Agreement Relating To

Amending and Restating Agreement

EX-10.2

 

Date 27 January 2011

 

ARGYLE MARITIME CORP.

CATON MARITIME CORP.

DORCHESTER MARITIME CORP.

LONGWOODS MARITIME CORP.

McHENRY MARITIME CORP.

SUNSWYCK MARITIME CORP.

as Joint and Several Borrowers

 

— and —

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

— and —

 

THE ROYAL BANK OF SCOTLAND PLC

as Mandated Lead Arranger

 

— and —

 

THE ROYAL BANK OF SCOTLAND PLC

as Bookrunner, Agent, Security Trustee and Swap Bank

 


 

AMENDING AND RESTATING AGREEMENT

 


 

relating to
a term loan facility of US$150,000,000

 

Watson, Farley & Williams

London

 



 

INDEX

 

Clause

 

Page

 

 

 

1

INTERPRETATION

3

 

 

 

2

AGREEMENT OF ALL PARTIES TO THE AMENDMENT OF THE LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

6

 

 

 

3

CONDITIONS PRECEDENT AND SUBSEQUENT

6

 

 

 

4

CAPITAL INFUSION

7

 

 

 

5

PERMITTED DISCRETIONARY ACTIVITIES

9

 

 

 

6

EXCESS CASH FOR DEBIT AMORTIZATION

9

 

 

 

7

REPRESENTATIONS AND WARRANTIES

10

 

 

 

8

AMENDMENT OF LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

10

 

 

 

9

FURTHER ASSURANCES

12

 

 

 

10

FEES AND EXPENSES

12

 

 

 

11

NOTICES

13

 

 

 

12

SUPPLEMENTAL

13

 

 

 

13

LAW AND JURISDICTION

13

 

 

 

SCHEDULE 1 LENDERS

14

 

 

SCHEDULE 2 REPAYMENT SCHEDULE

15

 

 

SCHEDULE 3 TBS CREDIT FACILITIES

16

 

 

EXECUTION PAGES

17

 

 

APPENDIX 1 FORM OF AMENDED AND RESTATED LOAN AGREEMENT MARKED TO INDICATE AMENDMENTS TO THE LOAN AGREEMENT

21

 

 

APPENDIX 2 FORM OF CORPORATE GUARANTEE SUPPLEMENTS

1

 

 

APPENDIX 3 FORM OF MORTGAGE ADDENDUM

6

 

 

APPENDIX 4 JOINT VENTURE INVESTMENT SCHEDULES

16

 



 

THIS AGREEMENT (hereinafter “this Agreement”) is made on 27 January 2011

 

BETWEEN

 

(1)                                  ARGYLE MARITIME CORP., CATON MARITIME CORP., DORCHESTER MARITIME CORP., LONGWOODS MARITIME CORP., McHENRY MARITIME CORP. and SUNSWYCK MARITIME CORP., each a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as joint and several borrowers (the “Borrowers”);

 

(2)                                  THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the “Lenders”);

 

(3)                                  THE ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England as mandated lead arranger (the “Mandated Lead Arranger”);

 

(4)                                  THE ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England as agent (the “Agent”);

 

(5)                                  THE ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England as security trustee (the “Security Trustee”);

 

(6)                                  THE ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England as swap bank (the “Swap Bank”); and

 

(7)                                  THE ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England as bookrunner (the “Bookrunner”).

 

BACKGROUND

 

(A)                              By a loan agreement dated 29 March 2007 as amended by a side letter dated 24 July 2007, a supplemental letter agreement dated 26 March 2008, a supplemental agreement dated 27 March 2009, a side letter dated 27 May 2009, a side letter dated 3 September 2009, a side letter dated 31 December 2009, a supplemental agreement dated 7 January 2010, a side letter dated 28 February 2010, a side letter dated 31 March 2010, an amending and restating agreement dated 6 May 2010 and a side letter dated 16 August 2010 and as further supplemented and/or amended by letter agreeme nts dated 30 September 2010, 12 November 2010 and 23 December 2010 (the “Loan Agreement”) each made between (inter alia) (i) the Borrowers as joint and several borrowers, (ii) the Lenders, (iii) the Mandated Lead Arranger, (iv) the Bookrunner, (v) the Agent, (vi) the Security Trustee and (viii) the Swap Bank, the Lenders agreed to make available to the

 



 

Borrowers a term loan facility in an amount of One hundred and fifty million United States Dollars (US$150,000,000).

 

(B)                                By an ISDA master agreement dated 29 March 2007 (the “Master Agreement”) made between the Borrowers and the Swap Bank, the Borrowers have entered into or will enter into certain Transactions (as such term is defined in the said Master Agreement) pursuant to separate Confirmations (as such term is defined in the said Master Agreement).

 

(C)                                By the letter agreement dated 23 December 2010 referred to in Recital (A) above (the “Forbearance Letter”), and subject to the terms and conditions therein, (i) the Lenders agreed to extend the period for which they would agree not to exercise their rights or remedies arising from certain specified Events of Default which forbearance was originally granted under the letter agreement dated 30 September 2010 referred to in Recital (A) and previously extended under the letter agreement dated 12 November 2010 referred to in Recital (A), (ii) the Borrowers agreed (inter alia) to utilise the funds on the Restricted Equity Deposit Account (being $6,175,000) to meet the delivery instalment of the Contract Price payable under the Shipbuilding Contract for Ship E (iii) the Lenders agreed to make an Advance of $160,000 the proceeds of which, together with the Borrowers’ own funds (including the funds from the Restricted Equity Deposit Account), were used to meet the delivery instalment of the Contract Price payable under the Shipbuilding Contract for Ship E, which Ship delivered on 5 January 2011, and (iv) the Lenders agreed to amend the drawdown schedule for Loans D and F so that the remaining delivery instalments of the Contract Price payable under the relevant Shipbuilding Contracts in respect of Ship D and Ship F (which are scheduled for delivery in April 2011 and August 2011 respectively) shall be met as follows:

 

 

 

Ship D

 

Ship F

 

 

 

 

 

 

 

Delivery Advance

 

$

7,420,000

 

$

7,420,000

 

 

 

 

 

 

 

Borrower’s own funds

 

0

 

0

 

 

 

 

 

 

 

Payment to Seller

 

$

7,420,000

 

$

7,420,000

 

 

(D)                               As at the date hereof the Total Commitment is One hundred and forty six million and six hundred and seventy thousand Dollars ($146,670,000) of which One hundred and thirty one million eight hundred and thirty thousand Dollars ($131,830,000) remains outstanding as follows:-

 

 

 

Amount Drawn

 

Amount Outstanding

 

Amount available for
Drawdown

 

 

 

 

 

 

 

 

 

Loan A

 

$

25,000,000

 

$

23,330,000

 

Zero

 

 

 

 

 

 

 

 

 

Loan B

 

$

24,587,000

 

$

23,752,500

 

Zero

 

 

 

 

 

 

 

 

 

Loan C

 

$

25,000,000

 

$

25,000,000

 

Zero

 

 

 

 

 

 

 

 

 

Loan D

 

$

20,000,000

 

$

20,000,000

 

$

7,420,000

 

 

 

 

 

 

 

 

 

Loan E

 

$

20,000,000

 

$

19,747,500

 

Zero

 

 

 

 

 

 

 

 

 

Loan F

 

$

20,000,000

 

$

20,000,000

 

$

7,420,000

 

 

2



 

(E)                                 Subject to the terms and conditions of this Agreement the Lenders have agreed with the Borrowers:

 

(i)                                     to amend certain covenants in the Loan Agreement on the terms and conditions set out herein;

 

(ii)                                  to change the Margin;

 

(iii)                               that the Borrowers will pay an additional restructuring fee;

 

(iv)                              to incorporate within an amended and restated Loan Agreement the amendments to the Loan Agreement agreed pursuant to the Forbearance Letter;

 

(v)                                 to reschedule the repayment instalments in respect of the Loans with no repayments until 30 June 2011 but retaining the Final Repayment Date of 9 September 2014; and

 

(vi)                              that there will be an infusion of equity into the New Corporate Guarantor of not less than Ten million Dollars ($10,000,000).

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

1.1                               Defined expressions.  Words and expressions defined in the Loan Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires.

 

1.2                               Definitions.  In this Agreement, unless the contrary intention appears:

 

Additional Capital Infusion” shall have the meaning given in Clause 4.3;

 

Additional Fee Letter”  means any letter or letters dated on or about the date of this Agreement between the Borrowers and any of the Creditor Parties in respect of any additional fees;

 

Amended and Restated Loan Agreement”  means the Loan Agreement as amended and restated by this Agreement in the form set out in Appendix 1;

 

Capital Infusion” shall mean the Initial Capital Infusion, the proceeds of the Rights Offering and any Additional Capital Infusion;

 

Corporate Guarantee Supplements”  means letters supplemental to each of the Corporate Guarantee and the New Corporate Guarantee executed or to be executed by the Corporate Guarantor and the New Corporate Guarantor for respectively in favour of the Security Trustee substantially in the forms set out in Appendix 2;

 

Deferring Lenders” means the lenders under the TBS Credit Facilities other than Credit Suisse and Commerzbank AG;

 

3



 

Effective Date”  means the date on which the Agent notifies the Borrowers and the Creditor Parties that the conditions precedent in Clause 3.2 have been fulfilled;

 

Equity Outside Date” means the date falling six months after the Effective Date;

 

Escrow Agreement” means the escrow agreement dated 25 January 2011 made between the New Corporate Guarantor, the Management Shareholders, the Agent, Bank of America N.A., DVB Group Merchant Bank (Asia) Ltd and JP Morgan Chase Bank, National Association as escrow agent;

 

Excess Cash” shall have the meaning given in Clause 6.1;

 

Existing Finance Documents”  means the Finance Documents (other than the Loan Agreement) which have been executed prior to the date hereof;

 

Existing Mortgages”  means:

 

(a)                                  a first preferred Panamanian ship mortgage dated 23 September 2009 as amended by a first addendum dated 26 March 2010 and a second addendum dated 6 May 2010, permanently registered at the Public Registry Office, Microfilm (Mercantile) Section, at Microjacket N-33447, Document No. 1689768 as of 5 December 2009 by which Argyle Maritime Corp. mortgaged the vessel “ROCKAWAY BELLE” to and in favour of the Security Trustee on the terms and conditions therein contained; and

 

(b)                                 a first preferred Panamanian ship mortgage dated 26 March 2010 as amended by a first addendum dated 6 May 2010 permanently registered at the Public Registry Office, Microfilm (Mercantile) Section, at Microjacket N-34102, Document No. 1806157 as of 7 July 2010 by which Caton Maritime Corp. mortgaged the vessel “DAKOTA PRINCESS” to and in favour of the Security Trustee on terms and conditions therein contained; and

 

(c)                                  a first preferred Panamanian ship mortgage dated 2 September 2010 permanently registered at the Public Registry Office, Microfilm (mercantile) Section, at Microjacket N-34665, Document No. 1895105 as of 21 December 2010 by which Dorchester Maritime Corp. mortgaged the vessel “MONTAUK MAIDEN” to and in favour of the Security Trustee on terms and conditions therein contained;

 

(d)                                 a first preferred Panamanian ship mortgage dated 5 January 2011 preliminary registered at the Public Registry Office, Microfilm (mercantile) Section, at Microjacket N-35071, Document No. 1900814 as of 5 January 2011 by which McHenry Maritime Corp. mortgaged the vessel “OMAHA BELLE” to and in favour of the Security Trustee on terms and conditions therein contained;

 

Final Capital Infusion” shall have the meaning given in Clause 4.1;

 

Global Restructuring Term Sheet” means the term sheet dated 14 January 2011 in respect of the restructuring of the Loan Facility and the other TBS Credit Facilities;

 

Initial Capital Infusion” shall have the meaning given in Clause 4.1;

 

Investment Agreement” means the investment agreement dated 25 January 2011, made between the New Corporate Guarantor and the Management Shareholders;

 

4



 

Jamaican JV” means investment projects in relation to limestone mines in the Dominican Republic and Jamaica;

 

Loan Agreement”  means the loan agreement dated 29 March 2007 as referred to in Recital (A);

 

LOG-STAR” means LOG-STAR Navegação S.A., a corporation organised under the laws of Brazil;

 

Logstar JV” means the joint venture with LOG-STAR in Brazil which will/does provide break-bulk, bulk, liner and parcel services in the Brazilian coastal cabotage trade;

 

Management Shareholders” means Joseph E. Royce, Lawrence A. Blatte and Gregg L. McNelis;

 

Master Agreement”  means the master agreement dated 29 March 2007 as amended and supplemented from time to time and  as referred to in Recital (B);

 

Minimum Liquidity Covenant” means the covenant set out in Schedule 8(a) of the Loan Agreement as amended by this Agreement;

 

Mortgage Addendum” or “Mortgage Addenda”  means in relation to each Existing Mortgage, an addendum to the Existing Mortgage, executed or to be executed by the relevant Borrower in favour of the Security Trustee substantially in the form set out in Appendix 3 (or in such other form as the Agent may approve or require);

 

Net Working Capital” shall have the meaning given in Clause 6.1;

 

Permitted Discretionary Activities” means investments permitted under Clause 5.1;

 

Permitted Additional Junior Capital” shall have the meaning given in Clause 4.7;

 

Preferred Equity” shall have the meaning given in Clause 4.1;

 

Quarter Date” means 31 March, 30 June, 30 September and 31 December in each year and, in the singular, means any of them;

 

Rights Offering” means the offering by the New Corporate Guarantor to its shareholders of rights to purchase Preferred Equity in the New Corporate Guarantor pursuant to the provisions of the Investment Agreement;

 

Rollover Capex” shall have the meaning given in Clause 6.1;

 

Special Accounts” shall have the meaning given in Clause 4.4;

 

Swap Facility Forbearance Letter” means the letter agreement dated 23 December 2010 and made between the Swap Bank, the Borrowers and the New Corporate Guarantor;

 

TBS Credit Facilities” means the credit facilities to various members of the TBS Group listed in Schedule 3;  and

 

TBS Group” means the New Corporate Guarantor and its subsidiaries.

 

5



 

1.3                               Application of construction and interpretation provisions of Loan Agreement.  Clauses 1.2, 1.5 and 1.6 of the Loan Agreement apply, with any necessary modifications, to this Agreement.

 

2                                         AGREEMENT OF ALL PARTIES TO THE AMENDMENT OF THE LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

 

2.1                               Agreement of the parties to this Agreement.  The parties to this Agreement agree, subject to and upon the terms and conditions of this Agreement to the amendment of the Loan Agreement, the Master Agreement and the Existing Finance Documents to be made pursuant to Clauses 8.1, 8.2 and 8.3.

 

2.2                               Effective Date.  The agreement of the parties to this Agreement contained in Clause 2.1 shall have effect on and from the Effective Date.

 

2.3                               Repayment Schedules.  With effect from the Effective Date the repayment schedules in respect of the Loans shall be as set out in Schedule 2 to this Agreement (and so that Schedule 5 to the Loan Agreement shall be replaced by Schedule 2 to this Agreement).

 

3                                         CONDITIONS PRECEDENT AND SUBSEQUENT

 

3.1                               General.  The agreement of the parties to this Agreement contained in Clause 2.1 is subject to the fulfilment of the conditions precedent in Clause 3.2.

 

3.2                               Conditions precedent.  The conditions referred to in Clause 2.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before 31 January 2011 or such later date as the Agent may agree with the Creditor Parties and the Borrowers:

 

(a)                                  in relation to the Borrowers, the New Corporate Guarantor, the Corporate Guarantor and the Shareholder, documents of the kind specified in paragraphs 2, 3, 4 and 5 of Part A of Schedule 3 of the Loan Agreement with appropriate modifications to refer to this Agreement, the Additional Fee Letter, the Corporate Guarantee Supplements and the Mortgage Addenda and insofar as each is a party thereto;

 

(b)                                 a duly executed original of this Agreement duly executed by the parties to it;

 

(c)                                  a duly executed original of the Mortgage Addenda;

 

(d)                                 a duly executed original of the Corporate Guarantee Supplements;

 

(e)                                  evidence that each of the TBS Credit Facilities (other than the Loan Facility) have been restructured upon the Effective Date as per the Global Restructuring Term Sheet with the approval of all of the creditors under such TBS Credit Facilities;

 

(f)                                    documentary evidence that the agent for service of process named in Clause 31 of the Loan Agreement has accepted its appointment in respect of this Agreement;

 

(g)                                 evidence reasonably satisfactory to the Agent that the requirements of Clause 4.1(a) have been met;

 

6



 

(h)                                 schedules in relation to the proposed investments in the Logstar JV and Jamaican JV approved by the Agent;

 

(i)                                     schedule of capital expenditure necessary to complete the construction programmes in respect of Ship D and Ship F and to maintain the existing fleet of the New Corporate Guarantor and its subsidiaries’ approved by the Agent;

 

(j)                                     a duly executed original of the Additional Fee Letter; and

 

(k)                                  any further opinions, consents, agreements and documents in connection with this Agreement, the Additional Fee Letter, the Mortgage Addenda, the Corporate Guarantee Supplements and the Finance Documents which the Agent may reasonably request by notice to the Borrowers no less than 5 Business Days prior to the Effective Date.

 

3.3                               Condition subsequent.  The Agent shall receive no later than 7 days after the Effective Date, documentary evidence that each Mortgage Addendum has been duly recorded against the relevant Ship as a valid addendum to the relevant Existing Mortgage over that Ship according to the laws of Panama.

