orders or claims instituted or made pursuant to any Environmental Laws or resulting from a Spill; or
(b)
any claim made by any other person relating to a Spill.
Environmental Incident means any Spill from any vessel in circumstances where:
(a)
any Fleet Vessel or its owner, operator or manager may be liable for Environmental Claims arising from the Spill (other than Environmental Claims arising and fully satisfied before the date of this Agreement); and/or
(b)
any Fleet Vessel may be arrested or attached in connection with any such Environmental Claim.
Environmental Laws means all laws, regulations and conventions concerning pollution or protection of human health or the environment.
Event of Default means any event or circumstance specified as such in clause 30 (Events of Default).
Facilities means the Commercial Facility, the KEXIM Facility and the KEXIM Covered Facility and Facility means any of them.
Facility Advances means the Commercial Facility Advances, the KEXIM Facility Advances and the KEXIM Covered Facility Advances and Facility Advance means any of them.
Facility Commitments means the Commercial Facility Commitments, the KEXIM Facility Commitments and the KEXIM Covered Facility Commitments and Facility Commitment means any of them.
Facility Office means:
(a)
in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office through which it will perform its obligations under this Agreement; and
(b)
in respect of any other Finance Party, the office in the jurisdiction in which it is resident for Tax purposes.
Facility Period means the period from and including the date of this Agreement to and including the date on which the Agent notifies the Borrower that the Total Commitments have reduced to zero and all indebtedness of the Obligors under the Finance Documents has irrevocably and unconditionally been fully paid and discharged.
FATCA means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
8


FATCA Application Date means:
(a)
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;
(b)
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
Fee Letter means any letter dated on or about the date of this Agreement between (inter alios) the Arranger and the Borrower and/or the Guarantors (or the Agent and the Borrower and/or the Guarantors) setting out any of the fees referred to in clause 11 (Fees).
Final Repayment Date means, subject to clause 37.7 (Business Days) and in respect of each Facility Advance, the date falling 144 months after the Utilisation Date for that Facility Advance.
Finance Documents means this Agreement, any Fee Letter, any Utilisation Request, any Compliance Certificate, the Hedging Contracts, the Hedging Master Agreement, the Security Documents, any Transfer Certificate and any other document designated as such by the Agent and the Borrower (other than the KEXIM Guarantee).
Finance Party means the Agent, the KEXIM Agent, the Security Agent, the Arranger, the Hedging Provider or a Lender.
Financial Indebtedness means any indebtedness for or in respect of:
(a)
monies borrowed and debit balances at banks or financial institutions;
(b)
any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c)
any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)
the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)
any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close out of that Treasury Transaction, that amount) shall be taken into account);
9


(g)
any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;
(h)
any amount of any liability under an advance or deferred purchase agreement if (a) one of the primary reasons behind entering into the agreement is to raise finance or (b) the agreement is in respect of the supply of assets or services and payment is due more than 180 days after the date of supply;
(i)
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under GAAP; and
(j)
the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (i) above.
Final Maturity Date means the Final Repayment Date which falls due last.
First Repayment Date means, subject to clause 37.7 (Business Days) in respect of each Facility Advance, the date falling 3 months after the Utilisation Date in respect of such Facility Advance.
Flag State means, in relation to a Ship, the country specified in respect of such Ship in Schedule 2 (Ship information), or such other state or territory as may be approved by all the Lenders and KEXIM (each acting reasonably), at the request of the relevant Owner (subject to the provisions of clause 22.1(b)), as being the Flag State of such Ship for the purposes of the Finance Documents.
Fleet Vessel means each Mortgaged Ship and any other vessel owned or managed by any Group Member.
GAAP means the most recent and up to date US GAAP at any relevant time.
General Assignment means, in relation to a Ship in respect of which the Mortgage is not in account current form, a first assignment of its interest in the Ship's Insurances, Earnings and Requisition Compensation, by the relevant Owner in favour of the Security Agent and/or any other Finance Parties in the agreed form.
Green Passport means, in relation to a Ship, a document or certificate listing all the potentially hazardous materials on board such Ship in form and substance acceptable to the Agent in its absolute discretion.
Group means the Borrower and its Subsidiaries for the time being and, for the purposes of clause 19.1 (Financial statements) and clause 20 (Financial covenants), any other entity required to be treated as a subsidiary in the Borrower's consolidated accounts in accordance with GAAP and/or any applicable law.
Group Member means the Borrower, the Owners and any other entity which is part of the Group.
Guarantee means the obligations of the Guarantors under clause 17 (Guarantee and indemnity).
Guarantors means, together, the Owners and the Parent.
Hedging Contract means any Hedging Transaction of a non-speculative nature between the Borrower and the Hedging Provider pursuant to the Hedging Master Agreement and otherwise on approved terms and includes the Hedging Master Agreement and any Confirmations from time to time exchanged under it and governed by its terms relating to that Hedging Transaction and any contract in relation to such a Hedging Transaction constituted and/or evidenced by them and Hedging Contracts means all of them.
Hedging Contract Security means a deed or other instrument by the Borrower in favour of the Security Agent in the agreed form conferring a Security Interest over any Hedging Contracts.
10


Hedging Exposure means, as at any relevant date, the aggregate of the amount certified by the Hedging Provider to the Agent to be the net amount in dollars:
(a)
in relation to all Hedging Contracts that have been closed out on or prior to the relevant date, that is due and owing by the Borrower to the Hedging Provider in respect of such Hedging Contracts on the relevant date; and
(b)
in relation to all Hedging Contracts that are continuing on the relevant date, that would be payable by the Borrower to the Hedging Provider under (and calculated in accordance with) the early termination provisions of the Hedging Contracts as if an Early Termination Date (as defined in the Hedging Master Agreement) had occurred on the relevant date in relation to all such continuing Hedging Contracts.
Hedging Master Agreement means the agreement made or (as the context may require) to be made between the Borrower and the Hedging Provider pursuant to clause 29 (Hedging Contracts), comprising an ISDA Master Agreement and Schedule thereto in the agreed form.
Hedging Transaction has the meaning given to the term "Transaction" in the Hedging Master Agreement.
Holding Company means, in relation to a company or corporation or other person, any other company or corporation or other person in respect of which it is a Subsidiary.
Increased Costs has the meaning given to it in clause 13.1 (Increased Costs).
Indemnified Person means:
(a)
each Finance Party, KEXIM and each Receiver and any attorney, agent or other person appointed by them under the Finance Documents;
(b)
each Affiliate of those persons; and
(c)
any officers, employees or agents of any of the above persons.
Insolvency Event in relation to a Finance Party means that the Finance Party:
(a)
is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b)
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;
(c)
makes a general assignment, arrangement or composition with or for the benefit of its creditors;
(d)
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;
(e)
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:
(i)
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or
11


(ii)
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;
(f)
has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;
(g)
has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(h)
seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in paragraph (d) above);
(i)
has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;
(j)
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (i) above; or
(k)
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts,
except if any such proceedings constitute an undisclosed administration of such Finance Party.
Insurance Notice means, in relation to a Ship, a notice of assignment in the form scheduled to such Ship's General Assignment or Deed of Covenant or in another approved form.
Insurances means, in relation to a Ship:
(a)
all policies and contracts of insurance; and
(b)
all entries in a protection and indemnity or war risks or other mutual insurance association,
in the name of such Ship's Owner or the joint names of its Owner and any other person in respect of or in connection with such Ship and/or its Owner's Earnings from such Ship and includes all benefits thereof (including the right to receive claims and to return of premiums, and which the Obligors undertake shall be taken out in accordance with the requirements of clause 24 (Insurance)).
Interbank Market means the London interbank market.
Interest Period means, in relation to an Advance (and each Facility Advance forming part of that Advance), each period determined in accordance with clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with clause 8.3 (Default interest).
Interpolated Screen Rate means in relation to LIBOR for any Facility Advance (or any part of it) or any Unpaid Sum, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period for that Facility Advance (or the relevant part of it) or the relevant Unpaid Sum; and
12


(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period for that Facility Advance (or the relevant part of it) or the relevant Unpaid Sum,
each as of 11:00 am on the relevant Quotation Day.
IPO means an initial public offering of the total issued voting share capital of the Borrower on an Approved Exchange.
IPO Change of Control occurs if, at any time after an IPO has been completed, without the prior written consent of the Majority Lenders and KEXIM:
(a)
any Owner ceases to be a direct wholly-owned Subsidiary of the Borrower; or
(b)
the Parent ceases to control directly or indirectly, the Borrower; or
(c)
the Parent ceases to own legally and beneficially, either directly or indirectly, at least 50% of either of (i) the issued and outstanding share capital or (ii) the issued and outstanding voting share capital, of or the Borrower; or
(d)
a person or persons acting in concert (other than the Parent):
(i)
own legally and/or beneficially, either directly or indirectly, more than 50% of the aggregate issued share capital of, or more than 50% of the aggregate issued voting share capital of, the Borrower; and/or
(ii)
have the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Borrower; or
(e)
the Permitted Holders cease to control, directly or indirectly, the Parent; or
(f)
the Permitted Holders cease to own legally and beneficially, either directly or indirectly, at least 50% of either of (i) the issued and outstanding share capital, or (ii) the issued and outstanding voting share capital, of the Parent; or
(g)
a person or persons acting in concert (other than the Permitted Holders):
(i)
own legally and/or beneficially, either directly or indirectly, more than 50% of the aggregate issued share capital of, or more than 50% of the aggregate issued voting share capital of, the Parent; and/or
(ii)
have the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Parent.
KEXIM means The Export-Import Bank of Korea in its capacity as guarantor under the KEXIM Guarantee (but in no other capacity, whether as KEXIM Facility Lender or otherwise).
KEXIM Agent means ABN AMRO Bank N.V., Singapore Branch or any other person who may be appointed as such under the Finance Documents.
KEXIM Covered Facility means the term loan facility made available by the KEXIM Covered Facility Lenders under this Agreement as described in clause 2 (The Facilities).
KEXIM Covered Facility Advance means an advance of the KEXIM Covered Facility Commitments forming part of an Advance, being the Relevant Percentage, in relation to the KEXIM Covered Facility, of an Advance.
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KEXIM Covered Facility Commitment means:
(a)
in relation to an Original KEXIM Covered Facility Lender, the amount set opposite its name under the heading "KEXIM Covered Facility Commitment" in Schedule 1 (The original parties) and the amount of any other KEXIM Covered Facility Commitment transferred to it under this Agreement; and
(b)
in relation to any other KEXIM Covered Facility Lender, the amount of any KEXIM Covered Facility Commitment assigned to it under this Agreement,
to the extent not cancelled, reduced or assigned by it under this Agreement.
KEXIM Covered Facility Lenders means:
(a)
the Original KEXIM Covered Facility Lenders; and
(b)
any bank, financial institution or other regulated investment company which has become a Party as a KEXIM Covered Facility Lender in accordance with clause 32 (Changes to the Lenders),
 which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
KEXIM Covered Loan means a loan made or to be made under the KEXIM Covered Facility or the principal amount outstanding for the time being of that loan.
KEXIM Facility means the term loan facility made available by the KEXIM Facility Lenders under this Agreement as described in clause 2 (The Facilities).
KEXIM Facility Advance means an advance of the KEXIM Facility Commitments forming part of an Advance, being the Relevant Percentage, in relation to the KEXIM Facility, of an Advance.
KEXIM Facility Commitment means:
(a)
in relation to an Original KEXIM Facility Lender, the amount set opposite its name under the heading "KEXIM Facility Commitment" in Schedule 1 (The original parties) and the amount of any other KEXIM Facility Commitment transferred to it under this Agreement; and
(b)
in relation to any other KEXIM Facility Lender, the amount of any KEXIM Facility Commitment transferred to it under this Agreement,
to the extent (i) not cancelled, reduced or transferred by it under this Agreement, and (ii) not deemed to be zero pursuant to clause 33.3 (Disenfranchisement on Debt Purchase Transactions entered into by Parent Affiliates).
KEXIM Facility Lenders means:
(a)
the Original KEXIM Facility Lenders; and
(b)
any bank, financial institution, trust, fund or other entity which has become a Party as a KEXIM Facility Lender in accordance with clause 32 (Changes to the Lenders),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
KEXIM Guarantee means the guarantee agreement dated on or about the date of this Agreement between (inter alios) KEXIM, the Security Agent, the KEXIM Agent and the KEXIM Covered Facility Lenders in respect of the KEXIM Covered Facility in agreed form.
14


KEXIM Guarantee Fee means the fee payable or (as the context may require) paid to KEXIM under the terms of the KEXIM Guarantee (referred to as "Guarantee Premium" in the KEXIM Guarantee).
KEXIM Loan means a loan made or to be made under the KEXIM Facility or the principal amount outstanding for the time being of that loan.
Last Availability Date means:
(a)
in relation to Advance A, 31 October 2017;
(b)
in relation to Advance B, 31 January 2018;
(c)
in relation to Advance C, 28 February 2018; and
(d)
in relation to Advance D, 30 April 2018,
or, in each such case, such later date as may be approved by all the Lenders (such approval not to be unreasonably withheld) and KEXIM.
Legal Reservations means:
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for, or indemnify a person against, non-payment of UK stamp duty may be void and defences of set-off or counterclaim; and
(c)
similar principles, rights and defences under the laws of any Relevant Jurisdiction.
Lender means:
(a)
any Commercial Facility Lender;
(b)
any KEXIM Covered Facility Lender;
(c)
any KEXIM Facility Lender; and
(d)
any bank, financial institution, trust, fund or other entity which has become a Party in accordance with clause 32 (Changes to the Lenders),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
LIBOR means, in relation to any Facility Advance or any part of it or any Unpaid Sum:
(a)
the applicable Screen Rate; or
(b)
if no Screen Rate is available for the relevant Interest Period, the Interpolated Screen Rate for that Facility Advance (or the relevant part of it) or that Unpaid Sum; or
(c)
if:
(i)
no Screen Rate is available for the relevant currency; or
(ii)
no Screen Rate is available for the relevant Interest Period and it is not possible to calculate an Interpolated Screen Rate for that Facility Advance (or the relevant part of it) or that Unpaid Sum,
15


the Reference Bank Rate, as of 11:00 a.m. (London time) on the Quotation Day for the offering of deposits in dollars for a period comparable to the Interest Period for that Facility Advance or relevant part of it or Unpaid Sum and if that rate is less than zero (0), LIBOR shall be deemed to be zero (0).
Loans mean the KEXIM Covered Loan, the Commercial Loan and the KEXIM Loan, and Loan means any one of them.
Loss Payable Clauses means, in relation to a Ship, the provisions concerning payment of claims under such Ship's Insurances in the form scheduled to such Ship's General Assignment or Deed of Covenant or in another approved form.
Losses means any costs, expenses (including, but not limited to, legal fees), payments, charges, losses, demands, liabilities, taxes (including VAT), claims, actions, proceedings, penalties, fines, damages, judgments, orders or other sanctions.
Major Casualty means any casualty to a vessel for which the total insurance claim, inclusive of any deductible, exceeds or may exceed the Major Casualty Amount.
Major Casualty Amount means, in relation to a Ship, the amount specified as such against the name of that Ship in Schedule 2 (Ship information) or the equivalent in any other currency.
Majority Lenders means:
(a)
if no Advances are then outstanding, at least two Lenders whose Commitments aggregate more than 66.67% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66.67% of the Total Commitments immediately prior to the reduction); or
(b)
at any other time, at least two Lenders whose participations in the Advances aggregate more than 66.67% of all the Advances.
Management Agreement means, in relation to a Ship, the agreement between the relevant Owner and the Manager relating to the appointment of the Manager in respect of such Ship.
Manager means, in relation to a Ship, TMS, appointed in accordance with clause 22.3 (Manager) or any other company (subject to such company providing a Manager's Undertaking in relation to such Ship) which is so appointed and the Agent may, with the authorisation of the Majority Lenders, approve from time to time, in each case as the manager of that Ship in respect of commercial and technical services and includes its successors in title.
Manager's Undertaking means, in relation to a Ship, an undertaking by any manager of the Ship to the Security Agent in the agreed form pursuant to clause 22.3 (Manager).
Margin means:
(a)
in relation to the KEXIM Covered Facility and each KEXIM Covered Facility Advance, 1.50% per annum; and
(b)
in relation to the Commercial Facility and each Commercial Facility Advance, 2.10% per annum; and
(c)
in relation to the KEXIM Facility and each KEXIM Facility Advance, 2.10% per annum.
Material Adverse Effect means, in the reasonable opinion of the Majority Lenders, a material adverse effect on:
(a)
the business, operations, property, performance, prospects or condition (financial or otherwise) of any Obligor or of the Group taken as a whole; or
16


(b)
the ability of an Obligor or the Manager to perform its obligations under any of the Finance Documents; or
(c)
the legality, validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.
Minimum Value means the amount in dollars which is at any relevant time 130% of the aggregate of (a) the Advances outstanding under the Facilities and (b) the Hedging Exposure at that time.
Mortgage means, in relation to a Ship, a first priority or (as the case may be) first preferred mortgage of the Ship in the agreed form by the relevant Owner in favour of the Security Agent and/or any of the other Finance Parties.
Mortgage Period means, in relation to a Mortgaged Ship, the period from the date the Mortgage over that Ship is executed and registered until the date such Mortgage is released and discharged or, if earlier, its Total Loss Repayment Date.
Mortgaged Ship means, at any relevant time, any Ship which has been delivered to the relevant Owner under the relevant Contract and is subject to a Mortgage and/or whose Earnings, Insurances and Requisition Compensation are subject to a Security Interest under the Finance Documents.
Non-Consenting Lender is a Lender who does not agree to a waiver, consent or amendment where:
(a)
the Borrower or the Agent have requested the Lenders to consent to a departure from, or waiver of, any provision of the Finance Documents or to agree to any amendment thereto;
(b)
the waiver, consent or amendment in question requires the agreement of all the Lenders;
(c)
a period of not less than 30 days has elapsed from the date the waiver, consent or amendment was requested;
(d)
the Majority Lenders have agreed to such waiver, consent or amendment; and
(e)
the Borrower has notified such Lender that they will treat it as a Non-Consenting Lender.
Notifiable Debt Purchase Transaction has the meaning given to that term in clause 33.3 (Disenfranchisement on Debt Purchase Transactions entered into by Parent Affiliates).
Obligors means the parties to the Finance Documents (other than Finance Parties, any Charterers, KEXIM and the Manager) and Obligor means any one of them.
Original Financial Statements means the audited consolidated financial statements of the Parent for its financial year ended 31 December 2016.
Original Lenders means:
(a)
the Original Commercial Facility Lenders;
(b)
the Original KEXIM Facility Lenders; and
(c)
the Original KEXIM Covered Facility Lenders.
Original Obligor means each party to this Agreement and the Original Security Documents (other than a Finance Party and the Manager).
17


Original Security Documents means:
(a)
the Mortgages over each of the Ships;
(b)
the Deeds of Covenant in relation to each of the Ships in respect of which the Mortgage is in account current form;
(c)
the General Assignments in relation to each of the Ships in respect of which the Mortgage is not in account current form;
(d)
the Charter Assignment in relation to each Ship's Charter Documents;
(e)
the Quiet Enjoyment Agreement in relation to each Ship;
(f)
the Account Security in relation to each Account;
(g)
the Share Security in relation to each Owner;
(h)
the Hedging Contract Security; and
(i)
each Manager's Undertaking in relation to each Ship.
Owner means, in relation to a Ship, the Owner specified against the name of that Ship in Schedule 2 (Ship information).
Parent means DryShips Inc., a corporation incorporated in the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960 and includes its successors in title.
Parent Affiliate means the Parent, the Borrower, each of their Affiliates, any trust of which the Parent, the Borrower or any of their Affiliates is a trustee, any partnership of which the Parent, the Borrower or any of their Affiliates are a partner and any trust, fund or other entity which is managed by, or is under the control of, the Parent, the Borrower or any of their Affiliates.
Parent Fleet Vessel means each Mortgaged Ship and any other vessel owned or managed by any Parent Group Member.
Parent Group has the meaning given to it in clause 20.1 (Financial definitions).
Parent Group Member has the meaning given to it in clause 20.1 (Financial definitions).
Participating Member State means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
Party means a party to this Agreement.
Payment Disruption Event means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facilities (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
18