 

4                                         CAPITAL INFUSION

 

4.1                               Capital Infusion.

 

(a)                                  On or before the Effective Date the Management Shareholders shall:

 

(i)                                     invest $3,000,000 (the “Initial Capital Infusion”) in the New Corporate Guarantor in exchange for the issuance of Preferred Equity (as defined below) issued separately and apart from the Rights Offering;

 

(ii)                                  unconditionally backstop the funding of an additional investment of $7,000,000 (the “Final Capital Infusion”) in the New Corporate Guarantor by depositing the Final Capital Infusion in an escrow account with JPMorgan Chase Bank, National Association in accordance with the Escrow Agreement; and

 

(iii)                               execute and deliver the Investment Agreement and the Escrow Agreement, each in form and substance reasonably satisfactory to the Agent.

 

(b)                                 Pursuant to the Investment Agreement, the New Corporate Guarantor shall issue to the Management Shareholders and other shareholders, in exchange for the Capital Infusion, rights to acquire preferred stock, convertible preferred stock or similar equity securities in the New Corporate Guarantor (the “Preferred Equity”).  The conversion price of convertible Preferred Equity shall be calculated as determined by the independent directors of the New Corporate Guarantor.

 

(c)                                  If the full amount of the Final Capital Infusion is not funded to the New Corporate Guarantor by the Equity Outside Date, an Event of Default shall occur under the Loan Agreement and the other Finance Documents.

 

(d)                                 The Initial Capital Infusion shall be immediately available for Permitted Discretionary Activities.

 

4.2                               Dividends on Preferred Equity.  Until the end of the Security Period, except as permitted by the Investment Agreement and the Escrow Agreement, the New Corporate

 

7



 

Guarantor shall not declare or pay any dividends or return any capital to any holder of Preferred Equity or authorise or make any other distribution, payment or delivery of property or cash to any holder of Preferred Equity, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any share of Preferred Equity, and the holders of the Preferred Equity shall not be entitled to require the New Corporate Guarantor to redeem the Preferred Equity or pay cash dividends on such Preferred Equity before 9 September 2016.

 

4.3                               Use of Final Capital Infusion.

 

(a)                                  Some or all of the Final Capital Infusion shall be drawn, as provided in the Investment Agreement and the Escrow Agreement, on or prior to the Equity Outside Date in exchange for the issuance to the Management Shareholders of Preferred Equity.  The Management Shareholders’ portion of the Final Capital Infusion shall be calculated as $7,000,000 less the sum of (i) the amount, if any, received from other shareholders subscribing to the Rights Offering and (ii) the amount of the Additional Capital Infusion (as defined below).

 

(b)                                 In accordance with the Investment Agreement and the Escrow Agreement, the Final Capital Infusion shall be available to be drawn, at the discretion of the New Corporate Guarantor, on or prior to the Equity Outside Date to fund Permitted Discretionary Activities or to maintain compliance with the Minimum Liquidity Covenant.  Any amounts so withdrawn (an “Additional Capital Infusion”) shall be in exchange for the issuance to the Management Shareholders of Preferred Equity of the New Corporate Guarantor issued separately and apart from the Rights Offering.

 

4.4                               Deposit of Capital Infusion.  The New Corporate Guarantor shall deposit the proceeds of any Capital Infusion up to $20,000,000, into one or more segregated accounts (the “Special Accounts”) held by the New Corporate Guarantor.

 

4.5                               Use of funds in Special Accounts.

 

(a)                                  The funds held in the Special Accounts shall be available, at the discretion of the New Corporate Guarantor, to fund Permitted Discretionary Activities or provide liquidity relief (including curing any breach of the Minimum Liquidity Covenant).  Any funds from the Special Account used to cure a breach of the Minimum Liquidity Covenant may thereafter be returned to the Special Accounts to the extent no longer needed to maintain compliance with such covenant; provided however that no such refund can be effectuated unless, after such refund, aggregate cash balances (other than cash in any Specia l Account and any cash pledged to support letters of credit) equal or exceed $22,500,000, subject to a limit, applied separately for each cure of a breach of the Minimum Liquidity Covenant, of the sum of (i) $5,000,000 plus (ii) the amount by which aggregate amounts spent for Permitted Discretionary Activities are less than $5,000,000.

 

(b)                                 The New Corporate Guarantor shall not pledge the Special Accounts or any funds standing to the credit of the Special Accounts.

 

(c)                                  The New Corporate Guarantor shall have the sole and exclusive rights to the Special Accounts and the funds standing to the credit of the Special Accounts and neither the Management Shareholders nor investors participating in the Rights Offering shall have any residual rights with respect to funds in the Special Accounts.

 

8



 

4.6                               Replenishment of Special Accounts.  The Special Accounts may be replenished as provided in Clause 4.5(a) above, Clause 4.7 below, by Clause 11.18(iv)(4) of the Loan Agreement and as may otherwise be permitted by the Finance Documents.

 

4.7                               Permitted Additional Junior Capital.  Additional capital infusions in the New Corporate Guarantor (“Permitted Additional Junior Capital”) may be made in any form permitted for the Capital Infusion and shall be used initially to replenish the Special Accounts up to $15,000,000 if the aggregate amount of the Capital Infusion before the Equity Outside Date is $15,000,000 or less, and up to $20,000,000, if the aggregate amount of the Capital Infusion before the Equity Outside Dat e is in excess of $15,000,000.  Permitted Additional Junior Capital in excess of amounts required to replenish the Special Accounts shall be treated as available cash for the purposes of calculating Excess Cash.

 

5                                         PERMITTED DISCRETIONARY ACTIVITIES

 

5.1                               Permitted Discretionary Activities.  The New Corporate Guarantor shall be permitted to make investments in the Logstar JV and the Jamaican JV out of the funds in the Special Account without the prior approval of the Lenders provided that:

 

(a)                                  the amount of such investments does not exceed the lower of Six million five hundred thousand Dollars ($6,500,000) and fifty per cent (50%) of the sum of the amount of the Capital Infusion and any Permitted Additional Junior Capital that is funded to the Special Account; and

 

(b)                                 the Borrowers and the other Security Parties are in compliance with all covenants and undertakings under this Agreement, the Loan Agreement as amended by the Agreement and the Finance Documents; and

 

(c)                                  such investments are substantially in accordance with the schedules approved by the Agent on or before the Effective Date and attached to this Agreement as Appendix 4.

 

6                                         EXCESS CASH FOR DEBIT AMORTIZATION

 

6.1                               Calculation of Excess Cash.  The amount of any Excess Cash shall be calculated semi-annually beginning with the first such calculation to be made as at 31 December 2011. “Excess Cash” for these purposes means:-

 

(a)                                 aggregate cash balances of the New Corporate Guarantor and its subsidiaries at the measurement date (other than cash in the Special Account and any cash pledged to support letters of credit);

 

(b)                                 minus Rollover Capex (and “Rollover Capex” means for these purposes capital expenditure permitted under the terms of the Loan Agreement as amended by this Agreement to be incurred in the last quarter of the relevant measurement period but actually to be incurred in the subsequent measurement period);

 

(c)                                  minus any insurance proceeds held for repair of any vessel within the fleet of vessels owned and/or operated by the New Corporate Guarantor or any of its subsidiaries;

 

(d)                                 minus an amount equal to the funds transferred from the Special Account to cure any breach of the Minimum Liquidity Covenant and eligible to be refunded to the Special

 

9



 

Account under the terms of this Agreement, but not yet so refunded on the relevant measurement date;

 

(e)                                  plus any increase in net working capital (as this term is used in GAAP as defined in Schedule 8 of the Loan Agreement) during the measurement period that exceeds Four million Dollars ($4,000,000) and minus any decrease in net working capital during the measurement period that exceeds Four million Dollars ($4,000,000);

 

(f)                                    minus net proceeds from the sale of any encumbered assets of the New Corporate Guarantor and its subsidiaries outside the ordinary course of business to the extent used or anticipated to be used within 30 days of the measurement period to repay debt encumbering such assets;

 

(g)                                 minus Thirty million Dollars ($30,000,000).

 

6.2                               Cash Management Practices.  The New Corporate Guarantor and its subsidiaries to maintain normal cash management practices provided however that nothing in such cash management practices are to impair the New Corporate Guarantor’s ability to pay the calculated amount of Excess Cash for debt amortisation as provided in this Clause 6.

 

6.3                               Debt amortisation.  Any Excess Cash calculated at the end of each semi-annual period as aforesaid shall be payable within 60 days after the end of such period where that period is the end of a calendar year and within 45 days after the end of such period where that period is not the end of a calendar year towards prepayment of the principal amount (in inverse order of maturity of instalments) of the Financial Indebtedness owing to the Deferring Lenders in proportion to the percentage allocati ons specified against each of the TBS Credit Facilities in Schedule 3.

 

7                                         REPRESENTATIONS AND WARRANTIES

 

7.1                               Repetition of Loan Agreement representations and warranties.  The Borrowers represent and warrant to the Agent that the representations and warranties in clause 10 of the Loan Agreement, as amended and restated by this Agreement and updated with appropriate modifications to refer to this Agreement and, where appropriate, the Mortgage Addendum, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing.

 

7.2                               Repetition of representations and warranties under Existing Finance Documents.  The Borrowers represent and warrant to the Agent that the representations and warranties in the Existing Finance Documents to which they are a party, as amended and restated by this Agreement and updated with appropriate modifications to refer to this Agreement and, where appropriate, the Mortgage Addendum, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing.

 

8                                         AMENDMENT OF LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

 

8.1                               Amendments to Loan Agreement

 

(a)                                  With effect on and from the Effective Date the Loan Agreement shall be, and shall be deemed by this Agreement to be, amended and restated in the form of the Amended and Restated Loan Agreement.  In addition the Loan Agreement shall be amended so that this Agreement becomes an integral part of the Loan Agreement, so that (i) all references

 

10



 

therein to this “Agreement” shall include this Agreement, (ii) the definitions set out in Clause 1.2 of this Agreement are included in Clause 1.1 of the Loan Agreement, (iii) by construing references therein to the Existing Mortgages as if the same referred to the Existing Mortgages as amended and supplemented by the Mortgage Addenda (iv) by construing references therein to the Corporate Guarantee and the New Corporate Guarantee as if the same referred to such Corporate Guarantee and the New Corporate Guarantee as amended and supplemented by the Corporate Guarantee Supplements and (iv) so that the definition of Finance Documents therein includes the Additional Fee Letter.

 

(b)                                 As so amended and restated pursuant to (a) above, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms.

 

8.2                               Amendments to Master Agreement.  With effect on and from the Effective Date the Master Agreement shall be, and shall be deemed by this Agreement to be, amended so that the definition of, and references throughout to, the Loan Facility and the Credit Support Documents shall be construed as if the same referred to the Loan Agreement and those Credit Support Documents as amended and restated or supplemented by this Agreement and the Mortgage Addendum.

 

8.3                               Amendments to Existing Finance Documents.  With effect on and from the Effective Date each of the Existing Finance Documents (other than the Existing Mortgages which are amended and supplemented by the Mortgage Addenda) shall be, and shall be deemed by this Agreement to be, amended as follows:

 

(a)                                  the definition of, and references throughout each of the Existing Finance Documents to, the Loan Agreement, the Master Agreement and any of the Existing Finance Documents shall be construed as if the same referred to the Loan Agreement, the Master Agreement and those Existing Finance Documents as amended and restated or supplemented by this Agreement;

 

(b)                                 by construing references throughout each of the Existing Finance Documents to “the Finance Documents” and other like expressions as if the same included the Additional Fee Letter and the Corporate Guarantee Supplements;

 

(c)                                  the definition of, and references throughout each of the Existing Finance Documents to, the Existing Mortgages, shall be construed as if the same referred to the Existing Mortgages as amended and supplemented by the Mortgage Addenda; and

 

(d)                                 by construing references throughout each of the Existing Finance Documents to “this Agreement”, “this Deed”, “hereunder” and other like expressions as if the same referred to such Existing Finance Documents as amended and supplemented by this Agreement.

 

8.4                               The Master Agreement and the Existing Finance Documents to remain in full force and effect.  The Master Agreement and the Existing Finance Documents shall remain in full force and effect, as amended by:

 

(a)                                  the amendments contained or referred to in Clause 8.2 and 8.3 and the Mortgage Addenda; and

 

11



 

(b)                                 such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.

 

8.5                               Waiver.  Pursuant to the Forbearance Letter, the Lenders and the Agent (for and on behalf of itself and the other Creditor Parties) agreed, subject to the terms and conditions set out in the Forbearance Letter, to forbear from exercising any of their rights or remedies arising from the Specified Events of Default and the Further Specified Events of Default (each as defined in the Forbearance Letter).  Subject to the fulfilment or waiver of the conditions set out in Clause 3 of  this   Agreement  and with effect from the Effective Date:

 

(a)                                  each Creditor Party hereby waives (i) each of the Specified Events of Default and the Further Specified Events of Default (as defined in the Forbearance Letter); and (ii) the rights and remedies of the Creditor Parties (or any of them) arising from the matters referred to in (a)(i) aforesaid; and

 

(b)                                 the Swap Bank waives (i) each of the Specified Events of Default and the Further Events of Default (as defined in the Swap Facility Forbearance Letter) and (ii) the rights and remedies of the Swap Bank arising from the matters referred to in (b)(i)aforesaid.

 

9                                         FURTHER ASSURANCES

 

9.1                               Borrowers’ obligations to execute further documents etc.  The Borrowers shall:

 

(a)                                  execute and deliver to the Agent (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Agent may, in any particular case, specify;

 

(b)                                 effect any registration or notarisation, give any notice or take any other step;

 

which the Agent may, by notice to the Borrowers, reasonably specify for any of the purposes described in Clause 9.2 or for any similar or related purpose.

 

9.2                               Purposes of further assurances.  Those purposes are:

 

(a)                                  validly and effectively to create any Security Interest or right of any kind which the Agent intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and restated or supplemented by this Agreement, or by the Mortgage Addenda; and

 

(b)                                 implementing the terms and provisions of this Agreement.

 

9.3                               Terms of further assurances.  The Agent may specify the terms of any document to be executed by the Borrowers under Clause 9.1, and those terms may include such powers and provisions which the Agent reasonably considers appropriate to protect its interests under the Finance Documents.

 

10                                  FEES AND EXPENSES

 

10.1                        Amendment Fee.  The Borrowers shall pay to the Agent a restructuring fee which in aggregate is equal to zero point five per cent (0.5%) of the Total Commitment outstanding as at the Effective Date such fee to be distributed pro rata amongst the

 

12



 

Lenders and to be payable in three (3) equal instalments on 31 January 2011, 31 March 2011 and 30 June 2011.

 

10.2                        Expenses.  The provisions of clauses 20.2 - 20.6 of the Loan Agreement as amended and restated by the Agreement shall apply to the Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

 

11                                  NOTICES

 

11.1                        General.  The provisions of clause 28 (Notices) of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

 

12                                  SUPPLEMENTAL

 

12.1                       Counterparts.  This Agreement may be executed in any number of counterparts.

 

12.2                        Third party rights.  Other than a Creditor Party, no person who is not a party to this Agreement has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

13                                  LAW AND JURISDICTION

 

13.1                        Governing law.  This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

 

13.2                        Incorporation of the Loan Agreement provisions.  The provisions of clauses 31.2-31.6 of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

 

THIS AGREEMENT has been duly executed as a deed on the date stated at the beginning of this Agreement.

 

13



 

SCHEDULE 1

 

LENDERS

 

 

Lender

 

Lending Office

The Royal Bank of Scotland plc

 

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

Fax No: + 44 207 085 7142

 

Attn: Transaction and Portfolio Management

 

 

 

Citibank, N.A.

 

750 Washington Boulevard

Stamford CT06901

USA

 

Fax No: + 203 975 6265

 

Attn: Mark McElwain

 

 

 

Landesbank Hessen-Thüringen Girozentrale

 

420 Fifth Avenue, 24th Floor

New York, NY 100108-2729

USA

 

Fax No: +1 212 703 5256

 

Attn: Corporate Finance/ Portfolio Management

 

 

 

Norddeutsche Landesbank Girozentrale

 

Ship and Aircraft Finance Department

Friedrichswall 10

30159 Hannover, Germany

 

Fax No: +49 511 361 4785

 

Attn: International Shipping Group

 

 

 

Santander Asset Finance plc

 

298 Deansgate

Manchester

M3 4HH

 

Fax No: + 44 161 953 3517

 

Attn: Corporate Administration Manager

 

 

 

Bank of America, N.A.

 

Bank of America

100 Federal Street

Boston MA 02110

 

Fax No: +617434 1955

 

Attn: Transportation Division - Credit Products

 

14



 

SCHEDULE 2

 

REPAYMENT SCHEDULE

 

1                                         The Borrowers shall make a repayment instalment in respect of each Loan in relation to a Ship* in the following amounts on each corresponding Quarter Date:

 

Quarter Date

 

Amount Per Ship

 

 

 

 

 

Second Quarter Date 2011

 

$

419,500

 

 

 

 

 

Third Quarter Date 2011

 

$

335,600

 

 

 

 

 

Fourth Quarter Date 2011

 

$

279,667

 

 

 

 

 

First Quarter Date 2012

 

$

214,833

 

 

 

 

 

Second Quarter Date 2012

 

$

214,833

 

 

 

 

 

Third Quarter Date 2012

 

$

214,833

 

 

 

 

 

Fourth Quarter Date 2012

 

$

214,833

 

 

 

 

 

First Quarter Date 2013

 

$

295,833

 

 

 

 

 

Second Quarter Date 2013

 

$

295,833

 

 

 

 

 

Third Quarter Date 2013

 

$

295,833

 

 

 

 

 

Fourth Quarter Date 2013

 

$

295,833

 

 

 

 

 

First Quarter Date 2014

 

$

295,833

 

 

 

 

 

Second Quarter Date 2014

 

$

295,833

 

 

2                                         On the Final Repayment Date the Borrowers shall repay any outstanding amounts of the Loans in full.

 


* For the Second Quarter Date 2011 “Ship” shall include Ship A, Ship B, Ship C and Ship E.  For the Third Quarter Date 2011 “Ship” shall include Ship A, Ship B, Ship C, Ship D and Ship E.  For subsequent Quarter Dates “Ship” shall include all Ships

 

15



 

SCHEDULE 3

 

TBS CREDIT FACILITIES

 

Lender Group

 

% Allocation

 

 

 

 

 

 

 

1

 

Bank of America Credit Facilities

 

58.96

%

 

 

 

 

 

 

2

 

DVB Group Merchant Bank (Asia) Ltd Credit Facility

 

12.92

%

 

 

 

 

 

 

3

 

Credit Suisse Credit Facility

 

00.00

%

 

 

 

 

 

 

4

 

AIG Commercial Equipment Finance, Inc. Credit Facility

 

6.15

%

 

 

 

 

 

 

5

 

Commerzbank AG Credit Facility

 

00.00

%

 

 

 

 

 

 

6

 

Berenberg Bank Credit Facility

 

02.52

%

 

 

 

 

 

 

7

 

The Royal Bank of Scotland Credit Facility

 

19.45

%

 

 

 

 

 

 

 

 

 

 

100

%

 

16



 

EXECUTION PAGES

 

BORROWERS

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

)

 

ARGYLE MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

)

 

CATON MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

DORCHESTER MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

LONGWOODS MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

McHENRY MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

17



 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

SUNSWYCK MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

LENDERS

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

PLC

 

 

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

CITIBANK, N.A.

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

LANDESBANK HESSEN-THÜRINGEN

 

)

 

GIROZENTRALE

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

NORDDEUTSCHE LANDESBANK

 

)

 

GIROZENTRALE

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

18



 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

SANTANDER ASSET FINANCE PLC

 

)

 

acting by

/s/ A. Walhaus

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Ewan Gregory

 

)

 

2 Triton Square, Regents Place

 

 

 

London, NWI 3AN

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

BANK OF AMERICA, N.A.

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

MANDATED LEAD ARRANGER

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

BOOKRUNNER

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

AGENT

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

/s/ Andrew Guthrie

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

19



 

SECURITY TRUSTEE

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

/s/ Andrew Guthrie

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

SWAP BANK

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

20



 

APPENDIX 1

 

FORM OF AMENDED AND RESTATED LOAN AGREEMENT MARKED TO INDICATE AMENDMENTS TO THE LOAN AGREEMENT

 

Amendments are indicated as follows:

 

1                                         additions are indicated by underlined text; and

 

2                                         deletions are shown by the relevant text being struck out.

 

21



 

Dated as of 29 March 2007

 

ARGYLE MARITIME CORP.

CATON MARITIME CORP.

DORCHESTER MARITIME CORP.

LONGWOODS MARITIME CORP.

McHENRY MARITIME CORP.

SUNSWYCK MARITIME CORP.

 

as Joint and Several Borrowers

 

— and —

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

— and —

 

THE ROYAL BANK OF SCOTLAND plc

as Mandated Lead Arranger

 

— and —

 

THE ROYAL BANK OF SCOTLAND plc

as Bookrunner, Agent, Security Trustee and Swap Bank

 


 

LOAN AGREEMENT

 


 

relating to a term loan facility of US$150,000,000

 

Watson, Farley & Williams

London

 



 

INDEX

 

Clause

 

Page

 

 

 

1

INTERPRETATION

1

 

 

 

2

LOAN FACILITY

1719

 

 

 

3

POSITION OF THE LENDERS AND THE SWAP BANK

2022

 

 

 

4

DRAWDOWN

2122

 

 

 

5

INTEREST

2224

 

 

 

6

INTEREST PERIODS

2426

 

 

 

7

DEFAULT INTEREST

2527

 

 

 

8

REPAYMENT AND PREPAYMENT

2628

 

 

 

9

CONDITIONS PRECEDENT

2831

 

 

 

10

REPRESENTATIONS AND WARRANTIES

3033

 

 

 

11

GENERAL UNDERTAKINGS AND FINANCIAL COVENANTS

3235

 

 

 

12

CORPORATE UNDERTAKINGS

3742

 

 

 

13

INSURANCE

3843

 

 

 

14

SHIP COVENANTS

4247

 

 

 

15

SECURITY COVER

4651

 

 

 

16

PAYMENTS AND CALCULATIONS

4752

 

 

 

17

APPLICATION OF RECEIPTS

4954

 

 

 

18

EARNINGS ACCOUNT AND STANDBY EARNINGS ACCOUNT

4955

 

 

 

19

EVENTS OF DEFAULT

5056

 

 

 

20

FEES AND EXPENSES

5661

 

 

 

21

INDEMNITIES

5763

 

 

 

22

NO SET-OFF OR TAX DEDUCTION

5965

 

 

 

23

ILLEGALITY, ETC

6066

 

 

 

24

INCREASED COSTS

6167

 

 

 

25

SET-OFF

6369

 

 

 

26

TRANSFERS AND CHANGES IN LENDING OFFICES

6369

 



 

27

VARIATIONS AND WAIVERS

6672

 

 

 

28

NOTICES

6773

 

 

 

29

JOINT AND SEVERAL LIABILITY

6976

 

 

 

30

SUPPLEMENTAL

7077

 

 

 

31

LAW AND JURISDICTION

7077

 

 

 

SCHEDULE 1 LENDERS

7279

 

 

SCHEDULE 2 DRAWDOWN NOTICE

7381

 

 

SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS

7483

 

 

SCHEDULE 4 TRANSFER CERTIFICATE

7988

 

 

SCHEDULE 5 REPAYMENT INSTALMENTS

8392

 

 

SCHEDULE 6 MANDATORY COST FORMULA

8594

 

 

SCHEDULE 7 CLASSIFICATION OF SHIPS

8797

 

 

SCHEDULE 8 FINANCIAL COVENANTS

8898

 

 

SCHEDULE 9 FORM OF COMPLIANCE CERTIFICATE

97109

 

 

EXECUTION PAGES

992

 



 

THIS LOAN AGREEMENT is made as of 29 March 2007

 

BETWEEN:

 

(1)                                  ARGYLE MARITIME CORP., CATON MARITIME CORP., DORCHESTER MARITIME CORP., LONGWOODS MARITIME CORP., McHENRY MARITIME CORP. and SUNSWYCK MARITIME CORP. as Joint and Several Borrowers;

 

(2)                                  THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

 

(3)                                  THE ROYAL BANK OF SCOTLAND plc as Mandated Lead Arranger;

 

(4)                                  THE ROYAL BANK OF SCOTLAND plc as Bookrunner;

 

(5)                                  THE ROYAL BANK OF SCOTLAND plc as Agent; and

 

(6)                                  THE ROYAL BANK OF SCOTLAND plc as Swap Bank.

 

BACKGROUND

 

(A)                              The Lenders have agreed to make available to the Borrowers a term loan facility of up to $150,000,000 for the purpose of part financing the acquisition cost of each of six newbuilding multipurpose carriers being built at Yahua Shipyard, China having hull nos. NYHS200720, NYHS200721, NYHS200722, NYHS200723, NYHS200724 and NYHS200725.

 

(B)                                The Swap Bank has agreed to enter into interest rate swap transactions with the Borrowers from time to time to hedge the Borrowers’ exposure under this Agreement to interest rate fluctuations.

 

(C)                                The Lenders and the Swap Bank have agreed to share in the security to be granted to the Security Trustee pursuant to this Agreement on the terms described herein.

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

1.1                               Definitions.  Subject to Clause 1.5, in this Agreement:

 

Account Security Deed”  means a deed creating security in respect of the Standby Earnings Account made or to be made by and between the Borrowers, TBS Pacific Liner and the Security Trustee, in such form as the Borrowers, TBS Pacific Liner and the Agent may agree;

 

Advance”  means the principal amount of each borrowing of a portion of the Commitments by the Borrowers under this Agreement;

 

Affected Lender”  has the meaning given in Clause 5.7;

 

Agency and Trust Agreement”  means the agency and trust agreement executed or to be executed between the Borrowers, the Lenders, the Agent and the Security Trustee in such form as the Borrowers and the Agent may agree;

 



 

Agent”  means The Royal Bank of Scotland plc, acting in such capacity through its office at Level 5, 135 Bishopsgate, London EC2M 3UR, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

 

Approved Managers”  means, Roymar Ship Management Inc., a company incorporated under the laws of New York and having a place of business at 612 East Grassy Sprain Road, Yonkers, New York 10710, USA or such other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the manager of the Ships;

 

Availability Period”  means the period commencing on the date of this Agreement and ending on:

 

(a)                                  (i)                                     in respect of Loan A, 30 September 2009 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(ii)                                  in respect of Loan B, 31 March 2010 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(iii)                               in respect of Loan C, 31 August30 September 2010 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(iv)                              in respect of Loan D, 30 April 2011 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(v)                                 in respect of Loan E, 31 January 2011 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(vi)                              in respect of Loan F, 31 August 2011 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers);

 

(b)                                 if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

 

Available Commitment”  means, in relation to a Lender and at any time, its Commitment less its Contribution at that time (and “Total Available Commitments”  means the aggregate of the Available Commitments of all the Lenders);

 

Bank of America Facilities means the credit facilities made available to Albermarle Maritime Corp and others pursuant to the amended and restated credit agreement dated as of 28 March 2008 (as amended and in effect from time to time) and made between Albermarle Maritime Corp., the New Corporate Guarantor, Bank of America, N.A and others;

 

Bareboat Charter”  means, in relation to each Ship, the bareboat charter made or to be made between the relevant Borrower and the Bareboat Charterer in respect of such Ship;

 

Bareboat Charterer”  means a company to be nominated by the Borrowers which is incorporated in the Philippines and owned or controlled by Aboitiz Jebsen, or such other company as the Borrowers may nominate with the Agent’s approval which is not to be unreasonably withheld;

 

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Bookrunner” means The Royal Bank of Scotland plc, acting in such capacity through Loan Markets, 3rd Floor, 135 Bishopsgate, London EC2M 3UR;

 

Borrower A”  means Argyle Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrower B”  means Caton Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrower C”  means Dorchester Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrower D”  means Longwoods Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrower E”  means McHenry Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrower F”  means Sunswyck Maritime Corp., being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Borrowers”  means together Borrower A, Borrower B, Borrower C, Borrower D, Borrower E and Borrower F and, in the singular, means any of them;

 

Builder”  means Nantong Yahua Shipbuilding Co., Ltd a corporation organised and existing under the laws of the People’s Republic of China, having its registered office at 1# Hongzha Road, Jinweigang, Nantong Jiangsu P.C. 226361, the People’s Republic of China;

 

Business Day”  means a day on which banks are open for general business in Dublin, Frankfurt, London and Paris and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

 

China Communications”  means China Communications Construction Company Ltd, a corporation organised and existing under the laws of the People’s Republic of China, having its registered office at No. B88, An Ding Men Wai Street, Beijing 100011, The People’s Republic of China;

 

Classification” means, in relation to a Ship, the classification set opposite its name in Schedule 7;

 

Commitment”  means in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may be require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

 

Confirmation” in relation to any continuing Designated Transaction, has the meaning given in the Master Agreement;

 

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Contract Price”  means, in relation to each Ship, the aggregate amount payable to the Seller pursuant to the terms of the Shipbuilding Contract for such Ship being in each case $35,420,000;

 

Contractual Currency”  has the meaning given in Clause 21.4;

 

Contribution”  means, in relation to a Lender the part of the Loans which is owing to that Lender (and “Total Contributions” means the aggregate of the Contributions of all the Lenders);

 

Corporate Guarantee”  means the corporate guarantee executed or to be executed by the Corporate Guarantor in favour of the Security Trustee, in such form as the Corporate Guarantor and the Agent may agree;

 

Corporate Guarantor”  means TBS International Limited, a company incorporated under the laws of Bermuda having its principal office at Suite 306, Commerce Building, One Chancery Lane, Hamilton HM12, Bermuda;

 

Creditor Party”  means the Agent, the Security Trustee, any Lender or the Swap Bank, whether as at the date of this Agreement or at any later time;

 

Delivery Advances”  means together Loan A Delivery Advance, Loan B Delivery Advance, Loan C Delivery Advance, Loan D Delivery Advance, Loan E Delivery Advance and Loan F Delivery Advance (as each such expression is defined in Clause 2.1) and, in the singular, means any of them;

 

Delivery Date”  means, in relation to each Ship, the date of delivery of such Ship by the Seller to the relevant Borrower under the relevant Shipbuilding Contract;

 

Designated Transaction”  means a Transaction which fulfils the following requirements:

 

(a)                                  it is entered into by the Borrowers pursuant to the Master Agreement with the Swap Bank; and

 

(b)                                 its purpose is the hedging of the Borrowers’ exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loans (or any part thereof) for a period expiring no later than the final Repayment Date;

 

Dispute” has the meaning given to that term in Clause 31.6;

 

Dollars” and “$”  means the lawful currency for the time being of the United States of America;

 

Drawdown Date”  means, in relation to an Advance, the date requested by the Borrowers for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

 

Drawdown Notice”  means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

 

Earnings”  means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the relevant Borrower owning the Ship or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):

 

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(a)                                  all freight, hire and passage moneys, compensation payable to the Borrower owning the Ship in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

 

(b)                                 all moneys which are at any time payable under Insurances in respect of loss of earnings; and

 

(c)                                  if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

 

Earnings Account”  means an account in the name of TBS Pacific Liner with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX designated with such designation as the Agent may allocate upon its opening or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Earnings Account for the purposes of this Agreement;

 

Environmental Claim” means:

 

(a)                                  any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or which relates to an alleged breach of, or non-compliance with, any Environmental Law; or

 

(b)                                 any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

 

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

 

Environmental Incident”  means:

 

(a)                                  any release of Environmentally Sensitive Material from a Ship; or

 

(b)                                 any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or a Borrower and/or any Approved Manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

 

(c)                                  any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where a Borrower and/or any Approved Manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

 

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Environmental Law”  means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

 

Environmentally Sensitive Material”  means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

 

Event of Default”  means any of the events or circumstances described in Clause 19.1;

 

Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Mandated Lead Arranger and the Borrowers (or the Agent and the Borrowers) setting out any of the fees referred to in Clause 20.1(a), (b) , (c), (d), (e), (f), (g) and (h), a letter dated 27 March 2009 between the Borrowers and the Agent and any further letters in relation to fees between the Borrowers and the Agent;

 

Final Repayment Date” means 9 September 2014;

 

Finance Documents” means:

 

(a)                                  this Agreement;

 

(b)                                 the Agency and Trust Agreement;

 

(c)                                  the Multiparty Deeds;

 

(d)                                 the Mortgages;

 

(e)                                  the Master Agreement;

 

(f)                                    the Master Agreement Assignment;

 

(g)                                 the Predelivery Security Assignments;

 

(h)                                 the Corporate Guarantee;

 

(i)                                     the New Corporate Guarantee;

 

(j)                                     the Shares Security Deeds;

 

(k)                                  the Account Security Deed;

 

(l)                                     the Restricted Equity Deposit Account Security Deed;

 

(l)                                     (m)the Fee Letter; and

 

(n)                                 the Intercreditor Agreement; and

 

(m)                               (o)any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers or any other person as security for, or to establish any

 

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form of subordination or priorities arrangement in relation to, any amount payable to the Creditor Parties under this Agreement or any of the other documents referred to in this definition;

 

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

 

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

 

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

 

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

 

(d)                                 under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor (other than normal trade credit not exceeding 180 days);

 

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

 

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

 

First Sub-Time Charter” means in relation to each Ship, the time charter made or to be made between the Time Charterer and the relevant Borrower in respect of such Ship;

 

Guarantee Facility Agreement”  means the guarantee facility agreement of even date herewith made between the Borrowers as obligors and the Issuing Bank relating to a guarantee facility of $84,000,000;

 

Insurances”  means, in relation to a Ship:

 

(a)                                  all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it; and

 

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

 

Intercreditor Agreement”  means the intercreditor agreement executed or to be executed between the Borrowers, the Security Trustee and the Issuing Bank in such form as such parties may agree;

 

Interest Period”  means a period determined in accordance with Clause 6;

 

ISM Code”  means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management

 

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Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

 

ISPS Code”  means the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended, supplemented or superseded from time to time);

 

ISSC”  means a valid and current International Ship Security Certificate issued under the ISPS Code;

 

Issuing Bank”  means The Royal Bank of Scotland plc acting as issuing bank under the Guarantee Facility Agreement acting through the Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HXLaguna Belle and Seminole Princess Leases” means the operating leases from DVB Bank of m.v.s “Laguna Belle” and “Seminole Princess”;

 

Joint Ventures”  means the following investment projects (details of which have separately been advised to the Agent):

 