(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties in accordance with the terms of the Finance Documents,
(and which (in either such case)) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
Permitted Holders means collectively:
(a)
the individual disclosed in writing by the Obligors to the Arranger and the Original Lenders on or before the date of this Agreement as being the ultimate beneficial owner of (i) no less than 50% of the issued and outstanding voting share capital of the Parent and (ii) 100% of the issued and outstanding share capital and voting share capital of the Manager;
(b)
his direct lineal descendants;
(c)
the personal estate of any of the above persons;
(d)
any trust, foundation or other similar entity created for the benefit of one or more of the above persons and their respective estates; and
(e)
any corporation or other legal entity beneficially owned (at least as to 100% of (i) its issued and outstanding share capital or (ii) its issued and outstanding voting share capital) and controlled by any of the above persons.
Permitted Maritime Liens means, in relation to a Ship:
(a)
unless a Default is continuing, any ship repairer's or outfitter's possessory lien in respect of such Ship for an amount not exceeding the Major Casualty Amount for such Ship;
(b)
any lien on such Ship for master's, officer's or crew's wages outstanding in the ordinary course of its trading; and
(c)
any lien on such Ship for salvage.
Permitted Security Interests means, in relation to any Mortgaged Ship, any Security Interest over it which is:
(a)
granted by the Finance Documents; or
(b)
a Permitted Maritime Lien; or
(c)
approved by the Majority Lenders,
or, in the case of Accounts only, any Security Interest created pursuant to the general banking conditions of the relevant Account Bank applicable to any such Account.
Pollutant means and includes crude oil and its products, any other polluting, toxic or hazardous substance and any other substance whose release into the environment is regulated or penalised by Environmental Laws.
Prepayment Fee Amount means, in respect of an Advance which is or is to be prepaid (in whole or in part) and/or cancelled as specified in clause 7.11 (Prepayment fee), the amount in dollars which is at that time 0.5% of any amount of that Advance which is to be so prepaid or cancelled by the Borrower.
Prepayment Notification Date has the meaning given to it in clause 7.9 (Prepayment option).
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Prepayment Option Date has the meaning given to it in clause 7.9 (Prepayment option).
Quiet Enjoyment Agreement means, in relation to a Ship, a letter by the Security Agent addressed to, and acknowledged by, the relevant Owner and the Charterer of that Ship in the agreed form.
Quotation Day means, in relation to any period for which an interest rate is to be determined, two London Business Days before the first day of that period unless market practice differs in the Interbank Market for a currency, in which case the Quotation Day for that currency shall be determined by the Agent in accordance with market practice in the Interbank Market (and if quotations would normally be given by leading banks in the Interbank Market on more than one (1) day, the Quotation Day will be the last of those days).
Receiver means a receiver or a receiver and manager or an administrative receiver appointed in relation to the whole or any part of any Charged Property under any relevant Security Document.
Reference Bank Rate means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by each Reference Bank as the rate at which the relevant Reference Bank could borrow funds in the Interbank Market, in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.
Reference Banks means, in respect of LIBOR, ABN AMRO Bank N.V. and/or such other banks as may be appointed by the Agent in consultation with the Borrower.
Registry means, in relation to each Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register the relevant Ship, the relevant Owner's title to such Ship and the relevant Mortgage under the laws of its Flag State.
Relevant Jurisdiction means, in relation to an Obligor and the Manager:
(a)
its jurisdiction of incorporation;
(b)
any jurisdiction where any Charged Property owned by it is situated;
(c)
any jurisdiction where it conducts its business; and
(d)
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
Relevant Percentage means:
(a)
in relation to the Commercial Facility and/or the Commercial Facility Advances, 33.33%;
(b)
in relation to the KEXIM Facility and/or the KEXIM Facility Advances, 46.67%; and
(c)
in relation to the KEXIM Covered Facility and/or the KEXIM Covered Facility Advances, 20%.
Repayment Date means, in relation to each Facility Advance:
(a)
the First Repayment Date for that Facility Advance;
(b)
each of the dates falling at 3 monthly intervals thereafter up to but not including the Final Repayment Date for that Facility Advance; and
(c)
the Final Repayment Date for that Facility Advance,
being, in each case, the due dates of the repayment instalments referred to in clause 6.2 (Scheduled repayment of Advances) for that Facility Advance.
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Repeating Representations means each of the representations and warranties set out in clause 18 (Representations) other than clauses 18.10 (No insolvency), 18.11 (No filing or stamp taxes), 18.12 (Tax) and 18.20.2 (Ownership of shares).
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Requisition Compensation means, in relation to a Ship, any compensation paid or payable by a government entity for the requisition for title, confiscation or compulsory acquisition of such Ship.
Restricted Person means a person that:
(a)
is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person) or otherwise a target of Sanctions (target of Sanctions signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities or against whom Sanctions are otherwise directed);
(b)
is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of or, such country which is subject to Sanctions which attach legal effect to being domiciled, registered as located in, having its main place of business in, and/or being incorporated under the laws of such country;
(c)
is directly or indirectly owned by or controlled by a person referred to in (a) and/or (b) above; or
(d)
owns or controls a person referred to in (a) and/or (b) above.
Retention Account means any Account designated as a Retention Account under clause 27 (Bank accounts).
Sanctions means any economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:
(a)
the United States of America government;
(b)
the United Nations;
(c)
the European Union or any of its member states, including without limitation, the United Kingdom;
(d)
any country to which any Obligor, or any other Group Member or any Affiliate of any of them is bound; or
(e)
the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (OFAC), the United States Department of State, and Her Majesty's Treasury (HMT) (together, the Sanctions Authorities).
Sanctions List means the "Specially Designated Nationals and Blocked Persons" list issued by OFAC, the "Consolidated List of Financial Sanctions Targets and Investment Ban List" issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities.
Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars and the relevant period displayed on the appropriate pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may
21


specify another page or service displaying the relevant rate after consultation with the Borrower and the Lenders.
Security Agent includes any person as may be appointed security agent and trustee for the other Finance Parties under this Agreement.
Security Documents means:
(a)
the Original Security Documents; and
(b)
any other document (other than the KEXIM Guarantee) as may be executed to guarantee and/or secure any amounts owing to the Finance Parties under this Agreement or any other Finance Document.
Security Interest means a mortgage, charge, pledge, lien, assignment, trust, hypothecation or other security interest of any kind securing any obligation of any person or any other agreement or arrangement having a similar effect.
Security Value means, at any time, the amount in dollars which, at that time, is the aggregate of (a) the Vessel Values (or, if less in relation to an individual Ship, the maximum amount capable of being secured by the Mortgage of the relevant Ship) of all of the Mortgaged Ships which have not then become a Total Loss and (b) the value of any additional security then held by the Security Agent or any other Finance Party provided under clause 25 (Minimum security value), in each case as most recently determined in accordance with this Agreement.
Selection Notice means a notice substantially in the form set out in Schedule 5 (Selection Notice) given in accordance with clause 9 (Interest Periods).
Share Security means, in relation to each Owner, the document constituting a first Security Interest in respect of all the shares of such Owner executed by the Borrower in favour of the Security Agent in the agreed form.
Ship A means the vessel described as such in Schedule 2 (Ship Information).
Ship B means the vessel described as such in Schedule 2 (Ship Information).
Ship C means the vessel described as such in Schedule 2 (Ship Information).
Ship Commitment means, in relation to a Ship, the amount specified as such in respect of such Ship in Schedule 2 (Ship information), as cancelled or reduced pursuant to any provision of this Agreement.
Ship D means the vessel described as such in Schedule 2 (Ship Information).
Ship Representations means each of the representations and warranties set out in clauses 18.27 (Ship status) and 18.28 (Ship's employment).
Ships means each of the ships described in Schedule 2 (Ship information), being each of Ship A, Ship B, Ship C and Ship D and:
(a)
in relation to Advance A, it means Ship A;
(b)
in relation to Advance B, it means Ship B;
(c)
in relation to Advance C, it means Ship C; or
(d)
in relation to Advance D, it means Ship D,
and Ship means any of them.
22


Spill means any actual or threatened spill, release or discharge of a Pollutant into the environment.
Spin-off means the transfer by the Parent of all or any of the shares of the Borrower to one or more other persons (other than by an IPO).
Spin-off Change of Control occurs if, at any time after a Spin-off has occurred but before and until an IPO is completed, without the prior written consent of the Majority Lenders and KEXIM:
(a)
any Owner ceases to be a direct wholly-owned Subsidiary of the Borrower; or
(b)
the Parent ceases to control, directly or indirectly, the Borrower; or
(c)
the Parent ceases to own legally and beneficially, either directly or indirectly, at least 50% of either of (i) the issued and outstanding share capital, or (ii) the issued and outstanding voting share capital, of or the Borrower; or
(d)
a person or persons acting in concert (other than the Parent):
(i)
own legally and/or beneficially, either directly or indirectly, more than 50% of the aggregate issued share capital of, or more than 50% of the aggregate issued voting share capital of, the Borrower; and/or
(ii)
have the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Borrower; or
(e)
the Permitted Holders cease to control, directly or indirectly, the Parent; or
(f)
the Permitted Holders cease to own legally and beneficially, either directly or indirectly, at least 50% of either of (i) the issued and outstanding share capital or (ii) the issued and outstanding voting share capital, of the Parent; or
(g)
a person or persons acting in concert (other than the Permitted Holders):
(i)
own legally and/or beneficially, either directly or indirectly, more than 50% of the aggregate issued share capital of, or more than 50% of the aggregate issued voting share capital of, the Parent; and/or
(ii)
have the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Parent.
Subsidiary of a person means any other person:
(a)
directly or indirectly controlled by such person; or
(b)
of whose dividends or distributions on ordinary voting share capital such person is entitled to receive more than 50%.
Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same) and Taxation shall be construed accordingly.
TMS means TMS Cardiff Gas Ltd., a corporation incorporated in the Republic of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 or any other person approved in writing by the Majority Lenders, and includes its successors in title.
Total Commercial Facility Commitments means the aggregate of the Commercial Facility Commitments, being $50,000,000 as at the date of this Agreement.
23


Total Commitments means the aggregate of the Total Commercial Facility Commitments, the Total KEXIM Facility Commitments and the Total KEXIM Covered Facility Commitments, being $150,000,000 at the date of this Agreement.
Total KEXIM Covered Facility Commitments means the aggregate of the KEXIM Covered Facility Commitments, being $30,000,000 as at the date of this Agreement.
Total KEXIM Facility Commitments means the aggregate of the KEXIM Facility Commitments, being $70,000,000 as at the date of this Agreement.
Total Loss means, in relation to a Ship, its:
(a)
actual, constructive, compromised, agreed or arranged total loss; or
(b)
requisition for title, confiscation or other compulsory acquisition by a government entity; or
(c)
hijacking, piracy, theft, condemnation, capture, seizure, arrest or detention for more than 30 days.
Total Loss Date means, in relation to the Total Loss of a Ship:
(a)
in the case of an actual total loss, the date it happened or, if such date is not known, the date on which the Ship was last reported;
(b)
in the case of a constructive, compromised, agreed or arranged total loss, the earliest of:
(i)
the date notice of abandonment of the Ship is given to its insurers; or
(ii)
if the insurers do not admit such a claim, the date later determined by a competent court of law to have been the date on which the total loss happened; or
(iii)
the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the Ship's insurers;
(c)
in the case of a requisition for title, confiscation or compulsory acquisition, the date it happened; and
(d)
in the case of hijacking, piracy, theft, condemnation, capture, seizure, arrest or detention, the date 30 days after the date upon which it happened.
Total Loss Repayment Date means, where a Mortgaged Ship has become a Total Loss after its Delivery, the earlier of:
(a)
the date 120 days after its Total Loss Date; and
(b)
the date upon which insurance proceeds or Requisition Compensation for such Total Loss are paid by insurers or the relevant government entity.
Transaction Security means the Security Interests created by the Finance Documents.
Transfer Certificate means a certificate substantially in the form set out in Schedule 6 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower or, at any time after the occurrence of an Event of Default, required by the Agent.
Transfer Date means, in relation to an assignment pursuant to a Transfer Certificate, the later of:
(a)
the proposed Transfer Date specified in the Transfer Certificate; and
(b)
the date on which the Agent executes the Transfer Certificate.
24


Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
Trust Property means, collectively:
(a)
all moneys duly received by the Security Agent under or in respect of the Finance Documents;
(b)
any portion of the balance on any Account held by or charged to the Security Agent at any time;
(c)
the Security Interests, guarantees, security, powers and rights given to the Security Agent under and pursuant to the Finance Documents including, without limitation, the covenants given to the Security Agent in respect of all obligations of any Obligor;
(d)
all assets paid or transferred to or vested in the Security Agent or its agent or received or recovered by the Security Agent or its agent in connection with any of the Finance Documents whether from any Obligor or any other person; and
(e)
all or any part of any rights, benefits, interests and other assets at any time representing or deriving from any of the above, including all income and other sums at any time received or receivable by the Security Agent or its agent in respect of the same (or any part thereof).
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
US means the United States of America.
US Tax Obligor means:
(a)
the Borrower if it is resident for tax purposes in the US; or
(b)
an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
Utilisation means the making of an Advance.
Utilisation Date means, in respect of a Utilisation, the date on which that Utilisation is made.
Utilisation Request means a notice substantially in the form set out in Schedule 4 (Utilisation Request).
VAT means:
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
Vessel Value means, in respect of a Mortgaged Ship, the value most recently attributed to that Mortgaged Ship as most recently determined pursuant to valuations undertaken in accordance with clause 25 (Minimum security value) and Vessel Values means the aggregate of the valuations of all the Mortgaged Ships.
25


1.2
Construction
1.2.1
Unless a contrary indication appears, any reference in any of the Finance Documents to:
(a)
Sections, clauses and Schedules are to be construed as references to the Sections and clauses of, and the Schedules to, the relevant Finance Document and references to a Finance Document include its Schedules;
(b)
a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as it may from time to time be amended, restated, novated or replaced, however fundamentally;
(c)
words importing the plural shall include the singular and vice versa;
(d)
a time of day is to Singapore time;
(e)
any person includes its successors in title, permitted assignees or transferees;
(f)
the knowledge, awareness and/or beliefs (and similar expressions) of any Obligor shall be construed so as to mean the knowledge, awareness and beliefs of the director and officers of such Obligor, having made due and careful enquiry;
(g)
two or more persons are acting in concert if pursuant to an agreement or understanding (whether formal or informal) they actively co-operate, through the acquisition (directly or indirectly) of shares in an entity by any of them, either directly or indirectly to obtain or consolidate control of that entity;
(h)
agreed form means:
(i)
where a Finance Document has already been executed by all of the relevant parties, such Finance Document in its executed form; and
(ii)
prior to the execution of a Finance Document, the form of such Finance Document separately agreed in writing between the Agent (acting on the instructions of all the Lenders) and the Borrower, whether before or after the date of this Agreement, as the form in which that Finance Document is to be executed or another form approved at the request of the Borrower or, if not so agreed or approved, in the form reasonably required by the Agent; (i)
(i)
approved by the Majority Lenders or approved by the Lenders means approved in writing by the Agent acting on the instructions of the Majority Lenders or, as the case may be, all of the Lenders (on such conditions as they may respectively impose) and otherwise approved means approved in writing by the Agent acting on the instructions of the Majority Lenders (on such conditions as the Agent (acting on the instructions of the Majority Lenders) may impose) and approval and approve shall be construed accordingly;
(j)
assets includes present and future properties, revenues and rights of every description;
(k)
an authorisation means any authorisation, consent, concession, approval, resolution, licence, exemption, filing, notarisation or registration;
(l)
charter commitment means, in relation to a vessel, any charter or contract for the use, employment or operation of that vessel or the carriage of people and/or cargo or the provision of services by or from it and includes any agreement for pooling or sharing income derived from any such charter or contract;
26


(m)
control of an entity means:
(i)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
A)
cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of that entity; or
B)
appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or
C)
give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or
(ii)
the holding beneficially of more than 50% of the issued share capital of that entity (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security Interest over share capital shall be disregarded in determining the beneficial ownership of such share capital),
and controlled shall be construed accordingly;
(n)
the term disposal or dispose means a sale, transfer or other disposal (including by way of lease or loan but not including by way of loan of money) by a person of all or part of its assets, whether by one transaction or a series of transactions and whether at the same time or over a period of time, but not the creation of a Security Interest;
(o)
dollar, $ and USD means the lawful currency of the United States of America;
(p)
the equivalent of an amount specified in a particular currency (the specified currency amount) shall be construed as a reference to the amount of the other relevant currency which can be purchased with the specified currency amount in the London foreign exchange market at or about 11 a.m. on the date the calculation falls to be made for spot delivery, as conclusively determined by the Agent (with the relevant exchange rate of any such purchase being the Agent's spot rate of exchange);
(q)
a government entity means any government, state or agency of a state;
(r)
a group of Lenders includes all the Lenders;
(s)
a guarantee means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;
(t)
indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(u)
month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:
(i)
if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that month (if there is one) or on the immediately preceding Business Day (if there is not); and
27


(ii)
if there is no numerically corresponding day in that month, that period shall end on the last Business Day in that month,
and the above rules in paragraphs (i) to (ii) will only apply to the last month of any period;
(v)
an obligation means any duty, obligation or liability of any kind;
(w)
something being in the ordinary course of business of a person means something that is in the ordinary course of that person's current day-to-day operational business (and not merely anything which that person is entitled to do under its Constitutional Documents);
(x)
pay, prepay or repay in clause 28 (Business restrictions) includes by way of set-off, combination of accounts or otherwise;
(y)
a person includes any individual, firm, company, corporation, government entity or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);
(z)
a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation and includes (without limitation) any Basel II Regulation or Basel Ill Regulation;
(aa)
right means any right, privilege, power or remedy, any proprietary interest in any asset and any other interest or remedy of any kind, whether actual or contingent, present or future, arising under contract or law, or in equity;
(bb)
trustee, fiduciary and fiduciary duty has in each case the meaning given to such term under applicable law;
(cc)
(i) the liquidation, winding up, dissolution, or administration of person or (ii) a receiver or administrative receiver or administrator in the context of insolvency proceedings or security enforcement actions in respect of a person shall be construed so as to include any equivalent or analogous proceedings or any equivalent and analogous person or appointee (respectively) under the law of the jurisdiction in which such person is established or incorporated or any jurisdiction in which such person carries on business including (in respect of proceedings) the seeking or occurrences of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors;
(dd)
an entity is a wholly-owned subsidiary of another entity if it has no shareholders or members except that other entity and that other entity's wholly-owned Subsidiaries or persons acting on behalf of that other entity or its wholly-owned Subsidiaries;
(ee)
a provision of law is a reference to that provision as amended or re-enacted; and
(ff)
a law includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the United States of America, any state thereof, Council of the European Union, the European Commission, the United Nations or its Security Council.
1.2.2
Where in this Agreement a provision includes a monetary reference level in one currency, unless a contrary indication appears, such reference level is intended to apply equally to its equivalent in other currencies as of the relevant time for the purposes of applying such reference level to any other currencies.
1.2.3
Section, clause and Schedule headings are for ease of reference only.
28