(a)                                   investments and loans in relation to a joint venture in South Africa with ICM Forwarding to form African Projects Logistics, a logistics provider for the South African Medupi Power Station Project;

 

(b)                                  investments in relation to limestone mines in the Dominican Republic and Jamaica;

 

(c)investments in relation to the LOG-STAR joint venture in Brazil which will/does provide break bulk, bulk, liner and parcel services in the Brazilian coastal cabotage trade

 

Laguna Belle and Seminole Princess Leases” means the operating leases from DVB Bank of m.v.s. “Laguna Belle” and “Seminole Princess”;

 

Lender”  means a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Agent under Clause 26.14) or its transferee, successor or assign;

 

LIBOR”  means, for an Interest Period the higher of:

 

(a)                                   One point five per cent (1.5%) per annum; or

 

(b)

 

(ai)                               the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period (and, for the purposes of this Agreement, “REUTERS BBA Page LIBOR 01“ means the display designated as “REUTERS BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace REUTERS BBA Page LIBOR 01 on that service for the purpose of d isplaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars); or

 

(bii)                           if no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of the rates per annum notified to the Agent by each Reference Bank as the rate at which deposits in Dollars are offered to that Reference Bank by leading banks in the London Interbank Market at that Reference Bank’s request at or about

 

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11.00 a.m. (London time) on the Quotation Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

 

Loan A”  means the five Advances referred to in Clause 2.1(i) or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan B”  means the five Advances referred to in Clause 2.1(ii) or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan C”  means the five Advances referred to in Clause 2.1(iii) or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan D”  means the five Advances referred to in Clause 2.1(iv) or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan E”  means the five Advances referred to in Clause 2.1(v) or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan F”  means the five Advances referred to in Clause 2.1(vi)or (as the context requires) the principal amount thereof for the time being advanced and outstanding under this Agreement;

 

Loan Facility”  means, the loan facility of $150,000,000 made available under this Agreement;

 

Loans”  means Loan A, Loan B, Loan C, Loan D, Loan E and Loan F and, in the singular, means any of them;

 

Major Casualty”  means, in relation to a Ship, any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

 

Majority Lenders”  means:

 

(a)                                  before an Advance has been made, Lenders whose Commitments total 66.66 per cent. of the Total Commitments; and

 

(b)                                 after an Advance has been made, Lenders whose Contributions total 66.66 per cent. of the Total  Contributions;

 

Mandated Lead Arranger”  means The Royal Bank of Scotland plc, acting in such capacity through the Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX;

 

Mandatory Cost”  means the percentage rate per annum calculated by the Agent in accordance with Schedule 6;

 

Margin”  means in relation to each Loan fivefour point zerotwo five per cent. (5.004.25%) per annum;

 

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Master Agreement”  means the master agreement (on the 1992 ISDA (Multicurrency Crossborder) form) dated 29 March 2007 between the Borrowers and the Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement as the same may be amended, supplemented or the subject of one of more assumption agreements;

 

Master Agreement Assignment”  means the assignment of the Master Agreement to be made between the Borrowers and the Security Trustee, in such form as the Borrowers and the Agent may agree;

 

Mortgage”  means, in relation to a Ship, the first preferred Panamanian ship mortgage on that Ship to be executed by the relevant Borrower in favour of the Security Trustee, in such form as the relevant Borrower and the Agent may agree and fully cross-collateralised with the Mortgages over the other Ships;

 

Multiparty Deed”  means, in relation to a Ship, a deed containing amongst other things (i) an assignment of the relevant Borrower’s interest in the Earnings, the Insurances and any Requisition Compensation of that Ship, (ii) an assignment of the relevant Borrower’s rights under the relevant Bareboat Charter and the Second Sub-Time Charter (iii) an assignment of the Bareboat Charterer’s interest in the Insurances of that Ship and the relevant Time Charter, (iv) an assignment of the Time Charterer’s rights under the First Sub-Time Charter and (v) an assignment of TBS Worldwide’s rights under the TBS Worldwide Time Charters to be made by and between the relevant Borrower, the Bareboat Charterer the, Time Charterer, TBS Worldwide and the Security Trustee, in such form as the relevant Borrower and the Agent may agree;

 

Negotiation Period”  has the meaning given in Clause 5.10;

 

New Corporate Guarantee”  means the corporate guarantee executed or to be executed by the New Corporate Guarantor in favour of the Security Trustee, in such form as the New Corporate Guarantor and the Agent may agree;

 

New Corporate Guarantor”  means TBS International Public Limited Company, a company incorporated in Ireland having its registered office at Arthur Cox Building, Earlsfort Centre, Earlsfort terrace, Dublin 2, Ireland;

 

Other Pre-delivery Security Assignments” means the Pre-delivery Security Assignments as defined in the Guarantee Facility Agreement;

 

Overall Agreement”  means the overall agreement dated 24 February 2007 relating to the Shipbuilding Contracts and made between the Corporate Guarantor and the Seller;

 

Payment Currency”  has the meaning given in Clause 21.4;

 

Permitted Logstar Debt” means the debt of the Logstar JV up to $3,500,000 related to merchant marine credits and provided that such debt shall be non recourse to the New Corporate Guarantor, the Corporate Guarantor and the Borrowers;

 

Permitted Security Interests”  means:

 

(a)                                  Security Interests created by the Finance Documents and the Other Pre-delivery Security Assignments;

 

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(b)                                 liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

 

(c)                                  liens for salvage;

 

(d)                                 liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

 

(e)                                  liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(g);

 

(f)                                    any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the relevant Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

 

(g)                                 Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

 

Pertinent Jurisdiction”,  in relation to a company, means:

 

(a)                                  England and Wales;

 

(b)                                 the country under the laws of which the company is incorporated or formed;

 

(c)                                  a country in which the company’s central management and control is or has recently been exercised;

 

(d)                                 a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

 

(e)                                  a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

 

(f)                                    a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

 

Potential Event of Default”  means an event or circumstance which, with the giving of any notice, the lapse of time, a determination (where required) of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

 

Predelivery Security Assignment”  means, in relation to each Shipbuilding Contract and corresponding Refund Guarantees, an assignment of the relevant Borrower’s rights under such Shipbuilding Contract and Refund Guarantees to be executed by the relevant Borrower

 

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in favour of the Security Trustee in such form as the relevant Borrower and the Agent may agree;

 

Quotation Date”  means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

 

Reference Banks”  means, subject to Clause 26.16, The Royal Bank of Scotland plc, Citibank and Bank of America;

 

Refund Guarantee”  means, in relation to each Ship, each refund guarantee issued by the Refund Guarantor in favour of the relevant Borrower pursuant to the Shipbuilding Agreement in respect of such Ship;

 

Refund Guarantor”  means Bank of Communications acting through its branch at 33 Jin Rong Da Jie, Xichang District, Beijing 100032, The People’s Republic of China;

 

Related Party Charters” means, in relation to a Ship, the Bareboat Charter, the Time Charter, the First Sub-Time Charter, the Second Sub-Time Charter and the TBS Worldwide Time Charters in relation to such Ship and which are the subject of the assignments under the relevant Multiparty Deed;

 

Relevant Person”  has the meaning given in Clause 19.9;

 

Relevant Percentage” means for that part of the Security Period up to (but not including) 1 December 2012, One hundred and twenty five per cent and thereafter during the Security Period, One hundred and thirty five per cent (135%);

 

Repayment Date”  means a date on which a repayment is required to be made under Clause 8;

 

Replacement Debt” means debt incurred to repay other existing debt provided that, except with respect to debt that refinances all existing debt scheduled to become due on or before 9 September 2014, the Replacement Debt shall only include debt (a) which does not provide for payment, on or before 9 September 2014, of current cash interest at a rate in excess of the existing debt refinanced or principal payments in excess of those required for existing debt refinanced and (b) which has no tighter covenant restrictions or events of default than the existing debt refinanced;

 

Requisition Compensation”  includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

 

Restricted Equity Deposit Account”  means an account in the name of the Borrowers with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX designated with such designation as the Agent may allocate upon its opening or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Restricted Equity Deposit Account for the purposes of this Agreement;

 

Restricted Equity Deposit Account Security Deed”  means a deed creating security in respect of the Restricted Equity Deposit Account made or to be made by and between the

 

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Borrowers and the Security Trustee in such form set as the Borrowers and the Agent may agree;

 

Second Sub-Time Charter” means in relation to each Ship, the time charter made or to be made between the relevant Borrower and TBS Worldwide in respect of such Ship;

 

Secured Liabilities”  means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

 

Security Interest”  means:

 

(a)                                  a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or assignment by way of security or any other security interest of any kind;

 

(b)                                 the security rights of a plaintiff under an action in rem; and

 

(c)                                  any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

 

Security Party”  means the Borrowers, the Corporate Guarantor, the New Corporate Guarantor, the Shareholder and any person who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents” but for the avoidance of doubt “Security Party” shall not include any Creditor Party, the Mandated Lead Arranger, the Bookrunner, the Issuing Bank, the Bareboat Charterer, the Time Charterer, TBS Pacific Liner, TBS Worldwide and the Approved Managers;

 

Security Period”  means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the Security Parties and the Lenders that:

 

(a)                                  all amounts which have become due for payment by the Borrowers or any Security Party under the Finance Documents have been paid;

 

(b)                                 no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

 

(c)                                  none of the Borrowers nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 or any other provision of this Agreement or another Finance Document; and

 

(d)                                 the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or a Security Party or in any present or possible

 

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future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

 

Security Trustee”  means The Royal Bank of Scotland plc, acting in such capacity through its office at Level 5, 135 Bishopsgate, London EC2M 3UR, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

 

Seller”  means together China Communications and the Builder;

 

Servicing Bank”  means the Agent or the Security Trustee;

 

Shareholder”  means Westbrook Holdings Ltd., a company incorporated under the laws of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

Shares Security Deed”  means, in relation to each Borrower, a deed creating security over the share capital of that Borrower and including an assignment of any shareholder loans made to the Borrowers to be executed by the Shareholder in favour of the Security Trustee in such form as the Shareholder and the Agent may agree;

 

Ships”  means together Ship A, Ship B, Ship C, Ship D, Ship E and Ship F and, in the singular, means any of them;

 

Ship A”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200720 to be constructed and sold by the Seller and to be purchased by Borrower A pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the name of Borrower A with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship B”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200721 to be constructed and sold by the Seller and to be purchased by Borrower B pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the name of Borrower B with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship C”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200722 to be constructed and sold by the Seller and to be purchased by Borrower C pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the name of Borrower C with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship D”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200723 to be constructed and sold by the Seller and to be purchased by Borrower D pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the name of Borrower D with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship D Sub-Advance” shall have the meaning given in Clause 2.1(iv);

 

Ship E”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200724 to be constructed and sold by the Seller and to be purchased by Borrower E pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the

 

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name of Borrower E with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship F”  means the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No. NYHS200725 to be constructed and sold by the Seller and to be purchased by Borrower F pursuant to the relevant Shipbuilding Contract and upon delivery to be registered in the name of Borrower F with the Panamanian registry and bareboat registered in the name of the Bareboat Charterer under the Philippines flag;

 

Ship F Sub-Advance” shall have the meaning given in Clause 2.1(vi);

 

Shipbuilding Contract”  means, in relation to Ship A, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower A in respect of such Ship, in relation to Ship B, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower B in respect of such Ship, in relation to Ship C, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower C in respect of such Ship, in relation to Ship D, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower D in respect of such Ship, in relation to Ship E, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower E in respect of such Ship, in relation to Ship F, the shipbuilding contract dated 24 February 2007 made between the Seller and Borrower F in respect of such Ship and, in each case, a s supplemented by the Overall Agreement;

 

Standby Earnings Account”  means an account in the name of TBS Pacific Liner with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX designated with such designation as the Agent may allocate upon its opening or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Standby Earnings Account for the purposes of this Agreement;

 

Swap Bank”  means The Royal Bank of Scotland plc acting in such capacity through its office at 135 Bishopsgate, London EC2M 3UR and its successors in title and assigns under the Master Agreement;

 

Swap Facility means the interest rate swap facility made or to be made available by the Swap Bank to the Borrowers under the Master Agreement;

 

TBS Pacific Liner”  means TBS Pacific Liner, Ltd. being a corporation organised and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

TBS Worldwide” means TBS Worldwide Services Inc being a corporation organised and existing under the laws of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

TBS Worldwide Time Charters” means, in relation to each Ship, the time charters entered or to be entered into between TBS Worldwide and other subsidiaries of the New Corporate Guarantor pursuant to which TBS Worldwide has agreed or shall agree to let, and such charterers have agreed or shall agree to hire, such Ship on time charter;

 

Time Charter means, in relation to each Ship, the time charter made or to be made between the Bareboat Charterer and the Time Charterer in respect of such Ship;

 

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Time Charterer” means Pacific Rim Shipping Corp., a company incorporated in the Marshall Islands whose principal office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

Total Loss”  means, in relation to a Ship:

 

(a)                                  actual, constructive, compromised, agreed or arranged total loss of the Ship;

 

(b)                                 any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the Borrower owning the Ship; and

 

(c)                                  any condemnation of the Ship by any tribunal or by any person or person claiming to be a tribunal; and

 

(d)                                 any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the Borrower owning the Ship;

 

Total Loss Date”  means, in relation to a Ship:

 

(a)                                  in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

 

(b)                                 in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

 

(i)                                     the date on which a notice of abandonment is given to the insurers; and

 

(ii)                                  the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning the Ship with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

 

(c)                                  in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

 

Transaction”  means a Transaction as defined in the introductory paragraph of the Master Agreement;

 

Transfer Certificate”  has the meaning given in Clause 26.2; and

 

Transfer Date” means, in relation to a transfer, 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 under Clause 26.3.

 

1.2                              Construction of certain terms.  In this Agreement:

 

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administration notice”  means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;

 

approved”  means, for the purposes of Clause 13, approved in writing by the Agent;

 

asset”  includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

 

company”  includes any partnership, joint venture and unincorporated association;

 

consent”  includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

 

contingent liability”  means a liability which is not certain to arise and/or the amount of which remains unascertained;

 

document”  includes a deed; also a letter or fax;

 

excess risks”  means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

 

expense”  means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

 

law”  includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation, directive, decision or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

 

legal or administrative action”  means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

 

liability”  includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

 

months”  shall be construed in accordance with Clause 1.3;

 

obligatory insurances”  means, in relation to a Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

 

parent company”  has the meaning given in Clause 1.4;

 

person”  includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

 

policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

 

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protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 

regulation”  includes any regulation, rule, official directive, request or guideline 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;

 

subsidiary”  has the meaning given in Clause 1.4;

 

tax”  includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

 

war risks”  includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

 

1.3                               Meaning of “month”.  A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

 

(a)                                  on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

 

(b)                                 on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

 

and “month” and “monthly” shall be construed accordingly.

 

1.4                               Meaning of “subsidiary”.  A company (S) is a subsidiary of another company (P) if:

 

(a)                                  a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

 

(b)                                 P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

 

(c)                                  P has the direct or indirect power to appoint or remove a majority of the directors of S; or

 

(d)                                 P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

 

and any company of which S is a subsidiary is a parent company of S.

 

1.5                               General Interpretation.  In this Agreement:

 

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(a)                                  references in Clause 1.1 to a Finance Document or any other document being in the form of a particular appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires;

 

(b)                                 references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

 

(c)                                  references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

 

(d)                                 words denoting the singular number shall include the plural and vice versa; and

 

(e)                                  Clauses 1.1 to 1.5 apply unless the contrary intention appears.

 

1.6                               Headings.  In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

 

2                                         LOAN FACILITY

 

2.1                               Amount of facilities.  Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrowers the Loan Facility in an amount of up to $150,000,000 which shall be made available in the following Advances:

 

(i)                                     five Advances in an aggregate amount of up to $25,000,000 to enable Borrower A to finance its acquisition of Ship A as follows:

 

(A)                              $5,000,000 to enable Borrower A to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship A;

 

(B)                                $5,000,000 to enable Borrower A to meet the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Contract in respect of Ship A;

 

(C)                                $5,000,000 to enable Borrower A to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship A;

 

(D)                               $5,000,000 to enable Borrower A to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship A;

 

(E)                                 $5,000,000 to enable Borrower A to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in respect of Ship A (the “Loan A Delivery Advance”);

 

(ii)                                  five Advances in an aggregate amount of $25,000,000 to enable Borrower B to finance its acquisition of Ship B as follows:

 

(A)                              $5,000,000 to enable Borrower B to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship B;

 

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(B)                                $5,000,000 to enable Borrower B to meet the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Agreement in respect of Ship B;

 

(C)                                $5,000,000 to enable Borrower B to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship B;

 

(D)                               $5,000,000 to enable Borrower B to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship B;

 

(E)                                 $5,000,000 to enable Borrower B to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in respect of Ship B (the “Loan B Delivery Advance”);

 

(iii)                               five Advances in an aggregate amount of up to $25,000,000 to enable Borrower C to finance its acquisition of Ship C as follows:

 

(A)                              $5,000,000 to enable Borrower C to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship C;

 

(B)                                $5,000,000 to enable Borrower C to meet the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Agreement in respect of Ship C;

 

(C)                                $5,000,000 to enable Borrower C to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship C;

 

(D)                               $5,000,000 to enable Borrower C to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship C;

 

(E)                                 $5,000,000 to enable Borrower C to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in respect of Ship C (the “Loan C Delivery Advance”);

 

(iv)                              five Advances in an aggregate amount of up to $25,000,00027,420,000 to enable Borrower D to finance its acquisition of Ship D as follows:

 

(A)                              $5,000,000 to enable Borrower D to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship D;

 

(B)                                $5,000,000 to reimburse Borrower D the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Contract in respect of Ship D;

 

(C)                                $5,000,000 to enable Borrower D to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship D;

 

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(D)                               $5,000,000 to enable Borrower D to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship D;

 

(E)                                 $5,000,0007,420,000 to enable Borrower D to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in respect of Ship D; (the “Loan D Delivery Advance”) which shall be advanced in two Sub-Advances of $5,000,000 and $2,420,000 the latter hereinafter being referred to as the “Ship D Sub-Advance;

 

(v)                                 five Advances in an aggregate amount of up to $25,000,00020,160,000 to enable Borrower E to finance its acquisition of Ship E as follows:

 

(A)                              $5,000,000 to enable Borrower E to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship E;

 

(B)                                $5,000,000 to reimburse Borrower E the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Contract in respect of Ship E;

 

(C)                                $5,000,000 to enable Borrower E to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship E;

 

(D)                               $5,000,000 to enable Borrower E to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship E;

 

(E)                                 $5,000,000160,000 to enable Borrower E to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in respect of Ship E; (the “Loan E Delivery Advance”);

 

(vi)                              five Advances in an aggregate amount of up to $25,000,00027,420,000 to enable Borrower F to finance its acquisition of Ship F as follows:

 

(A)                              $5,000,000 to enable Borrower F to meet the first stage payment (contract signing) of the Contract Price payable under the Shipbuilding Contract in respect of Ship F;

 

(B)                                $5,000,000 to reimburse Borrower F the second stage payment (steel cutting) of the Contract Price payable under the Shipbuilding Contract in respect of Ship F;

 

(C)                                $5,000,000 to enable Borrower F to meet the third stage payment (keel laying) of the Contract Price payable under the Shipbuilding Contract in respect of Ship F;

 

(D)                               $5,000,000 to enable Borrower F to meet the fourth stage payment (launching) of the Contract Price payable under the Shipbuilding Contract in respect of Ship F;

 

(E)                                 $5,000,0007,420,000 to enable Borrower F to meet the final delivery payment of the Contract Price payable under the Shipbuilding Contract in

 

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respect of Ship F; (the “Loan F Delivery Advance”) which shall be advanced in two Sub-Advances of $5,000,000 and $2,420,000, the latter hereinafter referred to as “Ship F Sub-Advance;

 

2.2                               Lenders’ participations.  Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments;

 

2.3                               Purpose of Advances.  The Borrowers undertake with each Creditor Party to use each Advance only for the respective purposes stated in the preamble of this Agreement.

 

3                                         POSITION OF THE LENDERS AND THE SWAP BANK

 

3.1                               Interests of Creditor Parties several.  The rights of the Creditor Parties under this Agreement are several.

 

3.2                               Individual Creditor Parties’ right of action.  Each Lender and the Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrowers to it under this Agreement without joining the Agent, the Security Trustee or any other Creditor Party as additional parties in the proceedings.

 

3.3                               Proceedings by individual Creditor Party requiring Majority Lenders’ consent.  Except as provided in Clause 3.2, neither the Swap Bank nor any Lender may commence proceedings against the Borrowers or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.

 

3.4                               Obligations of Creditor Parties several.  The obligations of the Lenders and the Swap Bank under this Agreement are several; and a failure of a Lender or the Swap Bank to perform its obligations under this Agreement shall not result in:

 

(a)                                  the obligations of the other Lenders or the Swap Bank being increased; nor

 

(b)                                 any Borrower, any Security Party, any other Lender or the Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document;

 

and in no circumstances shall a Lender or the Swap Bank have any responsibility for a failure of another Lender or the Swap Bank (as the case may be) to perform its obligations under this Agreement.

 

3.5                               Ranking of Swap Facility.  It is agreed by the Borrowers and the Creditor Parties that the Swap Facility and all amounts payable thereunder shall rank in priority after the Loan Facility.

 

4                                         DRAWDOWN

 

4.1                               Request for an Advance.  Subject to the following conditions, a Borrower may request that an Advance be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

 

4.2                               Availability.  The conditions referred to in Clause 4.1 are that:

 

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(a)

 

(i)                                     the Drawdown Date for such Advance has to be a Business Day during the Availability Period for the relevant Loan;

 

(ii)                                  the aggregate amount of the Advances shall not exceed the Total Commitments;

 

(iii)                               in the case of a Delivery Advance of a Loan, the amount of such Delivery Advance when aggregated with each of the other Advances made in relation to that Loan shall not exceed 75% of the valuation of the relevant Ship to be obtained pursuant to Schedule 3, Part C, Item 4 and if such test is not met the amount of such Delivery Advance shall be correspondingly reduced provided that (i) in the case of Ship D, the amount of Loan D for the purposes of determining whether the amount of the Loan D Delivery Advance needs to be reduced hereunder shall exclude an amount equal to the Ship D Sub-Advance an d (ii) in the case of Ship F, the amount of Loan F for the purposes of determining whether the amount of Loan F Delivery Advance needs to be reduced hereunder shall exclude an amount equal to the Ship F Sub-Advance..

 

(b)

 

(i)                                     no Event of Default or Potential Event of Default has occurred and is continuing or might result from the making of the relevant Advance;

 

(ii)                                  the representations and warranties of the Borrowers in Clause 10 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on the date of the relevant Drawdown Notice or the relevant Drawdown Date with reference to the circumstances then existing;

 

(iii)                               that if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance the Borrowers would not be obliged to provide additional security or prepay part of the Loans under that Clause and if the Borrowers would be so obliged the amount of the Advance to be made shall be correspondingly reduced provided that (i) in the case of Ship D, for the purposes of determining whether the amount of the Loan D Delivery Advance needs to be reduced hereunder the amount of Loan D shall exclude an amount equal to the Ship D Sub-Advance and Loans, where Ship E is subject to a Mortgage, shall include both the Ship D Sub-Advance and the Ship F Sub-Advance and (ii) in the case of Ship F for the purposes of determining whether the amount of Loan F Delivery Advance needs to be reduced hereunder, the amount of Loan F shall exclude an amount equal to the Ship F Sub-Advance and Loans, where Ship E is subject to a Mortgage, shall include both the Ship D Sub-Advance and Ship F Sub-Advance.

 

4.3                               Notification to Lenders of receipt of a Drawdown Notice.  The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

 

(a)                                  the amount of the Advance and the Drawdown Date;

 

(b)                                 the amount of that Lender’s participation in the relevant Advance; and

 

(c)                                  the duration of the first Interest Period for the relevant Advance.

 

4.4                               Drawdown Notice irrevocable.  A Drawdown Notice must be signed by a director, officer or, if agreed by the Agent, a duly authorised attorney-in-fact of the Borrowers; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

 

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4.5                               Lenders to make available Contributions.  Subject to the provisions of this Agreement, each Lender shall, on and with value on each Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender on that Drawdown Date under Clause 2.2.

 

4.6                               Disbursement of Advance.  Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be made:

 

(a)                                  to the account which the Borrowers specifies in the Drawdown Notice; and

 

(b)                                 in the like funds as the Agent received the payments from the Lenders.

 

4.7                               Disbursement of an Advance to third party.  The payment by the Agent under Clause 4.6 shall constitute the making of the Advance and each Borrower shall at that time become indebted, as a principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.

 

5                                         INTEREST

 

5.1                               Payment of normal interest.  Subject to the provisions of this Agreement, interest on an Advance in respect of each Interest Period applicable to it shall be paid by the Borrowers on the last day of that Interest Period.

 

5.2                               Normal rate of interest.  Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of the Margin, the Mandatory Cost (if any) and LIBOR for that Interest Period.

 

5.3                               Payment of accrued interest.  In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

 

5.4                               Notification of Interest Periods and rates of normal interest.  The Agent shall (subject to Clause 6.2(a) notify the Borrowers and each Lender of:

 

(a)                                  each rate of interest; and

 

(b)                                 the duration of each Interest Period;

 

as soon as reasonably practicable after each is determined.

 

5.5                               Obligation of Reference Banks to quote.  A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement.

 

5.6                               Absence of quotations by Reference Banks.  If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

 

5.7                               Market disruption.  The following provisions of this Clause 5 apply if:

 

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(a)                                 no rate is quoted on REUTERS BBA Page LIBOR 01 and the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

 

(b)                                 at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 66.66 per cent. of the Loans (or, if an Advance has not been made, Commitments amounting to more than 66.66 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00&nb sp;a.m. (London time) on the Quotation Date for the Interest Period; or

 

(c)                                  at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

 

5.8                               Notification of market disruption.  The Agent shall promptly notify the Borrowers and each of the Lenders stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

 

5.9                               Suspension of drawdown.  If the Agent’s notice under Clause 5.8 is served before an Advance is made:

 

(a)                                  in a case falling within Clauses 5.7(a) or 5.7(b), the Lenders’ obligations to make the Advance;

 

(b)                                 in a case falling within Clause 5.7(c), the Affected Lender’s obligation to participate in the Advance;

 

shall be suspended while the circumstances referred to in the Agent’s notice continue.

 

5.10                        Negotiation of alternative rate of interest.  If the Agent’s notice under Clause 5.8 is served after an Advance is made, the Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continu e to fund their or its Contribution during the Interest Period concerned.

 

5.11                        Application of agreed alternative rate of interest.  Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

 

5.12                        Alternative rate of interest in absence of agreement.  If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contributio n plus the Margin; and the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.  Once the circumstances giving rise to the invoking of Clauses 5.7 through 5.12 have ceased the Agent and the Lenders shall return to the normal method of calculating the interest rate hereunder.

 

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5.13                        Notice of prepayment.  If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.12, the Borrowers may give the Agent not less than 14 Business Days’ notice of their intention to prepay the Loans or the Affected Lender’s Contribution (as the case may require) at the end of the interest period set by the Agent.

 

5.14                        Prepayment; termination of Commitments.  A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers’ notice of intended prepayment; and:

 

(a)                                  on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

 

(b)                                 on the last Business Day of the interest period set by the Agent, the Borrowers shall prepay (without premium or penalty) the Loans or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

5.15                        Amounts payable upon prepayment etc.  The provisions of Clauses 8.9 to 8.12 inclusive shall apply in relation to the prepayment.

 

5.16                        Designated Transactions under the Master Agreement.

 

(a)                                  The Borrowers have entered into the Master Agreement with the Swap Bank and, pursuant thereto, may at any time conclude Designated Transactions, for the purpose of swapping their interest payment obligations under this Agreement in relation to the Loan Facility.

 

(b)                                 In relation to the Master Agreement, the Borrowers hereby agree and undertake throughout the Security Period:

 

(i)                                     only to use Designated Transactions concluded under the Master Agreement for the purpose of swapping their interest payment obligations under this Clause 5 in relation to the Loan Facility from LIBOR-based funding to longer-term fixed rate funding; and

 

(ii)                                  not to conclude Designated Transactions which would result, at any time during the Security Period, in the notional principal amount of all Designated Transactions then remaining exceeding the aggregate amount of the Loans, as reduced from time to time pursuant to Clause 8.

 

(c)                                  The Lenders agree that, to enable the Borrowers to secure their obligations to the Swap Bank under the Master Agreement, the security of the New Corporate Guarantee, the Corporate Guarantee, the Mortgages, the Multiparty Deeds, the Predelivery Security Assignments, the Shares Security Deeds, the Restricted Equity Deposit Account Security Deed and the Account Security Deed in respect of each of the Ships shall be held by the Security Trustee not only to secure the Borrowers’ obligations under this Agreement but also the Borrower’s obligations under the Master Agreement on the terms set ou t in Clause 18.

 

6                                         INTEREST PERIODS

 

6.1                               Commencement of Interest Periods.  The first Interest Period applicable to an Advance shall commence on the Drawdown Date for that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

6.2                              Duration of normal Interest Periods.  Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

 

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(a)                                  1, 3 or 6 months as notified by the Borrowers to the Agent not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

 

(b)                                 in the case of the first Interest Period applicable to any Advance of a Loan other than the first such Advance of such Loan, a period ending on the last day of the Interest Period applicable to the first Advance of that Loan then current, whereupon all such Advances of that Loan shall be consolidated and treated as a single Advance;

 

(c)                                  3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a); or

 

(d)                                 such other period as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers.

 

6.3                               Duration of Interest Periods for repayment instalments.  In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

 

6.4                               Non-availability of matching deposits for Interest Period selected.  If, after the Borrowers have selected and the Lenders have agreed an Interest Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, th e Interest Period shall be of 6 months.

 

7                                         DEFAULT INTEREST

 

7.1                               Payment of default interest on overdue amounts.  The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrowers under any Finance Document which the relevant Creditor Party does not receive on or before the relevant date, that is:

 

(a)                                  the date on which the Finance Documents provide that such amount is due for payment; or

 

(b)                                 if a Finance Document provides that such amount is payable on demand, the date on which the demand is served on the Borrowers; or

 

(c)                                  if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

 

7.2                               Default rate of interest.  Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 1.5 per cent. above:

 

(a)                                  in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

 

(b)                                 in the case of any other overdue amount, the rate set out at Clause 7.3(b).

 

7.3                               Calculation of default rate of interest.  The rates referred to in Clause 7.2 are:

 

(a)                                  the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

 

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(b)                                 the aggregate of the Margin and the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

 

(i)                                     LIBOR; or

 

(ii)                                  if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

 

7.4                               Notification of interest periods and default rates.  The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent’s notification.

 

7.5                               Payment of accrued default interest.  Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

 

7.6                               Compounding of default interest.  Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

 

7.7                               Application to Master Agreement.  For the avoidance of doubt, this Clause 7 does not apply to any amount payable under the Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest;  Other Amounts) of the Master Agreement shall apply.

 

8                                         REPAYMENT AND PREPAYMENT

 

8.1                               Repayment of Loans.  The Borrowers shall repay the Loans in the instalments and on the repayment dates set out in Schedule 5.

 

8.2                               Final Repayment Date.  On the Final Repayment Date, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

 

8.3                               Voluntary prepayment.  Subject to the following conditions, the Borrowers may prepay the whole or any part of a Loan.

 

8.4                               Conditions for voluntary prepayment.  The conditions referred to in Clause 8.3 are that:

 

(a)                                  a partial prepayment shall be in a minimum amount of $2,500,000 (and in integral multiples of $500,000);

 

(b)                                 the Agent has received from the Borrowers at least 7 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

 

(c)                                 the Borrowers have provided evidence satisfactory to the Agent that any consent required by the Borrowers in connection with the prepayment has been obtained and remains in force,

 

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and that any official  regulation relevant to this Agreement which affects the Borrowers has been complied with.

 

8.5                               Effect of notice of prepayment.  A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

 

8.6                               Notification of notice of prepayment.  The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.4(c).

 

8.7                               Mandatory prepayment upon a Sale or Total Loss of a Ship.  Without prejudice to the provisions of Clause 15, the Borrowers shall be obliged to make a prepayment in respect of the Loans if a Ship is sold or becomes a Total Loss or on the occurrence of one of the events set out in Clause 8.13 in relation to a Shipbuilding Contract:

 

(a)                                  in the case of a sale, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

 

(b)                                 in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss; or

 

(c)                                  in the case of the occurrence of one of the events set out in Clause 8.13 in relation to a Shipbuilding Contract, on demand by the Agent,

 

and in any such case the amount to be prepaid in respect of the Loans shall be the greater of:

 

(i)                                     the Loan relative to that Ship or that Shipbuilding Contract (and in the case of Ship D the Loan for these purposes shall exclude the Ship D Sub-Advance; in the case of Ship F the Loan shall exclude the Ship F Sub-Advance and in the case of Ship E the Loan shall include both the Ship D Sub-Advance and the Ship F Sub-Advance); and

 

(ii)                                  such sum as is necessary to ensure that, in relation to the remaining amount of the Loans and the remaining Ship or Ships immediately after such prepayment, the same asset cover ratio (calculated as per Clause 15.3) applies as applied immediately prior to such prepayment or, if higher, such sum as shall ensure that the requirements of Clause 15.1 are then complied with.

 

8.8                               Mandatory prepayment upon a change of control.  If there is a change of ownership of the shares in the New Corporate Guarantor or any Borrower such that an individual or company (or group of individuals and/or companies acting in concert) which does not at the date of this Agreement control the New Corporate Guarantor or that Borrower acquires control of the New Corporate Guarantor or that Borrower:

 

(i)                                     the Borrowers shall promptly notify the Agent upon becoming aware of that event; and

 

(ii)           a Lender shall not be obliged to fund an Advance requested in a Drawdown Notice and (unless the Agent has previously given its written consent to such change of control acting on the instruction of all the Lenders) a Lender, by not less than 10 days’ notice to the Borrowers and the other Lenders, may cancel its Available Commitment and require repayment of all of its Contribution immediately.

 

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For the purpose of this Clause 8.8 “acting in concert” means actively co-operating pursuant to an agreement or understanding (whether formal or informal).

 

8.9                               Amounts payable on prepayment.  A prepayment shall be made together with accrued interest (and any other amount payable under Clauses 8.14,  21 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

 

8.10                        Application of partial prepayment.  Each partial prepayment of a Loan shall be applied against the repayment instalments of such Loan in inverse order of maturity.