1.2.4
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.2.5
A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been waived to the satisfaction of the Agent acting on the instructions of the Lenders.
1.2.6
Unless a contrary indication appears, in the event of any inconsistency between the terms of this Agreement and the terms of any other Finance Document when dealing with the same or similar subject matter, the terms of this Agreement shall prevail.
1.3
Third party rights
1.3.1
Except for provisions expressed to be in favour of KEXIM, rights expressed to be for the benefit of or exercisable by KEXIM under a Finance Document or, unless expressly provided to the contrary in a Finance Document, a provision expressed to be for the benefit of a Finance Party or another Indemnified Person, a person who is not a party to a Finance Document has no right under the Contracts (Rights of Third Parties) Act 1999 (the Third Parties Act) to enforce or to enjoy the benefit of any term of the relevant Finance Document.
1.3.2
Any Finance Document may be rescinded or varied by the parties to it without the consent of any person who is not a party to it (unless otherwise provided by this Agreement in respect of KEXIM and without prejudice to the provisions of the KEXIM Guarantee).
1.3.3
An Indemnified Person who is not a party to a Finance Document may only enforce its rights under that Finance Document through a Finance Party and if and to the extent and in such manner as the Finance Party may determine.
1.3.4
Each party agrees that (a) KEXIM shall not have any obligations or liabilities under this Agreement unless and until it becomes a Lender in accordance with the terms of this Agreement and (b) this Agreement may not be amended to limit, modify or eliminate any rights of KEXIM without its prior written consent.
1.4
Finance Documents
Where any other Finance Document provides that this clause 1.4 shall apply to that Finance Document, any other provision of this Agreement which, by its terms, purports to apply to all or any of the Finance Documents and/or any Obligor shall apply to that Finance Document as if set out in it but with all necessary changes.
1.5
Conflict of documents
The terms of the Finance Documents (other than any Hedging Contracts and other than as relates to the creation and/or perfection of security) are subject to the terms of this Agreement and, in the event of any conflict between any provision of this Agreement and any provision of any Finance Document (other than any Hedging Contracts and other than in relation to the creation and/or perfection of security) the provisions of this Agreement shall prevail.
29



SECTION 2 - THE FACILITIES
2
THE FACILITIES
2.1
The Commercial Facility
Subject to the terms of this Agreement the Commercial Facility Lenders make available to the Borrower a term loan facility in an aggregate amount equal to the Total Commercial Facility Commitments.
2.2
The KEXIM Facility
Subject to the terms of this Agreement, the KEXIM Facility Lenders make available to the Borrower a term loan facility in an aggregate amount equal to the Total KEXIM Facility Commitments.
2.3
The KEXIM Covered Facility
Subject to the terms of this Agreement, the KEXIM Covered Facility Lenders make available to the Borrower a term loan facility in an aggregate amount equal to the Total KEXIM Covered Facility Commitments.
2.4
Finance Parties' rights and obligations
2.4.1
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
2.4.2
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with clause 2.4.3. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in a Facility or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor.
2.4.3
A Finance Party may, except as otherwise stated in the Finance Documents (including clauses 34.26 (All enforcement action through the Security Agent) and 35.2 (Finance Parties acting together)), separately enforce its rights under the Finance Documents.
3
PURPOSE
3.1
Purpose
The Borrower shall apply all amounts borrowed under the Facilities in accordance with this clause 3.
3.2
Use on Delivery
The Ship Commitment for each Ship shall be made available in one Advance solely for the purpose of assisting the Group Members to finance part of the Contract Price of that Ship payable on its Delivery by paying the same to the relevant Builder or, if and to the extent that there is a surplus after such payment to the Builder because the Ship Commitment (and the Advance) for such Ship is more than the part of the Contract Price which it is intended to finance on its Delivery, the balance shall be paid to the Borrower or to its order.
30


3.3
Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4
CONDITIONS OF UTILISATION
4.1
Initial conditions precedent
The Borrower may not deliver a Utilisation Request unless the Agent, or its duly authorised representative, has received all of the documents and other evidence listed in Part 1 of Schedule 3 (Conditions precedent to any Utilisation) in form and substance satisfactory to the Agent (acting on the instructions of all Lenders) and the KEXIM Agent.
4.2
Ships and security conditions precedent
The Ship Commitment in respect of a Ship may only be drawn down under this Agreement if, on or before the Utilisation of the relevant Advance for that Ship, the Agent, or its duly authorised representative, has received all of the documents and evidence listed in Part 2 of Schedule 3 (Ships and security conditions precedent) in relation to such Ship in form and substance satisfactory to the Agent and the KEXIM Agent.
4.3
Notice to Lenders
The Agent shall notify the Borrower, the Lenders, KEXIM Agent and KEXIM promptly upon receiving and being satisfied with all of the documents and evidence delivered to it under this clause 4 or (if applicable) only those of clause 5.5 (Pre-placement of Advances) in form and substance satisfactory to it in respect of each Advance. Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives any such notification, the Lenders authorise (but do not require) the Agent to give that notification in respect of each Advance. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification in respect of an Advance.
4.4
Further conditions precedent
The Lenders will only be obliged to comply with clause 5.4 (Lenders' participation) if on the date of a Utilisation Request and on the proposed Utilisation Date in relation to the Advance for a Ship:
(a)
no Default is continuing or would result from the proposed Utilisation;
(b)
the Repeating Representations and, in relation to the first Utilisation, all of the other representations set out in clause 18 (Representations) (except the Ship Representations), are true;
(c)
no events, facts, conditions or circumstances shall exist or have arisen or occurred (and neither the Agent nor any Lender or the Hedging Provider shall have become aware of other events, facts, conditions or circumstances not previously known to it), which the Agent (acting on the instructions of the Majority Lenders) shall determine, have had or could reasonably be expected to have, a Material Adverse Effect;
(d)
the Ship Representations are true so far as they relate to the Ship relating to the proposed Utilisation being made;
(e)
the Agent or any other Finance Party has not received any notice or other communication from KEXIM requesting the Lenders or any other Finance Party to suspend the Utilisation of the Facilities or stating or otherwise claiming (or purporting to claim) that the KEXIM Guarantee has been terminated or otherwise suspended; and
(f)
no Total Loss has occurred in relation to a Ship.
31


4.5
Waiver of conditions precedent
The conditions in this clause 4 are inserted solely for the benefit of the Finance Parties and may be waived on their behalf in whole or in part and with or without conditions by the Agent acting on the instructions of the Majority Lenders.
32



SECTION 3 - UTILISATION
5
UTILISATION
5.1
Delivery of a Utilisation Request
The Borrower may utilise the Facilities by delivery to the Agent of a duly completed Utilisation Request not later than 11:00 a.m. two (2) Business Days before the proposed Utilisation Date.
5.2
Completion of a Utilisation Request
5.2.1
A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(a)
the proposed Utilisation Date in respect of an Advance is a Business Day falling not later than the Last Availability Date for that Advance;
(b)
the currency and amount of the Utilisation comply with clause 5.3 (Currency and amount and the conditions of the Utilisations);
(c)
the proposed Interest Period complies with clause 9 (Interest Periods); and
(d)
it identifies the purpose for the Utilisation and that purpose complies with clause 3 (Purpose) and it identifies the Ship Commitment to which it relates.
5.2.2
The Ship Commitment in respect of a Ship may only be drawn down in a single amount in one Advance.
5.3
Currency and amount and the conditions of the Utilisations
5.3.1
The currency specified in a Utilisation Request must be dollars.
5.3.2
The total amount available and advanced under all Facilities shall not exceed the Total Commitments.
5.3.3
A proposed Advance specified in a Utilisation Request in relation to a Ship and the Advance in relation to that Ship shall:
(a)
not exceed the lower of:
(i)
the Ship Commitment for such Ship; and
(ii)
the amount in Dollars which is equal to 60% of the market value of that Ship as shown in the valuations of such Ship made pursuant to Part 2 of Schedule 3 (Ships and security conditions precedent); and
(b)
comprise a Commercial Facility Advance, a KEXIM Facility Advance and a KEXIM Covered Facility Advance, each in the Relevant Percentage of the Advance for that Ship.
5.3.4
An Advance shall be used for the purpose specified in clause 3 (Purpose) and solely in relation to the Ship to which that Advance relates, namely:
(a)
Advance A shall be made available under the Ship Commitment for Ship A and shall be used solely in relation to Ship A;
(b)
Advance B shall be made available under the Ship Commitment for Ship B and shall be used solely in relation to Ship B;
33


(c)
Advance C shall be made available under the Ship Commitment for Ship C and shall be used solely in relation to Ship C; and
(d)
Advance D shall be made available under the Ship Commitment for Ship D and shall be used solely in relation to Ship D.
5.4
Lenders' participation
5.4.1
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the relevant Utilisation Date through its Facility Office.
5.4.2
The amount of each Lender's participation in a Facility Advance being part of an Advance will be equal to the proportion borne by its Commercial Facility Commitment, KEXIM Facility Commitment and KEXIM Covered Facility Commitment (as applicable) to the Total Commercial Facility Commitments, Total KEXIM Facility Commitments and the Total KEXIM Covered Facility Commitments (as applicable) immediately prior to making the relevant Advance.
5.4.3
The Agent shall promptly notify each Lender of the amount of each Advance and each Facility Advance and the amount of its participation in each Advance and each Facility Advance, in each case by 11:00 a.m. on the Quotation Day.
5.4.4
The Agent shall pay all amounts received by it in respect of each Advance (and its own participation in it, if any) to the Borrower or the account of any of them or to the Builder, in each case in accordance with the instructions contained in the relevant Utilisation Request.
5.5
Pre-placement of Advances
5.5.1
Notwithstanding that the Borrower may have not yet satisfied all of the conditions precedent set out in Schedule 3 (Conditions precedent), in order to facilitate compliance by any Owner with a Contract, and provided that:
(a)
the Borrower has submitted a Utilisation Request in respect of an Advance in accordance with this clause 5;
(b)
the Borrower has satisfied the conditions precedent set out in Part 1 of Schedule 3 (Conditions precedent to any Utilisation) and paragraphs 7 and 12 of Part 2 of Schedule 3 (Ships and security conditions precedent); and
(c)
in the discretionary opinion of the Agent (acting on the instructions of the Majority Lenders (acting reasonably)) the Borrower is likely to satisfy all remaining and outstanding conditions precedent set out in Part 1, and also in Part 2 of Schedule 3 (Ships and security conditions precedent) in relation to the Ship to which such Advance relates within five (5) Business Days from the Utilisation Date for such Advance and in any event on or before the Release (as defined below in clause 5.5.2) for such Advance,
the Agent (acting on the instructions of the Majority Lenders) may, subject to the other terms and conditions of this clause 5.5 and the other provisions of this Agreement, make such Advance on the date specified in the relevant Utilisation Request, being the date on which the final instalment of the relevant Contract Price is required to be deposited in accordance with the relevant Contract and with a bank as provided in the relevant Contract and at all times acceptable to all the Lenders (a Builder's Bank).
5.5.2
An Advance utilised pursuant to this clause 5.5 (a Pre-placed Advance) shall (subject to the other provisions of this Agreement) be remitted by the Agent to the relevant Builder's Bank as a cash deposit in the Agent's name with the relevant Builder's Bank through its correspondent bank in New York, and will be held by the relevant Builder's Bank to the order of the Agent for release by the Agent to the Builder (a Release) and only subject to such irrevocable instructions addressed from the Agent to the relevant Builder's Bank as are acceptable to the Agent (irrevocable Instructions).
34


5.5.3
Any such Irrevocable Instructions in relation to a Pre-placed Advance shall in any event provide (inter alia) that the relevant Pre-placed Advance shall be returned to the Agent within ten (10) Business Days if not released to the Builder or its order. The Finance Parties and the Obligors hereby agree that the relevant Pre-placed Advance shall not be released to the Builder or to its order, and the Parties agree that the Agent (and the authorised representatives of the Agent specified in the Irrevocable Instructions) shall not agree to counter-sign the "Protocol of Delivery and Acceptance" in respect of the relevant Ship nor release the relevant Pre-placed Advance to the Builder or its order, unless and until:
(a)
the Agent or its duly authorised representative is satisfied that the "Protocol of Delivery and Acceptance" in respect of that Ship has been signed by the Builder and the relevant Owner; and
(b)
the Agent (acting on the instructions of all Lenders) is satisfied that all the conditions precedent set out in Part 1 of Schedule 3 (Conditions precedent to any Utilisation), in Part 2 of Schedule 3 (Ships and security conditions precedent) and in clause 4.4 (Further conditions precedent) in relation to such Ship and such Advance, have been satisfied in full or otherwise waived in accordance with the provisions of this Agreement.
5.5.4
The Borrower and each Owner hereby irrevocably and unconditionally undertakes that it shall not give any instructions to a Builder's Bank in respect of a Pre-placed Advance that are inconsistent with any Irrevocable Instructions in respect of that Pre-placed Advance.
5.5.5
The Borrower shall immediately prepay a Pre-placed Advance, together with interest thereon (calculated in accordance with clause 8.1 (Calculation of interest)), on the date on which the relevant Builder's Bank is required to return the moneys funded by that Pre-placed Advance to the Agent in accordance with the relevant Irrevocable Instructions (and regardless of whether the relevant Builder's Bank has then carried out such instructions), provided that any moneys actually returned to the Agent from the relevant Builder's Bank shall be applied by the Agent in satisfaction of such prepayment obligation of the Borrower and in payment of any amounts payable by the Borrower under clause 7.10 (Restrictions) as a result of such prepayment.
5.5.6
In case of application of this clause 5.5 in respect of any Pre-placed Advance, each Pre-placed Advance shall accrue interest in accordance with the terms of clause 8.1 (Calculation of interest) from the Utilisation Date for that Advance.
5.5.7
Any amount prepaid under clause 5.5.5 in respect of an Advance shall be, subject to the other terms of this Agreement, available to be redrawn by the Borrower where Delivery of the relevant Ship has been delayed, in again assisting the relevant Owner to satisfy its obligations under the relevant Contract.
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SECTION 4 - REPAYMENT, PREPAYMENT AND CANCELLATION
6
REPAYMENT
6.1
Repayment
Subject to clause 7.9 (Prepayment option) and the other provisions of this Agreement, the Borrower shall repay, on each Repayment Date for a Facility Advance, such part of that Facility Advance as is required to be repaid by clause 6.2 (Scheduled repayment of Advances).
6.2
Scheduled repayment of Advances
6.2.1
The Borrower shall repay to the Commercial Facility Lenders each Commercial Facility Advance by 48 instalments, one such instalment to be repaid on each of the Repayment Dates relative to such Commercial Facility Advance and, to the extent not previously reduced:
(a)
each of the 1st to the 24th instalment of each Commercial Facility Advance shall be in the amount of 1/52nd of the amount of the relevant Commercial Facility Advance originally drawn;
(b)
each of the 25th to the 47th instalment of each Commercial Facility Advance shall be in the amount of 1/68th of the amount of the relevant Commercial Facility Advance originally drawn; and
(c)
the 48th instalment of each Commercial Facility Advance referred to above shall be in an amount equal to the outstanding balance of the relevant Commitment Facility Advance.
The amount of each such repayment instalment due on each such Repayment Date for each Commercial Facility Advance is shown indicatively in the relevant table of Schedule 9 (Table of Repayment Instalments), calculated on the assumption that the Commercial Facility Commitments for the relevant Commercial Facility Advance have been utilised in full.
6.2.2
The Borrower shall repay to the KEXIM Facility Lenders each KEXIM Facility Advance by 48 instalments, one such instalment to be repaid on each of the Repayment Dates relative to such KEXIM Facility Advance and, to the extent not previously reduced, each to be in the amount of 1/48th of the amount of the relevant KEXIM Facility Advance originally drawn. The amount of each such repayment instalment due on each such Repayment Date for each KEXIM Facility Advance is shown indicatively in the relevant table of Schedule 9 (Table of Repayment Instalments), calculated on the assumption that the KEXIM Facility Commitments for the relevant KEXIM Facility Advance have been utilised in full.
6.2.3
The Borrower shall repay to the KEXIM Covered Facility Lenders each KEXIM Covered Facility Advance, by 48 instalments, one such instalment to be repaid on each of the Repayment Dates relative to such KEXIM Covered Facility Advance and, to the extent not previously reduced, each to be in the amount of 1/48th of the amount of the relevant KEXIM Covered Facility Advance originally drawn. The amount of each such repayment instalment due on each such Repayment Date for each KEXIM Covered Facility Advance is shown indicatively in the relevant table of Schedule 9 (Table of Repayment Instalments), calculated on the assumption that the KEXIM Covered Facility Commitments for the relevant KEXIM Covered Facility Advance have been utilised in full.
6.2.4
On the Final Repayment Date in relation to a Facility Advance (without prejudice to any other provision of this Agreement), such Facility Advance shall be repaid in full. On the Final Maturity Date (without prejudice to any other provision of this Agreement) the Loans and any amounts owing by the Borrower to any Finance Party under any of the Finance Documents or owing under or in connection with the KEXIM Guarantee (as conclusively certified by the Agent) shall be repaid in full.
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6.3
Adjustment of scheduled repayments
If the Facility Commitments in relation to a Facility Advance have been partially reduced under this Agreement and/or any part of any Facility Advance is prepaid (other than under clause 6.2 (Scheduled repayment for Advances)) before any Repayment Date for that Facility Advance, then the amount of the instalments by which the relevant Facility Advance shall be repaid under clause 6.2 (Scheduled repayment for Advances) on any such Repayment Date for that Facility Advance (as reduced by any earlier operation of this clause 6.3) shall be reduced pro rata to such prepayment of that Facility Advance or to such reduction in the Facility Commitments relating to that Facility Advance.
7
ILLEGALITY, PREPAYMENT AND CANCELLATION
7.1
Illegality
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Advance or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
(a)
that Lender shall promptly notify the Agent upon becoming aware of that event;
(b)
upon the Agent notifying the Borrower, the Commitments of that Lender will be immediately cancelled and the remaining Total Commitments and Facility Commitments (for each Facility in which that Lender participates) shall each be reduced accordingly, and the remaining Ship Commitments shall be reduced rateably; and
(c)
to the extent that the Lender's participation has not been assigned pursuant to clause 43.5 (Replacement of a Defaulting Lender), the Borrower shall repay that Lender's participation in the Advances on the last day of the Interest Period for each of those Advances occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).
7.2
Change of Control - IPO Change of Control — Spin-off Change of Control
If there is a Change of Control or an IPO Change of Control or a Spin-off Change of Control, the Borrower shall notify the Agent of the same upon its occurrence, and the Agent, upon becoming notified by any Party of a Change of Control or an IPO Change of Control or a Spin-off Change of Control, may, and if instructed by any one Lender or KEXIM shall, by notice to the Borrower:
(a)
cancel the Total Commitments, with effect from the date specified in that notice; and/or
(b)
declare that all or part of the Loans to be payable within 10 Business Days' of such notice, in which case the Borrower shall repay the Loans in full together with all amounts outstanding under this Agreement and the other Finance Documents within 10 Business Days of such notice.
7.3
Voluntary cancellation
The Borrower may, if they give the Agent not less than fifteen (15) days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of $1,000,000 or a multiple of such amount) of the undrawn amount of the Facilities, such cancellation being applied to all the Facilities on a pro rata basis and to reduce one or more Ship Commitments, at the Borrower's discretion. Upon any such cancellation the Total Commitments shall be reduced by the same amount and the relevant Commitments of the Lenders and Facility Commitments reduced on a pro rata basis.
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7.4
Voluntary prepayment
(a)
The Borrower may, if they give the Agent not less than thirty (30) days' (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part of an Advance (but if in part, being a minimum amount of $1,000,000 or a multiple of such amount), on the last day of an Interest Period in respect of the amount to be prepaid or on any other date subject to payment of any Break Costs and the other provisions of this Agreement (including the prepayment fee (if any) referred to in clause 7.11 (Prepayment fee)). Each such prepayment shall be applied to each Loan and each Facility Advance on a pro rata basis.
(b)
In the event that any Advance is prepaid in full under this clause 7.4 and/or the Ship Commitment for a Ship is cancelled in full under clause 7.3 (Voluntary cancellation), then after such prepayment and/or cancellation and at the cost and expense of the Borrower, the Finance Parties agree to promptly release the Mortgage and the other security over or in respect of the Mortgaged Ship to which the relevant Advance and/or Ship Commitment relates, provided that no Event of Default exists at the time of, or would result from, such release and immediately after such release:
(i)
the Security Value shall be no less than the Minimum Value; and
(ii)
the ratio of (1) the aggregate of the Loans and the Hedging Exposure to (2) the Security Value, shall be not higher than the same ratio was before such release.
7.5
Right of replacement or cancellation and prepayment in relation to a single Lender/Right of cancellation in relation to a Defaulting Lender
7.5.1
If:
(a)
any sum payable to any Lender by an Obligor is required to be increased under clause 12.2 (Tax gross-up); or
(b)
any Lender claims indemnification from the Borrower under clause 12.3 (Tax indemnity) or clause 13.1 (Increased Costs); or
(c)
any Lender becomes a Non-Consenting Lender,
the Borrower may, whilst the circumstance giving rise to the requirement for that increase or indemnification or the relevant Lender becoming a Non-Consenting Lender continues for a maximum period of 30 days, give the Agent notice of cancellation of the Commitments of that Lender and their intention to procure the repayment of that Lender's participation in the Loans or give the Agent notice of their intention to replace that Lender in accordance with clause 7.5.4.
7.5.2
On receipt of a notice referred to in clause 7.5.1 above, the Commitments of that Lender shall immediately be reduced to zero and (unless the Commitments of the relevant Lender are replaced in accordance with clause 7.5.4) the Total Commitments and the Facility Commitments (for each Facility in which that Lender participates) shall each be reduced accordingly (and the Ship Commitments shall be reduced rateably). The Agent shall as soon as practicable after receipt of a notice referred to in clause 7.5.1 above, notify all the Lenders.
7.5.3
On the last day of each Interest Period which ends after the Borrower has given notice under clause 7.5.1 above in relation to a Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender's participation in the Loans.
7.5.4
The Borrower may, in the circumstances set out in clause 7.5.1, on 10 Business Days' prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to assign (and, to the extent permitted by law, that Lender shall assign) pursuant to clause 32 (Changes to the Lenders) and subject always to clause 33.2 (Prohibition on Debt Purchase Transactions by the Group) all (and not part only) of its rights under this Agreement to a Lender or other bank, financial institution,
38


trust, fund or other entity selected by the Borrower which confirms its willingness to assume and does assume all the obligations of the assigning Lender in accordance with clause 32 (Changes to the Lenders) for a purchase price in cash or other cash payment payable at the time of the assignment equal to the aggregate of:
(a)
the outstanding principal amount of such Lender's participation in the Loans;
(b)
all accrued interest owing to such Lender to the extent that the Agent has not given a notification under clause 32.8 (Pro rata interest settlement);
(c)
the Break Costs which would have been payable to such Lender pursuant to clause 10.4 (Break Costs) had the Borrower prepaid in full that Lender's participation in the Loans on the date of the assignment; and
(d)
all other amounts payable to that Lender under the Finance Documents on the date of the assignment.
7.5.5
The replacement of a Lender pursuant to clause 7.5.4 shall be subject to the following conditions:
(a)
the Borrower shall have no right to replace the Agent;
(b)
neither the Agent nor any Lender shall have any obligation to find a replacement Lender;
(c)
in no event shall the Lender replaced under clause 7.5.4 be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and
(d)
the Lender shall only be obliged to transfer its rights pursuant to clause 7.5.4 above once it is satisfied that it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to that assignment.
7.5.6
A Lender shall perform the checks described in clause 7.5.5(d) above as soon as reasonably practicable following delivery of a notice referred to in clause 7.5.4 above and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks.
7.5.7
If any Lender becomes a Defaulting Lender, the Borrower may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent 10 Business Days' notice of cancellation of the undrawn Commitments of that Lender.
7.5.8
On the notice referred to in clause 7.5.7 above becoming effective, the undrawn Commitments of the Defaulting Lender shall immediately be reduced to zero and (unless the Commitments of the relevant Lender are replaced in accordance with clause 43.5 (Replacement of a Defaulting Lender)) the remaining undrawn Ship Commitments shall each be reduced rateably and the Total Commitments and the Facility Commitments shall be reduced accordingly.
7.5.9
The Agent shall, as soon as practicable after receipt of a notice referred to in clause 7.5.7 above, notify all Lenders.
7.6
Sale or Total Loss
7.6.1
On the Disposal Repayment Date of a Mortgaged Ship, the relevant Ship Commitment shall be reduced to zero and the Total Commitments shall be reduced accordingly (and the Facility Commitments and Commitments reduced pro rata), and the Borrower shall prepay the Loans by an amount equal to the higher of:
(a)
the full amount of the Advance relevant to such Ship; and
(b)
such amount as shall ensure that, immediately after such prepayment, the Security Value shall be no less than the Minimum Value; and
39


(c)
such amount as shall ensure that, immediately after such prepayment, the ratio of (i) the aggregate of the Loans and the Hedging Exposure to (ii) the Security Value, shall be no higher than the same ratio that was before such prepayment.
For the avoidance of any doubt, if the relevant Mortgaged Ship was the last Ship that was then a Mortgaged Ship as at its Disposal Repayment Date, then the Borrower shall in any event on such date prepay all Advances in full together with interest thereon and all the amounts owing under the Finance Documents and/or payable together with such prepayment pursuant to the Finance Documents.
7.6.2
Any such prepayment shall be applied in reduction of the Advance relevant to the Ship lost or sold until is prepaid in full and, as to its balance, in reduction of the other Advances pro rata between them.
7.7
Termination of KEXIM Guarantee
If at any time during the Facility Period:
(a)
any of the obligations of KEXIM under the KEXIM Guarantee are terminated, cancelled, become invalid, unenforceable or otherwise cease to be in full force and effect; or
(b)
it becomes unlawful or impossible for KEXIM to fulfill any of the obligations expressed to be assumed by it in the KEXIM Guarantee or for the KEXIM Agent, the Security Agent or a KEXIM Covered Facility Lender to exercise the rights or any of them vested in it under the KEXIM Guarantee (as applicable); or
(c)
the Agent or the Security Agent or any of the Lenders is informed of KEXIM's intention to, or KEXIM has stated its intention to, repudiate, terminate, cancel or suspend the application of the KEXIM Guarantee or amend, supplement, restate or otherwise modify the terms of the KEXIM Guarantee in any material respect without first obtaining the KEXIM Covered Facility Lenders' consent; or
(d)
any of the events or circumstances set out in clauses 30.9 (Insolvency) and 30.10 (Insolvency proceedings) occurs in relation to KEXIM,
then as of the time such event occurs:
(i)
no Lender shall be obliged to fund any Advance;
(ii)
the Total Commitments shall be automatically cancelled; and
(iii)
the Loans together with accrued interest and all other sums payable under this Agreement and any Finance Document shall be immediately due and payable.
7.8
Automatic cancellation
Any part of the Total Commitments relating to an Advance which has not become available by the Last Availability Date for that Advance shall be automatically cancelled at close of business in London on the Last Availability Date for that Advance.
7.9
Prepayment option
7.9.1
Any Commercial Facility Lender may require the Borrower to prepay in full its participation in all Commercial Facility Advances, on the date falling 72 months after the earlier of (a) 31 January 2018 and (b) the second Utilisation Date (the Prepayment Option Date), by giving the Agent written notice to that effect no later than the date falling 90 days before the Prepayment Option Date (the Prepayment Notification Date) (and the Agent shall notify the other Lenders and the Borrower of such notice).
40


7.9.2
In the event that by the date (the Final Replacement Date) falling forty five (45) days prior to the Prepayment Option Date, each Commercial Facility Lender who has given a notice pursuant to clause 7.9.1 has not been replaced by another person as Commercial Facility Lender pursuant to the assignment provisions of clause 32 (Changes to the Lenders) (and subject always to clause 33.2 (Prohibition on Debt Purchase Transactions by the Group)), in respect of all (but not part) of its Commercial Facility Commitments and all of its participation in the Commercial Facility Advance (but without the prepayment option set out in this clause 7.9 which shall no longer apply in favour of such replacement Commercial Facility Lender), the Borrower shall notify the Agent and the Agent shall give to the other Commercial Facility Lenders, the KEXIM Facility Lenders, the KEXIM Covered Facility Lenders and KEXIM, written notice of such circumstances on that date, upon which event:
(a)
each Commercial Facility Lender shall have the right to require the Borrower to prepay in full its participation in each Commercial Facility Advance on the Prepayment Option Date. In such case, on such date, all such Commercial Facility Lender's participation in each Commercial Facility Advance shall be so due and payable and the Commercial Facility Commitment of each such Lender in respect of all Commercial Facility Advances will immediately be cancelled. Each Commercial Facility Lender shall have such right, if it has notified the other Commercial Facility Lenders and the Agent, and the Agent has notified the Borrower and the other Lenders, in each case not later than the date falling seven (7) days after the Final Replacement Date, of such Commercial Facility Lender's intention to exercise such option;
(b)
each KEXIM Facility Lender shall have the right to require the Borrower to prepay in full its participation in each KEXIM Facility Advance on the Prepayment Option Date. In such case, on such date, all such KEXIM Facility Lender's participation in each KEXIM Facility Advance shall be so due and payable and the KEXIM Facility Commitment of each such Lender in respect of all KEXIM Facility Advances will immediately be cancelled. Each KEXIM Facility Lender shall have such right, if it has notified the other KEXIM Facility Lenders and the Agent, and the Agent has notified the Borrower and the other Lenders, in each case not later than the date falling seven (7) days after the Final Replacement Date, of such KEXIM Facility Lender's intention to exercise such option; and
(c)
KEXIM shall have the right to request each KEXIM Covered Facility Lender (whereupon each KEXIM Covered Facility Lender shall do so) to require the Borrower to prepay in full its participation in each KEXIM Covered Facility Advance on the Prepayment Option Date. In such case, on such date, all such KEXIM Covered Facility Lenders' participations in each KEXIM Covered Facility Advance shall be so due and payable and the KEXIM Covered Facility Commitments of all such Lenders in respect of all KEXIM Covered Facility Advances will immediately be cancelled. KEXIM shall have such right and each KEXIM Covered Facility Lender shall act in accordance with KEXIM request in respect of its own KEXIM Covered Facility participation, if KEXIM has notified each KEXIM Covered Facility Lender and the Agent, and the Agent has notified the Borrower and the other Lenders, in each case not later than the date falling seven (7) days after the Final Replacement Date, of KEXIM's request to that effect and the intention of KEXIM (and, consequently, the KEXIM Covered Facility Lenders' intention) to exercise such option.
7.9.3
For the avoidance of doubt, notwithstanding anything to the contrary contained in this Agreement or any other Finance Document, none of the Commercial Facility Lenders, the KEXIM Facility Lenders, the KEXIM Covered Facility Lenders or KEXIM require the consent of any person (including any other Finance Party or any Obligor) in order to exercise any of their options under this clause 7.9. No KEXIM Covered Facility Lender shall be entitled to exercise any of their option under this clause 7.9 in respect of its participation in each KEXIM Covered Facility Advance, unless KEXIM instructs them to do so pursuant to the terms of this clause 7.9.
7.9.4
For the avoidance of any doubt, upon the sending of any such notification from the Agent to the Borrower and the Lenders under the above clauses 7.9.1 and 7.9.2 in respect of a Facility Lender and the Facility Advances, the participation of the relevant Facility Lender in all such Facility Advances shall become payable in full on the Prepayment Option Date, together with interest on
41


such Facility Advances, and any and all other amounts due and payable under this Agreement and the other Finance Documents.
7.9.5
For the avoidance of doubt, the option of each Commercial Facility Lender under clause 7.9.2 above may be exercised in respect of each one of the Facility Advances and in respect of any or all of the Facility Advances at such Commercial Facility Lender's absolute discretion and irrespective of the decision of any of the Commerical Facility Lenders to exercise or not their options under this clause 7.9 in respect of any other Facilty Advance.
7.9.6
For the avoidance of doubt, the option of each KEXIM Facility Lender and KEXIM (and, consequently the KEXIM Covered Facility Lenders) under clause 7.9.2 above may be exercised in respect of each one of the Facility Advances and in respect of any or all of the Facility Advances at such KEXIM Facility Lender's or KEXIM's absolute discretion (as applicable) and irrespective of the decision of any of the KEXIM Facility Lenders or KEXIM to exercise or not their options under this clause 7.9 in respect any other Facility Advance.
7.10
Restrictions
7.10.1
Any notice of cancellation or prepayment given by any Party under this clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
7.10.2
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and the relevant prepayment fee payable under clause 7.11 (Prepayment fee) and, subject to any Break Costs, without any other premium or penalty.
7.10.3
The Borrower may not re-borrow any part of the Facilities which is repaid or prepaid.
7.10.4
The Borrower shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement (subject as provided in clause 5.5.7).
7.10.5
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
7.10.6
If the Agent receives a notice under this clause 7 it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate.
7.10.7
If the Total Commitments are partially reduced under this Agreement (other than under clause 7.1(Illegality), clause 7.5 (Right of replacement or cancellation and prepayment in relation to a single Lender/Right of cancellation in relation to a Defaulting Lender) and clause 7.9 (Prepayment option), the Commitments of all the Lenders and the Facility Commitments shall be reduced rateably and in all cases where the Total Commitments are partially reduced under this Agreement (other than in relation to a cancellation of all of the Ship Commitment for a Ship) the remaining Ship Commitments shall be reduced rateably.
7.10.8
If an Advance is or the Loans are partially prepaid under this Agreement (other than under clause 7.1 (Illegality), clause 7.5 (Right of replacement or cancellation and prepayment in relation to a single Lender/Right of cancellation in relation to a Defaulting Lender) and clause 7.9 (Prepayment option)), the amount prepaid shall reduce the participation of all the Lenders in that Advance or (as the case may be) the Loans rateably.
7.10.9
Any prepayment for the account of all the Lenders shall be applied pro rata to each Lender's participation in the Advances, other than:
(a)
a prepayment under clause 7.6 (Sale or Total Loss), where such prepayment will be applied, firstly, to the Advance in relation to the relevant Ship lost or sold only and, secondly, any additional amount to the other Advances pro rata; and
42


(b)
a prepayment under clause 7.4 (Voluntary prepayment), where the Borrower may select to prepay a specific Advance only.
7.10.10
Any prepayment under this Agreement shall be made, where applicable, together with payment of any amount falling due to the Hedging Provider under a Hedging Contract as a result of the termination or close out of that Hedging Contract or any Hedging Transaction under it in relation to that prepayment.
7.11
Prepayment fee
(a)
If the Borrower prepays any amount of any Commercial Facility Advance or KEXIM Covered Facility Advance at any time within 24 months following its Utilisation Date pursuant to clause 7.2 (Change of Control — IPO Change of Control — Spin-off Change of Control), 7.4 (Voluntary prepayment) or 7.6 (Sale or Total Loss) but the latter only in the event of a sale of a Ship, then they shall also pay to the Agent (for the account of all the Commercial Facility Lenders and the KEXIM Covered Facility Lenders pro rata to their Commitments to such Commercial Facility Advance or (as the case may be) KEXIM Covered Facility Advance) a prepayment fee equal to the applicable Prepayment Fee Amount.
(b)
If the Borrower prepays any amount of any KEXIM Facility Advance at any time throughout the Facility Period pursuant to clause 7.2 (Change of Control — IPO Change of Control—Spin-off Change of Control), 7.4 (Voluntary prepayment) or 7.6 (Sale or Total Loss) but the latter only in the event of a sale of a Ship, then they shall also pay to the Agent (for the account of all the KEXIM Facility Lenders pro rata to their Commitments to such KEXIM Facility Advance) a prepayment fee equal to the applicable Prepayment Fee Amount.
(c)
No prepayment fee shall be payable under this clause 7.11 in relation to one or more Facility Advances 'in the event of a prepayment in full of such Facility Advance or Facility Advances which results from either (i) a direct refinancing from the same Facility Lenders participating in the Facility Advance(s) being prepaid; or (ii) a prepayment of the same pursuant to clause 7.9 (Prepayment option).
(d)
The Borrower acknowledges that the prepayment fees referred to in this clause 7.11 represent a genuine pre-estimate of the loss the relevant Lenders shall suffer in such circumstances.
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SECTION 5 - COSTS OF UTILISATION
8
INTEREST
8.1
Calculation of interest
The rate of interest on each Facility Advance forming part of an Advance for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a)
Margin; and
(b)
LIBOR for that Interest Period.
8.2
Payment of interest
The Borrower shall pay accrued interest on:
(a)
each Commercial Facility Advance for the account of the Commercial Facility Lenders;
(b)
each KEXIM Facility Advance for the account of the KEXIM Facility Lenders; and
(c)
each KEXIM Covered Facility Advance of the account of the KEXIM Covered Facility Lenders,
on the last day of each Interest Period for the Advance of which each such Facility Advance forms part (and, if an Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of that Interest Period).
8.3
Default interest
8.3.1
If an Obligor fails to pay any amount payable by it under a Finance Document (other than a Hedging Contract) on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to clause 8.3.2 below, is two (2) percentage points higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Facility Advance to which it relates for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing in accordance with this clause 8.3 shall be immediately payable by the Obligors on demand by the Agent.
8.3.2
If any overdue amount consists of all or part of a Facility Advance which became due on a day which was not the last day of an Interest Period relating to that Facility Advance or the relevant part of it:
(a)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Facility Advance; and
(b)
the rate of interest applying to the overdue amount during that first Interest Period shall be two (2) percentage points higher than the rate which would have applied if the overdue amount had not become due.
8.3.3
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
8.4
Notification of rates of interest
The Agent shall notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.
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9
INTEREST PERIODS
9.1
Selection of Interest Periods
9.1.1
The Borrower may select an Interest Period for an Advance in the Utilisation Request for that Advance or (if that Advance has already been borrowed) in a Selection Notice.
9.1.2
Each Selection Notice is irrevocable and must be delivered to the Agent by the Borrower not later than 11:00 a.m. two (2) Business Days before the last day of the then current Interest Period.
9.1.3
If the Borrower fails to deliver a Selection Notice to the Agent in accordance with clause 9.1.2, the relevant Interest Period will, subject to clause 9.2 (Interest Periods overrunning Repayment Dates), be three (3) months.
9.1.4
Subject to this clause 9, the Borrower may select an Interest Period of three (3) months or any other period agreed between the Borrower and the Agent on the instructions of all the Lenders.
9.1.5
No Interest Period in respect of an Advance shall extend beyond the Final Repayment Date for that Advance.
9.1.6
The first Interest Period for an Advance shall start on the Utilisation Date for such Advance and each subsequent Interest Period for such Advance shall start on the last day of its preceding Interest Period.
9.2
Interest Periods overrunning Repayment Dates
If the Borrower selects an Interest Period in respect of a Facility Advance which would overrun any later Repayment Date for that Facility Advance, the relevant Facility Advance shall be divided into parts corresponding to the amounts by which the Total Commitments for that Facility Advance are scheduled to be reduced under clause 6.2 (Scheduled repayment of Advances) on each of the Repayment Dates for that Facility Advance falling during such Interest Period (each of which shall have a separate Interest Period ending on the relevant Repayment Date for that Facility Advance) and to the balance of that Facility Advance (which shall have the Interest Period selected by the Borrower).
9.3
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10
CHANGES TO THE CALCULATION OF INTEREST
10.1
Absence of quotations
Subject to clause 10.2 (Market Disruption Event), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11:00 a.m. on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
10.2
Market Disruption Event
10.2.1
If a Market Disruption Event occurs in relation to a Facility Advance for any Interest Period, then the rate of interest on each Lender's share of that Facility Advance for the Interest Period shall be the percentage rate per annum which is the sum of:
(a)
the applicable Margin; and
45


(b)
the rate notified to the Agent by that Lender as soon as practicable and in any event not later than five (5) Business Days before the date on which interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Facility Advance from whatever source it may reasonably select.
10.2.2
If a Market Disruption Event occurs the Agent shall, as soon as is practicable, notify the Borrower.
10.2.3
In this Agreement:
Market Disruption Event means that:
(a)
at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for the relevant Interest Period; or
(b)
before close of business in London on the Quotation Day for the relevant Interest Period in respect of a Facility Advance, the Agent receives notifications from a Lender or Lenders (whose participations in that Facility Advance equal or exceed 50% of that Facility Advance or, if prior to the first Utilisation, whose Commitments equal or exceed 50% of the Total Commitments) that the cost to it of funding its participation in that Facility Advance from whatever source it may reasonably select would be in excess of LIBOR.
10.3
Alternative basis of interest or funding
10.3.1
If a Market Disruption Event occurs and the Agent or the Borrower so require, the Agent and the Borrower shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.
10.3.2
Any alternative basis agreed pursuant to clause 10.3.1 above shall, with the prior consent of all the Lenders be binding on all Parties.
10.4
Break Costs
10.4.1
The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of an Advance or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Advance or Unpaid Sum or relevant part of it.
10.4.2
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
11
FEES
11.1
Commitment commission
11.1.1
The Borrower shall pay to the Agent (for the account of each Commercial Facility Lender) a fee in dollars computed at the rate of 0.84% per annum on the undrawn and uncancelled portion of that Lender's Commercial Facility Commitment calculated on a daily basis from the date of this Agreement (the Start Date).
11.1.2
The Borrower shall pay to the Agent (for the account of each KEXIM Facility Lender) a fee in dollars computed at the rate of 0.84% per annum on the undrawn and uncancelled portion of that Lender's KEXIM Facility Commitment calculated on a daily basis from the Start Date.
11.1.3
The Borrower shall pay to the Agent (for the account of each KEXIM Covered Facility Lender) a fee in dollars computed at the rate of 0.6% per annum, on the undrawn and uncancelled portion of that Lender's KEXIM Covered Facility Commitments calculated on a daily basis from the Start Date.
46