 

8.11                        No Reborrowing.  No amount of the Loans prepaid may be reborrowed.

 

8.12                        Unwinding of Designated Transactions.  On or prior to any repayment or prepayment of the Loans under this Clause 8 or any other provision of this Agreement, the Borrowers shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loans as reducing from time t o time thereafter pursuant to Clause 8.1.

 

8.13                        Prepayment pursuant to events arising in respect of the Shipbuilding Contracts.  The events referred to in Clause 8.7(c) are:

 

(a)                                  the occurrence of any of the events referred to in Article(s) X or XI of any of the Shipbuilding Contracts and in the case where the relevant Borrower has rescinded such Shipbuilding Contract either the Security Trustee has received from the Seller or the Refund Guarantor all amounts to be refunded under such Shipbuilding Contract or a period of 30 days (or such longer period as the Agent may agree) has elapsed from the date of such rescission whichever is the earlier; or

 

(b)                                 any of the Shipbuilding Contracts being cancelled, terminated, rescinded or suspended or otherwise ceasing to remain in force for any reason and in the case where the relevant Borrower has rescinded such Shipbuilding Contract either the Security Trustee has received from the Seller or the Refund Guarantor all amounts to be refunded under such Shipbuilding Contract or a period of 30 days (or such longer period as the Agent may agree) has elapsed from the date of such rescission whichever is the earlier; or

 

(c)                                  any of the Shipbuilding Contracts being amended or varied without the prior written consent of the Majority Lenders except for any such amendments or variation as is permitted by this Agreement or any other relevant Finance Document; or

 

(d)                                 any Ship not for any reason being delivered to, and accepted by, the relevant Borrower under the relevant Shipbuilding Contract by the end of the Availability Period applicable to the Loan to which that Ship relates; or

 

(e)                                  the rights of the Borrowers under any of the Shipbuilding Contracts are sold, novated or assigned other than by way of security pursuant to the Finance Documents.

 

8.14                       Refinancing of a Ship.  In the event that any of the Borrowers wish to refinance their Financial Indebtedness in respect of a Ship the Lenders agree to release the Mortgage and related security over such Ship subject to receiving a prepayment in respect of the Loans on or before the release in an amount equal to the greater of:

 

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(i)                                     the Loan relative to that Ship (and in the case of Ship D the Loan for these purposes shall exclude the Ship D Sub-Advance; in the case of Ship F the Loan shall exclude the Ship F Sub-Advance and in the case of Ship E the Loan shall include both the Ship D Sub-Advance and the Ship F Sub-Advance); and

 

(ii)                                  15.315.1such sum as is necessary to ensure that, in relation to the remaining amount of the Loans and the remaining Ship or Ships immediately after such prepayment, the same asset cover ratio (calculated as per Clause 15.3) applies as applied immediately prior to such prepayment or, if higher, such sum as shall ensure that the requirements of Clause 15.1 are then complied with.

 

9                                         CONDITIONS PRECEDENT

 

9.1                               Documents, fees and no default.  Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:

 

(a)                                  that, on or before the service of the first Drawdown Notice, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to it;

 

(b)                                 that, on or before a Drawdown Date but prior to the making of an Advance (other than a Delivery Advance), the Agent receives the documents described in Part B of Schedule 3 in form and substance satisfactory to it;

 

(c)                                  that, on or before the Drawdown Date but prior to the drawdown of a Delivery Advance, the Agent receives the documents described in Part C of Schedule 3 in form and substance satisfactory to it;

 

(d)                                 that, on or before each Drawdown Date, the Agent has received all arrangement, commitment and agency fees accrued due and payable pursuant to Clause 20.1;

 

(e)                                  that at the date of each Drawdown Notice and on each Drawdown Date:

 

(i)                                     no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Advance;

 

(ii)                                  the representations and warranties in Clause 10.1 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

 

(iii)                               none of the circumstances contemplated by Clause 5.7 has occurred and is continuing;

 

(f)                                    that, if the ratio set out in Clause 15.1 were applied immediately following the making of the relevant Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loans; and

 

(g)                                 that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, reasonably request by notice to the Borrowers prior to the Drawdown Date.

 

Provided that the Lenders shall not be required to make an Advance if the Loans relating to Ships which have not yet been delivered (but including the Advance being requested by the

 

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Borrowers) exceed 75% of (i) the aggregate Contract Value of the Ships and (ii) the net realisable value of any additional security provided under this Agreement and for.  In the case of Ship D, Loan D for these purposes shall exclude an amount equal to the Ship D Sub-Advance and in the case of Ship F, Loan F for these purposes shall exclude an amount equal to the Ship F Sub-Advance.  For the purpose of this Clause, “Contract Value” shall mean:

 

the market value of a Ship at any date based on the acquisition price of the rights and obligations under the Shipbuilding Contract relating to that Ship or a ship of a similar size and type and due to be delivered at the same time as that Ship as shown by a valuation prepared as at a date not more than 10 Business Days previously by an independent international sale and purchase shipbroker which the Agent has approved for the purpose and after deducting the estimated amount of usual and reasonable expenses which would be incurred in connection with such a sale.

 

9.2                               Waiver of conditions precedent.  If all the Lenders or, in relation to a condition which the Agent determines is non-material, the Majority Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 14 Business days after the Drawdown Date (or such longer period as the Agent may, with the authorisation of all the Lenders or (as the case may be) th e Majority Lenders, specify).

 

9.3                               Pre-positioning of delivery instalments under Shipbuilding Contracts. Notwithstanding the foregoing provisions of Clause 9, in the event a Delivery Advance is required to be drawndown prior to the satisfaction of the relevant conditions precedent set out in Schedule 3 and remitted to the Seller’s bank in accordance with Article II, 2.4 of the relevant Shipbuilding Contract, the Agent may with the authorisation of the Majority Lenders agree to remit such amount to the Seller’s bank p rior to the satisfaction of such conditions precedent provided that:

 

(a)                                  the amount remitted shall be held by the Seller’s bank in an account to the order of the Agent;

 

(b)                                 such amount will only be released to the Seller upon the Seller’s presentation to the Seller’s bank of a copy of the protocol of delivery and acceptance for the relevant Ship in the form agreed between the Seller and the relevant Borrower and duly signed on behalf of the Agent by a person named in the Agent’s remittance instructions;

 

(c)                                  such amount so released may only be used for payment to the account of the Seller with the Seller’s bank in satisfaction of the delivery instalment referred to in Article II, 2.3(e) of the relevant Shipbuilding Contract;

 

(d)                                 in the event that none of the said amount so remitted is released in accordance with the Agent’s instructions or any part thereof is not so released ten (or such longer period as the Agent may agree, up to a maximum of thirty days) days after its receipt by the Seller’s bank the money held by the Seller’s bank is returned to the account specified in the Agent’s remittance instructions;

 

(e)                                  the relevant conditions precedent set out in Schedule 3 shall be satisfied simultaneously with any release to the Seller pursuant to (b) above; and

 

(f)                                   any amounts so remitted and returned pursuant to (d) above will be applied in or towards prepayment of the relevant Delivery Advance pursuant to Clause 8 but will continue to be available to the Borrowers for borrowing subject to the terms and conditions of this Agreement.

 

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10                                  REPRESENTATIONS AND WARRANTIES

 

10.1                        General.  Each Borrower represents and warrants to each Creditor Party as follows.

 

10.2                        Status.  It is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

 

10.3                        Share capital and ownership.  It has an authorised share capital of 500 registered and/or bearer shares without par value all of which shares have been issued, and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by Westbrook Holdings Ltd.

 

10.4                        Corporate power.  It has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

 

(a)                                  to execute the Shipbuilding Contract to which it is a party, to purchase and pay for its Ship under that Shipbuilding Contract and to register such Ship in its name in the Panamanian Ship Registry;

 

(b)                                 to execute the Bareboat Charter to which it is a party and to bareboat charter its Ship to the Bareboat Charterer;

 

(c)                                  to execute the Finance Documents to which it is a party; and

 

(d)                                 to borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents.

 

10.5                        Consents in force.  All the consents referred to in Clause 10.4 remain in force and nothing to the best of the Borrower’s knowledge and belief has occurred which makes any of them liable to revocation.

 

10.6                        Legal validity; effective Security Interests.  The Finance Documents to which it is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

 

(a)                                  constitute its legal, valid and binding obligations enforceable against it in accordance with their respective terms; and

 

(b)                                 create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

 

subject to any relevant insolvency laws affecting creditors’ rights generally and subject to any qualifications as to matters of law which are specifically referred to in any legal opinion delivered to the Agent pursuant to Schedule 3.

 

10.7                        No third party Security Interests.  Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

 

(a)                                  the relevant Borrower or Borrowers which are a party to that Finance Document will have the right to create all the Security Interests which that Finance Document purports to create; and

 

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(b)                                no third party will to the best of the Borrower’s knowledge and belief have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which a Security Interest created by a Finance Document relates.

 

10.8                        No conflicts.  The execution by that Borrower of each Finance Document to which it is a party, and the borrowing by that Borrower of the Loans, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

 

(a)                                  any law or regulation in force at the date of this Agreement; or

 

(b)                                 the constitutional documents of that Borrower; or

 

(c)                                  any contractual or other obligation or restriction which is binding on that Borrower or any of its assets.

 

10.9                        No withholding taxes.  No tax is imposed in any jurisdiction in which that Borrower is ordinarily resident for tax by way of withholding or deduction or otherwise on any payment to be made under this Agreement.

 

10.10                 No default.  No Event of Default or Potential Event of Default has occurred and is continuing.

 

10.11                 Information.  All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document was to the best of the Borrower’s knowledge and belief true and not misleading as at the time it was given and all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrowers from that disclosed in the latest of those accounts.

 

10.12                 No litigation.  No legal or administrative action involving the Borrowers (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to that Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrowers’ financial position or profitability.

 

10.13                 Validity and completeness of Shipbuilding Contracts.  Each Shipbuilding Contract constitutes valid, binding and enforceable obligations of the Seller and the relevant Borrower respectively in accordance with its terms subject to any relevant insolvency laws attaching creditors’ rights generally and:

 

(a)                                  each copy of the Shipbuilding Contracts delivered to the Agent before the date of this Agreement is a true and complete copy; and

 

(b)                                 no amendments or additions to the Shipbuilding Contracts have been agreed nor has any Borrower or the Seller waived any of their respective rights under the Shipbuilding Contracts.

 

10.14                 No rebates etc.  There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrowers, the Seller or a third party in connection with the purchase by the Borrowers of the Ships, other than as disclosed to the Agent in writing on or prior to the date of this Agreement.

 

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10.15                 Compliance with certain undertakings.  At the date of this Agreement, each Borrower is in compliance with Clause 11.13 and (save as described in writing to the Agent) Clauses 11.4 and 11.9.

 

10.16                 Taxes paid.  Each Borrower has paid all taxes applicable to, or imposed on or in relation to it, its business or its Ships.

 

10.17                 Money laundering.  Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrowers of the Loan Facility, the performance and discharge of their obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which the Borrowers or any of them are a party, each Borrower confirms (i) that it is acting for its own account;  (ii) that it will use the proceeds of the Loans for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and (iii) that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented and in force to combat “money laundering” (as defined in Article 1 of Directive (91/308/EEC) of the Council of the European Communities).

 

10.18                 Conformity of Financial Covenants and Dividend Restrictions.

 

(a)                                  The financial covenants set out in Schedule 8 conform to the financial covenants given by the New Corporate Guarantor and its subsidiaries under the Bank of America Facilities.

 

(b)                                 The dividend restrictions in Clause 11.21 conform in substance to the dividend restrictions imposed on the New Corporate Guarantor under the Bank of America Facilities.

 

10.19                 Charters with TBS Worldwide to which Borrowers are a party.  Any charter which a Borrower shall enter into with TBS Worldwide shall be on terms comparable to, as far as charterhire is concerned, the time charter dated 10 May 2005, a copy of which was previously delivered to the Agent.

 

10.20                 Shareholder loans.  All shareholder loans and inter-company Indebtedness made available to the Borrowers (or any of them) shall be made by the Shareholder.

 

11                                  GENERAL UNDERTAKINGS AND FINANCIAL COVENANTS

 

11.1                        General.  Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders otherwise permit.

 

11.2                        Title; negative pledge.  Each Borrower will keep its rights under the Shipbuilding Contract and Refund Guarantees to which it is a party, and with effect from the Delivery Date of the Ship, will hold the legal title to, and own the entire beneficial interest in its Ship, its Insurances and Earnings, in each case free from all Security Interests and other interests and rights of every kind, except for Permitted Security Interests.

 

11.3                        No disposal of assets.  Save pursuant to the relevant Bareboat Charter or in the case of the disposal of a Ship or a Shipbuilding Contract where the provisions of Clause 8.7 are complied with, no Borrower will transfer, lease or otherwise dispose of:

 

(a)                                 its Ship or its rights under the Shipbuilding Contract to which it is a party or all or a substantial part of its other assets, whether by one transaction or a number of transactions, whether related or not; or

 

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(b)                                 any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

 

11.4                        No other liabilities or obligations to be incurred.  No Borrower will incur any liability or obligation except

 

(a)                                  liabilities and obligations under the Shipbuilding Contract, the Bareboat Charter, the First Sub-Time Charter, the Second Sub-Time Charter, the Finance Documents, the Guarantee Facility Agreement and the Finance Documents (as defined in the Guarantee Facility Agreement) to which it is a party; and

 

(b)                                 liabilities or obligations incurred in the ordinary course of supervising the construction of, providing supplies for, operating and chartering its Ship (and for the avoidance of doubt the management fees payable by the Borrowers to the Approved Managers may be a permitted expense); and

 

(c)                                  provided the terms of Clause 12.3(c)  are complied with, inter-company Indebtedness from other companies which are in the same ultimate beneficial ownership as the Borrowers.

 

11.5                        Information provided to be accurate.  All financial and other information which is provided in writing by or on behalf of each Borrower under or in connection with any Finance Document will to the best of that Borrower’s knowledge and belief be true and not misleading and will not omit any material fact or consideration which, if disclosed, would reasonably be expected to adversely affect the decision of a person considering whether to enter into this Agreement.

 

11.6                        Provision of financial statements.  Each Borrower will procure that there is sent to the Agent:

 

(a)                                  as soon as possible, but in no event later than 120 days after the end of each of the Corporate Guarantor’s and the New Corporate Guarantor’s financial years, the annual audited accounts of the Corporate Guarantor and the New Corporate Guarantor and each of their consolidated subsidiaries;

 

(b)                                 as soon as possible, but in no event later than 30 days after the end of each quarter in each of the Corporate Guarantor’s and the New Corporate Guarantor’s financial years:

 

(i)                                     the unaudited accounts of the Corporate Guarantor and the New Corporate Guarantor and each of their consolidated subsidiaries which are certified as to their correctness by its chief financial officer; and

 

(ii)                                  with effect from the relevant Delivery Date of its Ship management accounts in a format approved by the Agent which show the results of the operation of its Ship during the preceding financial quarter and which are certified as to their correctness by its chief financial officer;

 

(c)                                  as soon as possible, but in no event later than 3 months after the end of each of its financial years (but only with effect from the relevant Delivery Date of its Ship), a budget in a format approved by the Agent which shows all anticipated income and expenditure of its Ship during its next financial year;

 

(d)                                 (d)           by the New Corporate Guarantor on a monthlysemi annual basis, and in no event later than the 20th day of each month, monthly management information including information from the preceding month in respect of sales, operating profit, net income,

 

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EBITDA and available liquidity each on a consolidated basis and each compared against the relevant budget numbers for that month; and(e)by the New Corporate Guarantor on a monthly basis, and in no event later than the 30th day of each month60th day after each financial half year, updated financial projections including but not limited to revenues, operating expenses, net income, cash balances, loan balances, working capital requirements and equity for the period up to and including the following 24 months.income statements, balance sheets and cash flows projected on a monthly basis for the then subsequent 24 month period and on a yearly basis for the subsequent period commencing 24 months later and ending 60 months later;

 

(d)                                

 

(e)                                  by the New Corporate Guarantor within 45 days from the end of each calendar month or 60 days where the end of that month coincides with the end of a calendar year monthly financials including income statements, balance sheets, cash flows and key performance indicators for the business; and

 

(f)                                    by the New Corporate Guarantor 13 week cash flow report to be delivered on the Wednesday of each week reporting the prior week’s results and variances and rolling 13 week forecast.

 

11.7                        Form of financial statements.  All accounts (audited and unaudited) delivered under Clause 11.6 will:

 

(a)                                  be prepared in accordance with all applicable laws and generally accepted accounting principles of the U.S.A. consistently applied;

 

(b)                                 give a true and fair view of the financial condition of the relevant Borrower at the date of those accounts and of its profit for the period to which those accounts relate;

 

(c)                                  fully disclose or provide for all significant liabilities of the relevant Borrower.

 

11.8                        Shareholder and creditor notices.  Each Borrower will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to its shareholders or creditors or any class of them.

 

11.9                        Consents.  Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

 

(a)                                  for that Borrower to perform its obligations under any Finance Document to which it is a party;

 

(b)                                 for the validity or enforceability of any Finance Document to which it is a party;

 

(c)                                  for that Borrower to continue to own, charter and operate its Ship;

 

and the Borrower will comply with the terms of all such consents.