11.1.4
The Borrower shall pay the accrued commitment fee referred to in clauses 11.1.1, 11.1.2 and 11.1.3 above on the date falling three (3) months after the Start Date, on the last day of each successive period of three (3) months thereafter until the Last Availability Date to occur, on the Last Availability Date to occur and, if cancelled in full, on the cancelled amount of the relevant Lender's Commitments at the time the cancellation is effective.
11.1.5
No commitment fee is payable to the Agent (for the account of a Lender) on any undrawn Commitments of that Lender for any day on which that Lender is a Defaulting Lender.
11.2
Arrangement fee
The Obligors shall pay to the Agent (for distribution to the Arranger and the Lenders in a manner agreed between the Arranger and the Lenders in the Arranger's discretion) an arrangement fee in the amount and at the times agreed in a Fee Letter.
11.3
Agency Fee
The Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
11.4
KEXIM Guarantee Fee
11.4.1
The Borrower acknowledges that the KEXIM Covered Facility Lenders shall procure the KEXIM Guarantee is issued by KEXIM and shall benefit from it throughout the duration of the Facility Period. The Borrower agrees to pay to KEXIM (for its own account) the KEXIM Guarantee Fee in respect of each KEXIM Covered Facility Advance in the amounts, at the rate and in the manner specified in the KEXIM Guarantee. The KEXIM Guarantee Fee in respect of each KEXIM Covered Facility Advance shall be payable by the Utilisation Date for the relevant Advance and otherwise subject to and as more specifically provided in the KEXIM Guarantee.
11.4.2
The Borrower agrees that its obligation to make the payments set out in clause 11.4.1 above to KEXIM in respect of the KEXIM Guarantee Fee (or any part thereof) shall be an absolute obligation and shall not be affected by any matter whatsoever. Any refund of the KEXIM Guarantee Fee (or any part thereof) shall be made in accordance with the KEXIM Guarantee which provides that the KEXIM Guarantee Fee shall only be refundable to the KEXIM Covered Facility Lenders in accordance with the provisions of the KEXIM Guarantee, namely only in the following cases and percentages:
(a)
in the event of a full (but not part) prepayment of a KEXIM Covered Facility Advance made under clause 7.4 (Voluntary prepayment), refund in an amount equal to 75% of the KEXIM Guarantee Fee paid for such KEXIM Covered Facility Advance;
(b)
in the event of a full (but not part) cancellation of a KEXIM Covered Facility Advance or of the corresponding Ship Commitment made under clause 7.3 (Voluntary cancellation) or clause 7.8 (Automatic cancellation) or in the event that a KEXIM Covered Facility Advance is not utilised by its Last Availaility Date for any reason whatsoever, refund in an amount equal to 100% of the KEXIM Guarantee Fee paid for such KEXIM Covered Facility Advance; and
(c)
in the event of a prepayment of a KEXIM Covered Facility Advance made in respect of a sale (but not in the event of Total Loss) of a Mortgaged Ship pursuant to clause 7.6 (Sale or Total Loss), refund in an amount equal to 75% of the KEXIM Guarantee Fee paid for such KEXIM Covered Facility Advance,
in each case, reduced pro rata to take into account the period for which KEXIM has been liable under the KEXIM Guarantee for such prepaid or cancelled or undrawn amount (as applicable) until the actual date of prepayment or cancellation or the relevant Last Availability Date (as the case may be), and otherwise subject to the terms of the KEXIM Guarantee. Any refund to the KEXIM Covered Facility Lenders shall be in turn refundable by the KEXIM Facility Lenders to the Borrower in accordance with and subject to clause 11.4.3 below.
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11.4.3
If a Finance Party receives a refund of the KEXIM Guarantee Fee from KEXIM and if all amounts due and owing by the Borrower at that time have been discharged in full, such refund shall be payable to the Borrower. A Finance Party which has not received a refund of the KEXIM Guarantee Fee to which it is entitled pursuant to the relevant KEXIM Guarantee, shall take any appropriate steps in order to receive such refund.
11.4.4
The Borrower acknowledges that the amount of the KEXIM Guarantee Fee (and any agreement to refund any part of the same) has been solely determined by KEXIM and no Finance Party is in any way involved in the determination of the amount of the KEXIM Guarantee Fee (or of any such refund) and agree that the Borrower shall have no claim or defence against any Finance Party in connection with the amount of the KEXIM Guarantee Fee (or of any such refund).
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SECTION 6 - ADDITIONAL PAYMENT OBLIGATIONS
12
TAX GROSS-UP AND INDEMNITIES
12.1
Definitions
12.1.1
In this Agreement:
Protected Party means a Finance Party or, in relation to clause 14.5 (Indemnity concerning security) and clause 14.8 (Interest) insofar as it relates to interest on any amount demanded by that Indemnified Person under clause 14.5 (Indemnity concerning security), any Indemnified Person, which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document or the KEXIM Guarantee.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document (other than a Hedging Contract) or the KEXIM Guarantee other than a FATCA Deduction.
12.1.2
Unless a contrary indication appears, in this clause 12 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.
12.1.3
This clause 12.1 shall not apply in respect of any payments under any Hedging Contract, where the gross-up provisions of the Hedging Master Agreement itself shall apply.
12.2
Tax gross-up
12.2.1
Each Obligor shall make all payments to be made by it under any Finance Document without any Tax Deduction, unless a Tax Deduction is required by law.
12.2.2
The Borrower shall, promptly upon any of them becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction), notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and that Obligor.
12.2.3
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor under the relevant Finance Document shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
12.2.4
If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
12.2.5
Within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party (including by way of receipts) that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
12.2.6
This clause 12.2 shall not apply in respect of any payments under any Hedging Contract, where the gross-up provisions of the Hedging Master Agreement itself shall apply.
12.3
Tax indemnity
12.3.1
Each Obligor who is a Party shall (within three (3) Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines
49


will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document or the KEXIM Guarantee.
12.3.2
Clause 12.3.1 above shall not apply:
(a)
with respect to any Tax assessed on a Finance Party:
(i)
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(ii)
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party;
(b)
to the extent a loss, liability or cost is compensated for by an increased payment under clause 12.2 (Tax gross-up);
(c)
to the extent a loss, liability or cost is compensated for by a payment under clause 12.4 (Indemnities on after Tax basis); or
(d)
to the extent a loss, liability or cost relates to a FATCA Deduction required to be made by a Party.
12.3.3
A Protected Party making, or intending to make a claim under clause 12.3.1 above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower and the Guarantors.
12.3.4
A Protected Party shall, on receiving a payment from an Obligor under this clause 12.3, notify the Agent.
12.4
Indemnities on after Tax basis
12.4.1
If and to the extent that any sum payable to any Protected Party by the Borrower under any Finance Document by way of indemnity or reimbursement proves to be insufficient, by reason of any Tax suffered thereon, for that Protected Party to discharge the corresponding liability to a third party, or to reimburse that Protected Party for the cost incurred by it in discharging the corresponding liability to a third party, the Borrower shall pay that Protected Party such additional sum as (after taking into account any Tax suffered by that Protected Party on such additional sum) shall be required to make up the relevant deficit.
12.4.2
If and to the extent that any sum (the Indemnity Sum) constituting (directly or indirectly) an indemnity to any Protected Party but paid by the Borrower to any person other than that Protected Party, shall be treated as taxable in the hands of the Protected Party, the Borrower shall pay to that Protected Party such sum (the Compensating Sum) as (after taking into account any Tax suffered by that Protected Party on the Compensating Sum) shall reimburse that Protected Party for any Tax suffered by it in respect of the Indemnity Sum.
12.4.3
For the purposes of this clause 12.4 a sum shall be deemed to be taxable in the hands of a Protected Party if it falls to be taken into account in computing the profits or gains of that Protected Party for the purposes of Tax and, if so, that Protected Party shall be deemed to have suffered Tax on the relevant sum at the rate of Tax applicable to that Protected Party's profits or gains for the period in which the payment of the relevant sum falls to be taken into account for the purposes of such Tax.
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12.5
FATCA Information
12.5.1
Subject to clause 12.5.3 below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:
(a)
confirm to that other Party whether it is:
(i)
a FATCA Exempt Party; or
(ii)
not a FATCA Exempt Party;
(b)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(c)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.
12.5.2
If a Party confirms to another Party pursuant to clause 12.5.1(a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
12.5.3
Clause 12.5.1 above shall not oblige any Finance Party to do anything, and paragraph (c) of clause 12.5.1 above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(a)
any law or regulation;
(b)
any fiduciary duty; or
(c)
any duty of confidentiality.
12.5.4
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraphs (a) and (b) (including, for the avoidance of doubt, paragraph (c), where it applies) of clause 12.5.1, then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
12.5.5
If the Borrower is a US Tax Obligor, or where the Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten Business Days of:
(a)
where the Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(b)
where the Borrower is a US Tax Obligor and the relevant Lender is a New Lender, the relevant Transfer Date;
(c)
the date a new US Tax Obligor accedes as the Borrower; or
(d)
where the Borrower is not a US Tax Obligor, the date of a request from the Agent, supply to the Agent:
(i)
a withholding certificate on Form W-8 or Form W-9 or any other relevant form; or
51


(ii)
any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.
The Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this clause 12.5.5 to the Borrower.
12.5.6
If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Agent by a Lender pursuant to clause 12.5.5 above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Agent). The Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrower.
12.5.7
The Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to clause 12.5.5 or 12.5.6 above without further verification. The Agent shall not be liable for any action taken by it under or in connection with clause 12.5.5 or 12.5.6 above or this clause 12.5.7.
12.6
FATCA Deduction
12.6.1
Each Party may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
12.6.2
Each Party shall promptly upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Finance Parties and the Agent shall notify the other Finance Parties.
12.7
Stamp taxes
The Borrower shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document or the KEXIM Guarantee provided that this clause 12.7 shall not apply in respect of any such stamp duty or Tax which is payable in respect of an assignment or transfer by a Finance Party of any of its rights and/or obligations under any Finance Document or the KEXIM Guarantee, except if such assignment or transfer:
(a)
is required, requested or initiated by KEXIM; and/or
(b)
is required by the terms of the Finance Documents or the KEXIM Guarantee; and/or
(c)
is made to or in favour of KEXIM,
in respect of which this clause 12.7 shall apply in any event.
12.8
Value added tax
12.8.1
All amounts set out, or expressed in a Finance Document to be payable by any party to a Finance Party which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly, subject to clause 12.8.3 below, if VAT is or becomes chargeable on any supply made by any Finance Party to any party under a Finance Document, that party shall pay to the Finance Party (in addition to and at the same time as paying any other consideration for such
52


supply) an amount equal to the amount of such VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such party).
12.8.2
If VAT is or becomes chargeable on any supply made by any Finance Party (the Supplier) to any other Finance Party (the Recipient) under a Finance Document, and any party to a Finance Document other than the Recipient (the Subject Party) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration):
(a)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Subject Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this paragraph (a) applies) promptly pay to the Subject Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(b)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Subject Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
12.8.3
Where a Finance Document requires any party to it to reimburse or indemnify a Finance Party for any cost or expense, that party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment of in respect of such VAT from the relevant tax authority.
12.8.4
Any reference in this clause 12.8 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).
12.8.5
In relation to any supply made by a Finance Party to any party under a Finance Document, if reasonably requested by such Finance Party, that party must promptly provide such Finance Party with details of that party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.
13
INCREASED COSTS
13.1
Increased Costs
13.1.1
Subject to clause 13.3 (Exceptions), the Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates which:
(a)
arises as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement; and/or
(b)
is a Basel III Increased Cost.
13.1.2
In this Agreement Increased Costs means:
(a)
a reduction in the rate of return from the Facilities or on a Finance Party's (or its Affiliate's) overall capital;
(b)
an additional or increased cost; or
53


(c)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitments or funding or performing its obligations under any Finance Document.
13.2
Increased Cost claims
13.2.1
A Finance Party intending to make a claim pursuant to clause 13.1 (Increased Costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall notify the Borrower.
13.2.2
Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions
13.3.1
Clause 13.1 (Increased Costs) does not apply to the extent any Increased Cost is
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
(b)
compensated for by clause 12.3 (Tax indemnity) (or would have been compensated for under clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in clause 12.3.2 applied);
(c)
attributable to a FATCA Deduction required to be made by a Party; or
(d)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
13.3.2
In this clause 13.3, a reference to a Tax Deduction has the same meaning given to the term in clause 12.1 (Definitions).
14
OTHER INDEMNITIES
14.1
Currency indemnity
14.1.1
If any sum due from an Obligor under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of:
(a)
making or filing a claim or proof against that Obligor; and/or
(b)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall, as an independent obligation, within three Business Days of demand by a Finance Party, indemnify each Finance Party to whom that Sum is due against any Losses arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
14.1.2
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2
Mandatory cost
The Borrower shall, on demand by the Agent, pay to the Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Agent setting out its calculations
54


in reasonably sufficient detail and its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
which, in each case, is referable to that Lender's participation in the Loans.
14.3
Other indemnities
14.3.1
The Borrower and the Guarantors shall (or shall procure that another Obligor will), within three (3) Business Days of demand by a Finance Party, indemnify each Finance Party and KEXIM against any and all Losses incurred by that Finance Party or KEXIM (as the case may be) as a result of:
(a)
the occurrence of any Event of Default;
(b)
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any and all Losses arising as a result of clause 36 (Sharing among the Finance Parties);
(c)
funding, or making arrangements to fund, its participation in an Advance requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone);
(d)
under or pursuant to, the KEXIM Guarantee;
(e)
KEXIM making any payment to or for the account of a Finance Party under the KEXIM Guarantee subject to any withholding or other deduction on account of Tax;
(f)
a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower;
(g)
any enquiry, investigation, subpoena (or similar order) or litigation with respect to any Obligor or with respect to the transactions contemplated or financed under this Agreement; or
(h)
the information produced or approved by any Obligor being or being alleged to be misleading and/or deceptive in any respect.
14.3.2
The Borrower shall (or shall procure that another Obligor will), within three (3) Business Days of demand by an Indemnified Person, indemnify each Indemnified Person against any and all Losses, joint or several that may be incurred by or asserted or awarded against any Indemnified Person, in each case arising out of or in connection with or relating to any claim investigation, litigation or proceeding (or the preparation of any defence with respect thereto) commenced or threatened in relation to this Agreement (or the transactions contemplated hereby) or any use made or proposed to be made with the proceeds of the Facilities (including an Environmental Claim made or asserted against an Indemnified Person if such Environmental Claim would not have been, or been capable of being, made or asserted against an Indemnified Person if the Finance Parties or KEXIM had not entered into any of the Finance Documents or the KEXIM Guarantee and/or exercised any of their rights, powers and discretions thereby conferred and/or performed any of their obligations
55


thereunder and/or been involved in any of the transactions contemplated by the Finance Documents or the KEXIM Guarantee). This indemnity shall apply whether or not such claims, investigation, litigation or proceedings is brought by any Obligor, any other Group Member, any of their shareholders, their Affiliates, or creditors, or an Indemnified Person or any other person, or an Indemnified Person is otherwise a party thereto, except to the extent such Losses are found in a final non-appealable judgement by a court of competent jurisdiction to have resulted from such Indemnified Person's gross negligence or wilful misconduct. Each Indemnified Person may enforce and enjoy the benefit of this clause 14.3.2 under the Third Parties Act.
14.4
Indemnity to the Agent, the Security Agent, KEXIM Agent and KEXIM
The Borrower and the Guarantors shall promptly indemnify the Agent, the Security Agent, the KEXIM Agent and KEXIM against:
14.4.1
any and all Losses incurred by the Agent or the Security Agent, the KEXIM Agent or KEXIM (acting reasonably) as a result of:
(a)
without prejudice to clause 34.7.2(a) as extended to the Security Agent by clause 34.22 (Application of certain clauses to Security Agent) investigating any event which it reasonably believes is a Default;
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
(c)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; or
(d)
any action taken by the Agent or the Security Agent, the KEXIM Agent or KEXIM or any of its or their representatives, agents or contractors in connection with any powers conferred by any Security Document to enforce any Security Interest thereunder or to remedy any breach of any Obligor's obligations under the Finance Documents; and
14.4.2
any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent or the Security Agent or the KEXIM Agent or KEXIM (otherwise than by reason of the Agent's or the Security Agent's or the KEXIM Agent's or KEXIM's gross negligence or wilful default) (or, in the case of any cost, loss or liability pursuant to clause 37.11 (Disruption to payment systems etc.) notwithstanding the Agent's or the Security Agent's or the KEXIM Agent's or the KEXIM's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent or the Security Agent under the Finance Documents.
Further, and without prejudice to clauses 11 (Fees) and 16 (Costs and expenses), the Borrower shall indemnify each KEXIM Covered Facility Lender on demand and hold each of those parties harmless from and against any duly evidenced additional premiums, costs, expenses or fees as provided for under the KEXIM Guarantee which KEXIM may charge, invoice or set-off against amounts owing to such Lenders.
14.5
Indemnity concerning security
14.5.1
The Borrower and the Guarantors shall (or shall procure that another Obligor will) promptly indemnify each Indemnified Person against any and all Losses incurred by it in connection with:
(a)
any failure by the Borrower to comply with clause 16 (Costs and expenses);
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
(c)
the taking, holding, protection or enforcement of the Security Documents;
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(d)
the exercise or purported exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and/or any other Finance Party and each Receiver by the Finance Documents or by law unless and to the extent that it was caused by its gross negligence or wilful default;
(e)
any claim (whether relating to the environment or otherwise) made or asserted against the Indemnified Person which would not have arisen but for the execution or enforcement of one or more Finance Documents (unless and to the extent it is caused by the gross negligence or wilful default of that Indemnified Person); or
(f)
any breach by any Obligor of any of its obligations expressed to be assumed by it in the Finance Documents.
14.5.2
The Security Agent may, in priority to any payment to the other Finance Parties, indemnify itself out of the Trust Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this clause 14.5 and shall have a lien on the Security Documents and the proceeds of the enforcement of those Security Documents for all monies payable to it.
14.6
Continuation of indemnities
The indemnities by the Borrower in favour of the Indemnified Persons contained in this Agreement shall continue in full force and effect notwithstanding any breach by any Finance Party or the Borrower of the terms of this Agreement, the repayment or prepayment of the Loans, the cancellation of the Total Commitments or the repudiation by the Agent or the Borrower of this Agreement.
14.7
Third Parties Act
Each Indemnified Person may rely on the terms of clauses 12 (Tax gross-up and indemnities), 14.5 (Indemnity concerning security) and 14.8 (Interest) insofar as it relates to interest on any amount demanded by that Indemnified Person under clause 14.5 (Indemnity concerning security), subject to clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
14.8
Interest
Moneys becoming due by the Borrower to any Indemnified Person under the indemnities contained in this clause 14 or elsewhere in this Agreement shall be paid on demand made by such Indemnified Person and shall be paid together with interest on the sum demanded from the date of demand therefor to the date of reimbursement by the Borrower to such Indemnified Person (both before and after judgment) at the rate referred to in clause 8.3 (Default interest).
14.9
Exclusion of liability
No Indemnified Person will be in any way liable or responsible to any Obligor (whether as mortgagee in possession or otherwise) who is a Party or is a party to a Finance Document to which this clause applies for any loss or liability arising from any act, default, omission or misconduct of that Indemnified Person, except to the extent caused by its own gross negligence or wilful default. Any Indemnified Person may rely on this clause 14.9 subject to clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
14.10
Fax and email indemnity
The Borrower shall indemnify each Finance Party against any and all Losses together with any VAT thereon which any of the Finance Parties may sustain or incur as a consequence of any fax or email communication purporting to originate from the Borrower to the Agent or the Security Agent or the KEXIM Agent being made or delivered fraudulently or without proper authorisation (unless such Losses are the direct result of the gross negligence or wilful default of the relevant Finance Party or the Agent or the Security Agent or the KEXIM Agent).
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14.11
Waiver
In no event shall any of the Finance Parties be liable on any theory of liability for any special, indirect, consequential or punitive damages and the Obligors hereby waive, release and agree (for and on behalf of themselves and on behalf of themselves and the Group Members and their respective Affiliates and shareholders) not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in their favour.
14.12
Sanctions
14.12.1
Each Obligor shall, within three (3) Business Days of demand by a Finance Party, indemnify each Finance Party against any cost, loss or liability incurred by it as a result of any civil penalty or fine against, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred in connection with the defence thereof by, the Agent or any Lender as a result of conduct of any Obligor or any of their partners, directors, officers, employees, agents or advisors, that violates any Sanctions.
14.12.2
The indemnity in clause 14.12.1 above shall cover any Losses incurred by each Finance Party in any jurisdiction arising or asserted under or in connection with any law relating to any Sanctions.
15
MITIGATION BY THE LENDERS
15.1
Mitigation
15.1.1
Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 7.1 (Illegality), clause 12 (Tax gross-up and indemnities) or clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
15.1.2
Clause 15.1.1 does not in any way limit the obligations of any Obligor under the Finance Documents.
15.2
Limitation of liability
15.2.1
The Borrower shall promptly indemnify each Finance Party for all costs and expenses incurred by that Finance Party as a result of steps taken by it under clause 15.1 (Mitigation).
15.2.2
A Finance Party is not obliged to take any steps under clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
16
COSTS AND EXPENSES
16.1
Transaction expenses
The Borrower and the Guarantors shall promptly within five (5) Business Days of demand pay the Agent, the KEXIM Agent, the Arranger, the Hedging Provider and the Security Agent and KEXIM the amount of all costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants and advisers) reasonably incurred by any of them (and by any Receiver) in connection with the negotiation, preparation, printing, execution, syndication, registration and perfection and any release, discharge or reassignment of:
(a)
this Agreement, the Hedging Master Agreement and any other documents referred to in this Agreement and the Original Security Documents and the KEXIM Guarantee;
(b)
any other Finance Documents executed or proposed to be executed after the date of this Agreement including any executed to provide additional security under clause 25 (Minimum security value);or
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(c)
any Security Interest expressed or intended to be granted by a Finance Document,
whether or not the transactions contemplated under the Finance Documents are consummated.
16.2
Amendment costs
If an Obligor requests an amendment, waiver or consent, the Borrower shall, within five (5) Business Days of demand by the Agent or KEXIM, reimburse the Agent or KEXIM for the amount of all costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants and advisers) reasonably incurred by the Agent or by the Security Agent, the KEXIM Agent and KEXIM (and by any Receiver) in responding to, evaluating, negotiating or complying with that request or requirement.
16.3
Enforcement, preservation and other costs
The Borrower and the Guarantors shall, on demand by a Finance Party or KEXIM, pay to each Finance Party and KEXIM (through the Agent) the amount of all costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants, brokers, surveyors and advisers) incurred by that Finance Party or KEXIM in connection with:
(a)
the enforcement of, or the preservation of any rights under, any Finance Document or the KEXIM Guarantee and any proceedings initiated by or against any Indemnified Person and as a consequence of holding the Charged Property or enforcing those rights and any proceedings instituted by or against any Indemnified Person as a consequence of taking or holding the Security Documents or the KEXIM Guarantee or enforcing those rights;
(b)
any valuation carried out under clause 25 (Minimum security value); or
(c)
any inspection carried out under clause 23.8 (Inspection and notice of drydocking) or any survey carried out under clause 23.16 (Survey report) or any inspection carried out under clause 21.15 (Inspection).
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SECTION 7 - GUARANTEE
17
GUARANTEE AND INDEMNITY
17.1
Guarantee and indemnity
Each Guarantor hereby irrevocably and unconditionally and jointly and severally with the other Guarantors:
(a)
guarantees to the Security Agent (as trustee for the Finance Parties) and the other Finance Parties punctual performance by each other Obligor of all such Obligor's obligations under the Finance Documents, including without limitation, the due and punctual payment of each and every amount owing under the Finance Documents;
(b)
undertakes with the Security Agent (as trustee for the Finance Parties) and the other Finance Parties that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, it shall immediately on demand pay that amount as if it was the principal obligor; and
(c)
agrees with the Security Agent (as trustee for the Finance Parties) and the other Finance Parties that it will, as an independent and primary obligation, indemnify each Finance Party immediately on demand against any cost, loss or liability it incurs (i) if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal where such cost, loss or liability arises as a result of the Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by the Borrower under any Finance Document on the date when it would have been due, or (ii) if as a result (directly or indirectly) of the introduction of or any change in (or the interpretation, administration or application of) any law or regulation, or compliance with any law, regulation or administrative procedure made after entry into this Agreement (a Change in Law), there is a change in the currency, the value of the currency or the timing, place or manner in which any obligation guaranteed by the Guarantors is payable. The amount payable by the Guarantors under this indemnity:
(i)
in respect of paragraph (i) above, shall be the amount it would have had to pay under this clause 17 if the amount claimed had been recoverable on the basis of a guarantee but for any relevant unenforceability, invalidity or illegality; and
(ii)
in respect of paragraph (ii) above, shall include (1) the difference between (x) the amount (if any) received by the Agent and the other Finance Parties from the Borrower and (y) the amount that the Borrower was obliged to pay under the original express terms of the Finance Documents in the currency specified in the Finance Documents, disregarding any Change in Law (the Original Currency), and (2) all further costs, losses and liabilities suffered or incurred by the Agent and the other Finance Parties as a result of a Change in Law.
For the purposes of (1)(x) above, if payment was not received by the Agent or the other Finance Parties in the Original Currency, the amount received by the Agent and the other Finance Parties shall be deemed to be that payment's equivalent in the Original Currency converted, actually or notionally at the Agent's discretion, on the day of receipt at the then prevailing spot rate of exchange of the Agent or if, in the Agent's opinion, it could not reasonably or properly have made a conversion on the day of receipt of the equivalent of that payment in the Original Currency, that payment's equivalent as soon as the Agent could, in its opinion, reasonably and properly have made a conversion of the Original Currency with the currency of payment.
If the Original Currency no longer exists, the Guarantors shall make such payment in such currency as is, in the reasonable opinion of the Agent, required, after taking into account any payments by the Borrower, to place the Agent and the other Finance Parties in a position reasonably comparable to that it would have been in had the Original Currency continued to exist.
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17.2
Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. For the avoidance of doubt, it is agreed that, subject to the other terms and conditions of this guarantee and this Agreement (including clause 17.3 (Reinstatement)), any such irrevocable and unconditional intermediate payment or discharge of any amount guaranteed by this guarantee will reduce pro tanto the ultimate balance guaranteed by this guarantee.
17.3
Reinstatement
If any payment is made by an Obligor, or any discharge, release or arrangement is given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) in whole or in part on the basis of any payment, security or other disposition, and the same is avoided or reduced or must be restored in, or as a result of, insolvency, liquidation, administration or any other similar event or otherwise, then:
(a)
the liability of each Obligor under this clause 17 shall continue as if the payment, discharge, release, arrangement, avoidance or reduction had not occurred; and
(b)
each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, release, arrangement, avoidance or reduction had not occurred.
17.4
Waiver of defences
The obligations of each Guarantor under this clause 17 will not be affected by an act, omission, matter or thing (whether or not known to it or any Finance Party) which, but for this clause, would reduce, release or prejudice any of its obligations under this clause 17 including (without limitation):
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any other Obligor;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security;
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
(g)
any insolvency or similar proceedings.
17.5
Immediate recourse
Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment
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from any person before claiming from that Guarantor under this clause 17. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
17.6
Appropriations
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from a Guarantor or on account of the Guarantors' liability under this clause 17.
17.7
Deferral of Guarantors' rights
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor shall exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this clause 17:
(a)
to be indemnified by another Obligor;
(b)
to claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents;
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
(d)
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which that Guarantor has given a guarantee, undertaking or indemnity under clause 17 (Guarantee and Indemnity);
(e)
to exercise any right of set-off against any other Obligor; and/or
(f)
to claim or prove as a creditor of any other Obligor in competition with any Finance Party.
If any Guarantor receives any benefit, payment or distribution in relation to such rights it will promptly pay an equal amount to the Agent for application in accordance with clause 37 (Payment mechanics). This only applies until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full.
17.8
Additional security
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.
17.9
Guarantors' rights and obligations
17.9.1
The obligations of each Guarantor under the Guarantee and under this Agreement are joint and several. Failure by a Guarantor to perform its obligations under the Guarantee and/or this Agreement shall constitute a failure by all of the Guarantors.
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17.9.2
Each Guarantor irrevocably and unconditionally, jointly and severally with the other Guarantors:
(a)
agrees that it is responsible for the performance of the obligations of the other Guarantors under the Guarantee and this Agreement;
(b)
acknowledges and agrees that it is a principal and original debtor in respect of all amounts due from the Guarantors under the Guarantee and this Agreement; and
(c)
agrees with each Finance Party that, if any obligation of the other Guarantors under the Guarantee and this Agreement is or becomes unenforceable, invalid or illegal for any reason it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any and all Losses it incurs as a result of any other Guarantor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by any other Guarantor under the Guarantee and/or this Agreement. The amount payable under this indemnity shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.
17.10
Guarantors' demand against KEXIM
In no event shall any Guarantor have any right to claim or demand proceeds under the KEXIM Guarantee from KEXIM, whether on the basis that they have performed its obligations under the Guarantee and this Agreement and has acquired by way of subrogation the respective rights of the Borrower or the Lenders or any of them against KEXIM, or otherwise.
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SECTION 8 - REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
18
REPRESENTATIONS
Each Obligor who is a Party makes and repeats the representations and warranties set out in this clause 18 to each Finance Party at the times specified in clause 18.37 (Times when representations are made).
18.1
Status
18.1.1
Each Obligor and the Manager is duly incorporated and validly existing under the laws of the jurisdiction of its incorporation as a limited liability company or corporation and (except in relation to Obligors and the Manager incorporated in the Republic of the Marshall Islands) has no centre of main interests, permanent establishment or place of business outside the jurisdiction in which it is incorporated.
18.1.2
Each Obligor and the Manager has power and authority to carry on its business as it is now being conducted and to own its property and other assets.
18.1.3
No Obligor is a US Tax Obligor.
18.2
Binding obligations
Subject to the Legal Reservations, the obligations expressed to be assumed by each Obligor and the Manager in each Finance Document, any Charter Document or any Contract to which it is, or is to be, a party are or, when entered into by it, will be legal, valid, binding and enforceable obligations and each Security Document to which an Obligor and the Manager is, or will be, a party, creates or will create the Security Interests which that Security Document purports to create and those Security Interests are or will be valid and effective.
18.3
Power and authority
18.3.1
Each Obligor and the Manager has power to enter into, perform and deliver and comply with its obligations under, and has taken all necessary action to authorise its entry into, each Finance Document, any Charter Document or any Contract to which it is or is to be a party.
18.3.2
No limitation on any Obligor's or the Manager's powers to borrow, create security or give guarantees will be exceeded as a result of any transaction under, or the entry into of, any Finance Document, any Charter Document or any Contract to which such Obligor or the Manager is, or is to be, a party.
18.4
Non-conflict
The entry into and performance by each Obligor and the Manager of, and the transactions contemplated by the Finance Documents, the Charter Documents and the Contract to which it is, or is to be a party and the granting of the Security Interests purported to be created by the Security Documents do not and will not conflict with:
(a)
any law or regulation applicable to any Obligor or the Manager;
(b)
the Constitutional Documents of any Obligor or the Manager; or
(c)
any agreement or other instrument binding upon any Obligor or the Manager,
or constitute a default or termination event (however described) under any such agreement or instrument or result in the creation of any Security Interest (save for a Permitted Maritime Lien or under a Security Document) on any Obligor's assets, rights or revenues.
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18.5
Validity and admissibility in evidence
18.5.1
All authorisations required or desirable:
(a)
to enable each Obligor and the Manager lawfully to enter into, exercise its rights and comply with its obligations under each Finance Document and any Charter Document or any Contract to which it is, or is to be, a party;
(b)
to make each Finance Document and any Charter Document or any Contract to which it is, or is to be, a party admissible in evidence in its Relevant Jurisdiction; and
(c)
to ensure that each of the Security Interests created under the Security Documents has the priority and ranking contemplated by them, have been obtained or effected and are in full force and effect except any authorisation or filing referred to in clause 18.11 (No filing or stamp taxes), which authorisation or filing will be promptly obtained or effected within any applicable period.
18.5.2
All authorisations necessary for the conduct of the business, trade and ordinary activities of each Obligor and the Manager have been obtained or effected and are in full force and effect if failure to obtain or effect those authorisations might have a Material Adverse Effect.
18.6
Governing law and enforcement
18.6.1
The choice of English law or any other applicable law as the governing law of any Finance Document, any Charter Document or any Contract will be recognised and enforced in each Obligor's and the Manager's Relevant Jurisdiction.
18.6.2
Any judgment obtained in England in relation to an Obligor and the Manager will be recognised and enforced in each Obligor's and the Manager's Relevant Jurisdictions.
18.7
Information
18.7.1
Any Information is true and accurate in all material respects at the time it was given or made.
18.7.2
There are no facts or circumstances or any other information which could make the Information incomplete, untrue, inaccurate or misleading in any material respect.
18.7.3
The Information does not omit anything which could make the Information incomplete, untrue, inaccurate or misleading in any material respect.
18.7.4
All opinions, projections, forecasts or expressions of intention contained in the Information and the assumptions on which they are based have been arrived at after due and careful enquiry and consideration and were believed to be reasonable by the person who provided that Information as at the date it was given or made.
18.7.5
For the purposes of this clause 18.7, Information means: any information provided by any Obligor or any Group Member to any of the Finance Parties in connection with the Finance Documents, the Charter Documents or the Contracts or the transactions referred to in them (including any information memorandum).
18.8
Pari passu ranking
Each Obligor's payment obligations under the Finance Documents to which it is, or is to be, a party rank at least pari passu with all its other present and future unsecured and unsubordinated payment obligations, except for obligations mandatorily preferred by law applying to companies generally.
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18.9
Ranking and effectiveness of security
Subject to the Legal Reservations and any filing, registration or notice requirements which is referred to in any legal opinion delivered to the Agent under clause 4.1 (Initial conditions precedent), the security created by the Security Documents has (or will have when the Security Documents have been executed) the priority which it is expressed to have in the Security Documents, the Charged Property is not subject to any Security Interest other than Permitted Security Interests and such security will constitute perfected security on the assets described in the Security Documents.
18.10
No insolvency
No corporate action, legal proceeding or other procedure or step described in clause 30.10 (Insolvency proceedings) or creditors' process described in clause 30.11 (Creditors' process) has been taken or, to the knowledge of any Obligor, threatened in relation to any Obligor or the Manager and none of the circumstances described in clause 30.9 (Insolvency) applies to any Obligor or the Manager.
18.11
No filing or stamp taxes
Under the laws of the Relevant Jurisdiction of each Obligor it is not necessary that any Finance Document, any Charter Document or any Contract to which it is, or is to be, party be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to any such Finance Document, any Charter Document or any Contract or the transactions contemplated by the Finance Documents, the Charter Documents or any Contract, except any filing, recording or enrolling or any tax or fee payable in relation to any Finance Document which is referred to in any legal opinion delivered to the Agent under clause 4.1 (Initial conditions precedent) and which will be made or paid promptly after the date of the relevant Finance Document or the Charter Documents or any Contract.
18.12
Tax
18.12.1
No Obligor is required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to which it is, or is to be, a party and no other party is required to make any such deduction from any payment it may make under any, Charter Document or Contract.
18.12.2
The execution or delivery or performance by any Party of the Finance Documents will not result in any Finance Party:
(a)
having any liability in respect of Tax in any Flag State; or
(b)
having or being deemed to have a place of business in any Flag State or any Relevant Jurisdiction of any Obligor.
18.13
No Default
18.13.1