 

11.10                 Maintenance of Security Interests.  Each Borrower will:

 

(a)                                  at its own cost, do all that is necessary to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

 

(b)                                 without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any applicable court or authority, pay any applicable

 

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stamp, registration or similar tax in respect of any Finance Document, give any notice or take any other step which, in the reasonable opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

 

11.11                 Notification of litigation.  Each Borrower will provide the Agent with details of any legal or administrative action involving any Borrower, any Security Party, the Approved Managers or the Ships, their Earnings or the Insurances promptly upon becoming aware of the same where such legal or administrative action might, if adversely determined, have a material adverse effect on the ability of that Borrower to perform its obligations under any Finance Document to which it is a party.

 

11.12                 No amendment to Shipbuilding Contracts.  No Borrower will agree to any material amendment or supplement to, or waive or fail to enforce, the Shipbuilding Contract to which it is a party or any of its provisions (and for the purposes of this Clause 11.12 an amendment of a Shipbuilding Contract will always be material if alone or with any previous variations it increases the Contract Price thereunder by more than 5%).

 

11.13                 Chief Executive Office.  Each Borrower will maintain its chief executive office, and keep its corporate documents and records, at Suite 306, Commerce Building, One Chancery Lane, Hamilton, MH12, Bermuda.

 

11.14                 Confirmation of no default.  Each Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by the representative director of such Borrower and which:

 

(a)                                  states that no Event of Default or Potential Event of Default has occurred and is continuing; or

 

(b)                                 states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

 

11.15                 Notification of default.  Each Borrower will notify the Agent as soon as it becomes aware of:

 

(a)                                  the occurrence of an Event of Default or a Potential Event of Default; or

 

(b)                                 any matter which indicates that an Event of Default or a Potential Event of Default may have occurred and is continuing;

 

and will keep the Agent fully up-to-date with all developments.

 

11.16                 Provision of further information.  Each Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

 

(a)                                  to it, its Ship, her Earnings or Insurances; or

 

(b)                                 to any other matter relevant to, or to any provision of, a Finance Document;

 

which may be reasonably requested by the Agent, the Security Trustee or any Lender at any time.

 

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11.17                 Provision of copies and translation of documents.  Each Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, such Borrower will provide a certified English translation prepared by a translator approved by the Agent.

 

11.18                 Financial Covenants including Minimum Liquidity Covenant.

 

(i)                                     The Borrowers undertake to comply at all times with the financial covenants set out in Schedule 8.

 

(ii)                                  The Borrowers shall provide to the Agent within 60 days after the end of each financial quarter of the New Corporate Guarantor’s financial year a compliance certificate in the form set out in Schedule 9 executed by the chief financial officer of the New Corporate Guarantor and confirming that the Financial Covenants set out in Schedule 8 have been complied with during each financial quarter.

 

(iii)                               A formal review of the financial covenants set out in Schedule 8 will be undertaken by the Agent, having consulted and received the written agreement of the Lenders, upon expiry and prepayment of the Bank of America Facilities whichever is the earlier.

 

(iv)                              The parties to this Agreement shall review the financial covenants set out in Schedule 8 on or around 1 May 2012.

 

(1)                        Compliance with the Minimum Liquidity Covenant shall be reported on the 13-week cash flow report to be provided pursuant to Clause 11.6(f) above.  For any day after 6 January 2011 on which fees and expenses are actually paid in connection with the restructuring contemplated by the Global Restructuring Term Sheet, the calculation in respect of the Minimum Liquidity Covenant shall include, for the week in which such payment is made and the three weeks after each such payment, an add-back for such fees and expenses.  For these purposes restructuring fees and expenses include, without limitation, financing fees, commitment fees and pr ofessional and legal fees (but will expressly exclude any interest).

 

(2)                        If on any measurement date occurring after 31 January 2011 the Qualified Cash is $17,500,000 or less, the New Corporate Guarantor shall promptly conduct a bank update call with the Agent to discuss liquidity issues.  This threshold will not have add-back for restructuring fees and expenses.

 

(3)                        Qualified Cash shall exclude the monies on the Special Account and any cash pledged to support letters of credit.

 

(4)                        At the discretion of the New Corporate Guarantor, funds from the Special Account can be used to cure a breach of the Minimum Liquidity Covenant within the cure period specified below.  If funds are not required for compliance with the Minimum Liquidity Covenant in subsequent period the funds can be refunded to the Special Account at the discretion of the New Corporate Guarantor provided however that no such refund can be effectuated unless, after such refund, aggregate Qualified Cash (other than cash in the Special Account and any cash pledged to support letters of credit) equal or exceed $22,500,000 subject to a cap, applied separatel y for each cure of a breach of the Minimum

 

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Liquidity Covenant of the sum of (i) $5,000,000 plus (ii) the amount by which aggregate amounts spent for Permitted Discretionary Activities are less than $5,000,000.

 

(5)                        The cure period for any breach of the Minimum Liquidity Covenant before such breach becomes an Event of Default shall be two (2) Business Days after the delivery of a 13 week cash flow report reflecting liquidity below $15,000,000 for any period provided however that such applicable cure period shall be extended by two (2) Business Days if an Additional Capital Infusion is required to cure a breach of the Minimum Liquidity Covenant.

 

11.19                 Operational business of TBS Pacific Liner.  The Borrowers undertake to procure that TBS Pacific Liner opens the Earnings Account with the Agent no later than 30 June 2007 and that thereafter and throughout the Security Period (i) all of the operational business of TBS Pacific Liner shall be conducted through the Earnings Account and (ii) TBS Pacific Liner does not operate accounts with any banks other than the Agent (save that the Creditor Parties agree there may be a transitional period of up to 6 months from the date of opening the Earnings Account until all operational business of TBS Pacific Liner is completely transferred and all other accounts of TBS Pacific Liner which are currently with other banks are closed).

 

11.20                 Designated Transactions.  The Borrowers hereby undertake that on the Drawdown Date in respect of an Advance they shall hedge the interest rate payable in respect of such Advance for the period for which such Advance is scheduled to be outstanding by entering into a Designated Transaction with the Swap Bank pursuant to the Master Agreement.

 

11.21                 No Dividends.  As long as no Event of Default has occurred or would occur as a result of the payment of any dividend or the making of any distribution the Borrowers may pay any dividends or make other forms of distributions to the New Corporate Guarantor.  The Borrowers shall procure that the New Corporate Guarantor does not pay any dividend or make any other form of distribution Provided that so long as no Event of Default has occurred or would occur as a result of the payment of any dividend or the making of any distribution the New Corporate Guarantor may wi thhold stock in order that it be sold and the proceeds used solely to pay any payroll withholding taxes as required in connection with stock bonuses made to employees of the New Corporate Guarantor and its subsidiaries.

 

11.22                 Financial Covenants in other facilities.  The Borrowers undertake to provide and to procure that the New Corporate Guarantor provides the Creditor Parties with the benefit of any additional or more favourable financial covenants provided to other financing parties under other or future financing agreements in order that the Creditor Parties shall be treated no less favourably than any other of the financing parties to the New Corporate Guarantor and/or any of its subsidiaries by providing details of such financial covenants in order that appropriate amendments can be made by this Agreement and the relevant Finance Documents.

 

11.23                 Equity Contributions.  The Borrowers shall ensure that all amounts due under the Shipbuilding Contracts other than those amounts being financed by a Loan under this Agreement shall be paid from operating cashflow and the Borrowers shall not use any monies credited to the Restricted Equity Deposit Account until the Agent has notified the Borrowers that it is satisfied that the amount standing to the credit of the Restricted Equity Deposit Account is sufficient to meet all remaining amounts due under the Shipbuilding Contracts other than th ose amounts being financed by a Loan under this Agreement.  The Borrowers shall further ensure that any further equity raised by the New Corporate Guarantor shall be utilised in meeting the Borrowers’ equity contributions as required under this Clause

 

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in the first instance and any balance thereafter shall promptly be credited to the Restricted Equity Deposit Account. Any amount of equity raised over such amounts required to fund equity contributions in respect of amounts due under the Shipbuilding Contracts other than those amounts being financed by a Loan under this Agreement shall not be credited to the Restricted Equity Deposit Account but shall be used to prepay all loans and indebtedness owed by the New Corporate Guarantor and its subsidiaries to Bank of America, The Royal Bank of Scotland plc, DVB Group Merchant Bank (Asia) Ltd., Credit Suisse, AIG Commercial Equipment Finance, Inc., Commerzbank AG and Berenberg Bank under loan or facility agreements entered into with them on a pro rata basis.  Any prepayment of the Loans under this Clause shall be applied to all Loans on a pro rata basis in accordance with Clause 8. p>

 

11.23                 Operating leases and charter in agreements.

 

(a)                                  11.24Operating Leases.  TheSubject to Clause 11.23(b) the Borrowers shall ensure that neither the New Corporate Guarantor nor any of its subsidiaries shall permit any new or increase their existing off balance sheet operating leases, operating lease payments and payments associated with vessels chartered in for more than 12 months without the prior written consent of the Agent act ing on the instructions of the Majority Lenders.  In no circumstances shall any such off-balance sheet operating obligations exceed $45,000,000 when aggregated.

 

(b)                                 The New Corporate Guarantor and any of its subsidiaries (other than the Borrowers) may enter into ordinary course charter in agreements subject to a cap of $10,000,000 outstanding at any one time.  Such limit shall only apply to vessels chartered in so long as they have a fixed remaining term of greater than 12 months but shall not apply to the Laguna Belle and Seminole Princess Leases.  For the avoidance of doubt none of the New Corporate Guarantor and its subsidiaries shall be permitted to enter into any speculative charter in agreements of 12 months or less.

 

11.24                 11.25Additional Vessels.  The Borrowers shall not and shall procure that the New Corporate Guarantor or any of its subsidiaries do not purchase any additional vessels without the prior written consent of the Agent acting on the instructions of the Majority Lenders.

 

11.26Investments in Joint Ventures.  The Borrowers, the Corporate Guarantor and the New Corporate Guarantor acting individually or together shall not invest more than $10,000,000 in aggregate in any Joint Ventures of which any amounts in excess of $5,000,000 shall require the prior written consent of the Agent acting on the instructions of the Majority Lenders. For the avoidance of doubt, the $10,000,000 amount referred to above shall include all Joint Venture investments made on or after 27 March 2009.

 

11.25                 Other Restrictions.

 

(a)                                  None of the New Corporate Guarantor and its subsidiaries shall incur any capital expenditure other than to complete the construction programme in respect of Ship D and Ship F and to maintain their existing fleet and including Rollover Capex;

 

(b)                                 None of the New Corporate Guarantor and its subsidiaries shall incur any further Financial Indebtedness other than Capital Infusions, Permitted Additional Junior Capital, Replacement Debt, Permitted Logstar Debt and the existing Financial Indebtedness under each of the TBS Credit Facilities and under the Swap Facility.

 

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(c)                                  The New Corporate Guarantor and its subsidiaries shall not enter into any leases (other than existing leases and renewals related thereto and future de minimis and ordinary course leases nor make any investments (other than Permitted Discretionary Activities) nor make any distributions.

 

(d)                                 The New Corporate Guarantor shall be permitted to consolidate the Westchester Offices of the TBS Group in a new location within the same geographic area; provided that any such consolidation shall have no adverse cash flow impact compared to the aggregate premises expense of the existing Westchester offices.

 

(e)                                  The New Corporate Guarantor and its subsidiaries shall be permitted to cash collateralise letters of credit up to $3,000,000.

 

(f)                                    The New Corporate Guarantor shall be permitted to convert the Laguna Belle and Seminole Princess Leases to debt up to $25,000,000 in aggregate with no incremental profit & loss cash impact on the New Corporate Guarantor and its subsidiaries on an on-going basis.

 

12                                  CORPORATE UNDERTAKINGS

 

12.1                        General.  Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

 

12.2                        Maintenance of status.  Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

 

12.3                        Negative undertakings.  No Borrower will:

 

(a)                                  carry on any business other than in relation to the construction, purchase and eventual ownership, chartering and operation of its Ship; or

 

(b)                                 effect any form of redemption, purchase or return of share capital; or

 

(c)                                  provide any form of credit or financial assistance to:

 

(i)                                     a person who is directly or indirectly interested in that Borrower’s share or loan capital; or

 

(ii)                                  any company in or with which such a person is directly or indirectly interested or connected;

 

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms’ length provided however that prior to an Event of Default which is continuing that Borrower may provide loans to or incur inter-company Indebtedness from other subsidiaries of the New Corporate Guarantor and may service such inter-company Indebtedness provided that in the case of any such inter-company Indebtedness the relevant lending company has first executed an agreement in favour of the Security Trustee fully subordinating the rights of such lending company in respect of such Indebtedness to those of the Creditor Parties under the Finance Documents and assigning its rights in respect of any loan agreements relating to such inter-company Indebtedness made between it and the Borrowers;

 

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(d)                                 issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

 

(e)                                  acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

 

(f)                                    enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

 

13                                  INSURANCE

 

13.1                        General.  Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 in respect of each Ship at all times during the Security Period after that Ship has been delivered to it under the relevant Shipbuilding Contract except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

 

13.2                        Maintenance of obligatory insurances.  Each Borrower shall keep its Ship insured at its expense against:

 

(a)                                  fire and usual marine risks (including hull and machinery and excess risks);

 

(b)                                 war risks;

 

(c)                                  protection and indemnity risks; and

 

(d)                                 any other risks against which the Agent considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the reasonable opinion of the Agent be reasonable for a prudent owner to insure and which are specified by the Agent by notice to the Borrower.

 

13.3                        Terms of obligatory insurances.  Such insurances in relation to a Ship shall be effected by the Borrowers:

 

(a)                                  in Dollars;

 

(b)                                 in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) One hundred and twenty per cent. (120%) of the Loan in respect of such Ship and (ii) the market value of such Ship;

 

(c)                                  in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

 

(d)                                 in relation to protection and indemnity risks in respect of the full tonnage of such Ship;

 

(e)                                  on approved terms; and

 

(f)                                    through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations and without prejudice to the Borrowers’ obligation to obtain the prior approval of the Agent such approval not to be unreasonably withheld, at all times with reputable international brokers, companies, underwriters and mutual insurance associations.

 

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13.4                        Further protections for the Creditor Parties.  In addition to the terms set out in Clause 13.3, each Borrower shall use its best endeavours to procure that the obligatory insurances shall:

 

(a)                                  whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(b)                                 name the Security Trustee as loss payee with such directions for payment as the Security Trustee may reasonably specify;

 

(c)                                  provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

 

(d)                                 provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Agent in respect of any rights or interests (secured or not) held by or available to the Agent under the Finance Documents, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the Borrowers or any other Creditor Party) in circu mstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

 

(e)                                  provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party;

 

(f)                                    provide that the Security Trustee may make proof of loss if the Borrowers fail to do so; and

 

(g)                                 provide so far as possible that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Agent, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Agent for 30 days (or 7 days in the case of war risks) after receipt by the Agent of prior written notice from the insurers of such cancellation, change or lapse.

 

13.5                        Renewal of obligatory insurances.  The Borrowers shall:

 

(a)                                  at least 14 days before the expiry of any obligatory insurance effected by it:

 

(i)                                     notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrowers propose to renew that obligatory insurance and of the proposed terms of renewal; and

 

(ii)                                  obtain the Security Trustee’s approval to the matters referred to in paragraph (i) such approval not to be unreasonably withheld;

 

(b)                                 at least 7 days before the expiry of any obligatory insurance effected by it, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

 

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(c)                                  use its best endeavours to procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

 

13.6                        Copies of policies; letters of undertaking.  The Borrowers shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

 

(a)                                  they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

 

(b)                                 they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

 

(c)                                  they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

 

(d)                                 they will notify the Security Trustee, not less than 10 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrowers or their agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

 

(e)                                  they will not set off against any sum recoverable in respect of a claim relating to a Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Secur ity Trustee.

 

13.7                        Copies of certificates of entry.  The Borrowers shall ensure that any protection and indemnity and/or war risks associations in which a Ship is entered provides the Security Trustee with:

 

(a)                                  a certified copy of the certificate of entry for that Ship;

 

(b)                                 a letter or letters of undertaking in such form as may be reasonably required by the Security Trustee; and

 

(c)                                  a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

 

13.8                        Deposit of original policies.  The Borrowers shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

 

13.9                        Payment of premiums.  The Borrowers shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.

 

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13.10                 Guarantees.  The Borrowers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

13.11                 Restrictions on employment.  The Borrowers shall not employ the Ships, nor permit them to be employed, outside the cover provided by any obligatory insurances.

 

13.12                 Compliance with terms of insurances.  The Borrowers shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

 

(a)                                  the Borrowers shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

 

(b)                                 the Borrowers shall not make any changes relating to the classification or classification society or manager or operator of the Ships approved by the underwriters of the obligatory insurances;

 

(c)                                  the Borrowers shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ships are entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

 

(d)                                 the Borrowers shall not employ the Ships, nor allow them to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

13.13                 Alteration to terms of insurances.  The Borrowers shall not either make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

 

13.14                 Settlement of claims.  The Borrowers shall not either settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty unless the Agent is satisfied that such release, compromise or abandonment will not prejudice any of the Lenders’ interests, and the Borrowers shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

13.15                 Provision of copies of communications.  The Borrowers shall provide the Security Trustee, at the time of each such communication, copies of all written communications between the Borrowers and:

 

(a)                                  the approved brokers; and

 

(b)                                 the approved protection and indemnity and/or war risks associations; and

 

(c)                                  the approved insurance companies and/or underwriters,

 

which relate directly or indirectly to:

 

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(i)                                     the obligations of the Borrowers relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

(ii)                                  any credit arrangements made between the Borrowers and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

13.16                 Provision of information.  In addition, the Borrowers shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably requests for the purpose of:

 

(a)                                  obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

(b)                                 effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;

 

and the Borrowers shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses properly incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

 

13.17                 Mortgagee’s interest, additional perils.  The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance and a mortgagee’s interest marine insurance in relation to each Ship the subject of a Mortgage, in each case in an amount, which when aggregated with any such insurance policy taken out in relation to the other Ships then the subject of a Mortgage is equal to one hundred and ten per cent. (110%) of the Loans or part thereof at the discretion of the Security Trustee, on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrowers shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

13.18                 Review of insurance requirements.  The Agent may and, on instruction of the Majority Lenders, shall review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the reasonable opinion of the Agent or any Lender significant and capable of affecting the Borrowers or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject).