No Default is continuing or is reasonably likely to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Finance Document or any Charter Document or Contract.
18.13.2
No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on any Obligor or to which any Obligor's assets are subject which might have a Material Adverse Effect.
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18.14
No proceedings pending or threatened
No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency (including, without limitation, investigative proceedings) which, if adversely determined, might reasonably be expected to have a Material Adverse Effect, have (to the best of any Obligor's knowledge and belief) been started or threatened against any Obligor.
18.15
No breach of laws
18.15.1
No Obligor nor the Manager has breached any law or regulation which might have a Material Adverse Effect.
18.15.2
No labour dispute is current or, to the best of any Obligor's knowledge and belief (having made due and careful enquiry), threatened against any Obligor which may have a Material Adverse Effect.
18.15.3
No Obligor has breached any of the Obligors' general risk management policies, which breach might have a Material Adverse Effect.
18.16
Environmental matters
18.16.1
No Environmental Law applicable to any Fleet Vessel and/or any Obligor and/or the Manager has been violated in a manner or circumstances which might have, a Material Adverse Effect.
18.16.2
All consents, licences and approvals required under such Environmental Laws have been obtained and are currently in force.
18.16.3
No Environmental Claim has been made or threatened or is pending against any Obligor or the Manager or any Fleet Vessel where that claim might have a Material Adverse Effect, and there has been no Environmental Incident which has given, or might give, rise to such a claim.
18.17
Tax compliance
18.17.1
No Obligor is materially overdue in the filing of any Tax returns or overdue in the payment of any amount in respect of Tax.
18.17.2
No claims or investigations are being, or are reasonably likely to be, made or conducted against any Obligor with respect to Taxes such that a liability of, or claim against, any Obligor is reasonably likely to arise and which might have a Material Adverse Effect.
18.17.3
Each Obligor is in compliance with its Tax obligations within the jurisdiction of its incorporation.
18.18
Anti-corruption law
Each Obligor and the Manager has conducted its businesses in compliance with applicable anti-corruption and anti-bribery laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
18.19
Security and Financial Indebtedness
18.19.1
No Security Interests exist over all or any of the present or future assets of any Obligor in breach of this Agreement (other than Permitted Security Interests).
18.19.2
No Obligor has any Financial Indebtedness outstanding in breach of this Agreement.
18.19.3
No Security Interests exist over any of the shares of the Borrower or an Owner or over any of the rights deriving from or related to such shares.
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18.20
Legal and beneficial ownership
18.20.1
Ownership of assets
Each Obligor is the sole legal and beneficial owner of the respective assets over which it purports to grant a Security Interest under the Security Documents.
18.20.2
Ownership of shares
(a)
Each Owner is a direct wholly-owned Subsidiary of the Borrower.
(b)
The Borrower is a direct wholly-owned Subsidiary of the Parent.
(c)
Not less than 50% of all of the issued voting share capital of, the Parent, is legally and ultimately beneficially owned by the Permitted Holders.
(d)
The Permitted Holders control the Parent.
(e)
Not less than 100% of the issued share capital of, and all of the issued voting share capital of, the Manager, is legally and ultimately beneficially owned by the Permitted Holders.
18.21
Shares
The shares of each Obligor are fully paid and not subject to any option to purchase or similar rights. The Constitutional Documents of each Obligor do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Security Documents. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of each Obligor (including any option or right of pre-emption or conversion).
18.22
Accounting Reference Date
The financial year-end of each Obligor and each Group Member is the Accounting Reference Date.
18.23
No adverse consequences
18.23.1
It is not necessary under the laws of the Relevant Jurisdiction of any Obligor:
(a)
in order to enable any Finance Party to enforce its rights under any Finance Document; or
(b)
by reason of the execution of any Finance Document or the performance by any Obligor of its obligations under any Finance Document to which it is, or is to be, a party,
that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of such Relevant Jurisdictions.
18.23.2
No Finance Party is or will be deemed to be resident, domiciled or carrying on business in any Relevant Jurisdiction by reason only of the execution, performance and/or enforcement of any Finance Document.
18.24
Copies of documents
The copies of the Charter Documents, the Contracts and the Constitutional Documents of the Obligors delivered to the Agent under clause 4 (Conditions of Utilisation) or under any other provision of this Agreement will be true, complete and accurate copies of such documents and include all amendments and supplements to them as at the time of such delivery and no other agreements or arrangements exist between any of the parties to any Charter Document or Contract which would materially affect the transactions or arrangements contemplated by any Charter
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Document or Contract or modify or release the obligations of any party under that Charter Document or Contract.
18.25
No breach of any Contract or any Charter Document
No Obligor nor (so far as the Obligors are aware) any other person is in breach of any Charter Document or Contract to which it is a party nor has anything occurred which entitles or may entitle any party to any Charter Document or Contract to rescind or terminate it or decline to perform their obligations under it.
18.26
No immunity
No Obligor nor the Manager or any of its assets is immune to any legal action or proceeding.
18.27
Ship status
Each Ship shall on the first day of the relevant Mortgage Period be:
(a)
registered in the name of the relevant Owner through the relevant Registry as a ship under the laws and flag of the relevant Flag State;
(b)
operationally seaworthy and in every way fit for service;
(c)
classed with the relevant Classification, free of all requirements and recommendations of the relevant Classification Society; and
(d)
insured in the manner required by the Finance Documents.
18.28
Ship's employment
Each Ship shall, on the first day of the relevant Mortgage Period be free of any other charter commitment which, if entered into after that date, would require approval under the Finance Documents.
18.29
Address commission
There are no rebates, commissions or other payments in connection with any Contract or any Charter other than those referred to in it.
18.30
No Money Laundering
In relation to the borrowing by the Borrower of the Loans, the performance and discharge of the Obligors' obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by this Agreement and the Finance Documents, the Obligors are acting for their own account and the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented by any relevant regulatory authority or otherwise to combat Money Laundering (as defined in clause 21.16 (Bribery and corruption)).
18.31
Use of proceeds
The proceeds of each Utilisation have been or (as the case may be) on the relevant Utilisation Date will be used exclusively for the purposes specified in clause 3 (Purpose).
18.32
Maintenance of properties
Each Obligor has maintained in good working order and condition (ordinary wear and tear excepted) all of its assets necessary or desirable in the conduct of its business.
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18.33
Sanctions
18.33.1
No Obligor, nor any Group Member, nor the Manager, nor any of their respective joint ventures, nor any of their respective directors, officers, employees, agents or representatives:
(a)
has breached any Sanctions;
(b)
is a Restricted Person; or
(c)
has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions.
18.33.2
No proceeds of any Advance:
(a)
shall be made available, directly or indirectly, to or for the benefit of a Restricted Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions; or
(b)
will be used by any Obligor or the Manager:
(i)
to finance equipment or sectors under embargo decisions of the United Nations or the World Bank; or
(ii)
in breach of the provisions of any Sanctions.
18.34
No corrupt practices
No Advance will be used by any Obligor for and no Obligor nor the Manager shall engage in:
(a)
Corrupt Practices, Fraudulent Practices, Collusive Practices or Coercive Practices, including the procurement or the execution of any contract for goods or works relating to its functions; and
(b)
the Financing of Terrorism.
For the purposes of this clause 18.34 the defined terms of clause 21.16 (Bribery and corruption) shall apply.
18.35
Most favoured nation
Neither the Borrower nor the Guarantors nor any Group Member nor any other Parent Group Member has granted in favour of any lender or creditor of any indebtedness of any Group Member or Parent Group Member as at that date of this Agreement any financial covenants more favourable than those granted to the Finance Parties under clause 20 (Financial covenants) of this Agreement as long as such financial covenants relate to the Borrower and/or the Parent and/or the Group and/or the Parent Group.
18.36
Original Financial Statements
18.36.1
The Original Financial Statements were prepared in accordance with GAAP consistently applied.
18.36.2
The Original Financial Statements give a true and fair view of the consolidated financial condition and results of operations of the Parent and the Borrower during the relevant financial year.
18.36.3
There has been no material adverse change in the assets, business or financial condition or operations of any Obligor (or the assets, business or operations or consolidated financial condition of the Group or the Parent Group taken as a whole, in the case of the Borrower or the Parent, respectively) since the date of the Original Financial Statements.
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18.37
Times when representations are made
18.37.1
All of the representations and warranties set out in this clause 18 (other than Ship Representations) are deemed to be made and repeated on the dates of:
(a)
this Agreement;
(b)
each Utilisation Request; and
(c)
each Utilisation.
18.37.2
The Repeating Representations are also deemed to be made and repeated on the first day of each Interest Period.
18.37.3
All of the Ship Representations are deemed to be made and repeated on the first day of the Mortgage Period for the relevant Ship.
18.37.4
Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances then existing at the date the representation or warranty is deemed to be made.
19
INFORMATION UNDERTAKINGS
Each Obligor who is a Party undertakes that this clause 19 will be complied with throughout the Facility Period.
In this clause 19:
Annual Financial Statements means the audited consolidated financial statements for a financial year of the Parent and the Borrower, respectively, delivered pursuant to clause 19.1.1 (Financial statements).
Quarterly Financial Statements means the unaudited consolidated management accounts for a financial quarter of a financial year of the Parent and the Borrower, respectively, delivered pursuant to clause 19.1.1 (Financial statements).
19.1
Financial statements
19.1.1
The Obligors who are a Party shall supply to the Agent:
(a)
the audited consolidated financial statements of each of the Parent and the Borrower for each financial year (but commencing with the financial year ending on 31 December 2017) as soon as the same become available, but in any event within 180 days after the end of each financial year; and
(b)
the unaudited consolidated management accounts of each of the Parent and the Borrower for each financial quarter of each financial year (but commencing with the financial quarter ending on 30 September 2017) as soon as the same become available, but in any event within 90 days after the end of each such financial quarter.
19.2
Provision and contents of Compliance Certificate and valuations
19.2.1
The Obligors shall supply to the Agent:
(a)
with each set of Annual Financial Statements and Quarterly Financial Statements, a Compliance Certificate (including any supporting schedules or other information and evidence as the Agent may require); and
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(b)
with each set of Annual Financial Statements and Quarterly Financial Statements for the second financial quarter of each financial year, valuations of each Fleet Vessel and each Parent Fleet Vessel, each as defined in clause 20.1 (Financial definitions), each made in accordance with clause 25 (Minimum security value) at the cost and expense of the Borrower and showing the value of each such Fleet Vessel and Parent Fleet Vessel (and for such purposes, the provisions of such clause 25 (Minimum security value) shall apply to each such Fleet Vessel and Parent Fleet Vessel and this paragraph (b) mutatis mutandis as if each such Fleet Vessel and Parent Fleet Vessel were a Mortgaged Ship).
19.2.2
Each Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with clause 20.2 (Financial condition) and shall be signed by two authorised signatories of the Borrower and the Parent.
19.3
Requirements as to financial statements
19.3.1
The Obligors shall procure that each set of management accounts and financial statements includes a profit and loss account, a balance sheet and a cashflow statement and that, in addition, each set of Annual Financial Statements shall be audited by the Auditors.
19.3.2
Each set of management accounts and financial statements delivered pursuant to clause 19.1 (Financial statements) shall:
(a)
be prepared in accordance with GAAP;
(b)
give a true and fair view of (in the case of Annual Financial Statements), or fairly represent (in other cases), the financial condition (consolidated where applicable) and operations of the Borrower and the Parent, respectively, as at the date as at which those management accounts or, as the case may be, financial statements were drawn up; and
(c)
in the case of Annual Financial Statements, not be the subject of any qualification in the Auditors' opinion.
19.3.3
The Obligors shall procure that each set of management accounts and financial statements delivered pursuant to clause 19.1 (Financial statements) shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements, unless, in relation to any set of financial statements, the Borrower notifies the Agent that there has been a change in GAAP or the accounting practices and the Auditors deliver to the Agent:
(a)
a description of any change necessary for those financial statements to reflect the GAAP or accounting practices and reference periods upon which corresponding Original Financial Statements were prepared; and
(b)
sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether clause 20 (Financial covenants) has been complied with and to make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements.
Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
19.4
Presentations
If required by the Agent, once in every financial year (or more frequently if requested to do so by the Agent if the Agent reasonably suspects a Default is continuing or may have occurred or may occur), the Borrower shall procure that a representative of the Borrower gives a presentation to the Finance Parties about the on-going business and financial performance of the Group and any other matter which a Finance Party may reasonably request.
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19.5
Year-end
The Borrower shall procure that each financial year-end of each Obligor and each Group Member falls on the Accounting Reference Date.
19.6
Information: miscellaneous
The Borrower shall supply to the Agent:
(a)
at the same time as they are dispatched, copies of all documents dispatched by the Borrower or any other Obligor to its shareholders generally (or any class of them) or dispatched by the Borrower or any other Obligor to its creditors generally (or any class of them);
(b)
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Obligor or Group Member, and which, if adversely determined, might have a Material Adverse Effect or which would involve a liability, or a potential or alleged liability, exceeding $2,000,000 (or its equivalent in other currencies);
(c)
promptly, such information as the Agent may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Security Documents;
(d)
promptly upon becoming aware of them, details of any claim, action, suit, proceeding or investigation with respect to Sanctions against it, any other Obligor or Group Member, any of their respective direct or indirect owners, Subsidiaries, any of their joint ventures or any of their respective directors, officers, employees, agents or representatives promptly upon becoming aware of the same; and
(e)
promptly on request, such further information regarding the financial condition, assets and operations of the Group and/or any Obligor and/or any Group Member as any Finance Party through the Agent (or the KEXIM Agent, as applicable) may reasonably request.
19.7
Notification of Default
19.7.1
The Borrower shall notify the Agent and KEXIM of any Default (and the steps, if any, being taken to remedy it) promptly upon any Obligor becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).
19.7.2
If required by the Agent, the Borrower shall supply to the Agent a certificate as to whether a Default is continuing (and if it is, the steps, if any, being taken to remedy it).
19.8
Sufficient copies
The Borrower, if so requested by the Agent, shall deliver sufficient copies of each document to be supplied under the Finance Documents to the Agent to distribute to each of the Lenders and the Hedging Provider.
19.9
Use of websites
19.9.1
Unless otherwise agreed, the Borrower shall satisfy their obligation under this Agreement to deliver any information by submitting the information to the Agent for posting onto the Intralinks or Debt domain system or other electronic website designated by the Agent (the Designated Website).
19.9.2
The Agent shall supply each Lender and the Borrower with the address of and any relevant password specifications for the Designated Website following designation of that website by the Borrower and the Agent in order for the Borrower and the Lenders to obtain their respective passwords.
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19.9.3
The Borrower and the Lenders shall promptly upon any of them becoming aware of its occurrence notify the Agent if:
(a)
the Designated Website cannot be accessed due to technical failure;
(b)
the password specifications for the Designated Website change;
(c)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(d)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(e)
the Borrower or any Lender becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
If the Agent is notified under paragraphs (a) or (e) above, and until the Agent and each Lender is satisfied that the circumstances giving rise to the notification are no longer continuing (i) all information to be provided by the Borrower under this Agreement after the date of that notice shall be supplied to the Agent in paper form and (ii) any Lender may request that the Borrower supplies such Lender, through the Agent, with a paper copy of any information required to be provided under this Agreement. The Borrower shall comply with any such request within ten Business Days.
19.10
"Know your customer" checks
19.10.1
If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any internal policy or any law or regulation made after the date of this Agreement;
(b)
any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender or the Hedging Provider of any of its rights and/or obligations under this Agreement or any Hedging Contract to a party that is not already a Lender or the Hedging Provider prior to such assignment or transfer,
obliges the Agent, the Security Agent, the Hedging Provider or any Lender (or, in the case of paragraph (c) above, any prospective new Lender or Hedging Provider) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent, the Security Agent, or any Lender or the Hedging Provider supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender or the Hedging Provider) or any Lender, the Security Agent or the Hedging Provider (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective new Lender, the Security Agent, the Agent or the Hedging Provider) in order for the Agent, the Security Agent, such Lender or the Hedging Provider or, in the case of the event described in paragraph (c) above, any prospective new Lender or the Hedging Provider to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
19.10.2
Each Finance Party shall promptly upon the request of the Agent or the Security Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent or the Security Agent (for itself) in order for it to carry out and be satisfied with the results of all necessary "know your customer" or other similar checks under all internal policies, applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
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19.11
Money Laundering
The Borrower will:
19.11.1
provide the Agent with information, certificates and any documents required by the Agent or any other Finance Party to ensure compliance with any law official requirement or other regulatory measure or procedure implemented to combat Money Laundering (as defined in clause 21.16 (Bribery and corruption)) throughout the Facility Period; and
19.11.2
notify the Agent as soon as it becomes aware of any matters evidencing that a breach of any law official requirement or other regulatory measure or procedure implemented to combat Money Laundering (as defined in clause 21.16 (Bribery and corruption) may or is about to occur or that the person(s) who have or will receive the commercial benefit of this Agreement have changed from the date hereof.
For the purposes of this clause 19.11 the defined terms of clause 21.16 (Bribery and corruption) shall apply. 1
19.12
KEXIM notification and information
The Borrower shall promptly provide the Agent (and the Agent shall provide each Lender) with copies of all financial or other information required by the Agent to satisfy any request for information by KEXIM pursuant to the KEXIM Guarantee.
20
FINANCIAL COVENANTS
Each Obligor who is a Party undertakes that this clause 20 will be complied with throughout the Facility Period.
20.1
Financial definitions
In clauses 20.2 (Financial condition) and 20.3 (Financial testing):
Cash and Cash Equivalents means, at any relevant time, the aggregate of:
(a)
cash in hand or on deposit with any bank; and
(b)
any other marketable instrument, security or investment approved by the Majority Lenders,
which are free from any Security Interest and/or restrictions and to which a Parent Group Member is beneficially entitled at that time and which are readily available to the Parent Group Members and capable of being applied against Financial Indebtedness, but also including any cash deposit which is blocked and/or otherwise restricted and/or subject to a Security Interest if the sole purpose of such deposit and/or restriction and/or Security Interest is the maintenance of a minimum liquidity covenant under borrowing arrangements of any Parent Group Member, as demonstrated by the then most recent Financial Statements in respect of the Parent Group.
Debt Service means, at any relevant time and in respect of any period, the aggregate of:
(a)
all repayment instalments of principal (excluding any balloon payments) and interest payments thereon under any loan or facility agreement (including this Agreement) entered into by Group Members or guaranteed by Group Members;
(b)
any net payment under any interest rate hedging agreement or instrument entered into by Group Members, taking into account any premiums payable (including any Hedging Contracts);
(c)
any bareboat obligations of Group Members; and
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(d)
any other payments and deductions of similar effect by Group Members (including the capital and interest element of any finance leases),
in each case, which were made by Group Members during such period, each as shown in the then most recent Financial Statements in respect of the Group and in the Compliance Certificate and approved by the Majority Lenders.
EBITDA means, at any time and in relation to any Measurement Period, the consolidated net pre-taxation profits of the Group for the twelve-month period ending at the end of such Measurement Period, as demonstrated by the then most recent Financial Statements in respect of the Group and all as adjusted by:
(a)
adding back Net Interest Expense for such twelve-month period;
(b)
taking no account of any exceptional or extraordinary item;
(c)
adding back depreciation and amortisation of assets; and
(d)
taking no account of any other non-cash items, including (without limitation) any non-cash gain or loss on sale or cancellation of vessels, any unrealised gain or loss on derivative contracts or asset impairments.
Financial Statements means any of the Annual Financial Statements or the Quarterly Financial Statements of each of the Parent and the Borrower referred to and defined as such in clause 19.1 (Financial statements).
Fleet Market Value means, as of the date of calculation, the aggregate of:
(a)
the Vessel Values of the Mortgaged Ships; and
(b)
the aggregate market value of all other Fleet Vessels (other than the Mortgaged Ships), as most recently determined pursuant to valuations of such vessels provided to the Agent together with each Compliance Certificate under clause 19.2 (Provision and contents of Compliance Certificate and valuations) and made in accordance with the provisions of clause 25 (Minimum security value) which shall apply for the purposes of this paragraph mutatis mutandis to each Fleet Vessel as if each such vessel were a Ship.
Fleet Vessels means each of the Fleet Vessels as defined in clause 1.1 (Definitions) (including, but not limited to, the Ships but excluding vessels under construction) but only to the extent owned by the Group Members and Fleet Vessel means any of them.
Market Adjusted Equity means, at any time and in relation to any Measurement Period, the Total Market Adjusted Assets (Borrower) minus Total Liabilities (Borrower), as shown in the then most recent Financial Statements in respect of the Group.
Measurement Period means each financial year of each of the Parent and the Borrower and each financial quarter of each financial year of each of the Parent and the Borrower for which Financial Statements are to be delivered to the Agent under clause 19.1 (Financial statements).
Net Interest Expense means, at any time and in relation to any Measurement Period, all interest and other financing charges incurred or paid by the Group, minus all interest income accrued for the benefit of or paid by the Group during the twelve-month period ending at the end of such Measurement Period, as demonstrated by the then most recent Financial Statements in respect of the Group.
Parent Fleet Market Value means, as of the date of calculation, the aggregate of:
(a)
the Vessel Values of the Mortgaged Ships; and
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(b)
the aggregate market value of all other Parent Fleet Vessels (other than the Mortgaged Ships), as most recently determined pursuant to valuations of such vessels provided to the Agent together with each Compliance Certificate under clause 19.2 (Provision and contents of Compliance Certificate and valuations) and made in accordance with the provisions of clause 25 (Minimum security value) which shall apply for the purposes of this paragraph mutatis mutandis to each Parent Fleet Vessel as if each such vessel were a Ship.