 

13.19                 Modification of insurance requirements.  The Agent shall notify the Borrowers of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Agent, may or, on instruction of the Majority Lenders, shall reasonably consider appropriate, in the circumstances and, after consultation and taking full account of the Borrower’s opinions, such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers accordingly.

 

14                                  SHIP COVENANTS

 

14.1                        General.  Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 in respect of each Ship at all times during the Security

 

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Period after that Ship has been delivered to it under the relevant Shipbuilding Contract except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit.

 

14.2                        Ship’s name and registration.  Each Borrower shall keep its Ship registered in its name in the Panamanian ship registry; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of its Ship.

 

14.3                        Repair and classification.  Each Borrower shall keep its Ship in a good and safe condition and state of repair:

 

(a)                                  consistent with first-class ship ownership and management practice;

 

(b)                                 so as to maintain such Ship’s present Classification in each case free of  recommendations and conditions affecting that Ship’s Classification; and

 

(c)                                  so as to comply with all laws and regulations applicable to vessels registered at ports in the Republic of Panama or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

 

14.4                        Modification.  The Borrowers shall not make any modification or repairs to, or replacement of, any Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.

 

14.5                        Removal of parts.  The Borrowers shall not remove any material part of any Ship, or any item of equipment installed on, any Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the relevant Ship the property of the relevant Borrower and subject to the security constituted by the re levant Mortgage Provided that the Borrowers may install equipment owned by a third party if the equipment can be removed without any risk of damage to the relevant Ship.

 

14.6                        Surveys.  The Borrowers shall submit the Ships regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports.

 

14.7                        Inspection.  The Borrowers shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ships at all reasonable times and without interference to their itineraries to inspect their condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

 

14.8                        Prevention of and release from arrest.  The Borrowers shall promptly discharge:

 

(a)                                  all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ships, their Earnings or the Insurances;

 

(b)                                 all taxes, dues and other amounts charged in respect of the Ships, their Earnings or the Insurances; and

 

(c)                                 all other outgoings whatsoever in respect of the Ships, their Earnings or the Insurances;

 

and, upon receiving notice of the arrest of a Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrowers shall procure its release by providing bail or

 

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otherwise as the circumstances may require as soon as practicable and in any event within 14 days.

 

14.9                        Compliance with laws etc.  The Borrowers shall:

 

(a)                                  comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ships, their ownership, operation and management or to the business of the Borrowers;

 

(b)                                 not employ the Ships nor allow their employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

 

(c)                                  in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit any Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrowers have (at their expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

 

14.10                 Provision of information.  The Borrowers shall promptly provide the Security Trustee with any information which it reasonably requests regarding:

 

(a)                                  the Ships, their employment, position and engagements;

 

(b)                                 the Earnings and payments and amounts due to the master and crew of the Ships;

 

(c)                                  any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ships and any payments made in respect of the Ships;

 

(d)                                 any towages and salvages;

 

(e)                                  its compliance, the Approved Managers’ compliance and the compliance of the Ships with the ISM Code and the ISPS Code;

 

and, upon the Security Trustee’s request, provide copies of any current charter relating to any Ship, of any current charter guarantee and copies of a Ship’s Document of Compliance.

 

The Agent shall communicate any of the above information to any one of the Lenders upon receiving written demand subject to receipt of the same from the Borrower.

 

14.11                 Notification of certain events.  The Borrowers shall immediately notify the Security Trustee by fax, confirmed forthwith by letter, of:

 

(a)                                  any casualty which is or is likely to be or to become a Major Casualty;

 

(b)                                 any occurrence as a result of which any Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

(c)                                  any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

 

(d)                                 any arrest or detention of a Ship, any exercise or purported exercise of any lien on a Ship or its Earnings or any requisition of a Ship for hire;

 

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(e)                                  any intended dry docking of a Ship;

 

(f)                                    any Environmental Claim made against any Borrower or in connection with a Ship, or any Environmental Incident;

 

(g)                                 any claim for breach of the ISM Code or the ISPS Code being made against any Borrower, the Approved Managers or otherwise in connection with a Ship; or

 

(h)                                 any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;

 

and the Borrowers shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrowers’, the Approved Managers’ or any other person’s response to any of those events or matters.

 

14.12                 Restrictions on chartering, appointment of managers etc.  No Borrower shall, in relation to a Ship:

 

(a)                                  (other than pursuant to a Related Party Charter) let or allow any charterer to let that Ship on demise charter for any period;

 

(b)                                 (other than pursuant to a Related Party Charter) enter or allow any charterer to enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 13 months;

 

(c)                                  enter or allow any charterer to enter into any charter  in relation to that Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

 

(d)                                 (other than pursuant to a Related Party Charter) charter or allow any charterer to charter that Ship otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;

 

(e)                                  appoint or allow any charterer to appoint a manager of that Ship other than the Approved Managers or agree to any alteration to the terms of the Approved Managers’ appointment;

 

(f)                                    de-activate or lay up or allow any charterer to de-activate or lay up that Ship; or

 

(g)                                 put or allow any charterer to put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless (i) that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason or (ii) the cost of the work to be done on that Ship is covered by insurances and the underwriters have agreed to make payment direct to the person who is to carry out the work or (iii) the Agent is otherwise satisfied that the amounts payable in respect of the cost of the work will be paid on their relevant due date for payment.

 

14.13                 Notice of Mortgage.  Each Borrower shall keep the relevant Mortgage registered against its Ship as a valid first priority mortgage, carry on board its Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of its Ship a framed printed notice stating that its Ship is mortgaged by that Borrower to the Security Trustee.

 

14.14                 Sharing of Earnings.   Save as disclosed to the Agent, no Borrower shall enter into any agreement or arrangement for the sharing of any Earnings.

 

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14.15                 ISPS Code.  The Borrowers shall comply with the ISPS Code and in particular, without limitation, shall:

 

(a)                                  procure that each Ship and the company responsible for each Ship’s compliance with the ISPS Code comply with the ISPS Code; and

 

(b)                                 maintain for each Ship an ISSC;  and

 

(c)                                  notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

 

15                                  SECURITY COVER

 

15.1                        Minimum required security cover.  Clause 15.2 applies if the Agent notifies the Borrowers that:

 

(a)                                  the aggregate of the market values (determined as provided in Clause 15.3) of the Ships then subject to a Mortgage; plus

 

(b)                                 the net realisable value of any additional security previously provided under this Clause 15;

 

is below One hundred and twenty five per cent.(125%)the Relevant Percentage of the Loans (provided however that Loans for these purposes shall exclude prior to the Delivery Date in respect of a Ship and the advance of its Delivery Advance, all Advances of the Loan for such Ship).

 

15.2                        Provision of additional security; prepayment.  If the Agent serves a notice on the Borrowers under Clause 15.1, the Borrowers shall, within 1 month after the date on which the Agent’s notice is served, either:

 

(a)                                  provide, or ensure that a third party provides, additional security which, in the reasonable opinion of the Majority Lenders, has a net realisable market value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require; or

 

(b)                                 prepay such part (at least) of the Loan as will eliminate the shortfall.

 

15.3                        Valuation of Ships.  The market value of a Ship at any date is that shown by a valuation prepared:

 

(a)                                  as at a date not more than 10 Business days previously;

 

(b)                                 by an independent international sale and purchase shipbroker which the Agent has approved or appointed for the purpose;

 

(c)                                  with or without physical inspection of the Ship (as the Agent may require);

 

(d)                                 on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment;

 

(e)                                 after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

 

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15.4                        Value of additional vessel security.  The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3.

 

15.5                        Valuations binding.  Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest.

 

15.6                        Provision of information.  The Borrowers shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.3 or 15.4 with any information which the Agent or the shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent.

 

15.7                        Payment of valuation expenses.  Without prejudice to the generality of the Borrowers’ obligations under Clauses 20.2, 20.3 and 21.3, the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any shipbroker or expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause provided however that prior to the occurrence of an Event of Default the Borrowers shall only be obliged to reimburse the Agent such fees and expenses in relation to one valuationfour valuations of each Ship obtained pursuant to Clause 15 per each twelve month period. The Borrowers shall also pay to the Agent the amount of all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause 20.

 

15.8                        Frequency of valuations.  The Agent shall obtain valuations to test the security cover specified in Clause 15.2 on a quarterly basis or at such other times as the Agent may reasonably require.

 

15.9                        15.8Application of prepayment.  Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2(b).

 

15.10                 15.9Meaning of additional security.  In Clause 15.1 “security” means a Security Interest over an asset or assets (whether securing the Borrowers’ liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrowers’ liabilities under the Finance Documents.

 

15.11                 15.10Requirement for additional documents.  The Borrowers shall not be deemed to have complied with Clause 15.2(a) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Part A of Schedule 3 below and such legal opinions in terms acceptable to the Agent from such lawyers as it may select.

 

16                                  PAYMENTS AND CALCULATIONS

 

16.1                        Currency and method of payments.  All payments to be made by the Lenders or by the Borrowers under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

(a)                                 by not later than 11.00 a.m. (New York City time) on the due date;

 

(b)                                 in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall

 

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specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

 

(c)                                  in the case of an amount payable by a Lender to the Agent or by the Borrowers to the Agent or any Lender, to the account of the Agent at JP Morgan Chase Bank, New York (Swift Code: CHASUS33) Account No. 400759136 for credit to the Agent (Swift Code: RBOSGB2LGLO Swift Name: Royal Bank of Scotland GLO, London) reference “GLO re TBS”, or to such other account with such other bank as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and

 

(d)                                 in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties.

 

16.2                        Payment on non-Business Day.  If any payment by the Borrowers under a Finance Document would otherwise fall due on a day which is not a Business Day:

 

(a)                                  the due date shall be extended to the next succeeding Business Day; or

 

(b)                                 if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

 

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

 

16.3                        Basis for calculation of periodic payments.  All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

 

16.4                        Distribution of payments to Creditor Parties.  Subject to Clauses 16.5, 16.6 and 16.7:

 

(a)                                  any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, the Swap Bank or the Security Trustee shall be made available by the Agent to that Lender, the Swap Bank or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Bank or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

 

(b)                                 amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

 

16.5                        Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require or that Lender to pay on demand.

 

16.6                        Agent only obliged to pay when monies received.  Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender until the Agent has satisfied itself that it has received that sum.

 

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16.7                       Refund to Agent of monies not received.  If and to the extent that the Agent makes available a sum to the Borrowers or a Lender, without first having received that sum, the Borrowers or the Lender concerned (as the case may be) shall, on demand:

 

(a)                                  refund the sum in full to the Agent; and

 

(b)                                 pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

 

16.8                        Agent may assume receipt.  Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

 

16.9                        Creditor Party accounts.  Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

 

16.10                 Agent’s memorandum account.  The Agent shall maintain a memorandum account showing all sums owing to the Agent, the Security Trustee, and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

 

16.11                 Accounts prima facie evidence.  If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrowers or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.

 

17                                  APPLICATION OF RECEIPTS

 

17.1                        Normal order of application.  Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:-

 

(a)                                  FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (or any of them), other than the Master Agreement, in such order of application and/or such proportions as the Agent, acting with the authorisation of the Majority Lenders, may specify by notice to the Borrowers, the Security Parties and the other Creditor Parties;

 

(b)                                 SECONDLY: in or towards satisfaction of amounts then due and payable under the Master Agreement, in such order of application as the Agent, acting with the authorisation of the Majority Lenders, may specify by notice to the Borrowers, the Security Parties and the other Creditor Parties;

 

(c)                                  THIRDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause; and

 

(d)                                 FOURTHLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

 

17.2                        Variation of order of application.  The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrowers, the Security Parties and the other Creditor Parties

 

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provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

17.3                        Notice of variation of order of application.  The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

 

17.4                        Appropriation rights overridden.  This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any Security Party.

 

18                                  EARNINGS ACCOUNT AND STANDBY EARNINGS ACCOUNT

 

18.1                        Payment of EarningsThe Borrowers agree that at any time following the date of this Agreement (and whether before or after the occurrence of an Event of Default and whether or not the same is continuing), the Agent shall be entitled (but not bound) to give the Borrowers a notice in writing directing the Borrowers (or any of them) to procure and ensure that the Earnings of the Ships (or the relevant Ship referred to in such direction) are thereafter paid to the Standby Earnings Accoun t.  Where such a notice is given to the Borrowers (or relevant Borrower) before the occurrence of an Event of Default, the Borrowers (or relevant Borrower, as the case may be) shall be given a period of 5 Business Days in which to re-direct the payments but where an Event of Default has occurred the re-direction shall take effect immediately upon receipt of the Agent’s notice to that effect. For the avoidance of doubt where the Agent gives such a direction all Earnings of the relevant Ship or Ships which are subsequently paid to TBS Pacific Liner shall (save as provided above) be paid directly to the Standby Earnings Account.  In respect of any such Earnings which have been paid to and are standing to the credit of the Earnings Account the Borrowers shall procure that following the occurrence of an Event of Default and receipt of a direction from the Agent in accordance with this clause 18.1, such amounts shall be transferred to the Standby Earnings Account as soon as practicable after such di rection.

 

18.2                        Interest accrued on the Earnings Account and the Standby Earnings Account.  Any credit balance on the Earnings Account and the Standby Earnings Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Earnings Account and the Standby Earnings Account.

 

18.3                        Monies on the Earnings Account and the Standby Earnings Account.  Following the occurrence of an Event of Default which is continuing and a direction from the Agent under Clause 18.1 above:-

 

(i)                                     any Earnings of the Ships standing to the credit of the Earnings Account shall be transferred to the Standby Earnings Account; and

 

(ii)                                  any amounts standing to the credit of the Standby Earnings Account shall only be released with the approval of the Majority Lenders.

 

18.4                        Location of accounts.  The Borrowers shall, and shall procure that TBS Pacific Liner shall, promptly :

 

(a)                                  comply with any requirement of the Agent as to the location or re-location of the Earnings Account and the Standby Earnings Account;

 

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(b)                                 execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Standby Earnings Account.

 

18.5                        Debits for expenses etc.  Following the occurrence of an Event of Default which is continuing and a direction from the Agent under Clause 18.1 above, the Agent shall be entitled (but not obliged) from time to time to debit the Standby Earnings Account without prior notice in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

 

19                                  EVENTS OF DEFAULT

 

19.1                        Events of Default.  An Event of Default occurs if:

 

(a)                                  any Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document (and so that for this purpose (i) sums payable on demand shall be treated as having been paid when due if paid within 3 Business Days of receipt of the demand and (ii) if the failure is caused by a disruption to the payments system referred to in Clause 16.1(b) which disruption is beyond the control of the Borrowers, such failure shall not constitute an Event of Default if payment is made within 3 Business Days of its due date); or

 

(b)                                 any breach occurs of Clause 9.2, 11.2, 11.3, 12.2, 12.3 or 15.1; or

 

(c)                                  any breach occurs of Clause 11.18(i); or

 

(d)                                 any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) and if, in the opinion of the Majority Lenders, such default is capable of remedy (and for these purposes any breach by any Borrower of its obligations under Clause 13 in relation to insurances will be a default not capable of remedy), such default continues unremedied 10 Business Days after written notice from the Agent requesting action to remedy the same; or

 

(e)                                  any representation, warranty or statement made by, or by an officer of, any Borrower or a Security Party in a Finance Document or in a Drawdown Notice Request or any other notice or document relating to a Finance Document is untrue or misleading in any material respect when it is made; or

 

(f)                                    any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

 

(i)            any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand or in either such cases, within any applicable grace period; or

 

(ii)           any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

 

(iii)          a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

 

(iv)          any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or

 

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transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

 

(v)                                 any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable;

 

provided that no Event of Default will occur under this Clause 19.1(f) in relation to the New Corporate Guarantor if the amount of Financial Indebtedness falling within paragraph (i) to (v) above is less than $2,500,000 (or its equivalent in any other currency or currencies)

 

(g)                                 any of the following occurs in relation to a Relevant Person:

 

(i)                                     a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

 

(ii)                                all or substantially all of the assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency and is not discharged within one month of the same being levied or sued out; or

 

(iii)                             any administrative or other receiver is appointed over any substantial part of assets of a Relevant Person; or

 

(iv)                             an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

 

(v)                                 any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

 

(vi)                              a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or

 

(vii)                          a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction having jurisdiction over that Relevant Person for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that o r another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than a Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

 

(viii)                      an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than

 

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a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction having jurisdiction over that Relevant Person, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Perso n will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or

 

(ix)                              a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) by reason of financial difficulties or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangemen t is effected by court order, by the filing of documen