Parent Fleet Vessels means each Mortgaged Ship and any other vessel owned by any Parent Group Member (including, but not limited to, the Ships but excluding vessels under construction) and Parent Fleet Vessel means any of them.
Parent Group means the Parent and its Subsidiaries (including the Borrower and the Owners) for the time being and any other entity required to be treated as a subsidiary in the Parent's consolidated accounts in accordance with GAAP and/or any applicable law.
Parent Group Member means the Parent, the Borrower, the Owners, each Obligor and any other entity which is part of the Parent Group.
Total Liabilities (Borrower) means, at any time, the book value of the "Total Liabilities" of the Borrower as demonstrated by the then most recent Financial Statements in respect of the Group.
Total Liabilities (Parent) means, at any time, the book value of the "Total Liabilities" of the Parent as demonstrated by the then most recent Financial Statements in respect of the Parent Group.
Total Market Value Adjusted Assets (Borrower) means, at any time and in relation to any Measurement Period, the aggregate of (a) the book value of the "Total Assets" of the Group (excluding Fleet Vessels) as demonstrated by the then most recent Financial Statements in respect of the Group and (b) the Fleet Market Value.
Total Market Value Adjusted Assets (Parent) means, at any time and in relation to any Measurement Period, the aggregate of (a) the book value of the "Total Assets" of the Parent Group (excluding Parent Fleet Vessels) as demonstrated by the then most recent Financial Statements in respect of the Parent Group and (b) the Parent Fleet Market Value.
Total Net Liabilities (Parent) means, at any time and in relation to any Measurement Period, Total Liabilities minus Cash and Cash Equivalents, each as demonstrated by the then most recent Financial Statements in respect of the Parent Group.
Working Capital means, at any time, the current assets less the current liabilities of the Group (each as shown in, and calculated in accordance with, the then most recent Financial Statements in respect of the Group, but not including the current portion of any long term debt, namely any liabilities which are payable more than six (6) months after the relevant date).
20.2
Financial condition
Each Obligor who is a Party shall ensure that:
(a)
Debt service cover ratio: in respect of each Measurement Period (but starting with the annual Measurement Period ending on 31 December 2018), the ratio of (i) EBITDA to (ii) Debt Service, each for the twelve month period ending at the end of such Measurement Period, shall not be lower than:
(i)
1.10:1.00 for each Measurement Period up to the first Measurement Period falling after the fifth anniversary of the first Utilisation; and
(ii)
1.00:1.00 for each subsequent Measurement Period.
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(b)
Solvency: the ratio of Market Adjusted Equity to Total Market Value Adjusted Assets (Borrower) shall, at all times during and in respect of each Measurement Period, be higher than 0.25:1.00.
(c)
Working Capital: at all times during and in respect of each Measurement Period, the Working Capital shall be higher than zero (0).
(d)
Parent Group Consolidated leverage ratio: the ratio of (i) Total Net Liabilities (Parent) to (ii) Total Market Value Adjusted Assets (Parent) minus Cash and Cash Equivalents shall, at all times during and in respect of each Measurement Period, be lower than 0.70:1.00.
(e)
Parent Group Minimum liquidity: at all times the Cash and Cash Equivalents of the Parent Group (on a consolidated basis) shall be not less than $15,000,000.
(f)
Owner Minimum liquidity: each Owner who owns a Mortgaged Ship shall maintain at all times cash balances in its Earnings Account in an amount of not less than Seven hundred and fifty thousand dollars ($750,000) (namely, $750,000 per Mortgaged Ship).
20.3
Financial testing
The financial covenants set out in clause 20.2 (Financial condition) shall be calculated in accordance with GAAP on a consolidated basis for the Group and the Parent Group (as applicable) and tested by reference to each of the Financial Statements of the Group or the Parent Group (as applicable) delivered pursuant to, and defined as such in, clause 19.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to clause 19.2 (Provision and contents of Compliance Certificate and valuations).
20.4
Most favoured nation
Without prejudice to clause 20.2 (Financial condition), in the event that and each time that the Borrower or the Parent or any other Group Member agrees to, or grants, or agrees to grant, any financial covenants (but as long as such financial covenants relate to the Borrower and/or the Parent) to, for the benefit of, or in favour of, any lender or creditor of any indebtedness of any Group Member or Parent Group Member (the more favourable rights), which are in any respect more favourable to such lender or creditor than clause 20.2 (Financial condition) are for the Finance Parties, the Borrower and the Parent undertake and agree with the Finance Parties:
(a)
to notify the Agent within five (5) days after the granting of or any agreement to grant (as the case may be) such more favourable rights;
(b)
without prejudice to paragraph (c) below, within thirty (30) days after the date when such more favourable rights have been agreed or granted, to agree to, provide and grant, such more favourable rights also in favour of the Agent under or in connection with this Agreement, by entering into (and/or by procuring that any Obligor or any other person entering into) such documentation as the Agent shall reasonably require, immediately after the Finance Parties' request to the Borrower; and
(c)
notwithstanding paragraph (b) above, that any such more favourable rights shall in any event apply to this Agreement and the other Finance Documents automatically from the time they are granted to the other lenders or creditors, and irrespective of whether the Borrower and the other Obligors have complied with their obligations under clause 20.2 (Financial condition), except if the Agent at any time advises the Borrower that such or certain of such more favourable rights will not so apply and always without prejudice to the terms and conditions of this Agreement and the other Finance Documents.
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21
GENERAL UNDERTAKINGS
Each Obligor who is a Party undertakes with each Finance Party that this clause 21 will be complied with throughout the Facility Period.
21.1
Use of proceeds
The proceeds of the Utilisations will be used exclusively for the purposes specified in clause 3 (Purpose).
21.2
Authorisations
Each Obligor and the Manager will promptly:
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)
supply certified copies to the Agent of, any authorisation required under any law or regulation of a Relevant Jurisdiction to:
(i)
enable it to perform its obligations under the Finance Documents, the Charter Documents and the Contracts;
(ii)
ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document, Charter Document or Contract; and
(iii)
carry on its business, where failure to do so has, or is reasonably likely to have, a Material Adverse Effect.
21.3
Compliance with laws and Sanctions
21.3.1
Each Obligor, the Manager and each other Group Member will comply in all respects with its Constitutional Documents and all laws and regulations (including Environmental Laws) to which it may be subject.
21.3.2
Each Obligor, the Manager and each other Group Member will comply in all respects with all Sanctions.
21.4
Tax Compliance
21.4.1
Each Obligor shall pay and discharge all Taxes imposed upon it or its assets within such time period as may be allowed by law without incurring penalties unless and only to the extent that:
(a)
such payment is being contested in good faith;
(b)
adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Agent under clause 19.1 (Financial statements); and
(c)
such payment can be lawfully withheld.
21.4.2
Except as approved by the Majority Lenders, each Obligor shall ensure that it is and it remains in compliance with its Tax obligations in the jurisdiction in which it is incorporated.
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21.5
Change of business
Except as approved by the Majority Lenders, no substantial change will be made to the general nature of the business of the Borrower, the Owners, the Parent, the other Obligors or the Group taken as a whole from that carried on at the date of this Agreement.
21.6
Merger
Except as approved by the Majority Lenders, no Owner nor the Borrower nor the Parent will enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction, corporate redomicilation or change its legal name or legal type.
21.7
Further assurance
21.7.1
Each Obligor and the Manager shall promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Agent may reasonably specify (and in such form as the Agent may reasonably require):
(a)
to perfect the Security Interests created or intended to be created by that Obligor (as the case may be) under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other security over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Agent or any other Finance Party provided by or pursuant to the Finance Documents or by law;
(b)
to confer on the Security Agent and/or any other Finance Party Security Interests over any property and assets of that Obligor (as the case may be) located in any jurisdiction equivalent or similar to the Security Interest intended to be conferred by or pursuant to the Security Documents;
(c)
to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents;
(d)
to facilitate the accession by a New Lender to any Security Document following an assignment in accordance with clause 32.1 (Assignments and transfers by the Lenders); and/or
(e)
to satisfy any reasonable request of information made by KEXIM.
21.7.2
Each Obligor and the Manager shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security Interest conferred or intended to be conferred on the Security Agent and/or any other Finance Party by or pursuant to the Finance Documents.
21.8
Negative pledge in respect of Charged Property or Borrower's and Owners' shares
21.8.1
Except as approved by the Majority Lenders and save for Permitted Maritime Liens, no Obligor will grant or allow to exist any Security Interest over any Charged Property.
21.8.2
No Obligor will grant or allow to exist any Security Interest over any of the shares in any of the Borrower or the Owners or over any of the rights deriving from or related to such shares.
21.9
Environmental matters
21.9.1
The Borrower shall notify the Agent as soon as reasonably practicable of any Environmental Claim being made against any Group Member or any other Obligor or the Manager or any Fleet Vessel which, if successful to any extent, might have a Material Adverse Effect and of any Environmental Incident which may give rise to such a claim and they will keep the Agent regularly and promptly
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informed in reasonable detail of the nature of, and response to, any such Environmental Incident and the defence to any such claim.
21.9.2
The Borrower will procure that all Environmental Laws (and any consents, licences or approvals obtained under them) applicable to Fleet Vessels will not be violated in a way which might have a Material Adverse Effect.
21.10
Maintenance of satisfactory properties and insurances
21.10.1
Each Obligor shall maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary or desirable in the conduct of its business.
21.10.2
Each Obligor shall maintain insurances (in addition to the Insurances required to be maintained under clause 24 (Insurance)) on and in relation to its business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business.
21.11
Minimum liquidity
Each Owner who owns a Mortgaged Ship shall maintain at all times cash balances in its Earnings Account in an amount as required to be maintained under paragraph (f) of clause 20.2 (Financial condition).
21.12
Pari passu
Each Obligor will ensure that its obligations under the Finance Documents shall, without prejudice to the security intended to be created by the Security Documents, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract.
21.13
Syndication
The Borrower will provide reasonable assistance to the Arranger in the preparation of the primary syndication of the Facilities (including, without limitation, by making the senior management of the Borrower available for the purpose of making presentations to, or meeting, potential lending institutions) and will comply with all reasonable requests for information from potential syndicate members prior to completion of syndication (as and when such completion is determined by the Agent to have occurred).
21.14
Borrower's own account
Each Obligor will ensure that any borrowing by it and/or the performance of its obligations hereunder and under the other Finance Documents to which it is a party will be for its own account and will not involve any breach by it of any law, or regulatory measure relating to Money Laundering (as defined in clause 21.16 (Bribery and corruption)).
21.15
Inspection
Each Obligor who is a party undertakes with the Finance Parties that, from the date of this Agreement and so long as any moneys are owing under any of the Finance Documents, upon the request of the Agent it shall provide the Finance Parties or any of their representatives, professional advisors and contractors with access to, and permit inspection of, books and records of any Obligor, in each case at reasonable times and upon reasonable notice.
21.16
Bribery and corruption
21.16.1
No Obligor nor the Manager shall engage in:
(a)
Corrupt Practices, Fraudulent Practices, Collusive Practices or Coercive Practices, including the procurement or the execution of any contract for goods or works relating to its functions;
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(b)
Money Laundering or acted in breach of any applicable law relating to Money Laundering; or
(c)
the Financing of Terrorism.
21.16.2
Without prejudice to the generality of clause 21.16.1:
(a)
no Obligors, other Group Member or the Manager will directly or indirectly use the proceeds of the Facilities for any purpose which would breach the Bribery Act 2010 or the United States Foreign Corrupt Practices Act of 1977;
(b)
each Obligor shall:
(i)
conduct its businesses in compliance with the Bribery Act 2010 or the United States Foreign Corrupt Practices Act of 1977; and
(ii)
maintain policies and procedures designed to promote and achieve compliance with such laws.
21.16.3
For the purposes of this clause 21.16 and clauses 19.11 (No Money Laundering) and 18.34 (No corrupt practices), the following definitions shall apply:
Coercive Practice means impairing or harming or threatening to impair or harm, directly or indirectly, any party or its property or to improperly influence the actions of that party.
Collusive Practice means an arrangement between two or more parties without the knowledge, but designed to improperly influence the actions, of another party.
Corrupt Practice means the offering, giving, receiving, or soliciting, directly or indirectly, anything of value to improperly influence the actions of another party.
Financing of Terrorism means the act of providing or collecting funds with the intention that they be used, or in the knowledge that they are to be used, in order to carry out terrorist acts.
Fraudulent Practice means any action, including misrepresentation, to obtain a financial or other benefit or avoid an obligation, by deception.
Money Laundering means:
(a)
the conversion or transfer of property, knowing it is derived from a criminal offence, for the purpose of concealing or disguising its illegal origin or of assisting any person who is involved in the commission of the crime to evade the legal consequences of its actions;
(b)
the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property knowing that it is derived from a criminal offence; or
(c)
the acquisition, possession or use of property knowing at the time of its receipt that it is derived from a criminal offence.
21.17
Sanctions
(a)
Each Obligor, the Manager and any Group Member shall ensure that none of their director, officer, agent, employee or person acting on behalf of the foregoing, is a Restricted Person and acts directly or indirectly on behalf of a Restricted Person.
(b)
No Obligor shall, and shall procure that each Group Member and the Manager shall not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Finance Parties.
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(c)
Each Obligor and the Manager shall procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with any Finance Party in its name or in the name of any Group Member.
(d)
Each Obligor shall ensure that it, and each Group Member and the Manager, takes reasonable measures to ensure compliance with Sanctions.
(e)
Each Obligor shall, and shall procure that each Group Member and the Manager shall, to the extent permitted by law, promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority.
21.18
Use of proceeds
The Obligors shall not, and shall procure that each Group Member and any Affiliate of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loans or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (a) involving or for the benefit of any Restricted Person or (b) in any other manner that could result in any Obligor or a Finance Party being in breach of any Sanctions or becoming a Restricted Person.
21.19
KEXIM requirements
No Obligor shall act (or omit to act) in a manner that is inconsistent with any requirement of KEXIM under or in connection with the KEXIM Guarantee and, in particular:
(a)
each Obligor shall do all that is necessary to ensure that all requirements (to which it is subject) of KEXIM under or in connection with each KEXIM Guarantee are complied with;
(b)
each Obligor shall refrain from acting in any manner which might be reasonably expected to result in a breach of any requirements of KEXIM under or in connection with the KEXIM Guarantee or affect the validity of any of them; and
(c)
each Obligor shall do all that is necessary to satisfy any reasonable request for information made by KEXIM.
21.20
KEXIM cover
If at any time in the opinion of the KEXIM Agent, any provision of a Finance Document contradicts or conflicts with any provision of the KEXIM Guarantee, the Borrower will:
(a)
take all steps as the Agent, the KEXIM Agent and/or KEXIM shall reasonably require to remove such contradiction or conflict; and
(b)
take all steps as the Agent, the KEXIM Agent and/or KEXIM shall reasonably require to ensure that the KEXIM Guarantee remains in full force and effect.
Upon the Borrower's written request, the Agent and/or the KEXIM Agent may deliver a copy of the executed KEXIM Guarantee (and each Finance Party and KEXIM hereby authorise such action) to the Borrower.
21.21
IPO
21.21.1
The Obligors hereby agree to procure that no IPO will be attempted, commenced or completed unless the following conditions are met:
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(a)
no Default has occurred at the times when the Obligor's relevant request for consent of such IPO under paragraph (d) below is made to the Finance Parties (if applicable), when such IPO commences and when such IPO completes or immediately thereafter;
(b)
upon and immediately following the completion of such IPO, no IPO Change of Control occurs;
(c)
no public offering may be made of any shares of any Obligor (except the Parent) or any Group Member except for an IPO in respect of the Borrower; and
(d)
the Finance Parties (through a decision obtained by all Lenders) and KEXIM have provided their written consent to such IPO provided that, for the avoidance of doubt, if conditions (a), (b) and (c) above are satisfied no such written consent is required.
21.21.2
If an IPO compliant with this clause 21.21 and the other provisions of the Finance Documents has been completed, then the Obligors who are Party hereby agree to procure that by no later than 30 days after completion of the IPO, each Obligor will enter into amendment agreements to the Finance Documents (including a supplemental agreement to this Agreement) for the purpose of implementing any consequential changes to the Finance Documents as may be required as a result of the IPO and any provisions of the Finance Documents in relation to the IPO, in each case in such form and substance as may be required by the Agent and at the cost and expense of the Borrower.
21.22
Spin-off
21.22.1
The Obligors hereby agree to procure that no Spin-off will be attempted, commenced or completed unless the following conditions are met:
(a)
no Default has occurred at the times when the Obligors' relevant request for consent of such Spin-off under paragraph (d) below is made to the Finance Parties (if applicable), when such Spin-off commences and when such Spin-off completes or immediately thereafter;
(b)
upon and immediately following the completion of such Spin-off, no Spin-off Change of Control occurs;
(c)
no transfer or other disposal may be made of any shares of any Obligor (except the Borrower) or any Group Member except pursuant to a Spin-off (and subject to the provisions of clause 21.21 (IPO) in respect of an IPO compliant with such clause); and
(d)
the Finance Parties (through a decision obtained by all Lenders) and KEXIM have provided their written consent to such Spin-off provided that, for the avoidance of doubt, if conditions (a), (b) and (c) above are satisfied no such written consent is required.
21.22.2
If a Spin-off compliant with this clause 21.22 and the other provisions of the Finance Documents has been completed, then the Obligors who are Party hereby agree to procure that by no later than 30 days after completion of the Spin-off, each Obligor will enter into amendment agreements to the Finance Documents (including a supplemental agreement to this Agreement) for the purpose of implementing any consequential changes to the Finance Documents as may be required as a result of the Spin-off and any provisions of the Finance Documents in relation to the Spin-off, in each case in such form and substance as may be required by the Agent and at the cost and expense of the Borrower.
21.23
Condition subsequent; delivery under the relevant Charter
The Obligors shall, no later than five (5) Business Days after Delivery of each Ship:
(a)
procure delivery of the relevant Ship to the Charterer under the relevant Charter and provide the Agent with evidence that the relevant Ship has been accepted by the relevant Charterer under the relevant Charter together with any other documents or evidence of the type
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referred to in Schedule 3 (Conditions precedent) in relation to such delivery as the Agent may require; and
(b)
procure delivery to the Agent of the Quiet Enjoyment Agreement for the relevant Ship, duly executed by the relevant Owner, the Security Agent and the relevant Charterer.
22
DEALINGS WITH SHIPS
Each Obligor undertakes that this clause 22 will be complied with in relation to each Mortgaged Ship throughout the relevant Ship's Mortgage Period.
22.1
Ship's name and registration
(a)
The Ship's name shall only be changed after prior notice of at least 3 Business Days to the Agent.
(b)
The Ship shall be registered with the relevant Registry under the laws of its Flag State. Except with approval by all the Lenders and KEXIM, the Ship shall not be registered under any other flag or at any other port or fly any other flag (other than that of its Flag State) provided that no such approval shall be required for the registration of a Ship under the flag of another Approved Flag State as long as replacement Security Interests are granted in respect of that Ship (which are, in the opinion of the Lenders, equivalent to those in place prior to such registration) in favour of the Security Agent immediately following the registration of such ship under the flag of that Approved Flag State. If that registration is for a limited period, it shall be renewed at least 15 days before the date it is due to expire and the Agent shall be notified of that renewal at least 15 days before the date it is due to expire.
(c)
Nothing will be done and no action will be omitted if that might result in such registration being forfeited or imperilled or the Ship being required to be registered under the laws of another state of registry.
22.2
Sale or other disposal of Ship
Except with approval of the Agent (acting on the instructions of all the Lenders), an Owner will not sell, or agree to, transfer, abandon or otherwise dispose of its Ship or any share or interest in it if the net proceeds of sale would be insufficient to discharge the prepayment obligations of the Borrower in respect of such sale under clause 7.6 (Sale or Total Loss), or if an Event of Default exists. Where no approval is required under this clause, the Borrower shall provide advance notice to the Agent of any such proposed sale and such sale shall be subject to the provisions of the same clause 7.6 (Sale or Total Loss).
22.3
Manager
A manager of the Ship (other than TMS) shall not be appointed unless that manager and the terms of its appointment are approved (which approval of such manager shall not be required if such manager has the same ultimate beneficial owner as TMS has on the date of this Agreement) and it and the relevant Owner have delivered a duly executed Manager's Undertaking to the Security Agent. The relevant Owner shall not agree to any change to the terms of appointment of a manager which have been approved unless such change is approved by the Majority Lenders.
22.4
Copy of Mortgage on board
A properly certified copy of the relevant Mortgage shall be kept on board the Ship with its papers and shown to anyone having business with the Ship which might create or imply any commitment or Security Interest over or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Agent or the Security Agent.
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22.5
Notice of Mortgage
A framed printed notice of the Ship's Mortgage shall be prominently displayed in the navigation room and in the Master's cabin of the Ship. The notice must be in plain type and read as follows:
"NOTICE OF MORTGAGE
This Ship is subject to a first mortgage in favour of [here insert name of mortgagee] of [here insert address of mortgagee]. Under the said mortgage and related documents, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage".
No-one will have any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage.
22.6
Conveyance on default
Where the Ship is (or is to be) sold in exercise of any power conferred by the Security Documents, the relevant Owner shall, upon the Agent's request, immediately execute such form of transfer of title to the Ship as the Agent may require.
22.7
Chartering
22.7.1
Except with approval by the Majority Lenders, the relevant Owner shall not enter into any charter commitment for a Ship (except for the Charter for each Ship, where applicable) which is:
(a)
a bareboat or demise charter or passes possession and operational control of the Ship to another person;
(b)
capable of lasting more than 12 months;
(c)
on terms as to payment or amount of hire which are materially less beneficial to it than the terms which at that time could reasonably be expected to be obtained on the open market for vessels of the same age and type as the Ship under charter commitments of a similar type and period; or
(d)
to another Group Member.
22.7.2
Without prejudice to the rights of the Finance Parties under clause 22.7.1 above and any other provisions of the Finance Documents, the Borrower shall advise the Agent and the KEXIM Agent promptly of any proposed charter commitment (other than a Charter) of a Ship, and: