Date November 2007 PARAGON SHIPPING INC. as Borrower - and - THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 as Lenders - and - COMMERZBANK AG as Agent, Arranger and as Security Trustee - and - COMMERZBANK AG as Swap Bank LOAN AGREEMENT...
Date November
2007
as
Borrower
- and
-
THE
BANKS AND FINANCIAL INSTITUTIONS
listed
in Schedule 1
as
Lenders
- and
-
COMMERZBANK
AG
as Agent,
Arranger and as Security Trustee
- and
-
COMMERZBANK
AG
as Swap
Bank
__________________________________
__________________________________
relating
to a secured revolving credit facility of
up to
US$250,000,000 to be secured on certain vessels
XXXXXX
XXXXXX & XXXXXXXX
Piraeus
INDEX
Clause Page
|
1
|
INTERPRETATION
|
1
|
|
2
|
FACILITY
|
18
|
|
3
|
POSITION
OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS
|
19
|
|
4
|
DRAWDOWN
|
20
|
|
5
|
INTEREST
|
21
|
|
6
|
INTEREST
PERIODS
|
23
|
|
7
|
DEFAULT
INTEREST
|
23
|
|
8
|
REPAYMENT
AND PREPAYMENT
|
24
|
|
9
|
CONDITIONS
PRECEDENT
|
26
|
|
10
|
REPRESENTATIONS
AND WARRANTIES
|
27
|
|
11
|
GENERAL
UNDERTAKINGS
|
29
|
|
12
|
CORPORATE
UNDERTAKINGS
|
33
|
|
13
|
INSURANCE
|
35
|
|
14
|
SHIP
COVENANTS
|
40
|
|
15
|
SECURITY
COVER
|
44
|
|
16
|
PAYMENTS
AND CALCULATIONS
|
46
|
|
17
|
APPLICATION
OF RECEIPTS
|
47
|
|
18
|
APPLICATION
OF EARNINGS
|
48
|
|
19
|
EVENTS
OF DEFAULT
|
50
|
|
20
|
FEES
AND EXPENSES
|
54
|
|
21
|
INDEMNITIES
|
55
|
|
22
|
NO
SET-OFF OR TAX DEDUCTION
|
57
|
|
23
|
ILLEGALITY,
ETC
|
57
|
|
24
|
INCREASED
COSTS
|
58
|
|
25
|
SET
OFF
|
59
|
|
26
|
TRANSFERS
AND CHANGES IN LENDING OFFICES
|
60
|
|
27
|
VARIATIONS
AND WAIVERS
|
63
|
|
28
|
NOTICES
|
64
|
|
29
|
SUPPLEMENTAL
|
65
|
|
30
|
LAW
AND JURISDICTION
|
66
|
|
SCHEDULE
1
|
LENDERS
AND COMMITMENTS
|
67
|
|
SCHEDULE
2
|
DETAILS
OF EXISTING SHIPS AND OWNERS
|
68
|
|
SCHEDULE
3
|
DRAWDOWN
NOTICE
|
69
|
| SCHEDULE 4 | CONDITION PRECEDENT DOCUMENTS | 70 |
| SCHEDULE 5 | TRANSFER CERTIFICATE | 74 |
| SCHEDULE 6 | FORM OF COMPLIANCE CERTIFICATE | 78 |
| SCHEDULE 7 | MANDATORY COST FORMULA | 79 |
| SCHEDULE 8 | DESIGNATION NOTICE | 81 |
| EXECUTION PAGES | 82 |
THIS LOAN AGREEMENT is made on November 2007
BETWEEN:
|
(1)
|
PARAGON SHIPPING INC. a
corporation incorporated in the Xxxxxxxx Islands whose registered office
is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The
Xxxxxxxx Xxxxxxx XX 00000 as Borrower;
|
|
(2)
|
THE BANKS AND FINANCIAL
INSTITUTIONS listed in Schedule 1, as Lenders;
|
|
(3)
|
COMMERZBANK AG acting
through its office at Ness 7-9, X-00000, Xxxxxxx, Germany, as Agent;
|
|
(4)
|
COMMERZBANK AG acting
through its office at Ness 7-9, X-00000, Xxxxxxx, Germany, as Arranger;
|
|
(5)
|
COMMERZBANK AG acting
through its office at Ness 7-9, D-20457, Hamburg, Germany, as Security Trustee;
|
|
(6)
|
COMMERZBANK AG acting
through its office at Xxxxxxxxxxxxx 00, 00000 Xxxxxxxxx xx Xxxx, Xxxxxxx,
as Swap
Bank.
|
WHEREAS
|
(A)
|
The
Lenders have agreed to make available to the Borrower a secured revolving
credit facility in an amount of up to US$250,000,000 to finance up to 50%
of the lesser of (a) the aggregate Initial Value of the Ships and (b) the
aggregate Market Value of the Ships. The Borrower will on-lend
the loan to the Owners to assist them in refinancing the indebtedness
secured on the Existing Ships and in part-financing the purchase price of
Target Ships.
|
|
(B)
|
The
Swap Bank has agreed to enter into interest rate swap transactions with
the Borrower from time to time to hedge at least 50 per cent. of the
Borrower’s exposure under this Agreement to interest rate
fluctuations.
|
|
(C)
|
The
Lenders and the Swap Bank have agreed to share pari passu in the security
to be granted to the Security Trustee pursuant to this
Agreement.
|
IT IS AGREED as
follows:
|
1
|
INTERPRETATION
|
|
1.1
|
Definitions. Subject
to Clause 1.5, in this Agreement:
|
“Acquisition Advance” means any
Advance to be made available to the Borrower in accordance with the terms of
this Agreement which is to be used in financing part of the balance of the
acquisition cost payable pursuant to the MOA applicable to a Target Ship on
delivery of that Ship to its Owner and in the plural means all of
them;
“Advances” means the Existing
Ships Advance and each Acquisition Advance and in the singular means any of
them;
“Affected Lender” has the
meaning given in Clause 5.5;
“Agency and Trust Deed” means
the agency and trust deed executed or to be executed between the Borrower, the
Lenders, the Agent, the Security Trustee, the Arranger and the Swap Bank in such
form as the Lenders may approve or require;
“Agent” means Commerzbank AG
and any of its successors including, without limitation, any successor appointed
under clause 5 of the Agency and Trust Deed;
“Applicable Accounts” means, as at the
date of calculation or, as the case may be, in respect of an accounting period,
the annual audited consolidated accounts and financial statements of the Group
or the quarterly unaudited accounts and financial statements of the Group, in
each case, which the Borrower is obliged to deliver to the Agent pursuant to
Clause 11.6;
“Approved Broker” means each of
X. Xxxxxxxx & Company Limited of London, England, Xxxxx Xxxxxxxx Xxxxxx X.X.
of Paris, France, X.X. Xxxxxx Shipbrokers A.S. of Oslo, Norway, Arrow Sale &
Purchase (UK) Ltd. of London, England, Xxxxxxx Xxxxxx & Xxxxx of London,
England, Fearnley AS of Oslo, Norway and Xxxxxxxxx’x Limited of London,
England;
“Approved Flag” means the
Xxxxxxxx Islands flag, the Liberian flag, the Cayman Islands flag or such other
flag as the Agent may, in its sole and absolute discretion, approve as the flag
on which a Ship shall be registered;
“Approved Flag State” means the
Xxxxxxxx Islands, Liberia, the Cayman Islands or any other country in which the
Agent, may in its sole and absolute discretion, approve that a Ship be
registered;
“Approved Manager” means, in
relation to each Ship, Allseas Marine S.A. a corporation organised and existing
under the laws of the Republic of Liberia, having its registered office at 00
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx and maintaining a ship management office at 00,
Xxxxxxxxx Xxxxxx, 000 00 Xxxxx, Xxxxxx or any other company which the Agent may,
with the authorisation of the Majority Lenders, approve from time to time as the
technical and/or commercial manager of a Ship;
“Arranger” means Commerzbank AG
acting through its office at Ness 7-9, D-20457, Hamburg, Germany,
“Availability Period” means the
period commencing on the date of this Agreement and ending on:
|
|
(a)
|
(i)
in the case of each Existing Ships Advance, 31 December 2007 and (ii) in
the case of each Acquisition Advance, the date falling on the first
anniversary of the date of this Agreement or (in the case of any Advance)
such later date as the Agent may, with the authorisation of all the
Lenders, agree with the Borrower;
or
|
|
|
(b)
|
if
earlier, the date on which the Total Commitments are fully borrowed,
cancelled or terminated;
|
“Borrower” means Paragon
Shipping Inc., a corporation incorporated in the Xxxxxxxx Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, The Xxxxxxxx Xxxxxxx XX 00000;
“Bridge Facility Agreement”
means a loan agreement dated 25 July 2007 and entered into between (i) the
Borrower, (ii) the banks and financial institutions listed therein as lenders
and (iii) Commerzbank AG as Agent, Arranger and Security Trustee in respect of a
bridge facility of (initially) up to $300,000,000;
“Business Day” means a day on
which banks are open in London, Athens, Hamburg and any other city in which a
Lender is incorporated or maintains its lending office and, in respect of a day
on which a payment is required to be made under a Finance Document, also in New
York City;
2
“Charterparty Assignment”
means, in relation to each Ship, an assignment of the rights of the Owner of
that Ship under any charterparty or other contract of employment referred to in
Clause 14.16 executed or to be executed by the relevant Owner in favour of the
Security Trustee, in each case, in such form as the Lenders may approve or
require and, in the plural, means all of them;
“Commitment” means, in relation
to a Lender, the amount set opposite its name in the Schedule 1 or, as the case
may require, the amount specified in the relevant Transfer Certificate, as that
amount may be reduced, cancelled or terminated in accordance with this Agreement
(and “Total Commitments”
means, subject to Clause 2.4, the aggregate of the Commitments of all the
Lenders);
“Compliance Certificate” means
a certificate in the form set out in Schedule 6 (or in any other form which the
Agent approves or reasonably requires) to be provided at the times and in the
manner set out in Clauses 12.5 and 12.9;
“Compliance Date” means 31
March, 30 June, 30 September and 31 December in each calendar year (or such
other dates as of which the Borrower prepares the consolidated financial
statements which it is required to deliver pursuant to Clause
11.6);
“Contractual Currency” has the
meaning given in Clause 21.5;
“Confirmation” and “Early Termination
Date” in relation to any continuing Designated Transaction,
have the meanings given in the Master Agreement;
“Contribution” means, in
relation to a Lender, the part of the Loan which is owing to that
Lender;
“Creditor Party” means the
Agent, the Arranger, the Security Trustee, the Swap Bank or any Lender, whether
as at the date of this Agreement or at any later time;
“Deed of Covenant” means a deed
of covenant collateral to a mortgage on a Ship to be executed in favour of the
Security Trustee by the Owner of the relevant Ship in such form as the Lenders
may approve or require and, in the plural means all of them;
“Designated Transaction” means
a Transaction which fulfils the following requirements:
|
|
(a)
|
it
is entered into by the Borrower pursuant to the Master Agreement with the
Swap Bank which, at the time the Transaction is entered into, is also a
Lender;
|
|
|
(b)
|
its
purpose is the hedging of the Borrower’s exposure under this Agreement to
fluctuations in LIBOR arising from the funding of the Loan (or any part
thereof) for a period expiring no later than the final Repayment Date;
and
|
|
|
(c)
|
it
is designated by the Borrower, by delivery by the Borrower to the Agent of
a notice of designation in the form set out in Schedule 8, as a Designated
Transaction for the purposes of the Finance
Documents;
|
“Dividend Declaration Date”
means, in respect of each quarterly period during each Financial Year, a date
(being a Business Day) falling no later than 60 days after the end of the
relevant preceding financial quarter but in any event not later than 10 days
prior to any intended declaration by the Borrower to its shareholders of any
dividend;
“Dollars” and “$” means the lawful currency
for the time being of the United States of America;
3
“Drawdown Date” means, in
relation to an Advance, the date requested by the Borrower 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 3 (or in any other form which the Agent
approves or reasonably requires);
“Earnings” means, in relation
to each Ship, all moneys whatsoever which are now, or later become, payable
(actually or contingently) to the Owner thereof or the Security Trustee and
which arise out of the use or operation of that Ship, including (but not limited
to):
|
|
(a)
|
all
freight, hire and passage moneys, compensation payable to the relevant
Owner or the Security Trustee in the event of requisition of that 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) above are pooled or shared with any other
person, that proportion of the net receipts of the relevant pooling or
sharing arrangement which is attributable to the
Ship;
|
“Earnings Accounts” means,
together, the Existing Ships Earnings Accounts and the Target Ships Earnings
Accounts and, in the singular, means any of them;
“EBITDA” means, as at the date
of calculation or, as the case may be, for any accounting period, the
consolidated net income of the Group for that accounting period:
|
|
(a)
|
plus,
to the extent deducted in computing consolidated net income of the Group
for that accounting period, the sum, without duplication,
of:
|
|
|
(i)
|
all
federal, state, local and foreign taxes and tax
distributions;
|
|
|
(ii)
|
Net
Interest Expenses; and
|
|
|
(iii)
|
depreciation,
depletion, amortisation of intangibles and other non-cash charges or
non-cash losses (including non-cash transaction expenses and the
amortisation of debt discounts) and any extraordinary losses not incurred
in the ordinary course of business;
|
|
|
(b)
|
minus,
to the extent added in computing consolidated net income of the Group for
that accounting period, any non-cash income or non-cash gains and any
extraordinary gains not incurred in the ordinary course of
business;
|
all
determined on a consolidated basis in accordance with GAAP and as shown in the
consolidated statements of income for the Group in the Applicable
Accounts;
“Environmental Claim”
means:
|
|
(a)
|
any
claim by any governmental, judicial or regulatory authority which arises
out of an Environmental Incident or an alleged Environmental Incident or
which relates to any Environmental Law;
or
|
4
|
|
(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,
in relation to each Ship:
|
|
(a)
|
any
release of Environmentally Sensitive Material from that Ship;
or
|
|
|
(b)
|
any
incident in which Environmentally Sensitive Material is released from a
vessel other than the Ship and which involves a collision between the Ship
and such other vessel or some other incident of navigation or operation,
in either case, in connection with which the Ship is actually or
potentially liable to be arrested, attached, detained or injuncted and/or
the Ship or the Owner thereof and/or any operator or manager is at fault
or allegedly at fault or otherwise liable to any legal or administrative
action; or
|
|
|
(c)
|
any
other incident in which Environmentally Sensitive Material is released
otherwise than from the Ship and in connection with which the Ship is
actually or potentially liable to be arrested and/or where the Owner
thereof and/or any operator or manager of the Ship is at fault or
allegedly at fault or otherwise liable to any legal or administrative
action;
|
“Environmental Law” means any
law relating to pollution or protection of the environment, to the carriage of
Environmentally Sensitive Material or to actual or threatened releases of
Environmentally Sensitive Material;
“Environmentally Sensitive
Material” means oil, oil products and any other substance (including any
chemical, gas or other hazardous or noxious substance) which is (or is capable
of being or becoming) polluting, toxic or hazardous;
“Epic” means Epic
Investments Inc., a corporation incorporated in the Xxxxxxxx Islands and having
its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, The Xxxxxxxx Xxxxxxx XX 00000;
“Epic Account” means
an account in the name of Epic with the Agent in Hamburg designated “Epic
Investments Inc. - Cash Management Account” or any other account (with that or
another office of the Agent) which is designated by the Agent as the Epic
Account for the purposes of the Loan Agreement;
“Epic Account
Pledge” means an agreement creating security in favour of the
Security Trustee over the Epic Account in such form as the Lenders may approve
or require;
“Epic
Guarantee” means a guarantee of the obligations of the
Borrower under (inter alia) this Agreement in such form as the Lenders may
approve or require;
“Event of Default” means any of
the events or circumstances described in Clause 19.1;
“Existing Ships” means,
together, the Ships referred to in Schedule 2 and, in the singular, means any of
them;
“Existing Ships Advance” means
the Advance to be made available to the Borrower in accordance with the terms of
this Agreement which shall be applied in refinancing the acquisition cost of the
Existing Ships;
5
“Existing Ship Earnings
Account” means, in relation to each Existing Ship, an account in the name
of the Owner of that Ship with the Agent designated “[name of Ship] - Earnings
Account”, or any other account (with that or another office of the Agent which
is designated by the Agent as the Earnings Account for that Existing Ship for
the purposes of this Agreement and in the plural means all of them;
“Existing Ship Earnings Account
Pledge” means, in relation to each Existing Ship Earnings Account, an
agreement creating security in favour of the Security Trustee over that account
in such form as the Lenders may approve or require;
“Fee Letter” means a letter
issued or to be issued by the Borrower to the Agent in which the Borrower agrees
to pay certain fees to the Agent in connection with this Agreement;
“Final Maturity Date” means 31
December 2010;
“Finance Documents”
means:
|
|
(a)
|
this
Agreement;
|
|
|
(b)
|
the
Master Agreement;
|
|
|
(c)
|
the
Agency and Trust Deed;
|
|
|
(d)
|
the
Fee Letter;
|
|
|
(e)
|
the
Guarantees;
|
|
|
(f)
|
the
Master Agreement Assignment;
|
|
|
(g)
|
the
Mortgages;
|
|
|
(h)
|
the
General Assignments;
|
|
|
(i)
|
the
Deeds of Covenant;
|
|
|
(j)
|
the
Existing Ship Earnings Accounts
Pledges;
|
|
|
(k)
|
the
Target Ship Earnings Accounts
Pledges;
|
|
|
(l)
|
the
Retention Account Pledge;
|
|
|
(m)
|
the
Reserve Account Pledge;
|
|
|
(n)
|
the
Epic Account Pledge;
|
|
|
(o)
|
the
Epic Guarantee;
|
|
|
(p)
|
any
Charterparty Assignment;
|
|
|
(q)
|
the
Manager’s Undertakings; and
|
|
|
(r)
|
any
other document (whether creating a Security Interest or not) which is
executed at any time by the Borrower, any Owner or any other person as
security for, or to establish any form of subordination or priorities
arrangement in relation to, any amount payable to the Lenders under this
Agreement or any of the documents referred to in this
definition;
|
6
|
|
“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;
|
|
|
(e)
|
under
any interest or currency swap or any other kind of derivative transaction
entered into by the debtor or, if the agreement under which any such
transaction is entered into requires netting of mutual liabilities, the
liability of the debtor for the net amount;
or
|
|
|
(f)
|
under
a guarantee, indemnity or similar obligation entered into by the debtor in
respect of a liability of another person which would fall within (a) to
(e) if the references to the debtor referred to the other
person;
|
“Financial Year” means, in
relation to the Group, each period of 1 year commencing on 1 January in respect
of which its consolidated accounts are or ought to be prepared;
“Fleet Vessels” means,
together, all of the vessels (including, but not limited to, the Ships) from
time to time owned by members of the Group;
“GAAP” means generally accepted
accounting principles as from time to time in effect in the United States of
America;
“General Assignment” means, in
relation to each Ship, a general assignment of the Earnings, the Insurances and
any Requisition Compensation of that Ship in such form as the Lenders may
approve or require and in plural means all of them;
“Group” means the Borrower and
its subsidiaries (whether direct or indirect and including, but not limited to,
the Owners) from time to time during the Security Period and “member of the Group” shall be
construed accordingly;
“Guarantee” means, in relation
to each Owner, a guarantee to be given by that Owner in favour of the Security
Trustee guaranteeing the obligations of the Borrower under (inter alia) this
Agreement and the other Finance Documents in such form as the Lenders shall
approve or require and in the plural means all of them;
“Hedge Strategy Letter” means
each letter issued or to be issued by the Borrower to the Agent in a form and on
terms acceptable to the Agent which letter shall be prepared in consultation
with, and with the assistance of, the Agent in accordance with Clause 11.20 and
in the plural means all of them;
“HSH Loan Agreement” means the
loan agreement dated 18 December 2006 (as the same has been supplemented,
amended and restated) made between (i) the Borrower (ii) the banks and financial
institutions referred to therein as lenders and (iii) HSH Nordbank AG as (inter
alia) agent, security trustee and swap bank in respect of a revolving credit
facility of (originally) $109,538,620;
“IACS” means the International
Association of Classification Societies;
7
“Initial Borrowing Date” means
a Business Day falling not later than 31 December 2007;
“Initial
Value” means, in relation to each Ship, the lesser of (a) the
acquisition cost of that Ship and (b) the Market Value of the Ship determined on
the date on which the acquisition of the Ship is or was completed by delivery
thereof to its Owner;
“Insurances” means,
in relation to each Ship:
|
|
(a)
|
all
policies and contracts of insurance, including entries of that Ship in any
protection and indemnity or war risks association, which are effected in
respect of the Ship, her Earnings or otherwise in relation to her;
and
|
|
|
(b)
|
all
rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a
premium;
|
“Interest Period” means a
period determined in accordance with Clause 6;
“ISM Code” means:
|
|
(a)
|
‘The
International Management Code for the Safe Operation of Ships and for
Pollution Prevention’, currently known or referred to as the ‘ISM Code’,
adopted by the Assembly of the International Maritime Organisation by
Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994
into chapter IX of the International Convention for the Safety of Life at
Sea 1974 (SOLAS 1974); and
|
|
|
(b)
|
all
further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of
the International Maritime Organisation or any other entity with
responsibility for implementing the ISM Code, including without
limitation, the ‘Guidelines on implementation or administering of the
International Safety Management (ISM) Code by Administrations’ produced by
the International Maritime Organisations pursuant to Resolution A.788(19)
adopted on 25 November 1995,
|
as the
same may be amended, supplemented or replaced from time to time;
“ISM Code Documentation”
includes, in relation to each Ship:
|
|
(a)
|
the
document of compliance (DOC) and safety management certificate (SMC)
issued pursuant to the ISM Code in relation to that Ship within the
periods specified by the ISM Code;
and
|
|
|
(b)
|
all
other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Agent may require;
and
|
|
|
(c)
|
any
other documents which are prepared or which are otherwise relevant to
establish and maintain the Ship’s or the compliance of its Owner with the
ISM Code which the Agent may
require;
|
“ISM SMS” means, in relation to
each Ship, the safety management system for that Ship which is required to be
developed, implemented and maintained under the ISM Code;
“ISPS Code” means the
International Ship and Port Facility Security Code constituted pursuant to
resolution A.924(22) of the International Maritime Organisation (“IMO”) now set
out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as
amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of
the IMO on Maritime Security in December 2002 and includes any amendments or
extensions to it and any regulation issued pursuant to it but shall only apply
insofar as it is applicable law in the relevant Ship’s flag state and any
jurisdiction on which such Ship is operated;
8
“ISPS Code Documentation”
includes:
|
|
(a)
|
the
International Ship Security Certificate issued pursuant to the ISPS Code
in relation to each Ship within the period specified in the ISPS Code;
and
|
|
|
(b)
|
all
other documents and data which are relevant to the ISPS Code and its
implementation and verification which the Agent may
require;
|
|
|
“Lender” means, subject
to Clause 26.6:
|
|
|
(a)
|
a
bank or financial institution listed in Schedule 1 and acting through its
branch indicated in Schedule 1 (or through another branch notified to the
Borrower under Clause 26.14) unless it has delivered a Transfer
Certificate or Certificates covering the entire amounts of its Commitment
and its Contribution; and
|
|
|
(b)
|
the
holder for the time being of a Transfer
Certificate;
|
“Leverage Ratio” means, at any
relevant time, the ratio (expressed as a percentage) of:
|
|
(a)
|
the
Total Liabilities (including, without limitation, all amounts outstanding
from time to time under this Agreement, the Master Agreement and the other
Finance Documents); and
|
|
|
(b)
|
the
Market Value Adjusted Total Assets (including, without limitation, the
Ships);
|
“LIBOR” means, for an Interest
Period:
|
|
(a)
|
the
rate per annum equal to the offered quotation for deposits in Dollars for
a period equal to, or as near as possible equal to, the relevant Interest
Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m.
(London time) on the second Business Day prior to the commencement of that
Interest Period (and, for the purposes of this Agreement, “REUTERS BBA
Page LIBOR 01” means the display designated as “REUTERS BBA Page LIBOR 01”
on the Reuters Money News Services or such other page as may replace
REUTERS BBA Page LIBOR 01 on that service for the purpose of displaying
rates comparable to that rate or on such other service as may be nominated
by the British Bankers’ Association for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for Dollars);
or
|
|
|
(b)
|
if
no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum
determined by the Agent to be the arithmetic mean of the rates per annum
notified to the Agent by each Lender to be the rate per annum at which
deposits in Dollars are offered to that Lender by leading banks in the
London Interbank Market at or about 11.00 a.m. (London time) on the second
Business Day prior to the commencement of that Interest Period for a
period equal to that Interest Period and for delivery on the first
Business Day of it;
|
“Liquid
Assets” means, at any relevant time hereunder, the aggregate
of:
|
|
(a)
|
cash
in hand or held with banks or other financial institutions of the Borrower
and/or any other member of the Group (other than restricted cash) in
Dollars or another currency freely convertible into
Dollars;
|
9
|
|
(b)
|
the
market value of transferable certificates of deposit in a freely
convertible currency acceptable to the Lenders (being for the purposes of
this Agreement, Dollars, Japanese Yen, Swiss Francs, Euros or Sterling)
issued by a prime international bank;
and
|
|
|
(c)
|
the
market value of equity securities (if and to the extent that the Agent is
satisfied that such equity securities are readily saleable for cash and
that there is a ready market therefor) and investment grade debt
securities which are publicly traded on a major stock exchange or
investment market (valued at market value as at any applicable date of
determination);
|
in each
case owned by the Borrower or any other member of the Group where:
|
|
(i)
|
the
market value of any asset specified in paragraph (b) and (c) shall be the
bid price quoted for it on the relevant calculation date by the Agent;
and
|
|
|
(ii)
|
the
amount or value of any asset denominated in a currency other than Dollars
shall be converted into Dollars using the Agent’s spot rate for the
purchase of Dollars with that currency on the relevant calculation
date;
|
“Loan” means the principal
amount for the time being outstanding under this Agreement;
“Major Casualty” means, in
relation to each Ship, any casualty to that 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 at least 66 2/3
per cent. of the Total Commitments;
and
|
|
|
(b)
|
after
an Advance has been made, Lenders whose Contributions total 66 2/3 per
cent. of the Loan;
|
“Manager’s Undertaking” means,
in relation to each Ship, a letter of undertaking executed or to be executed by
the Approved Manager in favour of the Security Trustee in such form as the
Lenders may approve or require agreeing certain matters in relation to the
management of that Ship and subordinating the rights of the Approved Manager
against the Ship and the Owner thereof to the rights of the Creditor Parties
under the Finance Documents and, in the plural, means all of them;
“Management Agreement” means,
in relation to each Ship, an agreement made or to be made between the Owner of
that Ship and the Approved Manager in respect of the commercial and technical
management of the Ship and, in the plural, means all of them;
“Mandatory Cost” means the percentage
rate per annum calculated by the Agent in accordance with Schedule
7;
“Margin” means:
|
|
(a)
|
at
any time when the Leverage Ratio is above 55 per cent. per annum, 1.10 per
cent. per annum; and
|
|
|
(b)
|
at
all other times, 0.95 per cent. per
annum;
|
10
“Market Value” means, in
relation to each Ship and each Fleet Vessel, the market value thereof calculated
in accordance with Clause 15.4;
“Market Value Adjusted Net
Worth” means Paid-Up Capital plus General Reserves plus Retained Earnings
adjusted to reflect the difference between the book values of the Fleet Vessels
and the Market Values of all Fleet Vessels at any relevant time;
“Market Value Adjusted Total
Assets” means, at any time, Total Assets adjusted to reflect
the difference between the book values of all Fleet Vessels and the aggregate
Market Value of all Fleet Vessels and lease transactions relating to any Fleet
Vessels;
“Master Agreement” means the
master agreement (on the 1992 or, as the case may be, 2001 ISDA (Multicurrency -
Crossborder) form) made between the Borrower and the Swap Bank and includes all
Designated Transactions from time to time entered into and Confirmations from
time to time exchanged under the master agreement;
“Master Agreement Assignment”
means, the assignment of the Master Agreement in such form as the Lenders may
approve or require and, in the plural, means both of them;
“MOA” means, in relation to a
Target Ship, a memorandum of agreement made or to be made between the Seller of
that Ship and the Owner which is the buyer of that Ship on terms and conditions
acceptable to the Agent and, in the plural, means all of them;
“Mortgage” means, in relation
to a Ship, the first preferred or, as the case may be, priority ship mortgage on
the Ship under the relevant Approved Flag executed by the Owner of that Ship in
favour of the Security Trustee, each in such form as the Lenders may approve or
require and, in plural, means all of them;
“Negotiation Period” has the
meaning given in Clause 5.8;
“Net Interest
Expenses” means, in respect of any relevant period, the
aggregate of all interest, commitment and other fees, commissions, discounts and
other costs, charges or expenses accruing due from all the members the Group
during that accounting period less interest income received, determined on a
consolidated basis in accordance with GAAP and as shown in the consolidated
statements of income for the Group in the Applicable Accounts;
“Notifying Lender” has the
meaning given in Clause 23.1 or Clause 24.1 as the context
requires;
“Owner” means:
|
|
(a)
|
in
relation to each Existing Ship, in the case of Xxxxx Marine Co., a
corporation incorporated in the Republic of the Xxxxxxxx Islands having
its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, The Xxxxxxxx Xxxxxxx XX 00000 and in the case of each of
Protea International Inc. and Reading Navigation Co., each a corporation
incorporated in the Republic of Liberia having its registered office at 00
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx of Liberia;
and
|
|
|
(b)
|
in
relation to a Target Ship, any corporation which is or will be the owner
of that Target Ship incorporated in a jurisdiction approved by the
Agent,
|
each
being a corporation which is a direct or indirect wholly-owned subsidiary of the
Borrower and, in the plural, means all of them;
11
“Paid-Up Capital”, “General Reserves” and “Retained Earnings” have the meanings
ascribed to them in the Applicable Accounts;
“Payment Currency” has the
meaning given in Clause 21.5;
“Permitted Security Interests”
means:
|
|
(a)
|
Security
Interests created by the Finance
Documents;
|
|
|
(b)
|
liens
for unpaid crew’s wages in accordance with usual maritime
practice;
|
|
|
(c)
|
liens
for salvage;
|
|
|
(d)
|
liens
arising by operation of law for not more than 2 months’ prepaid hire
under any charter in relation to 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 Owner in good faith by
appropriate steps) and subject, in the case of liens for repair or
maintenance, to
Clause 14.13(f);
|
|
|
(f)
|
any
Security Interest created in favour of a plaintiff or defendant in any
action of the court or tribunal before whom such action is brought as
security for costs and expenses where the relevant Owner is prosecuting or
defending such action in good faith by appropriate steps;
and
|
|
|
(g)
|
Security
Interests arising by operation of law in respect of taxes which are not
overdue for payment other than taxes being contested in good faith by
appropriate steps and in respect of which appropriate reserves have been
made;
|
“Pertinent Jurisdiction”, in
relation to a company, means:
|
|
(a)
|
England
and Wales;
|
|
|
(b)
|
the
country under the laws of which the company is incorporated or
formed;
|
|
|
(c)
|
a
country in which the company’s central management and control is or has
recently been exercised;
|
|
|
(d)
|
a
country in which the overall net income of the company is subject to
corporation tax, income tax or any similar
tax;
|
|
|
(e)
|
a
country in which assets of the company (other than securities issued by,
or loans to, related companies) having a substantial value are situated,
in which the company maintains a permanent place of business, or in which
a Security Interest created by the company must or should be registered in
order to ensure its validity or priority;
and
|
|
|
(f)
|
a
country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which would
have such jurisdiction if their assistance were requested by the courts of
a country referred to in paragraphs (b) or (c)
above;
|
“Potential Event of Default”
means an event or circumstance which, with the giving of any notice, the lapse
of time, a determination of the Majority Lenders and/or the satisfaction of any
other condition, would constitute an Event of Default;
12
“Relevant Dividend Distribution
Date” has the meaning given in Clause 8.2;
“Relevant Person” has the
meaning given in Clause 19.9;
“Requisition Compensation”
includes all compensation or other moneys payable by reason of any act or event
such as is referred to in paragraph (b) of the definition of “Total
Loss”;
“Reserve Account” means an
account in the name of the Borrower with the Agent in Hamburg designated
“Paragon Shipping Inc. - Reserve Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the Reserve
Account for the purposes of this Agreement;
“Reserve Account Pledge” means
a pledge agreement creating security in favour of the Security Trustee in
respect of the Reserve Account in such form as the Lenders may approve or
require;
“Retention Account “ means an
account in the name of the Borrower with the Agent in Hamburg designated
“Paragon Shipping Inc. - Retention Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the Retention
Account for the purposes of this Agreement;
“Retention Account Pledge”
means a pledge agreement creating security in favour of the Security Trustee in
respect of the Retention Account in such form as the Lenders may approve or
require;
“Secured Liabilities” means all
liabilities which the Borrower, the Security Parties or any of them have, at the
date of this Agreement or at any later time or times, under or by virtue of the
Finance Documents or any judgment relating to the Finance Documents; and for
this purpose, there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in connection
with, any bankruptcy, liquidation, arrangement or other procedure under the
insolvency laws of any country;
“Security Cover Percentage”
means, at any relevant time, the aggregate of the Market Value of all the Ships
subject to a Mortgage expressed as a percentage of the Loan;
“Security Interest”
means:
|
|
(a)
|
a
mortgage, charge (whether fixed or floating) or pledge, any maritime or
other lien or any other security interest of any
kind;
|
|
|
(b)
|
the
rights of the plaintiff under an action in rem in which the
vessel concerned has been arrested or a writ has been issued or similar
step taken; and
|
|
|
(c)
|
any
arrangement entered into by a person (A) the effect of which is to place
another person (B) in a position which is similar, in economic terms, to
the position in which B would have been had he held a security interest
over an asset of A; but (c) does not apply to a right of set off or
combination of accounts conferred by the standard terms of business of a
bank or financial institution;
|
“Security Party” means each
Owner, the Approved Manager, Epic and any other person (except a Creditor Party)
who, as a surety or mortgagor, as a party to any subordination or priorities
arrangement, or in any similar capacity, executes a document falling within the
final paragraph of the definition of “Finance Documents”;
13
“Security Period” means the
period commencing on the date of this Agreement and ending on the date on which
the Agent notifies the Borrower, the Security Parties and the Lenders
that:
|
|
(a)
|
all
amounts which have become due for payment by the Borrower or any Security
Party under the Finance Documents have been
paid;
|
|
|
(b)
|
no
amount is owing or has accrued (without yet having become due for payment)
under any Finance Document;
|
|
|
(c)
|
neither
the Borrower nor any Security Party has any future or contingent liability
under Clause 20, 21 or 22 below or any other provision of this Agreement
or another Finance Document; and
|
|
|
(d)
|
the
Agent, the Security Trustee and the Majority Lenders do not consider that
there is a significant risk that any payment or transaction under a
Finance Document would be set aside, or would have to be reversed or
adjusted, in any present or possible future bankruptcy of the Borrower or
a Security Party or in any present or possible future proceeding relating
to a Finance Document or any asset covered (or previously covered) by a
Security Interest created by a Finance
Document;
|
“Security Trustee” means
Commerzbank AG and any of its successors including, without limitation, any
successor appointed under clause 5 of the Agency and Trust Deed;
“Seller” means, in relation to
each Target Ship, the company which is a party to the MOA for that Ship in its
capacity as the seller of the Ship;
“Swap Bank” means Commerzbank
AG acting through its office at Xxxxxxxxxxxxx
00, 00000 Xxxxxxxxx xx Xxxx, Xxxxxxx;
“Swap Exposure” means, as at
any relevant date, the amount certified by the Swap Bank to the Agent to be the
aggregate net amount in Dollars which would be payable by the Borrower to the
Swap Bank under (and calculated in accordance with) section 6(e) (Payments on
Early Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Designated
Transactions entered into between the Borrower and the Swap Bank;
“Ships” means, together, the
Existing Ships and the Target Ships which may be subject to a Mortgage at any
time and, in the singular, means any of them;
“Target Ship” means a Ship
which satisfies the following criteria:
|
|
(a)
|
it
is a handymax, panamax or capesize bulk carrier or any other type of
vessel as may be approved by the Lenders (in their sole and absolute
discretion);
|
|
|
(b)
|
its
age is such that, when combined with the age of all the other Ships then
subject to a Mortgage, the average age of all such Ships at all times
during the Security Period shall not be more than 8
years;
|
|
|
(c)
|
it
is purchased on normal arm’s length commercial
terms;
|
|
|
(d)
|
it
maintains the highest classification with a first-class classification
society which is a member of the IACS as the Agent may approve free of any
overdue recommendations and
conditions;
|
|
|
(e)
|
it
is to be registered on an Approved Flag;
and
|
14
|
|
(f)
|
the
Owner thereof is a wholly-owned subsidiary of the
Borrower,
|
and in
the plural, means all of them;
“Target Ship Earnings Account” means, in
relation to each Target Ship, an account in the name of the Owner of that Ship
with the Agent in Hamburg designated “[name of Ship] - Earnings Account”, or any
other account (with that or another office of the Agent) which is designated by
the Agent as the Earnings Account for that Ship for the purposes of this
Agreement and, in the plural means all of them;
“Target Ship Earnings Accounts Pledge”
means, in relation to each Target Ship Earnings Account, a pledge agreement
creating security in favour of the Security Trustee over that account in such
form as the Lenders may approve or require and in the plural means all of
them;
“Total Assets” means, as at the
relevant date, the aggregate value of all current assets, fixed assets, and
other assets and restricted cash of the Group (valued in accordance with GAAP),
but excluding any assets held on trust;
“Total
Equity” means, as at the relevant date, the value of the
stockholders’ equity of the Group determined on a consolidated basis in
accordance with GAAP and as shown in the consolidated balance sheets for the
Group in the Applicable Accounts;
“Total Liabilities” means, as
at the date of calculation, the aggregate Financial Indebtedness of the
Group;
“Total Loss” means, in relation
to each Ship:
|
|
(a)
|
actual,
constructive, compromised, agreed or arranged total loss of that
Ship;
|
|
|
(b)
|
any
expropriation, confiscation, requisition or acquisition of the Ship,
whether for full consideration, a consideration less than her proper
value, a nominal consideration or without any consideration, which is
effected by any government or official authority or by any person or
persons claiming to be or to represent a government or official authority,
excluding a requisition for hire for a fixed period not exceeding one year
without any right to an extension;
|
|
|
(c)
|
any
condemnation of the Ship by any tribunal or by any person or person
claiming to be a tribunal;
|
|
|
(d)
|
any
arrest, capture, seizure or detention of the Ship (including any hijacking
or theft) unless she is within 30 days redelivered to the full control the
relevant Owner;
|
“Total Loss Date”
means:
|
|
(a)
|
in
the case of an actual loss of a Ship, the date on which it occurred or, if
that is unknown, the date when that Ship was last heard
of;
|
|
|
(b)
|
in
the case of a constructive, compromised, agreed or arranged total loss of
a 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 relevant Owner, with the Ship’s insurers in which the insurers agree
to treat the Ship as a total loss;
and
|
15
|
|
(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;
|
“Transfer
Certificate” has the meaning given in Clause
26.2;
“Transaction” has the meaning
given in the Master Agreement; and
“Trust Property” has the
meaning given in clause 3.1 of the Agency and Trust Deed.
|
1.2
|
Construction of certain
terms. In this
Agreement:
|
“approved” means, for the
purposes of Clause 13, approved in writing by the Agent;
“asset” includes every kind of
property, asset, interest or right, including any present, future or contingent
right to any revenues or other payment;
“company” includes any
partnership, joint venture and unincorporated association;
“consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;
“contingent liability” means a
liability which is not certain to arise and/or the amount of which remains
unascertained;
“document” includes a deed;
also a letter, fax or telex;
“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 her insured value being less than the value at
which that Ship is assessed for the purpose of such claims;
“expense” means any kind of
cost, charge or expense (including all legal costs, charges and expenses) and
any applicable value added or other tax;
“law” includes any form of
delegated legislation, any order or decree, any treaty or international
convention and any regulation or resolution of the Council of the European
Union, the European Commission, the United Nations or its Security
Council;
“legal or administrative
action” means any legal proceeding or arbitration and any administrative
or regulatory action or investigation;
“liability” includes every kind
of debt or liability (present or future, certain or contingent), whether
incurred as principal or surety or otherwise;
“months” shall be construed in
accordance with Clause 1.3;
“obligatory insurances” means,
in relation to a Ship, all insurances effected, or which the Borrower and/or the
Owner owning the Ship is obliged to effect, under Clause 13 below or any other
provision of this Agreement or another Finance Document;
“parent company” has the
meaning given in Clause 1.4;
“person” includes any company;
any state, political sub-division of a state and local or municipal authority;
and any international organisation;
“policy”, in relation to any
insurance, includes a slip, cover note, certificate of entry or other document
evidencing the contract of insurance or its terms;
16
“protection and indemnity
risks” means the usual risks covered by a protection and indemnity
association managed in London, including pollution risks and the proportion (if
any) of any sums payable to any other person or persons in case of collision
which are not recoverable under the hull and machinery policies by reason of the
incorporation therein of clause 1 of the Institute Time Clauses (Hulls)(1/10/83)
or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any
regulation, rule, official directive, request or guideline (either having the
force of law or compliance with which is reasonable in the ordinary course of
business of the party concerned) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;
“subsidiary” has the meaning
given in Clause 1.4;
“successor” includes any person
who is entitled (by assignment, novation, merger or otherwise) to any other
person’s rights under this Agreement or any other Finance Document (or any
interest in those rights) or who, as administrator, liquidator or otherwise, is
entitled to exercise those rights; and in particular references to a successor
include a person to whom those rights (or any interest in those rights) are
transferred or pass as a result of a merger, division, reconstruction or other
reorganisation of it or any other person;
“tax” includes any present or
future tax, duty, impost, levy or charge of any kind which is imposed by any
state, any political sub-division of a state or any local or municipal authority
(including any such imposed in connection with exchange controls), and any
connected penalty, interest or fine; and
“war risks” means the risks
according to Institute War and Strike Clauses (Hull Time) (1/10/83) or
(1/11/95), or equivalent conditions, including, but not limited to risk of
mines, blocking and trapping, missing vessel, confiscation, vandalism, sabotage
and malicious mischief and all risks excluded from the standard form of English
or other marine policy.
|
1.3
|
Meaning of “month”. A
period of one or more “months” ends on the day in the relevant calendar
month numerically corresponding to the day of the calendar month on which
the period started (“the
numerically corresponding day”),
but:
|
|
(a)
|
on
the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day;
or
|
|
(b)
|
on
the last Business Day in the relevant calendar month, if the period
started on the last Business Day in a calendar month or if the last
calendar month of the period has no numerically corresponding
day;
|
and
“month” and “monthly” shall be construed
accordingly.
|
1.4
|
Meaning of “subsidiary”. A
company (S) is a subsidiary of another company (P)
if:
|
|
(a)
|
a
majority of the issued shares in S (or a majority of the issued shares in
S which carry unlimited rights to capital and income distributions) are
directly owned by P or are indirectly attributable to P;
or
|
|
(b)
|
P
has direct or indirect control over a majority of the voting rights
attached to the issued shares of S;
or
|
|
(c)
|
P
has the direct or indirect power to appoint or remove a majority of the
directors of S; or
|
17
|
(d)
|
P
otherwise has the direct or indirect power to ensure that the affairs of S
are conducted in accordance with the wishes of
P;
|
and any
company of which S is a subsidiary is a parent company of S.
|
1.5
|
General
Interpretation.
|
|
(a)
|
In
this Agreement:
|
|
|
(i)
|
references
to, or to a provision of, a Finance Document or any other document are
references to it as amended or supplemented, whether before the date of
this Agreement or otherwise;
|
|
|
(ii)
|
references
to, or to a provision of, any law include any amendment, extension,
re-enactment or replacement, whether made before the date of this
Agreement or otherwise; and
|
|
|
(iii)
|
words
denoting the singular number shall include the plural and vice
versa.
|
|
(b)
|
Clauses
1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
intention appears.
|
|
(c)
|
References
in Clause 1.1 to a document being in the form of a particular Appendix or
Schedule include references to that form with any modifications to that
form which the Agent (with the authorisation of the Majority Lenders in
the case of substantial modifications) approves or reasonably
requires.
|
|
(d)
|
The
clause headings shall not affect the interpretation of this
Agreement.
|
|
2
|
FACILITY
|
|
2.1
|
Amount and purpose of
facility. Subject to the other provisions of this
Agreement, the Lenders shall make available to the Borrower a revolving
credit facility in an amount not exceeding the lesser of (a) $250,000,000,
(b) the Total Commitments at the relevant time and (c) the lesser of 50
per cent. of (i) the aggregate Initial Value of the Ships and (ii) the
aggregate Market Value of the Ships. The Loan shall be used in
refinancing the indebtedness secured on the Existing Ships and in
part-financing the purchase price of the Target
Ships.
|
|
2.2
|
Lenders’ participations in
Loan. 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 Borrower undertakes with each Creditor
Party to use each Advance only for the purpose stated in the preamble to
this Agreement.
|
|
2.4
|
Limit
of initial Total Commitments.
|
|
(a)
|
The
Borrower hereby acknowledges that until Commerzbank AG transfers
$50,000,000 of its Commitments (“Excess Commitment”) the
maximum principal amount of the revolving credit facility which shall be
available to the Borrower hereunder is $200,000,000 and the reference to
Total Commitments in this Agreement shall be construed to mean
$200,000,000.
|
|
(b)
|
As
from the date of this Agreement the Agent and the Borrower shall endeavour
to find banks or financial institutions to whom Commerzbank AG will
transfer its Excess Commitment in order to increase the maximum amount of
the revolving credit facility to be made available hereunder to
$250,000,000. The Borrower agrees that
if
|
18
Commerzbank
AG is unable to transfer its Excess Commitment within [l] days of the date of
this Agreement, the Borrower will negotiate in good faith with the Agent an
increase in the Margin and the fees payable to the Creditor Parties pursuant to
Clause 20.1 in order to facilitate the transfer of the Excess Commitment and
shall enter into such documentation as may be required by the Agent in order to
document the amendments to this Agreement and any other Finance
Documents.
|
3
|
POSITION
OF THE LENDERS, THE SWAP BANK AND THE MAJORITY
LENDERS
|
|
3.1
|
Interests of Lenders and Swap
Bank several. The rights of the Lenders and the Swap
Bank under this Agreement and the Master Agreement are several;
accordingly (a) each Lender shall be entitled to xxx for any amount which
has become due and payable by the Borrower to it under this Agreement; and
(b) the Swap Bank shall be entitled to xxx for any amount which has become
due and payable by the Borrower to it under the Master Agreement without
joining the Agent, the Security Trustee or any other Lender or the Swap
Bank as additional parties in the
proceedings.
|
|
3.2
|
Proceedings by individual
Lender or Swap Bank. However, without the prior consent
of the Majority Lenders, neither a Lender nor a Swap Bank may bring
proceedings in respect of:
|
|
(a)
|
any
other liability or obligation of the Borrower or a Security Party under or
connected with a Finance Document or the Master Agreement;
or
|
|
(b)
|
any
misrepresentation or breach of warranty by the Borrower or a Security
Party in or connected with a Finance Document or the Master
Agreement.
|
|
3.3
|
Obligations
several. The obligations of the Lenders under this
Agreement and of the Swap Bank under the Master Agreement are several; and
a failure of a Lender to perform its obligations under this Agreement or
of the Swap Bank to perform its obligations under the Master Agreement
shall not result in:
|
|
(a)
|
the
obligations of the other Lenders being increased;
nor
|
|
(b)
|
the
Borrower, any Security Party or any other Creditor Party being discharged
(in whole or in part) from its obligations under any Finance
Document;
|
and in no
circumstances shall a Lender have any responsibility for a failure of another
Lender or the Swap Bank to perform its obligations under this Agreement and the
Master Agreement.
|
3.4
|
Parties bound by certain
actions of Majority Lenders. Every Lender, the Swap
Bank, the Borrower and each Security Party shall be bound
by:
|
|
(a)
|
any
determination made, or action taken, by the Majority Lenders under any
provision of a Finance Document;
|
|
(b)
|
any
instruction or authorisation given by the Majority Lenders to the Agent or
the Security Trustee under or in connection with any Finance
Document;
|
|
(c)
|
any
action taken (or in good faith purportedly taken) by the Agent or the
Security Trustee in accordance with such an instruction or
authorisation.
|
19
|
3.5
|
Reliance on action of
Agent. However, the Borrower and each Security
Party:
|
|
(a)
|
shall
be entitled to assume that the Majority Lenders have duly given any
instruction or authorisation which, under any provision of a Finance
Document, is required in relation to any action which the Agent has taken
or is about to take; and
|
|
(b)
|
shall
not be entitled to require any evidence that such an instruction or
authorisation has been given.
|
|
3.6
|
Construction. In
Clauses 3.4 and 3.5 references to action taken include (without
limitation) the granting of any waiver or consent, an approval of any
document and an agreement to any
matter.
|
|
4
|
DRAWDOWN
|
|
4.1
|
Request for
Advance. Subject to the following conditions, the
Borrower may request an Advance to be made by ensuring that the Agent
receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg
time) 3 Business Days prior to the intended Drawdown
Date.
|
|
4.2
|
Availability. The
conditions referred to in Clause 4.1 are
that:
|
|
(a)
|
a
Drawdown Date has to be a Business Day during the Availability
Period;
|
|
(b)
|
the
first Drawdown Date shall be a Business Day falling on or before the
Initial Borrowing Date;
|
|
(c)
|
each
Advance shall be made available in a single amount of not less than
$10,000,000;
|
|
(d)
|
the
Existing Ships Advance shall be in an amount which does not exceed 50 per
cent. of the lesser of (i) the aggregate Initial Value of the Existing
Ships and (ii) the aggregate Market Value of the Existing Ships
(determined by reference to the valuations referred to in paragraph 5 of
Schedule 4, Part B);
|
|
(e)
|
each
Acquisition Advance shall be in an amount which does not exceed 50 per
cent. of the lesser of (i) the Initial Value of the Target Ship whose
acquisition is being part-financed by that Advance and (ii) the Market
Value of that Target Ship (determined by reference to the valuations
referred to in paragraph 6 of Schedule 4, Part C) and such Advance shall
be applied in part-financing the acquisition of that Target Ship upon
delivery of that Ship to its Owner;
|
|
(f)
|
each
Acquisition Advance may, subject to the other conditions of this
Agreement, be drawn down on or after the Initial Borrowing Date until the
date falling on the first anniversary of the date of this Agreement (but
in any event not later than 31 December
2008);
|
|
(g)
|
no
Acquisition Advance may be made available to the Borrower prior to the
Drawdown Date of the Existing Ships Advance;
and
|
|
(h)
|
the
aggregate of the Advances shall not exceed the Total
Commitments.
|
|
4.3
|
Notification to Lenders of
receipt of a Drawdown Notice. The Agent shall promptly
notify the Lenders that it has received a Drawdown Notice and shall inform
each Lender of:
|
|
(a)
|
the
amount of the Advance and the Drawdown
Date;
|
|
(b)
|
the
amount of that Lender’s participation in the Advance;
and
|
20
|
(c)
|
the
duration of the first Interest Period applicable to that
Advance.
|
|
4.4
|
Drawdown Notice
irrevocable. A Drawdown Notice must be signed by a
director of the Borrower; and once served, a Drawdown Notice cannot be
revoked without the prior written consent of the Agent, acting on the
authority of the Majority Lenders.
|
|
4.5
|
Lenders to make available
Contributions. Subject to the provisions of this
Agreement, each Lender shall, on and with value on each Drawdown Date,
make available to the Agent for the account of the Borrower 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 Borrower the amounts
which the Agent receives from the Lenders under Clause 4.5; and that
payment to the Borrower shall be
made:
|
|
(a)
|
to
the account which the Borrower specifies in the relevant Drawdown Notice;
and
|
|
(b)
|
in
the like funds as the Agent received the payments from the
Lenders.
|
|
4.7
|
Disbursement of Advance to
third party. The payment by the Agent under Clause 4.6
to a third party specified in the relevant Drawdown Notice
shall constitute the making of the Advance and the Borrower shall
thereupon become indebted, as principal and direct obligor, to each Lender
in an amount equal to that Lender’s
Contribution.
|
|
5
|
INTEREST
|
|
5.1
|
Payment of normal
interest. Subject to the provisions of this Agreement,
interest on each Advance and the Loan and each part thereof in respect of
each Interest Period shall be paid by the Borrower on the last day of that
Interest Period.
|
|
5.2
|
Normal rate of
interest. Subject to the provisions of this Agreement,
the rate of interest on each Advance and the Loan and each part thereof in
respect of an Interest Period shall be the aggregate of (i) the applicable
Margin, (ii) the Mandatory Cost (if any) and (iii)
LIBOR.
|
|
5.3
|
Payment of accrued
interest. In the case of an Interest Period longer than
3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest
Period.
|
|
5.4
|
Notification of Interest
Periods and rates of normal interest. The Agent shall
notify the Borrower and each Lender
of:
|
|
(a)
|
each
rate of interest; and
|
|
(b)
|
the
duration of each Interest Period;
|
as soon
as reasonably practicable after each is determined.
|
5.5
|
Market
disruption. The following provisions of this Clause 5
apply if:
|
|
(a)
|
no
rate is quoted on Reuters BBA Page LIBOR 01 and at least half of the total
number of Lenders at any time do not, before 1.00 p.m. (Hamburg time) on
the second Business Day before the commencement of an Interest Period,
provide quotations to the Agent in order to fix LIBOR;
or
|
|
(b)
|
at
least one Business Day before the start of an Interest Period, Lenders
having Contributions together amounting to more than 50 per cent. of the
Loan (or, if an Advance has not been made, Commitments amounting to more
than 50 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
|
21
any part
of them) during the Interest Period in the London Interbank Dollar Market at or
about 11.00 a.m. (London time) on the second Business Day before the
commencement of the Interest Period; or
|
(c)
|
at
least one Business Day before the start of an Interest Period, the Agent
is notified by a Lender (the “Affected Lender”) that
for any reason it is unable to obtain Dollars in the London Interbank
Market in order to fund its Contribution (or any part of it) during the
Interest Period.
|
|
5.6
|
Notification of market
disruption. The Agent shall promptly notify the Borrower
and each of the Lenders stating the circumstances falling within Clause
5.5 which have caused its notice to be
given.
|
|
5.7
|
Suspension of
drawdown. If the Agent’s notice under Clause 5.6 is
served before an Advance is made:
|
|
(a)
|
in
a case falling within paragraphs (a) or (b) of Clause 5.5, the Lenders’
obligations to make the Advance;
|
|
(b)
|
in
a case falling within paragraph (c) of Clause 5.5, the Affected Lender’s
obligation to participate in the
Advance;
|
shall be
suspended while the circumstances referred to in the Agent’s notice
continue.
|
5.8
|
Negotiation of alternative rate
of interest. If the Agent’s notice under Clause 5.6 is
served after an Advance is made, the Borrower, the Agent and the Lenders
or (as the case may be) the Affected Lender shall use reasonable
endeavours to agree, within the 30 days after the date on which the Agent
serves its notice under Clause 5.6 (the “Negotiation Period”), an
alternative interest rate or (as the case may be) an alternative basis for
the Lenders or (as the case may be) the Affected Lender to fund or
continue to fund their or its Contribution to the relevant Advance or
Advances during the Interest Period
concerned.
|
|
5.9
|
Application of agreed
alternative rate of interest. Any alternative interest
rate or an alternative basis which is agreed during the Negotiation Period
shall take effect in accordance with the terms
agreed.
|
|
5.10
|
Alternative rate of interest in
absence of agreement. If an alternative interest rate or
alternative basis is not agreed within the Negotiation Period, and the
relevant circumstances are continuing at the end of the
Negotiation Period, then the Agent shall, with the agreement of each
Lender or (as the case may be) the Affected Lender, set an interest period
and interest rate representing the cost of funding of the Lenders or (as
the case may be) the Affected Lender in Dollars or in any available
currency of their or its Contribution to the relevant Advance or Advances
plus the Mandatory Cost (if any) and the applicable Margin; and the
procedure provided for by this Clause 5.10 shall be repeated if the
relevant circumstances are continuing at the end of the interest period so
set by the Agent.
|
|
5.11
|
Notice of
prepayment. If the Borrower does not agree with an
interest rate set by the Agent under Clause 5.10, the Borrower may give
the Agent not less than 15 Business Days’ notice of its intention to
prepay the relevant Advance or Advances at the end of the interest period
set by the Agent.
|
|
5.12
|
Prepayment; termination of
Commitments. A notice under Clause 5.11 shall be
irrevocable; the Agent shall promptly notify the Lenders or (as the case
may require) the Affected Lender of the Borrower’s notice of intended
prepayment; and:
|
22
|
(a)
|
on
the date on which the Agent serves that notice, the Total Commitments or
(as the case may require) the Commitment of the Affected Lender shall be
cancelled; and
|
|
(b)
|
on
the last Business Day of the interest period set by the Agent, the
Borrower shall prepay (without premium or penalty) the Loan or, as the
case may be, the Affected Lender’s Contribution, together with accrued
interest thereon at the applicable rate plus the applicable Margin and the
Mandatory Cost (if any).
|
|
5.13
|
Application of
prepayment. The provisions of Clause 8 shall apply in
relation to the prepayment.
|
|
5.14
|
Determination of Leverage
Ratio. The Agent shall calculate the Leverage Ratio on
the first Drawdown Date and on each Compliance Date thereafter (each a
“Margin Calculation
Date”) for the purposes of calculating the Margin and shall advise
the Borrower and the Lenders in writing, within 10 Business Days of each
Margin Calculation Date, of the Margin which will apply for the 3-month
period commencing on the relevant Margin Calculation Date Provided
that in respect of each Margin Calculation Date other
than the first Margin Calculation Date, the Agent shall only be obliged to
advise the Borrowers and the Lenders of the Margin which will apply for
the 3-month period commencing on the relevant Margin Calculation Date if
that Margin will be different to the Margin which applies immediately
prior to the relevant Margin Calculation
Date.
|
For the
purposes of calculating the Leverage Ratio pursuant to this Clause 5.14, the
Market Value of the Ships shall be determined no more than 15 days prior to the
relevant Margin Calculation Date.
|
6
|
INTEREST
PERIODS
|
|
6.1
|
Commencement of Interest
Periods. The first Interest Period applicable to an
Advance shall commence on the Drawdown Date relative to that Advance and
each subsequent Interest Period shall commence on the expiry of the
preceding Interest Period.
|
|
6.2
|
Duration of normal Interest
Periods. Each Interest Period in respect of each Advance
shall be:
|
|
(a)
|
1,
3, 6 or 12 months as notified by the Borrower to the Agent not later than
11.00 a.m. (Hamburg time) 3 Business Days before the commencement of the
Interest Period Provided that there may
be no more than 6 Interest Periods having a duration of 1 month in any
calendar year; or
|
|
(b)
|
in
the case of the first Interest Period applicable to the second and any
subsequent Advance, a period ending on the last day of the then current
Interest Period whereupon all of the Advances shall be consolidated and
treated as a single Advance;
|
|
(c)
|
3
months, if the Borrower fails to notify the Agent by the time specified in
paragraph (a) above; or
|
|
(d)
|
such
other period as the Agent may, with the Majority Lenders’ authority, agree
with the Borrower.
|
|
7
|
DEFAULT
INTEREST
|
|
7.1
|
Payment of default interest on
overdue amounts. The Borrower shall pay interest in
accordance with the following provisions of this Clause 7 on any amount
payable by the Borrower under any Finance Document which the Agent, the
Security Trustee or the other designated payee does not receive on or
before the relevant date, that is:
|
23
|
(a)
|
the
date on which the Finance Documents provide that such amount is due for
payment; or
|
|
(b)
|
if
a Finance Document provides that such amount is payable on demand, the
date on which the demand is served;
or
|
|
(c)
|
if
such amount has become immediately due and payable under Clause 19.4, the
date on which it became immediately due and
payable.
|
|
7.2
|
Default rate of
interest. Interest shall accrue on an overdue amount
from (and including) the relevant date until the date of actual payment
(as well after as before judgment) at the rate per annum determined by the
Agent to be 2 per cent. above:
|
|
(a)
|
in
the case of an overdue amount of principal, the higher of the rates set
out at paragraphs (a) and (b) of Clause 7.3;
or
|
|
(b)
|
in
the case of any other overdue amount, the rate set out at paragraph (b) of
Clause 7.3.
|
|
7.3
|
Calculation of default rate of
interest. The rates referred to in Clause 7.2
are:
|
|
(a)
|
the
rate applicable to the overdue principal amount immediately prior to the
relevant date (but only for any unexpired part of any then current
Interest Period);
|
|
(b)
|
the
aggregate of the Mandatory Cost (if any) and the applicable Margin plus,
in respect of successive periods of any duration (including at call) up to
3 months which the Agent may select from time to
time:
|
|
|
(i)
|
LIBOR;
or
|
|
|
(ii)
|
if
the Agent determines that Dollar deposits for any such period are not
being made available to a Lender or (as the case may be) Lenders by
leading banks in the London Interbank Market in the ordinary course of
business, a rate from time to time determined by the Agent by reference to
the cost of funds to the Agent from such other sources as the Agent may
from time to time determine.
|
|
7.4
|
Notification of interest
periods and default rates. The Agent shall promptly
notify the Lenders and the Borrower of each interest rate determined by
the Agent under Clause 7.3 and of each period selected by the Agent for
the purposes of paragraph (b) of that Clause; but this shall not be taken
to imply that the Borrower is liable to pay such interest only with effect
from the date of the Agent’s
notification.
|
|
7.5
|
Payment of accrued default
interest. Subject to the other provisions of this
Agreement, any interest due under this Clause shall be paid on the last
day of the period by reference to which it was determined; and the payment
shall be made to the Agent for the account of the Creditor Party to which
the overdue amount is due.
|
|
7.6
|
Compounding of default
interest. Any such interest which is not paid at the end
of the period by reference to which it was determined shall thereupon be
compounded.
|
|
7.7
|
Application to Master
Agreement. For the avoidance of doubt, this Clause 7
does not apply to any amount payable under the Master Agreement in respect
of any continuing Designated Transaction as to which section 2(e) (Default
Interest; Other Amounts) of the Master Agreement shall
apply.
|
|
8
|
REPAYMENT
AND PREPAYMENT
|
|
8.1
|
Amount of repayment
instalments. If, on the date falling 3 days prior to a
Dividend Declaration Date, the Security Cover Percentage is less than 145
per cent., then the
|
24
|
|
Borrower
shall repay the Loan in an amount which, once repaid, shall eliminate the
shortfall.
|
|
8.2
|
Repayment
dates. If a repayment is required pursuant to Clause 8.1
on any Dividend Declaration Date (being the “Relevant Dividend Declaration
Date”), then the Borrower shall transfer the amount of the
repayment due under Clause 8.1 into the Retention Account by no later than
3 Business Days after the Relevant Dividend Declaration
Date. On the last day of the Interest Period current as at the
Relevant Dividend Declaration Date the Agent shall apply all amounts
standing to the credit of the Retention Account in or towards repayment of
the Loan and the payment of interest thereon in accordance with Clause
18.4.
|
|
8.3
|
Final Maturity
Date. On the Final Maturity Date, the Borrower shall
additionally pay to the Agent for the account of the Creditor Parties all
principal and other sums then accrued or owing under any Finance
Document.
|
|
8.4
|
Voluntary
prepayment. Subject to the following conditions, the
Borrower may prepay the whole or any part of the Loan on the last day of
an Interest Period.
|
|
8.5
|
Conditions for voluntary
prepayment. The conditions referred to in Clause 8.4 are
that:
|
|
(a)
|
any
partial prepayment to be applied against the Loan shall be $1,000,000 or a
higher multiple thereof;
|
|
(b)
|
the
Agent has received from the Borrower at least 15 days’ prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made (such date shall be the last day of an Interest
Period); and
|
|
(c)
|
the
Borrower has provided evidence satisfactory to the Agent that any consent
required by the Borrower or any Security Party in connection with the
prepayment has been obtained and remains in force, and that any
requirement relevant to this Agreement which affects the Borrower or any
Security Party has been complied
with.
|
|
8.6
|
Effect of notice of
prepayment. A prepayment notice may not be withdrawn or
amended without the consent of the Agent, given with the authority of the
Majority Lenders, and the amount specified in the prepayment notice shall
become due and payable by the Borrower on the date for prepayment
specified in the prepayment notice.
|
|
8.7
|
Notification of notice of
prepayment. The Agent shall notify the Lenders promptly
upon receiving a prepayment notice, and shall provide any Lender which so
requests with a copy of any document delivered by the Borrower under
Clause 8.5(c).
|
|
8.8
|
Voluntary Commitment
reductions. Subject to the following conditions, the
Total Commitments may be permanently reduced, cancelled or terminated by
the Borrower.
|
|
8.9
|
Conditions for voluntary
Commitment reduction. The conditions referred to in
Clause 8.8 are that:
|
|
(a)
|
any
partial reduction, cancellation or termination of the Total Commitments
shall be for an amount of $1,000,000 or a higher integral multiple
thereof;
|
|
(b)
|
the
Agent has received from the Borrower at least 3 Business Days prior
written notice specifying the amount of the Total Commitments to be
reduced, cancelled or terminated and the date on which such reduction,
cancellation or termination is to apply;
and
|
|
(c)
|
a
notice served under paragraph (b) may not be given after expiry of the
Availability Period and may not be withdrawn or amended without the
consent of the Agent given with the authority of the Majority
Lenders.
|
25
|
8.10
|
Notification of notice of
Commitment reduction. The Agent shall notify the Lenders
promptly upon receiving a notice under Clause 8.9(b), and shall notify
each Lender of the amount by which its Commitment shall be reduced
pursuant thereto.
|
|
8.11
|
Mandatory
prepayment. The Borrower shall be obliged to prepay the
Relevant Amount of the Loan:
|
|
(a)
|
if
a Ship is sold, on or before the date on which the sale is completed by
delivery of the Ship to the buyer;
or
|
|
(b)
|
if
a Ship becomes a Total Loss, on the earlier of the date falling 120 days
after the relevant Total Loss Date and the date of receipt by the Security
Trustee of the proceeds of insurance relating to such Total
Loss.
|
In this
Clause 8.11, “Relevant
Amount” means an amount which after giving credit for the amount of the
prepayment made pursuant to this Clause 8.11, results in the Security Cover
Percentage being equal to the higher of (i) the Security Cover Percentage
maintained immediately prior to the prepayment made pursuant to this Clause 8.11
and (ii) the Security Cover Percentage required to be maintained at that time
pursuant to Clause 15.1.
|
8.12
|
Amounts payable on
prepayment. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 21 below or
otherwise) in respect of the amount prepaid and, if the prepayment is not
made on the last day of an Interest Period together with any sums payable
under Clause 21.1(b) but without premium or
penalty.
|
|
8.13
|
Application of partial
prepayment. Any sum received by the Agent pursuant to
Clauses 8.4 and 8.11 shall be applied in prepayment of the Loan and,
subject to no Event of Default being in occurrence or continuing at the
time a prepayment is made under Clause 8.11, any balance arising from the
sale or Total Loss proceeds of a Ship which is sold or becomes a Total
Loss after the prepayment required by Clause 8.11 has been made shall be
released to the Borrower or to such other person (including, without
limitation, the Owner of the relevant Ship) as the Borrower may
direct.
|
|
8.14
|
Reborrowing
permitted. Subject to the terms of this Agreement,
amounts prepaid in respect of the Loan may be
reborrowed.
|
|
8.15
|
Unwinding of Designated
Transactions. On or prior to any repayment or prepayment
of the Loan under this Clause 8 or any other provision of this Agreement,
the Borrower shall wholly or partially reverse, offset, unwind or
otherwise terminate one or more of the continuing Designated Transactions
to the extent necessary to ensure that the notional principal amount of
the continuing Designated Transactions thereafter remaining does not and
will not in the future (taking into account the scheduled amortisation)
exceed the amount of the Loan as reducing from time to time thereafter
pursuant to Clause 8.1.
|
|
8.16
|
Prepayment of Swap
Benefit. If a Designated Transaction is terminated in
circumstances where the Swap Bank would be obliged to pay an amount to the
Borrower under the Master Agreement, the Borrower hereby agrees that such
payment shall be applied in prepayment of the Loan and authorises the Swap
Bank to pay such amount to the Agent for such
purpose.
|
|
9
|
CONDITIONS
PRECEDENT
|
|
9.1
|
Documents, fees and no
default. Each Lender’s obligation to contribute to an
Advance is subject to the following conditions
precedent:
|
26
|
(a)
|
that,
on or before the date of this Agreement, the Agent receives the documents
described in Part A of Schedule 4 in a form and substance satisfactory to
the Agent and its lawyers;
|
|
(b)
|
that,
on or before the service of the first Drawdown Notice, the Agent receives
the documents described in Part B of Schedule 4 in a form and substance
satisfactory to the Agent and its
lawyers
|
|
(c)
|
that,
on or before the Drawdown Date in respect of each Acquisition
Advance:
|
|
|
(i)
|
the
Agent receives the documents described in Part C of Schedule 4 in form and
substance satisfactory to the Agent and its
lawyers;
|
|
|
(ii)
|
the
Agent receives satisfactory evidence that the Borrower has fully drawn the
revolving credit facility which is the subject of the HSH Loan Agreement
or that it has fully refinanced such facility;
and
|
|
|
(iii)
|
the
existing Financial Indebtedness of the Borrower under the Bridge Facility
Agreement has been fully repaid;
|
|
(d)
|
that,
on or before each Drawdown Date, the Agent receives all facility fees
referred to in Clause 20.1 which are payable at that time (including,
without limitation, any accrued commitment fee) and has received payment
of the expenses referred to in Clause
20.2;
|
|
(e)
|
that
both at the date of each Drawdown Notice and at each Drawdown
Date:
|
|
|
(i)
|
no
Event of Default or Potential Event of Default has occurred and is
continuing or would result from the borrowing of the relevant
Advance;
|
|
|
(ii)
|
the
representations and warranties in Clause 10 and those of the Borrower or
any Security Party which are set out in the other Finance Documents would
be true and not misleading if repeated on each of those dates with
reference to the circumstances then existing;
and
|
|
|
(iii)
|
none
of the circumstances contemplated by Clause 5.5 has occurred and is
continuing;
|
|
(f)
|
that,
if the ratio set out in Clause 15.1 were applied immediately following the
making of each Advance, the Borrower would not be obliged to provide
additional security or prepay part of the Loan under that Clause;
and
|
|
(g)
|
that
at each Drawdown Date the Agent has received, and found to be acceptable
to it, any further opinions, consents, agreements and documents in
connection with the Finance Documents which the Agent may, with the
authorisation of the Majority Lenders, request by notice to the Borrower
prior to the relevant Drawdown
Date.
|
|
9.2
|
Waiver of conditions
precedent. If 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 Borrower shall ensure that those
conditions are satisfied within 5 Business Days after the Drawdown Date
relative to that Advance (or such longer period as the Agent may, with the
authority of the Majority Lenders,
specify).
|
|
10
|
REPRESENTATIONS
AND WARRANTIES
|
|
10.1
|
General. The
Borrower represents and warrants to each Creditor Party as
follows.
|
|
10.2
|
Status. The
Borrower is duly incorporated and validly existing and in good standing
under the laws of the Xxxxxxxx
Islands.
|
27
|
10.3
|
Share capital and
ownership. The Borrower has an authorised share capital
divided into 150,000,000 registered shares of $0.001 each, 25,744,983 of
which shares have been issued each fully
paid.
|
|
10.4
|
Corporate
power. The Borrower has the corporate capacity, and has
taken all corporate action and obtained all consents necessary for
it:
|
|
(a)
|
to
execute the Finance Documents to which it is a party;
and
|
|
(b)
|
to
borrow under this Agreement, enter into Designated Transactions under the
Master Agreement and to make all the payments contemplated by, and to
comply with, those Finance Documents to which the Borrower is a
party.
|
|
10.5
|
Consents in
force. All the consents referred to in Clause 10.4
remain in force and nothing has occurred which makes any of them liable to
revocation.
|
|
10.6
|
Legal validity; effective
Security Interests. The Finance Documents to which the
Borrower is a party, do now or, as the case may be, will, upon execution
and delivery (and, where applicable, registration as provided for in the
Finance Documents):
|
|
(a)
|
constitute
the Borrower’s legal, valid and binding obligations enforceable against
the Borrower in accordance with their respective terms;
and
|
|
(b)
|
create
legal, valid and binding Security Interests enforceable in accordance with
their respective terms over all the assets to which they, by their terms,
relate
|
subject
to any relevant insolvency laws affecting creditors’ rights
generally.
|
10.7
|
No third party Security
Interests. Without limiting the generality of Clause
10.6, at the time of the execution and delivery of each Finance
Document:
|
|
(a)
|
the
Borrower will have the right to create all the Security Interests which
that Finance Document purports to create;
and
|
|
(b)
|
no
third party will have any Security Interest (except for Permitted Security
Interests) or any other interest, right or claim over, in or in relation
to any asset to which any such Security Interest, by its terms,
relates.
|
|
10.8
|
No
conflicts. The execution by the Borrower of each Finance
Document to which it is a party, and the borrowing by the Borrower of the
Loan, and its compliance with each Finance Document to which it is a party
will not involve or lead to a contravention
of:
|
|
(a)
|
any
law or regulation; or
|
|
(b)
|
the
constitutional documents of the Borrower;
or
|
|
(c)
|
any
contractual or other obligation or restriction which is binding on the
Borrower or any of its assets.
|
|
10.9
|
No withholding
taxes. All payments which the Borrower is liable to make
under the Finance Documents may be made without deduction or withholding
for or on account of any tax payable under any law of any Pertinent
Jurisdiction.
|
|
10.10
|
No
default. No Event of Default or Potential Event of
Default has occurred and is
continuing.
|
28
|
10.11
|
Information. All
information which has been provided in writing by or on behalf of the
Borrower or any Security Party to any Creditor Party in connection with
any Finance Document
satisfied the requirements of Clause 11.5; all audited and unaudited
accounts which have been so provided satisfied the requirements of Clause
11.7; and there has been no material adverse change in the financial
position or state of affairs of the Borrower from that disclosed in the
latest of those accounts.
|
|
10.12
|
No
litigation. No legal or administrative action involving
the Borrower has been commenced or taken or, to the Borrower’s knowledge,
is likely to be commenced or taken.
|
|
10.13
|
No rebates
etc. There is no agreement or understanding to allow or
pay any rebate, premium, commission, discount or other benefit or payment
(howsoever described) to a third party in connection with the purchase by
each Owner of the Target Ship to be owned by it, other than as disclosed
to the Lenders in writing on or prior to the date of this
Agreement.
|
|
10.14
|
Compliance with certain
undertakings. At the date of this Agreement, the
Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and
11.13.
|
|
10.15
|
Taxes
paid. The Borrower has paid all taxes applicable to, or
imposed on or in relation to the Borrower or its
business.
|
|
10.16
|
ISM and ISPS Code
compliance. The Borrower will procure that the Owners
and the Approved Manager obtain all necessary ISM Code Documentation and
ISPS Code Documentation in connection with the Ships and comply with the
ISM Code and the ISPS Code on or
before:
|
|
(a)
|
the
date of this Agreement, in the case of each Existing Ship;
and
|
|
(b)
|
the
date on which each Ship is delivered to its Owner pursuant to the MOA
relative to that Ship, in the case of each other
Ship.
|
|
10.17
|
No money
laundering. Without prejudice to the generality of
Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the
performance and discharge of its obligations and liabilities under the
Finance Documents, and the transactions and other arrangements effected or
contemplated by the Finance Documents to which the Borrower is a party,
the Borrower confirms that it is acting for its own account and that the
foregoing will not involve or lead to contravention of any law, official
requirement or other regulatory measure or procedure implemented to combat
“money laundering” (as defined in Article 1 of the Directive (91/308/EEC)
of the Council of the European
Communities).
|
|
11
|
GENERAL
UNDERTAKINGS
|
|
11.1
|
General. The
Borrower undertakes with each Creditor Party to comply with the following
provisions of this Clause 11 at all times during the Security Period
except as the Agent may, with the authority of the Majority Lenders,
otherwise permit.
|
|
11.2
|
Title; negative pledge and pari
passu ranking. The Borrower
will:
|
|
(a)
|
own
(directly or indirectly) the entire beneficial interest in each Owner free
from all Security Interests and other interests and rights of every kind,
except for those created by the Finance
Documents;
|
|
(b)
|
not
create or permit to arise any Security Interest (except for Permitted
Security Interests) over any other asset, present or future (including,
but not limited to the Borrower’s rights against the Swap Bank under the
Master Agreement or all or any part of the Borrower’s interest in any
amount payable to the Borrower by the Swap Bank under the Master
Agreement); and
|
29
|
(c)
|
procure
that its liabilities under the Finance Documents to which it is a party do
and will rank at least pari passu with all its other present and future
unsecured liabilities, except for liabilities which are mandatorily
preferred by law.
|
|
11.3
|
No disposal of
assets. The Borrower will not transfer, lease or
otherwise dispose of:
|
|
(a)
|
all
or a substantial part of its assets, whether by one transaction or a
number of transactions, whether related or not;
or
|
|
(b)
|
any
debt payable to it or any other right (present, future or contingent
right) to receive a payment, including any right to damages or
compensation.
|
|
11.4
|
Restriction on other
liabilities or obligations to be incurred. The Borrower
will not incur, and will procure that none of the Owners will, incur, any
liability or obligation except liabilities and
obligations:
|
|
(a)
|
under
the MOAs and the Finance Documents to which each is a
party;
|
|
(b)
|
under
the Master Agreement (but in such case, only in connection with Designated
Transactions); and
|
|
(c)
|
(in
the case of each Owner) incurred in the normal course of its business of
operating its Ship.
|
|
11.5
|
Information provided to be
accurate. All financial and other information which is
provided in writing by or on behalf of the Borrower under or in connection
with any Finance Document will be true and not misleading and will not
omit any material fact or
consideration.
|
|
11.6
|
Provision of financial
statements. The Borrower will send to the
Agent:
|
|
(a)
|
as
soon as possible, but in no event later than 120 days after the end of
each Financial Year (commencing with the Financial Year ended 31 December
2006), the audited consolidated Financial Statements of the Group for that
Financial Year;
|
|
(b)
|
as
soon as possible, but in no event later than each Dividend Declaration
Date (commencing with the first Dividend Declaration Date falling within
2007 after the date of this Agreement), the unaudited consolidated
accounts of the Group for the most recent financial quarter which has
ended before that Dividend Declaration Date and additionally, in the case
of each of the second, third and fourth financial quarters, the unaudited
consolidated accounts of the Group for the period 1 January up to the end
of the relevant financial quarter certified in each case as to their
correctness by the chief financial officer of the
Borrower;
|
|
(c)
|
together
with the quarterly financial statements referred to in paragraph (b) above
for each of the financial quarters in each Financial Year, at least two
valuations of each Fleet Vessel each prepared by an Approved Broker (at
the cost of the Borrower) in accordance with Clause 15.4, which valuations
shall be used in determining the Security Cover Percentage pursuant to
Clause 15.1, the financial covenants referred to in Clause 12.4, the
ability of the Borrower to declare a dividend in accordance with Clause
12.8 and whether a repayment of the Loan needs to be made in accordance
with Clause 8.1; and
|
|
(d)
|
promptly
after each request by the Agent, such further financial information about
the Borrower, the Group, the Ships, the other Fleet Vessels and the Owners
(including, but not limited to, charter arrangements, Financial
Indebtedness and operating expenses) as the Agent may
require.
|
30
|
11.7
|
Form of financial
statements. All accounts (audited and unaudited)
delivered under Clause 11.6 will:
|
|
(a)
|
be
prepared in accordance with all applicable laws and GAAP consistently
applied;
|
|
(b)
|
in
the case of the annual audited financial statements of the Group, be
audited by an internationally renowned auditing firm and such financial
statements shall not include any material
qualifications;
|
|
(c)
|
give
a true and fair view of the state of affairs of the Group at the date of
those accounts and of its profit for the period to which those accounts
relate; and
|
|
(d)
|
fully
disclose or provide for all significant liabilities of the
Group.
|
|
11.8
|
Shareholder and creditor
notices. The Borrower will send the Agent, at the same
time as they are despatched, copies of all communications which are
despatched to all of the Borrower’s shareholders or creditors or any class
of them.
|
|
11.9
|
Consents. The
Borrower will maintain in force and promptly obtain or renew, and will
promptly send certified copies to the Agent of, all consents
required:
|
|
(a)
|
for
the Borrower to perform its obligations under any
Finance Document;
|
|
(b)
|
for
the validity or enforceability of any Finance
Document;
|
|
(c)
|
for
each Owner to continue to own and operate the Ship owned by
it,
|
and the
Borrower will comply (or procure compliance) with the terms of all such
consents.
|
11.10
|
Maintenance of Security
Interests. The Borrower
will:
|
|
(a)
|
at
its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
|
|
(b)
|
without
limiting the generality of paragraph (a) above, at its own cost, promptly
register, file, record or enrol any Finance Document with any court or
authority in all Pertinent Jurisdictions, pay any stamp, registration or
similar tax in all Pertinent Jurisdictions in respect of any Finance
Document, give any notice or take any other step which, in the opinion of
the Majority Lenders, is or has become necessary or desirable for any
Finance Document to be valid, enforceable or admissible in evidence or to
ensure or protect the priority of any Security Interest which it
creates.
|
|
11.11
|
Notification of
litigation. The Borrower will provide the Agent with
details of any legal or administrative action involving the Borrower, any
Security Party, the Approved Manager, any Ship or the Earnings or the
Insurances of any Ship as soon as such action is instituted or it becomes
apparent to the Borrower that it is likely to be instituted, unless it is
clear that the legal or administrative action cannot be considered
material in the context of any Finance
Document.
|
|
11.12
|
Principal place of
business. The Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
stated in Clause 28.2(a); and the Borrower will not establish,
or do anything as a result of which it would be deemed to have, a place of
business in any country other than the Xxxxxxxx
Islands.
|
|
11.13
|
Confirmation of no
default. The Borrower will, within 2 Business Days after
service by the Agent of a written request, serve on the Agent a notice
which is signed by 2 directors of the Borrower and
which:
|
31
|
(a)
|
states
that no Event of Default or Potential Event of Default has occurred;
or
|
|
(b)
|
states
that no Event of Default or Potential Event of Default has occurred,
except for a specified event or matter, of which all material details are
given.
|
The Agent
may serve requests under this Clause 11.13 from time to time but only if asked
to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of
the Loan or (if no Advance has been made) Commitments exceeding 10 per cent of
the Total Commitments; and this Clause 11.13 does not affect the Borrower’s
obligations under Clause 11.14.
|
11.14
|
Notification of
default. The Borrower will notify the Agent as soon as
the Borrower becomes aware of:
|
|
(a)
|
the
occurrence of an Event of Default or a Potential Event of Default;
or
|
|
(b)
|
any
matter which indicates that an Event of Default or a Potential Event of
Default may have occurred;
|
and will
thereafter keep the Agent fully up-to-date with all developments.
|
11.15
|
Provision of further
information. The Borrower will, as soon as practicable
after receiving the request, provide the Agent with any additional
financial or other information
relating:
|
|
(a)
|
to
the Borrower, any Owner, any Ship, the Approved Manager or any other
Security Party, the Insurances or the Earnings;
or
|
|
(b)
|
to
any other matter relevant to, or to any provision of, a Finance
Document
|
which may
be requested by the Agent, the Security Trustee or any Lender at any
time.
|
11.16
|
Provision of copies and
translation of documents. The Borrower will supply the
Agent with a sufficient number of copies of the documents referred to
above to provide 1 copy for each Creditor Party; and if the Agent so
requires in respect of any of those documents, the Borrower will provide a
certified English translation prepared by a translator approved by the
Agent.
|
|
11.17
|
Ownership. The
Borrower shall ensure that (a) it shall remain the direct or indirect
owner of the whole of the issued share capital of each Owner and (b) there
shall be no change in the legal and beneficial ownership of the shares in
each Owner.
|
|
11.18
|
General and administrative
costs. The Borrow shall ensure that the payment of all
the general and administrative costs of the Borrower and the Owners in
connection with the ownership and operation of the Ships (including,
without limitation, the payment of the management fees pursuant to the
Management Agreements) shall be fully subordinated to the payment
obligations of the Borrower and the Owners under this Agreement and the
other Finance Documents throughout the Security
Period.
|
|
11.19
|
No amendment to Master
Agreement; Transactions. The Borrower will
not:
|
|
(a)
|
agree
to any amendment or supplement to, or waive or fail to enforce, the Master
Agreement or any of its provisions;
or
|
|
(b)
|
enter
into any Transaction pursuant to the Master Agreement except Designated
Transactions.
|
32
|
11.20
|
Hedging of interest rate
risks. The Borrower shall deliver to the Agent by no
later than 60 days from the Drawdown Date in relation to each Advance a
duly signed Hedge Strategy Letter, and shall from time to time, enter into
such Designated Transactions with the Swap Bank in order to implement the
hedging strategy outlined in the Hedge Strategy Letter whereby for the
period on and from the date of this Agreement up to and including the
Final Maturity Date, it will hedge all or the major part of the interest
risk under this Agreement (but in any event not less than 50 per cent. of
the interest rate risk under this Agreement outstanding at any time during
the aforesaid period).
|
|
12
|
CORPORATE
UNDERTAKINGS
|
|
12.1
|
General. The
Borrower also undertakes with each Creditor Party to comply with the
following provisions of this Clause 12 at all times during the Security
Period except as the Agent may, with the authority of the Majority
Lenders, otherwise permit.
|
|
12.2
|
Maintenance of
status. The Borrower will maintain its separate
corporate existence and remain in good standing under the laws of the
Xxxxxxxx Islands.
|
|
12.3
|
Negative
undertakings. The Borrower will
not:
|
|
(a)
|
change
the nature of its business; or
|
|
(b)
|
declare
or pay any dividend or effect any other form of distribution save as
permitted pursuant to Clause 12.8:
|
|
(c)
|
effect
any form of redemption, purchase or return of share capital;
or
|
|
(d)
|
provide
any form of credit or financial assistance
to:
|
|
|
(i)
|
a
person who is directly or indirectly interested in the Borrower’s share or
loan capital; or
|
|
|
(ii)
|
any
company in or with which such a person is directly or indirectly
interested or connected;
|
or enter
into any transaction with or involving such a person or company on terms which
are, in any respect, less favourable to the Borrower than those which it could
obtain in a bargain made at arms’ length Provided that this shall not
prevent or restrict the Borrower from on-lending the Loan to the Owners or
granting credit or financial assistance to its wholly-owned direct or indirect
subsidiaries;
|
(e)
|
issue,
allot or grant any person a right to any shares in its capital or
repurchase or reduce its issued share
capital;
|
|
(f)
|
acquire
any shares or other securities other than US or UK Treasury bills and
certificates of deposit issued by major North American or European banks
or enter into any transaction in a derivative other than Designated
Transactions;
|
|
(g)
|
enter
into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation.
|
|
12.4
|
Financial
Covenants. The Borrower shall ensure that at all
times:
|
|
(a)
|
the
ratio of Total Liabilities to EBITDA shall not exceed
5:1;
|
|
(b)
|
the
Market Value Adjusted Net Worth of the Group shall not be less than
$100,000,000;
|
33
|
(c)
|
there
is available to the Borrower and all the other members of the Group an
amount of not less than $500,000 per Fleet Vessel (excluding, for the
avoidance of doubt, any amount standing to the credit of the Retention
Account which has been transferred thereto in accordance with Clause 18.2
or any other restricted account) in Liquid Assets of which, all amounts in
respect of the Ships, shall be held in the Reserve Account;
and
|
|
(d)
|
the
Leverage Ratio shall not exceed
0.7:1.
|
|
12.5
|
Compliance
Check. Compliance with the undertakings contained in
Clause 12.4 shall be determined in each Financial
Year:
|
|
(a)
|
at
the time the Agent receives the audited consolidated accounts of the Group
and the unaudited consolidated accounts of the Group (pursuant to Clauses
11.6(a) and 11.6(b) respectively), by reference to the unaudited
consolidated accounts in the case of the first three financial quarters in
each Financial Year and for the fourth financial quarter in each Financial
Year, initially by reference to the unaudited consolidated accounts for
the relevant fourth quarter and, once available, by reference to the
audited consolidated accounts for that Financial Year of the Group;
and
|
|
(b)
|
at
any other time as the Agent may reasonably request by reference to such
evidence as the Lenders may require to determine and calculate the
financial covenants referred to in Clause
12.4.
|
At the
same time as it delivers the consolidated accounts referred to in this Clause
12.5, the Borrower shall deliver to the Agent a Compliance Certificate
demonstrating its compliance (or not, as the case may be) with the provisions of
Clause 12.4 signed by the chief financial officer of the Borrower.
|
12.6
|
Change in accounting
expressions and policies. If, by reason of change in
format or GAAP or other relevant accounting policies, the expressions
appearing in any accounts and financial statements referred to in Clause
11.6 alter from those in the accounts and financial statements for the
Borrower for the year ended 31 December 2006, the relevant definitions
contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed
modified in such manner as the Agent, acting with the authorisation of the
Majority Lenders, shall require to take account of such different
expressions but otherwise to maintain in all respects the substance of
those provisions.
|
|
12.7
|
Subordination of rights of
Borrower. All rights which the Borrower at any time has
(whether in respect of the Loan or any other transaction) against any
Owner or its assets shall be fully subordinated to the rights of the
Creditor Parties under the Finance Documents; and in particular, the
Borrower shall not during the Security
Period:
|
|
(a)
|
claim,
or in a bankruptcy of any Owner or prove for any amount payable to the
Borrower by an Owner, whether in respect of the Loan or any other
transaction;
|
|
(b)
|
take
or enforce any Security Interest for any such amount;
or
|
|
(c)
|
claim
to set-off any such amount against any amount payable by the Borrower to
any Owner.
|
|
12.8
|
Dividend
payment. Subject to the following conditions, the
Borrower may pay dividends in any Financial
Year.
|
|
12.9
|
Conditions for dividend
payment. The conditions referred to in Clause 12.8 are
as follows:
|
34
|
(a)
|
that
the Agent has received from the Borrower by no later than the relevant
Dividend Declaration Date at least 10 days’ prior written notice of its
intention to announce a dividend payment (such notice hereinafter a “Dividend
Declaration”);
|
|
(b)
|
each
Dividend Declaration is accompanied by a completed Compliance Certificate
(evidencing the Borrower is in compliance with the financial covenants
referred to in Clause 12.4) and evidence that the payment of the proposed
dividend will not result in the Borrower being in breach of any of the
said financial covenants or in the occurrence of an Event of Default or a
Potential Event of Default;
|
|
(c)
|
each
completed Compliance Certificate referred to in paragraph (b) above shall
be accompanied by the latest Applicable Accounts evidencing, together with
the details of the aggregate Market Value of the Ships referred to in
paragraph (d) below, the compliance of the Borrower with the financial
covenants referred to in Clause
12.4;
|
|
(d)
|
each
Dividend Declaration is accompanied by details of the Market Value of each
Ship determined in accordance with Clause 15.4 and evidence that the
Security Cover Percentage as at the Dividend Declaration Date is no less
than 145 per cent.; and
|
|
(e)
|
the
Agent has confirmed to the Borrower in writing that the Borrower is in
compliance with paragraphs (b) and (c) prior to the Borrower’s
announcement of such dividend
payment.
|
|
13
|
INSURANCE
|
|
13.1
|
General. The
Borrower also undertakes with each Creditor Party to procure that each
Owner will comply with the following provisions of this Clause 13 at all
times during the Security Period (other than in the case of each Target
Ship, in which case the provisions of this Clause 13 shall apply to that
Ship as from the date on which the Target Ship which is owned or to be
owned by that Owner is delivered to it under the relevant MOA) except as
the Agent may, with the authority of the Majority Lenders, otherwise
permit.
|
|
13.2
|
Maintenance of obligatory
insurances. The Borrower shall procure that each Owner
keep the Ship owned by it insured at the expense of that Owner
against:
|
|
(a)
|
fire
and usual marine risks (including hull and machinery and excess
risks);
|
|
(b)
|
war
risks (including protection and indemnity war
risks);
|
|
(c)
|
in
the case of protection and indemnity war risks, in an amount equal to the
amount for which the war risks under the hull policies are
effected;
|
|
(d)
|
protection
and indemnity risks including protection and indemnity war risks cover in
excess of the amount for war risks (hull) and including cover for oil
pollution liability risks; and
|
|
(e)
|
any
other risks against which the Majority Lenders consider, having regard to
practices and other circumstances prevailing at the relevant time, it
would in the opinion of the Majority Lenders be reasonable for the
relevant Owner to insure and which are specified by the Security Trustee
by notice to the relevant Owner.
|
|
13.3
|
Terms of obligatory
insurances. The Borrower shall procure that each Owner
shall effect such insurances:
|
|
(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) an amount, which when
aggregated with the insured value of
the other Ships at the relevant time subject to a Mortgage, is equal to
120 per cent. of the Loan and (ii) the Market Value of the Ship owned by
it; and
|
35
|
(c)
|
in
the case of oil pollution liability risks, for an aggregate amount equal
to the highest level of cover from time to time available under basic
protection and indemnity club entry (with the international group of
protection and indemnity clubs) and the international marine insurance
market (currently $1,000,000,000);
|
|
(d)
|
in
relation to protection and indemnity risks, in respect of the full value
and tonnage of the Ship owned by
it;
|
|
(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.
|
|
13.4
|
Further protections for the
Creditor Parties. In addition to the terms set out in
Clause 13.3, the Borrower shall procure that the obligatory insurances
shall:
|
|
(a)
|
name
the Security Trustee as sole loss payee with such directions for payment
as the Security Trustee may
specify;
|
|
(b)
|
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;
|
|
(c)
|
provide
that the insurers shall waive, to the fullest extent permitted by English
law, their entitlement (if any) (whether by statute, common law, equity,
or otherwise) to be subrogated to the rights and remedies of the Security
Trustee in respect of any rights or interests (secured or not) held by or
available to the Security Trustee in respect of the Secured Liabilities,
until the Secured Liabilities shall have been fully repaid and discharged,
except that the insurers shall not be restricted by the terms of this
paragraph (d) from making personal claims against persons (other than the
relevant Owner or any Creditor Party) in circumstances where the insurers
have fully discharged their liabilities and obligations under the relevant
obligatory insurances;
|
|
(d)
|
provide
that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Security
Trustee;
|
|
(e)
|
provide
that the Security Trustee may make proof of loss if the relevant Owner
fails to do so; and
|
|
(f)
|
provide
that if any obligatory insurance is cancelled, or if any substantial
change is made in the coverage which adversely affects the interest of the
Security Trustee, or if any obligatory insurance is allowed to lapse for
non-payment of premium, such cancellation, charge or lapse shall not be
effective with respect to the Security Trustee for 30 days (or 7 days in
the case of war risks) after receipt by the Security Trustee of prior
written notice from the insurers of such cancellation, change or
lapse.
|
|
13.5
|
Renewal of obligatory
insurances. The Borrower shall procure that each Owner
shall:
|
|
(a)
|
at
least 21 days before the expiry of any obligatory
insurance:
|
|
|
(i)
|
notify
the Security Trustee of the brokers (or other insurers) and any protection
and indemnity or war risks association through or with whom that Owner
proposes to renew that insurance and of the proposed terms of renewal;
and
|
36
|
|
(ii)
|
in
case of any substantial change in insurance cover, obtain the Security
Trustee’s approval to the matters referred to in paragraph (i)
above;
|
|
(b)
|
at
least 14 days before the expiry of any obligatory insurance, renew the
insurance in accordance with the Security Trustee’s approval pursuant to
paragraph (a); and
|
|
(c)
|
procure
that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall
promptly after the renewal notify the Security Trustee in writing of the
terms and conditions of the
renewal.
|
|
13.6
|
Copies of policies; letters of
undertaking. The Borrower shall procure that each Owner
shall ensure that all approved brokers provide the Security Trustee with
copies of all policies relating to the obligatory insurances which they
effect or renew and of a letter or letters of undertaking (in the event of
fleet cover, together with waivers for liens for unpaid premiums of other
vessels not mortgaged to the Security Trustee) 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 14 days before the expiry
of the obligatory insurances, in the event of their not having received
notice of renewal instructions from that Owner or its Agents and, in the
event of their receiving instructions to renew, they will promptly notify
the Security Trustee of the terms of the
instructions;
|
|
(e)
|
they
will notify the Security Trustee if any person other than the Owner is
named as assured or co-assured in any of the obligatory insurances and
shall procure that, upon the written request of the Security Trustee, such
additional assured or co-assured executes in favour of the Security an
assignment (in such form as the Lenders may approve or require) of its
interest in the obligatory insurances;
and
|
|
(f)
|
they
will not set off against any sum recoverable in respect of a claim
relating to the Ship owned by the relevant Owner 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
the Ship forthwith upon being so requested by the Security
Trustee.
|
If any of
the obligatory insurances referred to in Clause 13.6 form part of a fleet cover,
the Borrower will procure that any letter of undertaking referred to in this
Clause is amended to provide that the relevant brokers shall undertake to the
Security Trustee that they shall neither set-off against any claims in respect
of a Ship any premiums due in respect of other vessels under such fleet cover of
any premiums due for other insurances, nor cancel the insurance for reason of
non-payment of premiums for other vessels under such fleet cover or of premiums
for such other insurances.
|
13.7
|
Copies of certificates of
entry. The Borrower shall procure that each Owner shall
ensure that any protection and indemnity and/or war risks associations in
which the Ship owned by that Owner is entered provides the Security
Trustee with:
|
37
|
(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 required by the
Security Trustee; and
|
|
(c)
|
where
required to be issued under the terms of insurance/indemnity provided by
the Borrower’s protection and indemnity association, a certified copy of
each United States of America voyage quarterly declaration (or other
similar document or documents) made by that Owner in accordance with the
requirements of such protection and indemnity association;
and
|
|
(d)
|
a
certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority.
|
|
13.8
|
Deposit of original
policies. The Borrower shall procure that each Owner
shall ensure that all policies relating to obligatory insurances are
deposited with the approved brokers through which the insurances are
effected or renewed.
|
|
13.9
|
Payment of
premiums. The Borrower shall procure that each Owner
shall punctually pay all premiums or other sums payable in respect of the
obligatory insurances and produce all relevant receipts when so required
by the Security Trustee.
|
|
13.10
|
Guarantees. The
Borrower shall procure that each Owner shall ensure that any guarantees
required by a protection and indemnity or war risks association are
promptly issued and remain in full force and
effect.
|
|
13.11
|
Restrictions on
employment. The Borrower shall procure that no Owner
employ the Ship owned by it, nor permit her to be employed, outside the
cover provided by any obligatory
insurances.
|
|
13.12
|
Compliance with terms of
insurances. The Borrower shall procure that no Owner
shall do or omit to do (or permit to be done or not to be done) any act or
thing which would or might render any obligatory insurance invalid, void,
voidable or unenforceable or render any sum payable thereunder repayable
in whole or in part; and, in
particular:
|
|
(a)
|
each
Owner shall take all necessary action and comply with all requirements
which may from time to time be applicable to the obligatory insurances,
and (without limiting the obligation contained in Clause 13.7(c) above)
ensure that the obligatory insurances are not made subject to any
exclusions or qualifications to which the Security Trustee has not given
its prior approval;
|
|
(b)
|
no
Owner shall make any changes relating to the classification or
classification society or manager or operator of the Ship owned by it
unless approved by the underwriters of the obligatory
insurances;
|
|
(c)
|
each
Owner shall make all quarterly or other voyage declarations which may be
required by the protection and indemnity risks association in which the
Ship owned by it is entered to maintain cover for trading to the United
States of America and Exclusive Economic Zone (as defined in the United
States Oil Pollution Act 1990 or any other applicable legislation);
and
|
|
(d)
|
no
Owner shall employ the Ship owned by it, nor allow it to be employed,
otherwise than in conformity with the terms and conditions of the
obligatory insurances, without first obtaining the consent of the insurers
and complying with any requirements (as to extra premium or otherwise)
which the insurers specify.
|
|
13.13
|
Alteration to terms of
insurances. The Borrower shall procure that no Owner
shall either make or agree to any alteration to the terms of any
obligatory insurance or waive any
right relating to any obligatory insurance without the prior written
consent of the Security
Trustee.
|
38
|
13.14
|
Settlement of
claims. The Borrower shall procure that no Owner shall
settle, compromise or abandon any claim under any obligatory insurance for
Total Loss or for a Major Casualty, and shall do all things necessary and
provide all documents, evidence and information to enable the Security
Trustee to collect or recover any moneys which at any time become payable
in respect of the obligatory
insurances.
|
|
13.15
|
Provision of copies of
communications. The Borrower shall procure that each
Owner shall provide the Security Trustee, at the time of each such
communication, copies of all written communications between that Owner
and:
|
|
(a)
|
the
approved brokers; and
|
|
(b)
|
the
approved protection and indemnity and/or war risks associations;
and
|
|
(c)
|
the
approved insurance companies and/or underwriters, which relate directly or
indirectly to:
|
|
|
(i)
|
that
Owner’s obligations relating to the obligatory insurances including,
without limitation, all requisite declarations and payments of additional
premiums or calls; and
|
|
|
(ii)
|
any
credit arrangements made between that Owner and any of the persons
referred to in paragraphs (a) or (b) above relating wholly or partly to
the effecting or maintenance of the obligatory
insurances.
|
|
13.16
|
Provision of
information. In addition, the Borrower shall procure
that each Owner shall promptly provide the Security Trustee (or any
persons which it may designate) with any information which the Security
Trustee (or any such designated person) requests for the purpose
of:
|
|
(a)
|
obtaining
or preparing any report from an independent marine insurance broker as to
the adequacy of the obligatory insurances effected or proposed to be
effected; and/or
|
|
(b)
|
effecting,
maintaining or renewing any such insurances as are referred to in Clause
13.17 below or dealing with or considering any matters relating to any
such insurances
|
and the
Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect
of all fees and other expenses incurred by or for the account of the Security
Trustee in connection with any such report as is referred to in paragraph (a)
above.
|
13.17
|
Mortgagee’s interest and
additional peril insurances. The Security Trustee shall
be entitled from time to time to effect, maintain and renew all or any of
the following insurances in such amounts, on such terms, through such
insurers and generally in such manner as the Security Trustee may from
time to time consider appropriate:
|
|
(a)
|
a
mortgagee’s interest insurance in an amount equal to 120 per cent. of the
Loan;
|
|
(b)
|
a
mortgagee’s interest additional perils (pollution) insurance in an amount
equal to 110 per cent. of the Loan.
|
and the
Borrower shall upon demand fully indemnify the Security Trustee in respect of
all premiums and other expenses which are incurred in connection with or with a
view to effecting, maintaining or renewing any such insurance or dealing with,
or considering, any matter arising out of any such insurance.
39
| 13.18 | Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting the Owners 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 Owners may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower. |
|
13.19
|
Modification of insurance
requirements. The Security Trustee shall notify the
Borrower of any proposed modification under Clause 13.18 to the
requirements of this Clause 13 which the Majority Lenders consider
appropriate in the circumstances, and such modification shall take effect
on and from the date it is notified in writing to the Borrower as an
amendment to this Clause 13 and shall bind the Borrower
accordingly.
|
|
13.20
|
Compliance with mortgagee’s
instructions. The Security Trustee shall be entitled
(without prejudice to or limitation of any other rights which it may have
or acquire under any Finance Document) to require any Ship to remain at
any safe port or to proceed to and remain at any safe port designated by
the Security Trustee until the Owner of that Ship implements any
amendments to the terms of the obligatory insurances and any operational
changes required as a result of a notice served under Clause
13.19.
|
|
14
|
SHIP
COVENANTS
|
|
14.1
|
General. The
Borrower also undertakes with each Creditor Party to procure that each
Owner shall comply with the following provisions of this Clause 14 at all
times during the Security Period (after the Ship has been delivered to it
under the relevant MOA) except as the Agent, with the authority of the
Majority Lenders, may otherwise
permit.
|
|
14.2
|
Ship’s name and
registration. The Borrower shall procure that each Owner
shall keep the Ship owned by it registered in its ownership under an
Approved Flag; shall not do or allow to be done anything as a result of
which such registration might be cancelled or imperilled; and shall not
change the name or port of registry of any
Ship.
|
|
14.3
|
Repair and
classification. The Borrower shall procure that each
Owner shall keep the Ship owned by it in a good and safe condition and
state of repair:
|
|
(a)
|
consistent
with first-class ship ownership and management
practice;
|
|
(b)
|
so
as to maintain the highest class with a first-class classification society
which is a member of IACS acceptable to the Agent free of overdue
recommendations and conditions of such classification society;
and
|
|
(c)
|
so
as to comply with all laws and regulations applicable to vessels
registered at ports in the relevant Approved Flag State or to vessels
trading to any jurisdiction to which the Ship may trade from time to time,
including but not limited to the ISM Code, the ISPS Code, the ISM Code
Documentation and the ISPS Code
Documentation.
|
|
14.4
|
Classification society
undertaking. The Borrower shall procure that each Owner
shall instruct the classification society referred to in Clause 14.3 (and
procure that the classification society undertakes with the Security
Trustee):
|
|
(a)
|
to
send to the Security Trustee, following receipt of a written request from
the Security Trustee, certified true copies of all original class records
and any other related records held by the classification society in
relation to the Ship owned by that
Owner;
|
40
|
(b)
|
to
allow the Security Trustee (or its agents), at any time and from time to
time, to inspect the original class and related records of that Owner and
its Ship at the offices of the classification society and to take copies
of them;
|
|
(c)
|
to
notify the Security Trustee immediately in writing if the classification
society:
|
|
|
(i)
|
receives
notification from the Owner or any person that the Ship’s classification
society is to be
changed; or
|
|
|
(ii)
|
becomes
aware of any facts or matters which may result in or have resulted in a
change, suspension, discontinuance, withdrawal or expiry of the Ship’s
class under the rules or terms and conditions of the Owner’s or the Ship’s
membership of the classification
society;
|
|
(d)
|
following
receipt of a written request from the Security
Trustee:
|
|
|
(i)
|
to
confirm that the Owner is not in default of any of its contractual
obligations or liabilities to the classification society and, without
limiting the foregoing, that it has paid in full all fees or other charges
due and payable to the classification
society; or
|
|
|
(ii)
|
if
the Owner is in default of any of its contractual obligations or
liabilities to the classification society, to specify to the Security
Trustee in reasonable detail the facts and circumstances of such default,
the consequences thereof, and any remedy period agreed or allowed by the
classification society.
|
|
14.5
|
Modification. The
Borrower shall procure that no Owner shall make any modification or
repairs to, or replacement of, the Ship owned by it or equipment installed
on her which would or might materially (in the sole opinion of the Agent)
alter the structure, type or performance characteristics of the Ship or
materially reduce her value.
|
|
14.6
|
Removal of
parts. The Borrower shall procure that no Owner shall
remove any material part of the Ship owned by it, or any item of equipment
installed on, the Ship unless the part or item so removed is forthwith
replaced by a suitable part or item which is in the same condition as or
better condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Security
Trustee and becomes on installation on the Ship the property of the Owner
and subject to the security constituted by the Mortgage and if applicable,
the Deed of Covenant, relative to the Ship Provided that the Owner
may install equipment owned by a third party if the equipment can be
removed without any risk of damage to the
Ship.
|
|
14.7
|
Surveys. The
Borrower shall procure that each Owner shall submit the Ship owned by it
regularly to all periodical or other surveys which may be required for
classification purposes and, if so required by the Majority Lenders,
provide the Security Trustee (at the expense of the Borrower) with copies
of all survey reports.
|
|
14.8
|
Inspection. The
Borrower shall procure that:
|
|
(a)
|
each
Owner shall permit the Security Trustee (by surveyors or other persons
appointed by it for that purpose) to board the Ship owned by it at all
reasonable times to inspect her condition or to satisfy themselves about
proposed or executed repairs and shall afford all proper facilities for
such inspections Provided
that so long as no Event of Default has occurred and is continuing
at the relevant time and a Ship is found to be in a satisfactory condition
(in the opinion of the Security Trustee) the Borrower shall be obliged to
pay the fees and expenses of one inspection of that Ship in any calendar
year; and
|
41
|
(b)
|
if
any survey report for a Target Ship (as referred to at paragraph 5 of
Schedule 4, Part C) indicates that the Ship is not in a satisfactory
condition (in the sole discretion of the
Agent):
|
|
|
(i)
|
the
necessary improvements shall be made to the Ship by no later than the date
falling 180 days after the date of the survey report so that the Ship is
in a condition satisfactory to the Agent;
and
|
|
|
(ii)
|
there
shall be sent to the Agent within 5 Business Days after receipt by the
Agent of the survey report for the Ship referred to at paragraph 5 of
Schedule 4, Part C an estimate of the costs required to improve the
condition of the Ship and the Borrower shall within 20 Business Days of
providing such estimate to the Agent deposit in an account with the Agent
an amount equal to the estimated costs to improve the condition of the
Ship and such deposit shall only be applied in meeting the improvement
costs.
|
|
14.9
|
Prevention of and release from
arrest. The Borrower shall procure that each Owner shall
promptly discharge:
|
|
(a)
|
all
liabilities which give or may give rise to maritime or possessory liens on
or claims enforceable against the Ship owned by it, her Earnings or her
Insurances;
|
|
(b)
|
all
taxes, dues and other amounts charged in respect of the Ship, her Earnings
or her Insurances; and
|
|
(c)
|
all
other outgoings whatsoever in respect of the Ship, her Earnings or her
Insurances
|
and,
forthwith upon receiving notice of the arrest of the Ship, or of her detention
in exercise or purported exercise of any lien or claim, the relevant Owner shall
forthwith procure her release by providing bail or otherwise as the
circumstances may require.
|
14.10
|
Compliance with laws
etc. The Borrower shall procure that each Owner and the
Approved Manager shall:
|
|
(a)
|
comply,
or procure compliance with the ISM Code, the ISPS Code, all Environmental
Laws and all other laws or regulations relating to the Ship owned by the
relevant Owner, its ownership, operation and management or to the business
of that Owner;
|
|
(b)
|
not
employ the Ship nor allow her employment in any manner contrary to any law
or regulation in any relevant jurisdiction including but not limited to
the ISM Code and the ISPS Code; and
|
|
(c)
|
in
the event of hostilities in any part of the world (whether war is declared
or not), not cause or permit the Ship to enter or trade to any zone which
is declared a war zone by any government or by the Ship’s war risks
insurers unless the prior written consent of the Majority Lenders has been
given and the Owner has (at its expense) effected any special, additional
or modified insurance cover which the Majority Lenders may
require.
|
|
14.11
|
Provision of
information. The Borrower shall procure that each Owner
shall promptly provide the Security Trustee with any information which the
Majority Lenders request regarding:
|
|
(a)
|
the
Ship owned by it, her employment, position and
engagements;
|
|
(b)
|
the
Earnings and payments and amounts due to the master and crew of the Ship
owned by it;
|
42
|
(c)
|
any
expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship owned by it and any payments
made in respect of that Ship;
|
|
(d)
|
any
towages and salvages;
|
|
(e)
|
its
compliance or the compliance of the Ship owned by it with the ISM Code and
the ISPS Code,
|
and, upon
the Security Trustee’s request, provide copies of any current charter relating
to the Ship and of any current charter guarantee, and copies of the ISM Code
Documentation and the ISPS Code Documentation.
|
14.12
|
Notification of certain
events. The Borrower shall procure that each Owner shall
immediately notify the Security Trustee by letter
of:
|
|
(a)
|
any
casualty which is or is likely to be or to become a Major
Casualty;
|
|
(b)
|
any
occurrence as a result of which the Ship owned by it has become or is, by
the passing of time or otherwise, likely to become a Total
Loss;
|
|
(c)
|
any
requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
|
|
(d)
|
any
arrest or detention of the Ship owned by it, any exercise or purported
exercise of any lien on that Ship or her Earnings or any requisition of
that Ship for hire;
|
|
(e)
|
any
intended dry docking of the Ship;
|
|
(f)
|
any
Environmental Claim made against that Owner or in connection with the Ship
owned by it, or any Environmental
Incident;
|
|
(g)
|
any
claim for breach of the ISM Code or the ISPS Code being made against the
Owner, the Approved Manager or otherwise in connection with the Ship owned
by it; or
|
|
(h)
|
any
other matter, event or incident, actual or threatened, the effect of which
will or could lead to the ISM Code or the ISPS Code not being complied
with
|
and the
Borrower shall keep the Security Trustee advised in writing on a regular basis
and in such detail as the Security Trustee shall require of the Owner’s, the
Approved Manager’s or any other person’s response to any of those
events or matters.
|
14.13
|
Restrictions on chartering,
appointment of managers etc. The Borrower shall procure
that no Owner shall:
|
|
(a)
|
change
the terms on which the Ship is employed or the identity of the person by
whom the Ship is employed;
|
|
(b)
|
enter
into any charter in relation to the Ship under which more than 2 months’
hire (or the equivalent) is payable in
advance;
|
|
(c)
|
charter
the Ship otherwise than on bona fide arm’s length terms at the time when
the Ship is fixed;
|
|
(d)
|
appoint
a manager of the Ship other than the Approved Manager or agree to any
alteration to the terms of the Approved Manager’s
appointment;
|
|
(e)
|
de-activate
or lay up the Ship; or
|
43
|
(f)
|
put
the Ship into the possession of any person for the purpose of work being
done upon her in an amount exceeding or likely to exceed $500,000 (or the
equivalent in any other currency) unless that person has first given to
the Security Trustee and in terms satisfactory to it a written undertaking
not to exercise any lien on the Ship or her Earnings for the cost of such
work or otherwise.
|
|
14.14
|
Notice of
Mortgage. The Borrower shall procure that each Owner
shall keep the Mortgage applicable to the Ship owned by it registered
against that Ship as a valid first priority or first preferred mortgage,
carry on board that Ship a certified copy of the Mortgage and place and
maintain in a conspicuous place in the navigation room and the Master’s
cabin of that Ship a framed printed notice stating that that Ship is
mortgaged by the relevant Owner to the Security
Trustee.
|
|
14.15
|
Sharing of
Earnings. The Borrower shall procure that no Owner
shall:
|
|
(a)
|
enter
into any agreement or arrangement for the sharing of any
Earnings;
|
|
(b)
|
enter
into any agreement or arrangement for the postponement of any date on
which any Earnings are due; the reduction of the amount of any Earnings or
otherwise for the release or adverse alteration of any right of that Owner
to any Earnings; or
|
|
(c)
|
enter
into any agreement or arrangement for the release of, or adverse
alteration to, any guarantee or Security Interest relating to any
Earnings.
|
|
14.16
|
Charterparty
Assignment. If any Owner enters into any bareboat
charter or any time charterparty or other contract of employment for a
term which exceeds or is capable of exceeding 11 months in respect of its
Ship that Owner shall, at the request of the Agent, execute, or, as the
case may be, procure the execution in favour of the Security Trustee of a
Charterparty Assignment in respect of that charter or other contract of
employment, and shall deliver to the Agent such other documents equivalent
to those referred to at paragraphs 3, 4 and 5 of Schedule 4, Part A as the
Agent may require.
|
|
15
|
SECURITY
COVER
|
|
15.1
|
Provision of additional
security cover; prepayment of Loan. The Borrower
undertakes with each Creditor Party that if the Agent notifies the
Borrower that:
|
|
(a)
|
the
aggregate Market Value of the Ships subject to a Mortgage;
plus
|
|
(b)
|
the
net realisable value of any additional security previously provided under
this Clause 15;
|
is below
the Relevant Percentage. of the Loan, the Borrower will on the first Business
Day after the date on which the Agent’s notice is served prepay in accordance
with Clause 8 such part (at least) of the Loan as will eliminate the
shortfall.
If the
Borrower satisfies the Majority Lenders that it is unable to make the prepayment
of the Loan required pursuant to this Clause 15.1, the Agent (acting upon the
instructions of the Majority Lenders) may (in its sole and absolute discretion)
agree instead to accept within 14 days after the date on which its notice is
served, additional security from the Borrower or a third party which, in the
opinion of the Majority Lenders, has a net realisable value at least equal to
the shortfall and which, if it consists of or includes a Security Interest,
covers such asset or assets and is documented in such terms as the Agent may,
with authorisation from the Majority Lenders, approve or require.
In this
Clause 15.1, “Relevant
Percentage” means (i) on any Dividend Declaration Date, 145 per cent. and
(ii) at any other time, 140 per cent.
44
| 15.2 | Meaning of additional security. In Clause 15.1 “security” means a Security Interest over an asset or assets (including, without limitation a vessel (other than a Ship)) (whether securing the Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit, cash deposit or other security acceptable to the Majority Lenders (in their sole and absolute discretion) in respect of the Borrower’s liabilities under the Finance Documents. |
|
15.3
|
Requirement for additional
documents. The Borrower shall not be deemed to have
complied with Clause 15.1 above until the Agent has received in connection
with the additional security certified copies of documents of the kinds
referred to in paragraphs 3, 4 and 5 of Schedule 5, Part A and such legal
opinions in terms acceptable to the Majority Lenders from such lawyers as
they may select.
|
|
15.4
|
Valuation of
Ship. The market value of a Ship at any date is that
shown by taking the arithmetic mean of two valuations each
prepared:
|
|
(a)
|
as
at a date not more than 30 days
previously;
|
|
(b)
|
in
the case of the first valuation, by an Approved Broker appointed by the
Borrower and, in the case of the second valuation, by an Approved Broker
appointed by the Agent;
|
|
(c)
|
with
or without physical inspection of the Ship (as the Agent may
require);
|
|
(d)
|
on
the basis of a sale for prompt delivery for cash on normal arm’s length
commercial terms as between a willing seller and a willing buyer, free of
any existing charter or other contract of employment;
and
|
|
(e)
|
after
deducting the estimated amount of the usual and reasonable expenses which
would be incurred in connection with the
sale,
|
Provided that if
the two valuations provided pursuant to this Clause 15.4 differ by more than 15
per cent., a third valuation shall be obtained from a third Approved Broker
appointed by the Agent and prepared on the basis described in paragraphs (a),
(c), (d) and (e) of this Clause 15.4 and the Market Value of the relevant Ship
which is the subject of the third valuation shall be the arithmetic mean of the
three valuations obtained pursuant to this Clause 15.4.
|
15.5
|
Value of additional
security. The net realisable value of any additional
security which is provided under Clause 15.1 and which consists of a
Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause
15.4.
|
|
15.6
|
Valuations
binding. Any valuation under Clause 15.1(i), 15.4 or
15.5 shall be binding and conclusive as regards the Borrower, as shall be
any valuation which the Majority Lenders make of a security which does not
consist of or include a Security
Interest.
|
|
15.7
|
Provision of
information. The Borrower shall promptly provide the
Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5
with any information which the Agent or the Approved Broker or expert may
request for the purposes of the valuation; and, if the Borrower fails to
provide the information by the date specified in the request, the
valuation may be made on any basis and assumptions which the Approved
Broker or the Majority Lenders (or the expert appointed by them) consider
prudent.
|
|
15.8
|
Payment of valuation
expenses. Without prejudice to the generality of the
Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower
shall, on demand, pay the Agent the amount of the fees and expenses of any
Approved Broker instructed by the Agent under this
Clause.
|
45
|
16
|
PAYMENTS
AND CALCULATIONS
|
|
16.1
|
Currency and method of
payments. All payments to be
made:
|
|
(a)
|
by
the Lenders to the Agent; or
|
|
(b)
|
by
the Borrower to the Agent, the Security Trustee or any
Lender
|
under a
Finance Document shall be made to the Agent or to the Security Trustee, in the
case of an amount payable to it:
|
|
(i)
|
by
not later than 11.00 a.m. (New York City time) on the due
date;
|
|
|
(ii)
|
in
same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Agent shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement);
|
|
|
(iii)
|
to
the account designated “Paragon financing account” with Xxxxxxxxxxx XX,
Xxxxxxx Branch (Account No. 620346700USD; SWIFT Code: XXXXXXXX000 via
correspondent bank Commerzbank AG, New York COBAUS3XX) under reference
“Paragon Shipping Inc. - US$250 million facility”), or to such other
account with such other bank as the Agent may from time to time notify to
the Borrower and the other Creditor Parties;
and
|
|
|
(iv)
|
in
the case of an amount payable to the Security Trustee, to such account as
it may from time to time notify to the Borrower and the other Creditor
Parties.
|
|
16.2
|
Payment on non-Business
Day. If any payment by the Borrower under a Finance
Document would otherwise fall due on a day which is not a Business
Day:
|
|
(a)
|
the
due date shall be extended to the next succeeding Business Day;
or
|
|
(b)
|
if
the next succeeding Business Day falls in the next calendar month, the due
date shall be brought forward to the immediately preceding Business
Day
|
and
interest shall be payable during any extension under paragraph (a) at the rate
payable on the original due date.
|
16.3
|
Basis for calculation of
periodic payments. All interest and commitment fee and
any other payments under any Finance Document which are of an annual or
periodic nature shall accrue from day to day and shall be calculated on
the basis of the actual number of days elapsed and a 360 day
year.
|
|
16.4
|
Distribution of payments to
Creditor Parties. Subject to Clauses 16.5, 16.6 and
16.7:
|
|
(a)
|
any
amount received by the Agent under a Finance Document for distribution or
remittance to a Lender, the Swap Bank or the Security Trustee shall be
made available by the Agent to that Lender or, as the case may be, the
Swap Bank or the Security Trustee by payment, with funds having the same
value as the funds received, to such account as the Lender, the Swap Bank
or the Security Trustee may have notified to the Agent not less than 5
Business Days previously; and
|
|
(b)
|
amounts
to be applied in satisfying amounts of a particular category which are due
to the Lenders or the Swap Bank generally shall be distributed by the
Agent to each Lender or the Swap Bank pro rata to the amount in that
category which is due to it.
|
46
|
16.5
|
Permitted deductions by
Agent. Notwithstanding any other provision of this
Agreement or any other Finance Document, the Agent may, before making an
amount available to a Lender or the Swap Bank, deduct and withhold from
that amount any sum which is then due and payable to the Agent from that
Lender or the Swap Bank under any Finance Document or any sum which the
Agent is then entitled under any Finance Document to require that Lender
or the Swap Bank to pay on demand.
|
|
16.6
|
Agent only obliged to pay when
monies received. Notwithstanding any other provision of
this Agreement or any other Finance Document, the Agent shall not be
obliged to make available to the Borrower or any Lender or the Swap Bank
any sum which the Agent is expecting to receive for remittance or
distribution to the Borrower or that Lender or the Swap Bank until the
Agent has satisfied itself that it has received that
sum.
|
|
16.7
|
Refund to Agent of monies not
received. If and to the extent that the Agent makes
available a sum to the Borrower or a Lender or the Swap Bank, without
first having received that sum, the Borrower or (as the case may be) the
Lender or the Swap Bank concerned shall, on
demand:
|
|
(a)
|
refund
the sum in full to the Agent; and
|
|
(b)
|
pay
to the Agent the amount (as certified by the Agent) which will indemnify
the Agent against any funding or other loss, liability or expense incurred
by the Agent as a result of making the sum available before receiving
it.
|
|
16.8
|
Agent may assume
receipt. Clause 16.7 shall not affect any claim which
the Agent has under the law of restitution, and applies irrespective of
whether the Agent had any form of notice that it had not received the sum
which it made available.
|
|
16.9
|
Creditor Party
accounts. Each Creditor Party shall maintain accounts
showing the amounts owing to it by the Borrower and each Security Party
under the Finance Documents and all payments in respect of those amounts
made by the Borrower and any Security
Party.
|
|
16.10
|
Agent’s memorandum
account. The Agent shall maintain a memorandum account
showing the amounts advanced by the Lenders and all other sums owing to
the Agent, the Security Trustee and each Lender from the Borrower and each
Security Party under the Finance Documents and all payments in respect of
those amounts made by the Borrower and any Security
Party.
|
|
16.11
|
Accounts prima facie
evidence. If any accounts maintained under Clauses 16.9
and 16.10 show an amount to be owing by the Borrower or a Security Party
to a Creditor Party, those accounts shall, absent manifest error, be prima
facie evidence that that amount is owing to that Creditor
Party.
|
|
17
|
APPLICATION
OF RECEIPTS
|
|
17.1
|
Normal order of
application. Except as any Finance Document may
otherwise provide, any sums which are received or recovered by any
Creditor Party under or by virtue of any Finance Document shall be
applied:
|
|
(a)
|
FIRST:
in or towards satisfaction of any amounts then due and payable under the
Finance Documents and the Master Agreement in the following order and
proportions:
|
|
|
(i)
|
first,
in or towards satisfaction pro rata of all amounts then due and payable to
the Creditor Parties under the Finance Documents other than those amounts
referred to at paragraphs (ii) and (iii) (including, but without
limitation, all amounts payable by the Borrower under Clauses 20, 21 and
22 of this Agreement or by the Borrower
or any Security Party under any corresponding or similar provision in any
other Finance Document or in the Master
Agreement);
|
47
|
|
(ii)
|
secondly,
in or towards satisfaction pro rata of any and all amounts of interest or
default interest payable to the Creditor Parties under the Finance
Documents and the Master Agreement (and, for this purpose, the
expression “interest” shall include
any net amount which the Borrower shall have become liable to pay or
deliver under section 2(e) (Obligations) of the Master Agreement but shall
have failed to pay or deliver to the relevant Swap Bank at the time of
application or distribution under this Clause 17);
and
|
|
|
(iii)
|
thirdly,
in or towards satisfaction pro rata of the Loan and the Swap Exposure of
the Swap Bank (in the case of the latter, calculated as at the actual
Early Termination Date applying to each particular Designated Transaction,
or if no such Early Termination Date shall have occurred, calculated as if
an Early Termination Date occurred on the date of application or
distribution hereunder);
|
|
(b)
|
SECONDLY:
in retention of an amount equal to any amount not then due and payable
under any Finance Document or the Master Agreement but which the Agent, by
notice to the Borrower, the Security Parties and the other Creditor
Parties, states in its opinion will or may become due and payable in the
future and, upon those amounts becoming due and payable, in or towards
satisfaction of them in accordance with the provisions of Clause 17.1(a);
and
|
|
(c)
|
THIRDLY:
any surplus shall be paid to the Borrower or to any other person appearing
to be entitled to it.
|
|
17.2
|
Variation of order of
application. The Agent may, with the authorisation of
the Majority Lenders and the Swap Bank by notice to the Borrower, the
Security Parties and the other Creditor Parties provide for a different
manner of application from that set out in Clause 17.1 either as regards a
specified sum or sums or as regards sums in a specified category or
categories.
|
|
17.3
|
Notice of variation of order of
application. The Agent may give notices under Clause
17.2 from time to time; and such a notice may be stated to apply not only
to sums which may be received or recovered in the future, but also to any
sum which has been received or recovered on or after the third Business
Day before the date on which the notice is
served.
|
|
17.4
|
Appropriation rights
overridden. This Clause 17 and any notice which the
Agent gives under Clause 17.3 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or any Security
Party.
|
|
18
|
APPLICATION
OF EARNINGS
|
|
18.1
|
Payment of
Earnings. The Borrower undertakes with each Creditor
Party to ensure that throughout the Security Period (subject only to
provisions of the relevant General Assignment), all the Earnings of each
Ship are paid to the Earnings Account for that
Ship.
|
|
18.2
|
Transfers to Retention
Account. The Borrower undertakes with each Creditor
Party to ensure that:
|
|
(a)
|
no
later than 3 days after a Relevant Dividend Declaration Date, there shall
be transferred to the Retention Account out of the aggregate Earnings
received in the Earnings Accounts, the repayment instalment falling due
under Clause 8.1 at that time; and
|
|
(b)
|
in
each calendar month of the Security Period commencing on the date falling
1 month after the first Drawdown Date and on the same day in each
subsequent month, there is
|
48
|
|
transferred
to the Retention Account out of the aggregate Earnings received in the
Earnings Accounts during the preceding calendar month the relevant
fraction of the amount of interest on the Loan which is payable on the
next due date for payment of interest for the Loan under this
Agreement.
|
The
“relevant fraction” in
paragraph (b) above, is a fraction of which the numerator is 1 and the
denominator the number of months comprised in the then current Interest Period
applicable to the Loan (or, if the current Interest Period ends after the next
date for payment of interest under this Agreement, the number of months from the
later of the commencement of the current Interest Period or the last due date
for payment of interest to the next date for payment of interest under this
Agreement).
|
18.3
|
Shortfall in
Earnings. If the aggregate Earnings received are
insufficient in any month for the required amount to be transferred to the
Retention Account under Clause 18.2, the Borrower shall make up the amount
of the insufficiency on demand from the Agent; but, without thereby
prejudicing the Agent’s right to make such demand at any time, the Agent
may, if so authorised by the Majority Lenders, permit the Borrower to make
up all or part of the insufficiency by increasing the amount of any
transfer under Clause 18.2 from the Earnings received in the next or
subsequent months.
|
|
18.4
|
Application of
retentions. Until an Event of Default occurs, the Agent
shall on each due date for the payment of interest under this Agreement
distribute to the Lenders in accordance with Clause 16.4 so much of the
then balance on the Retention Account as
equals:
|
|
(a)
|
any
repayment instalment due in accordance with Clause 8.1 on that interest
payment date; and
|
|
(b)
|
the
amount of interest payable on that interest payment
date
|
|
|
in
discharge of the Borrower’s liability for that repayment instalment or
that interest.
|
|
18.5
|
Interest accrued on Retention
Account. Any credit balance on the Retention Account
shall bear interest at the rate from time to time offered by the Agent to
its customers for Dollar deposits of similar amounts and for periods
similar to those for which such balances appear to the Agent likely to
remain on the Retention Account.
|
|
18.6
|
Release of accrued
interest. Interest accruing under Clause 18.5 shall be
released to the Borrower on each interest payment date unless an Event of
Default or a Potential Event of Default has occurred or the then credit
balance on the Retention Account is less than what would have been the
balance had the full amount required by Clause 18.2 (and Clause 18.3, if
applicable) been transferred in that and each previous
month.
|
|
18.7
|
Location of
accounts. The Borrower shall
promptly:
|
|
(a)
|
comply,
and ensure that the Owners comply, with any requirement of the Agent as to
the location or re-location of any Earnings Account or the Retention
Account;
|
|
(b)
|
execute,
and ensure that the Owners 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 Earnings Accounts (or any of them) and the
Retention Account.
|
|
18.8
|
Debits for expenses
etc. The Agent shall be authorised by the Borrower (but
not obliged) from time to time to debit the Earnings Account without prior
notice in order to discharge any amount due and payable under Clause 20 or
21 to a Creditor Party or payment of which any Creditor Party has become
entitled to demand under Clause 20 or
21.
|
49
|
18.9
|
Borrower’ obligations
unaffected. The provisions of this Clause 18 do not
affect:
|
|
(a)
|
the
liability of the Borrower to make payments of principal and interest on
the due dates; or
|
|
(b)
|
any
other liability or obligation of the Borrower or any Security Party under
any Finance Document.
|
|
18.10
|
Epic
Account. The Owners may from time to time transfer
credit balances on the Earnings Accounts to the Epic Account subject to
the Borrower being in compliance with its obligations under this Agreement
(including, without limitation, Clause
18.2).
|
|
19
|
EVENTS
OF DEFAULT
|
|
19.1
|
Events of
Default. An Event of Default occurs
if:
|
|
(a)
|
the
Borrower or any Security Party fails to pay when due or (if so payable) on
demand any sum payable under a Finance Document or under any document
relating to a Finance Document; or
|
|
(b)
|
any
breach occurs of Clause 9.2, 11.2, 11.3, 11.4, 11.6, 11.7, 12.2, 12.3,
12.4, 12.5, 12.8, 12.9, 13.2, 15.1 or 18.1;
or
|
|
(c)
|
any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach covered by paragraphs (a) or (b)
above) if, in the opinion of the Majority Lenders, such default is capable
of remedy, and such default continues unremedied 10 days after written
notice from the Agent requesting action to remedy the same;
or
|
|
(d)
|
(subject
to any applicable grace period specified in the Finance Document) any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach covered by paragraphs (a), (b) or
(c) above); or
|
|
(e)
|
any
representation, warranty or statement made by, or by an officer of, the
Borrower or a Security Party in a Finance Document or in a Drawdown Notice
or any other notice or document relating to a Finance Document is untrue
or misleading when it is made; or
|
|
(f)
|
any
of the following occurs in relation to any Financial Indebtedness of a
Relevant Person:
|
|
|
(i)
|
any
Financial Indebtedness of a Relevant Person is not paid when due or, if so
payable, on demand; or
|
|
|
(ii)
|
any
Financial Indebtedness of a Relevant Person becomes due and payable or
capable of being declared due and payable prior to its stated maturity
date as a consequence of any event of default;
or
|
|
|
(iii)
|
a
lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or owner or
becomes capable of being terminated as a consequence of any termination
event; or
|
|
|
(iv)
|
any
overdraft, loan, note issuance, acceptance credit, letter of credit,
guarantee, foreign exchange or other facility, or any swap or other
derivative contract or transaction, relating to any Financial Indebtedness
of a Relevant Person ceases to be available or becomes capable of being
terminated as a result of any event of default, or cash cover is required,
or becomes capable of being required, in respect of such a facility as a
result of any event of default; or
|
50
|
|
(v)
|
any
Security Interest securing any Financial Indebtedness of a Relevant Person
becomes enforceable; or
|
|
(g)
|
any
of the following occurs in relation to a Relevant
Person:
|
|
|
(i)
|
a
Relevant Person becomes, in the opinion of the Majority Lenders, unable to
pay its debts as they fall due; or
|
|
|
(ii)
|
any
assets of a Relevant Person are subject to any form of execution,
attachment, arrest, sequestration or distress in respect of a sum of, or
sums aggregating, $100,000 or more or the equivalent in another currency;
or
|
|
|
(iii)
|
any
administrative or other receiver is appointed over any asset of a Relevant
Person; or
|
|
|
(iv)
|
a
Relevant Person makes any formal declaration of bankruptcy or any formal
statement to the effect that it is insolvent or likely to become
insolvent, or a winding up or administration order is made in relation to
a Relevant Person, or the members or directors of a Relevant Person pass a
resolution to the effect that it should be wound up, placed in
administration or cease to carry on business, save that this paragraph
does not apply to a fully solvent winding up of a Relevant Person other
than the Borrower which is, or is to be, effected for the purposes of an
amalgamation or reconstruction previously approved by the Majority Lenders
and effected not later than 3 months after the commencement of the winding
up; or
|
|
|
(v)
|
a
petition is presented in any Pertinent Jurisdiction for the winding up or
administration, or the appointment of a provisional liquidator, of a
Relevant Person unless the petition is being contested in good faith and
on substantial grounds and is dismissed or withdrawn within 30 days of the
presentation of the petition; or
|
|
|
(vi)
|
a
Relevant Person petitions a court, or presents any proposal for, any form
of judicial or non-judicial suspension or deferral of payments,
reorganisation of its debt (or certain of its debt) or arrangement with
all or a substantial proportion (by number or value) of its creditors or
of any class of them or any such suspension or deferral of payments,
reorganisation or arrangement is effected by court order, contract or
otherwise; or
|
|
|
(vii)
|
any
meeting of the members or directors of a Relevant Person is summoned for
the purpose of considering a resolution or proposal to authorise or take
any action of a type described in paragraphs (iii), (iv), (v) or (vi)
above; or
|
|
(viii)
|
in
a Pertinent Jurisdiction other than England, any event occurs or any
procedure is commenced which, in the opinion of the Majority Lenders, is
similar to any of the foregoing; or
|
|
(h)
|
the
Borrower or any Security Party ceases or suspends carrying on or changes
the nature of its business or a part of its business which, in the opinion
of the Majority Lenders, is material in the context of this Agreement;
or
|
|
(i)
|
it
becomes unlawful in any Pertinent Jurisdiction or
impossible:
|
|
|
(i)
|
for
the Borrower or any Security Party to discharge any liability under a
Finance Document or to comply with any other obligation which the Majority
Lenders consider material under a Finance Document;
or
|
51
|
|
(ii)
|
for
the Agent, the Security Trustee or the Lenders to exercise or enforce any
right under, or to enforce any Security Interest created by, a Finance
Document; or
|
|
(j)
|
any
consent necessary to enable any Owner to own, operate or charter a Ship or
to enable the Borrower or any Security Party to comply with any provision
which the Majority Lenders consider material of a Finance Document is not
granted, expires without being renewed, is revoked or becomes liable to
revocation or any condition of such a consent is not fulfilled;
or
|
|
(k)
|
without
the prior written consent of the Majority Lenders, a change has occurred
or probably has occurred after the date of this Agreement in the ownership
of any of the shares in any Owner or in the ultimate control of the voting
rights attaching to any of those shares;
or
|
|
(l)
|
any
provision which the Majority Lenders consider material of a Finance
Document proves to have been or becomes invalid or unenforceable, or a
Security Interest created by a Finance Document proves to have been or
becomes invalid or unenforceable or such a Security Interest proves to
have ranked after, or loses its priority to, another Security Interest or
any other third party claim or interest;
or
|
|
(m)
|
the
security constituted by a Finance Document is in any way imperilled or in
jeopardy;
|
|
(n)
|
any
other event occurs or any other circumstances arise or develop including,
without limitation:
|
|
|
(i)
|
a
change in the financial position, state of affairs or prospects of any
Security Party; or
|
|
|
(ii)
|
any
accident or other event involving any Ship or another vessel owned,
chartered or operated by a Relevant
Person;
|
in the
light of which the Majority Lenders consider that there is a significant risk
that the Borrower or any Security Party is, or will later become, unable to
discharge its liabilities under the Finance Documents as they fall due;
or
|
(o)
|
the
Master Agreement is terminated, cancelled, suspended, rescinded or revoked
or otherwise ceases to remain in full force and effect for any reason
except with the consent of the Agent, acting with the authorisation of the
Majority Lenders.
|
|
19.2
|
Actions following an Event of
Default. On, or at any time after, the occurrence of an
Event of Default:
|
|
(a)
|
the
Agent may, and if so instructed by the Majority Lenders, the Agent
shall:
|
|
|
(i)
|
serve
on the Borrower a notice stating that the Commitments and all other
obligations of each Lender to the Borrower under this Agreement are
terminated; and/or
|
|
|
(ii)
|
serve
on the Borrower a notice stating that the Loan, all accrued interest and
all other amounts accrued or owing under this Agreement are immediately
due and payable or are due and payable on demand;
and/or
|
|
|
(iii)
|
take
any other action which, as a result of the Event of Default or any notice
served under paragraph (i) or (ii) above, the Agent and/or the Lenders are
entitled to take under any Finance Document or any applicable law;
and/or
|
|
(b)
|
the
Security Trustee may, and if so instructed by the Agent, acting with the
authorisation of the Majority Lenders, the Security Trustee shall take any
action which, as a result of
|
52
|
|
the
Event of Default or any notice served under paragraph (a) (i) or (ii)
above, the Security Trustee, the Agent and/or the Lenders are entitled to
take under any Finance Document or any applicable
law.
|
|
19.3
|
Termination of
Commitments. On the service of a notice under paragraph
(a)(i) of Clause 19.2, the Commitments and all other obligations of each
Lender to the Borrower under this Agreement shall
terminate.
|
|
19.4
|
Acceleration of
Loan. On the service of a notice under paragraph (a)(ii)
of Clause 19.2, the Loan, all accrued interest and all other amounts
accrued or owing from the Borrower or any Security Party under this
Agreement and every other Finance Document shall become immediately due
and payable or, as the case may be, payable on
demand.
|
|
19.5
|
Multiple notices; action
without notice. The Agent may serve notices under
paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different
dates and it and/or the Security Trustee may take any action referred to
in that Clause if no such notice is served or simultaneously with or at
any time after the service of both or either of such
notices.
|
|
19.6
|
Notification of Creditor
Parties and Security Parties. The Agent shall send to
each Lender, the Security Trustee and each Security Party a copy of the
text of any notice which the Agent serves on the Borrower under Clause
19.2; but the notice shall become effective when it is served on the
Borrower, and no failure or delay by the Agent to send a copy of the text
of the notice to any other person shall invalidate the notice or provide
the Borrower or any Security Party with any form of claim or
defence.
|
|
19.7
|
Lender’s rights
unimpaired. Nothing in this Clause shall be taken to
impair or restrict the exercise of any right given to individual Lenders
under a Finance Document or the general law; and, in particular, this
Clause is without prejudice to Clause
3.1.
|
|
19.8
|
Exclusion of Creditor Party
Liability. No Creditor Party, and no receiver or manager
appointed by the Security Trustee, shall have any liability to the
Borrower or a Security Party:
|
|
(a)
|
for
any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or
delay to exercise such a right or to enforce such a Security Interest;
or
|
|
(b)
|
as
mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in
such a Security Interest or for any reduction (however caused) in the
value of such an asset;
|
except
that this does not exempt a Creditor Party or a receiver or manager from
liability for losses shown to have been caused by the gross negligence or the
wilful misconduct of such Creditor Party’s own officers and employees or (as the
case may be) such receiver’s or manager’s own partners or
employees.
|
19.9
|
Relevant
Persons. In this Clause 19 “a Relevant Person” means
the Borrower, a Security Party and any other member of the Group; but
excluding any company which is dormant and the value of whose gross assets
is $50,000 or less.
|
|
19.10
|
Interpretation. In
Clause 19.1(f) references to an event of default or a termination event
include any event, howsoever described, which is similar to an event of
default in a facility agreement or a termination event in a finance lease;
and in Clause 19.1(g) “petition” includes an
application.
|
|
19.11
|
Position of the Swap
Bank. Neither the Agent nor the Security Trustee shall
be obliged, in connection with any action taken or proposed to be taken
under or pursuant to the
|
53
|
|
foregoing
provisions of this Clause 19, to have any regard to the requirements of
the Swap Bank except to the extent that the Swap Bank is also a
Lender.
|
|
20
|
FEES
AND EXPENSES
|
|
20.1
|
Facility and commitment
fees. The Borrower shall pay to the
Agent:
|
|
(a)
|
a
commitment fee for distribution among the Lenders pro rata to their
Commitments at the rate of 0.25 per cent. per annum on the amount of the
Total Commitments less the amount of the Loan for the period from (and
including) the date of this Agreement up to and including the earlier of
(i) the Drawdown Date in respect of the final Advance and (ii) the last
day of the Availability Period, such fee to be paid quarterly in arrears
and on the last day of such period;
and
|
|
(b)
|
such
other facility fees as are referred to in the Fee Letter, such fees being
payable at the times and in the manner referred to in the Fee
Letter.
|
|
20.2
|
Costs of negotiation,
preparation etc. The Borrower shall pay to the Agent on
its demand the amount of all expenses incurred by the Agent or the
Security Trustee in connection with the negotiation, preparation,
execution or registration of any Finance Document or any related document
or with any transaction contemplated by a Finance Document or a related
document (including, without limitation, any legal fees (which shall
include, for the avoidance of doubt, the fees incurred by the Agent with
respect to the legal opinions referred to in Schedule 4) or out of pocket
expenses and printing expenses).
|
|
20.3
|
Costs of variations,
amendments, enforcement etc. The Borrower shall pay to
the Agent, on the Agent’s demand, the amount of all expenses (including,
without limitation, any legal fees or expenses) incurred by a Lender in
connection with:
|
|
(a)
|
any
amendment or supplement to a Finance Document, or any proposal for such an
amendment to be made;
|
|
(b)
|
any
consent or waiver by the Lenders, the Majority Lenders or the Lender
concerned under or in connection with a Finance Document, or any request
for such a consent or waiver;
|
|
(c)
|
the
valuation of any security provided or offered under Clause 15 or any other
matter relating to such security;
|
|
(d)
|
such
circumstances where the Agent, in its absolute opinion, considers that
there has been a material change to the insurances in respect of a Ship,
the review of the insurances of that Ship pursuant to Clause
13.18;
|
|
(e)
|
any
step taken by the Lender concerned or the Swap Bank concerned with a view
to the protection, exercise or enforcement of any right or Security
Interest created by a Finance Document or for any similar
purpose.
|
There
shall be recoverable under paragraph (e) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any taxation or
other procedure carried out under such rules.
|
20.4
|
Documentary
taxes. The Borrower shall promptly pay any tax payable
on or by reference to any Finance Document, and shall, on the Agent’s
demand, fully indemnify each Creditor Party against any liabilities and
expenses resulting from any failure or delay by the Borrower to pay such a
tax.
|
54
|
20.5
|
Certification of
amounts. A notice which is signed by two officers of a
Creditor Party, which states that a specified amount, or aggregate amount,
is due to that Creditor Party under this Clause 20 and which indicates
(without necessarily specifying a detailed breakdown) the matters in
respect of which the amount, or aggregate amount, is due shall be prima
facie evidence that the amount, or aggregate amount, is
due.
|
|
21
|
INDEMNITIES
|
|
21.1
|
Indemnities regarding borrowing
and repayment of Loan. The Borrower shall fully
indemnify the Agent and each Lender on the Agent’s demand and the Security
Trustee on its demand in respect of all expenses, liabilities and losses
which are incurred by that Creditor Party, or which that Creditor Party
reasonably and with due diligence estimates that it will incur, as a
result of or in connection with:
|
|
(a)
|
an
Advance not being borrowed on the date specified in the Drawdown Notice
for that Advance for any reason other than a default by the Lender
claiming the indemnity;
|
|
(b)
|
the
receipt or recovery of all or any part of the Loan or an overdue sum
otherwise than on the last day of an Interest Period or other relevant
period;
|
|
(c)
|
any
failure (for whatever reason) by the Borrower to make payment of any
amount due under a Finance Document on the due date or, if so payable, on
demand (after giving credit for any default interest paid by the Borrower
on the amount concerned under Clause
7);
|
|
(d)
|
the
occurrence and/or continuance of an Event of Default or a Potential Event
of Default and/or the acceleration of repayment of the Loan under Clause
19;
|
and in
respect of any tax (other than tax on its overall net income) for which a
Creditor Party is liable in connection with any amount paid or payable to that
Creditor Party (whether for its own account or otherwise) under any Finance
Document.
|
21.2
|
Breakage
costs. Without limiting its generality, Clause 21.1
covers any liability, expense or loss, including a loss of a prospective
profit, incurred by a Lender:
|
|
(a)
|
in
liquidating or employing deposits from third parties acquired or arranged
to fund or maintain all or any part of its Contribution and/or any overdue
amount (or an aggregate amount which includes its Contribution or any
overdue amount); and
|
|
(b)
|
in
terminating, or otherwise in connection with, any interest and/or currency
swap or any other transaction entered into (whether with another legal
entity or with another office or department of the Lender concerned) to
hedge any exposure arising under this Agreement or that part which the
Lender concerned determines is fairly attributable to this Agreement of
the amount of the liabilities, expenses or losses (including losses of
prospective profits) incurred by it in terminating, or otherwise in
connection with, a number of transactions of which this Agreement is
one.
|
|
21.3
|
Miscellaneous
indemnities. The Borrower shall fully indemnify each
Creditor Party severally on their respective demands in respect of all
claims, demands, proceedings, liabilities, taxes, losses and expenses of
every kind (“liability
items”) which may be made or brought against, or incurred by, the
relevant Creditor Party, in any country, in relation
to:
|
|
(a)
|
any
action taken, or omitted or neglected to be taken, under or in connection
with any Finance Document by the Agent, the Security Trustee or any other
Creditor Party or by any receiver appointed under a Finance
Document;
|
55
|
(b)
|
any
other event, matter or question which occurs or arises at any time during
the Security Period and which has any connection with, or any bearing on,
any Finance Document, any payment or other transaction relating to a
Finance Document or any asset covered (or previously covered) by a
Security Interest created (or intended to be created) by a Finance
Document;
|
other
than liability items which are shown to have been caused by the gross negligence
or the wilful misconduct of the relevant Creditor Party’s own officers or
employees.
|
21.4
|
Extension of indemnities;
environmental indemnity. Without prejudice to its
generality, Clause 21.3 covers:
|
|
(a)
|
any
matter which would be covered by Clause 21.3 if any of the references in
that Clause to a Lender were a reference to the Agent or (as the case may
be) to the Security Trustee; and
|
|
(b)
|
any
liability items which arise, or are asserted, under or in connection with
any law relating to safety at sea, pollution, the protection of the
environment, the ISM Code or the ISPS
Code.
|
|
21.5
|
Currency
indemnity. If any sum due from the Borrower or any
Security Party to a Creditor Party under a Finance Document or under any
order or judgment relating to a Finance Document has to be converted from
the currency in which the Finance Document provided for the sum to be paid
(the “Contractual
Currency”) into another currency (the “Payment Currency”) for
the purpose of:
|
|
(a)
|
making
or lodging any claim or proof against the Borrower or any Security Party,
whether in its liquidation, any arrangement involving it or otherwise;
or
|
|
(b)
|
obtaining
an order or judgment from any court or other tribunal;
or
|
|
(c)
|
enforcing
any such order or judgment;
|
the
Borrower shall indemnify the Creditor Party concerned against the loss arising
when the amount of the payment actually received by that Creditor Party is
converted at the available rate of exchange into the Contractual
Currency.
In this
Clause 21.5, the “available
rate of exchange” means the rate at which the Creditor Party concerned is
able at the opening of business (Hamburg time) on the Business Day after it
receives the sum concerned to purchase the Contractual Currency with the Payment
Currency.
This
Clause 21.5 creates a separate liability of the Borrower which is distinct from
its other liabilities under the Finance Documents and which shall not be merged
in any judgment or order relating to those other liabilities.
|
21.6
|
Certification of
amounts. A notice which is signed by 2 officers of a
Creditor Party, which states that a specified amount, or aggregate amount,
is due to that Creditor Party under this Clause 21 and which indicates
(without necessarily specifying a detailed breakdown) the matters in
respect of which the amount, or aggregate amount, is due shall be prima
facie evidence that the amount, or aggregate amount, is
due.
|
|
21.7
|
Sums deemed due to a
Lender. For the purposes of this Clause 21, a sum
payable by the Borrower to the Agent or the Security Trustee for
distribution to a Lender shall be treated as a sum due to that
Lender.
|
|
21.8
|
Application to Master
Agreement. For the avoidance of doubt, Clause 21.5 does
not apply in respect of sums due from the Borrower to the Swap Bank under
or in connection
|
56
|
|
with
the Master Agreement as to which sums the provisions of section 8
(Contractual Currency) of the Master Agreement shall
apply.
|
|
22
|
NO
SET-OFF OR TAX DEDUCTION
|
|
22.1
|
No
deductions. All amounts due from the Borrower under a
Finance Document shall be paid:
|
|
(a)
|
without
any form of set-off, cross-claim or condition;
and
|
|
(b)
|
free
and clear of any tax deduction except a tax deduction which the Borrower
is required by law to make.
|
|
22.2
|
Grossing-up for
taxes. If the Borrower is required by law to make a tax
deduction from any payment:
|
|
(a)
|
the
Borrower shall notify the Agent as soon as it becomes aware of the
requirement;
|
|
(b)
|
the
Borrower shall pay the tax deducted to the appropriate taxation authority
promptly, and in any event before any fine or penalty
arises;
|
|
(c)
|
the
amount due in respect of the payment shall be increased by the amount
necessary to ensure that each Creditor Party receives and retains (free
from any liability relating to the tax deduction) a net amount which,
after the tax deduction, is equal to the full amount which it would
otherwise have received.
|
|
22.3
|
Evidence of payment of
taxes. Within 1 month after making any tax deduction,
the Borrower concerned shall deliver to the Agent documentary evidence
satisfactory to the Agent that the tax had been paid to the appropriate
taxation authority.
|
|
22.4
|
Exclusion of tax on overall net
income. In this Clause 22 “tax deduction” means any
deduction or withholding for or on account of any present or future tax
except tax on a Creditor Party’s overall net
income.
|
|
22.5
|
Application to the Master
Agreement. For the avoidance of doubt, Clause 22 does
not apply in respect of sums due from the Borrower to the Swap Bank under
or in connection with the Master Agreement as to which sums the provisions
of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement
shall apply.
|
|
23
|
ILLEGALITY,
ETC
|
|
23.1
|
Illegality. This
Clause 23 applies if a Lender (the “Notifying Lender”)
notifies the Agent that it has become, or will with effect from a
specified date, become:
|
|
(a)
|
unlawful
or prohibited as a result of the introduction of a new law, an amendment
to an existing law or a change in the manner in which an existing law is
or will be interpreted or applied;
or
|
|
(b)
|
contrary
to, or inconsistent with, any
regulation,
|
for the
Notifying Lender to maintain or give effect to any of its obligations under this
Agreement in the manner contemplated by this Agreement.
|
23.2
|
Notification of
illegality. The Agent shall promptly notify the
Borrower, the Security Parties, the Security Trustee and the other Lenders
of the notice under Clause 23.1 which the Agent receives from the
Notifying Lender.
|
57
|
23.3
|
Prepayment; termination of
Commitment. On the Agent notifying the Borrower under
Clause 23.2, the Notifying Lender’s Commitment shall terminate; and
thereupon or, if later, on the date specified in the Notifying Lender’s
notice under Clause 23.1 as the date on which the notified event would
become effective the Borrower shall prepay the Notifying Lender’s
Contribution in accordance with Clause
8.
|
|
23.4
|
Mitigation. If
circumstances arise which would result in a notification under
Clause 23.1 then, without in any way limiting the rights of the
Notifying Lender under Clause 23.3, the Notifying Lender shall use
reasonable endeavours to transfer its obligations, liabilities and rights
under this Agreement and the Finance Documents to another office or
financial institution not affected by the circumstances but the Notifying
Lender shall not be under any obligation to take any such action if, in
its opinion, to do would or might:
|
|
(a)
|
have
an adverse effect on its business, operations or financial condition;
or
|
|
(b)
|
involve
it in any activity which is unlawful or prohibited or any activity that is
contrary to, or inconsistent with, any regulation;
or
|
|
(c)
|
involve
it in any expense (unless indemnified to its satisfaction) or tax
disadvantage.
|
|
24
|
INCREASED
COSTS
|
|
24.1
|
Increased
costs. This Clause 24 applies if a Lender (the “Notifying Lender”)
notifies the Agent that the Notifying Lender considers that as a result
of:
|
|
(a)
|
the
introduction or alteration after the date of this Agreement of a law or
regulation or an alteration after the date of this Agreement in the manner
in which a law or regulation is interpreted or applied (disregarding any
effect which relates to the application to payments under this Agreement
of a tax on the Notifying Lender’s overall net income);
or
|
|
(b)
|
the
effect of complying with any law or regulation (including any which
relates to capital adequacy or liquidity controls or which affects the
manner in which the Notifying Lender allocates capital resources to its
obligations under this Agreement (including, without limitation, any laws
or regulations which shall replace, amend and/or supplement those set out
in the statement of the Basle Committee on Banking Regulations and
Supervisory Practices dated July 1988 and entitled “International
Convergence of Capital Management and Capital Structures”)) which is
introduced, or altered, or the interpretation or application of which is
altered, after the date of this
Agreement,
|
is that
the Notifying Lender (or a parent company of it) has incurred or will incur an
“increased cost”, that
is to say:
|
|
(i)
|
an
additional or increased cost incurred as a result of, or in connection
with, the Notifying Lender having entered into, or being a party to, this
Agreement or a Transfer Certificate, of funding or maintaining its
Commitment or Contribution or performing its obligations under this
Agreement, or of having outstanding all or any part of its Contribution or
other unpaid sums; or
|
|
|
(ii)
|
a
reduction in the amount of any payment to the Notifying Lender under this
Agreement or in the effective return which such a payment represents to
the Notifying Lender or on its
capital;
|
|
|
(iii)
|
an
additional or increased cost of funding all or maintaining all or any of
the advances comprised in a class of advances formed by or including the
Notifying Lender’s Contribution or (as the case may require) the
proportion of that cost attributable to the Contribution;
or
|
58
|
|
(iv)
|
a
liability to make a payment, or a return foregone, which is calculated by
reference to any amounts received or receivable by the Notifying Lender
under this Agreement;
|
but not
an item attributable to a change in the rate of tax on the overall net income of
the Notifying Lender (or a parent company of it) or an item covered by the
indemnity for tax in Clause 21.1 or by Clause 22.
For the
purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or
spread costs and/or losses among its assets and liabilities (or any class
thereof) on such basis as it considers appropriate.
|
24.2
|
Notification to Borrower of
claim for increased costs. The Agent shall promptly
notify the Borrower and the Security Parties of the notice which the Agent
received from the Notifying Lender under Clause
24.1.
|
|
24.3
|
Payment of increased
costs. The Borrower shall pay to the Agent, at the end
of any Interest Period during which the Agent makes demand, for the
account of the Notifying Lender, the amounts which the Agent from time to
time notifies the Borrower that the Notifying Lender has specified to be
necessary to compensate the Notifying Lender for the increased
cost.
|
|
24.4
|
Notice of
prepayment. If the Borrower is not willing to continue
to compensate the Notifying Lender for the increased cost under Clause
24.3, the Borrower may give the Agent not less than 14 days’ notice of its
intention to prepay the Notifying Lender’s Contribution at the end of an
Interest Period.
|
|
24.5
|
Prepayment; termination of
Commitment. A notice under Clause 24.4 shall be
irrevocable; the Agent shall promptly notify the Notifying Lender of the
Borrower’s notice of intended prepayment;
and:
|
|
(a)
|
on
the date on which the Agent serves that notice, the Commitment of the
Notifying Lender shall be cancelled;
and
|
|
(b)
|
on
the date specified in its notice of intended prepayment, the Borrower
shall prepay (without premium or penalty) the Notifying Lender’s
Contribution, together with accrued interest thereon at the applicable
rate plus the applicable Margin and the Mandatory Cost (if
any).
|
|
24.6
|
Application of
prepayment. Clause 8 shall apply in relation to the
prepayment.
|
|
25
|
SET-OFF
|
|
25.1
|
Application of credit
balances. Each Creditor Party may without prior
notice:
|
|
(a)
|
apply
any balance (whether or not then due) which at any time stands to the
credit of any account in the name of the Borrower at any office in any
country of that Creditor Party in or towards satisfaction of any sum then
due from the Borrower to that Creditor Party under any of the Finance
Documents; and
|
|
(b)
|
for
that purpose:
|
|
|
(i)
|
break,
or alter the maturity of, all or any part of a deposit of the
Borrower;
|
|
|
(ii)
|
convert
or translate all or any part of a deposit or other credit balance into
Dollars;
|
|
|
(iii)
|
enter
into any other transaction or make any entry with regard to the credit
balance which the Creditor Party concerned considers
appropriate.
|
59
| 25.2 | Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document). |
|
25.3
|
Sums deemed due to a
Lender. For the purposes of this Clause 25, a sum
payable by the Borrower to the Agent or the Security Trustee for
distribution to, or for the account of, a Lender shall be treated as a sum
due to that Lender; and each Lender’s proportion of a sum so payable for
distribution to, or for the account of, the Lenders shall be treated as a
sum due to such Lender.
|
|
26
|
TRANSFERS
AND CHANGES IN LENDING OFFICES
|
|
26.1
|
Transfer by
Borrower. The Borrower may not, without the prior
written consent of the Agent, given on the instructions of all the
Lenders:
|
|
(a)
|
transfer
any of its rights or obligations under any Finance Document;
or
|
|
(b)
|
enter
into any merger, de-merger or other reorganisation, or carry out any other
act, as a result of which any of its rights or liabilities would vest in,
or pass to, another person.
|
|
26.2
|
Transfer by a
Lender. Subject to Clause 26.5, a Lender (the “Transferor Lender”) may
at any time, cause:
|
|
(a)
|
its
rights in respect of all or part of its Contribution;
or
|
|
(b)
|
its
obligations in respect of all or part of its Commitment;
or
|
|
(c)
|
a
combination of (a) and (b)
|
to be (in
the case of its rights) transferred to, or (in the case of its obligations)
assumed by, another bank or financial institution which is experienced in ship
financing (a “Transferee
Lender”) by delivering to the Agent a completed certificate in the form
set out in Schedule 4 with any modifications approved or required by the Agent
(a “Transfer
Certificate”) executed by the Transferor Lender and the Transferee
Lender.
However
any rights and obligations of the Transferor Lender in its capacity as Agent or
Security Trustee will have to be dealt with separately in accordance with the
Agency and Trust Deed.
|
|
A
transfer pursuant to this Clause 26.2
shall:
|
|
|
(i)
|
require
the prior written consent of the
Agent;
|
|
|
(ii)
|
be
effected without the consent of, but with notice to, the Borrower and
without any cost to the Borrower:
|
|
|
(A)
|
following
the occurrence of an Event of
Default;
|
|
|
(B)
|
if
such transfer is to a subsidiary or any other company or financial
institution which is in the same ownership or control as the Transferor
Lender; and
|
|
|
(iii)
|
require
the consent of the Borrower (such consent not to be unreasonably withheld
or delayed) in all circumstances (other than those referred to in
sub-paragraph (ii) above).
|
60
|
26.3
|
Transfer Certificate, delivery
and notification. As soon as reasonably practicable
after a Transfer Certificate is delivered to the Agent, it shall (unless
it has reason to believe that the Transfer Certificate may be
defective):
|
|
(a)
|
sign
the Transfer Certificate on behalf of itself, the Borrower, the Security
Parties, the Security Trustee and each of the
Lenders;
|
|
(b)
|
on
behalf of the Transferee Lender, send to the Borrower and each Security
Party letters or faxes notifying them of the Transfer Certificate and
attaching a copy of it; and
|
|
(c)
|
send
to the Transferee Lender copies of the letters or faxes sent under
paragraph (b) above.
|
|
26.4
|
Effective Date of Transfer
Certificate. A Transfer Certificate becomes effective on
the date, if any, specified in the Transfer Certificate as its effective
date Provided that
it is signed by the Agent under Clause 26.3 on or before that
date.
|
|
26.5
|
No transfer without Transfer
Certificate. No assignment or transfer of any right or
obligation of a Lender under any Finance Document is binding on, or
effective in relation to, the Borrower, any Security Party, the Agent or
the Security Trustee unless it is effected, evidenced or perfected by a
Transfer Certificate.
|
|
26.6
|
Lender re-organisation; waiver
of Transfer Certificate. However, if a Lender enters
into any merger, de-merger or other reorganisation as a result of which
all its rights or obligations vest in another person (the “successor”), the
successor shall automatically and without any further act being necessary
become a Lender with the same Commitment and Contribution as were held by
the predecessor Lender.
|
|
26.7
|
Effect of Transfer
Certificate. A Transfer Certificate takes effect in
accordance with English law as
follows:
|
|
(a)
|
to
the extent specified in the Transfer Certificate, all rights and interests
(present, future or contingent) which the Transferor Lender has under or
by virtue of the Finance Documents are assigned to the Transferee Lender
absolutely, free of any defects in the Transferor Lender’s title and of
any rights or equities which the Borrower or any Security Party had
against the Transferor Lender;
|
|
(b)
|
the
Transferor Lender’s Commitment is discharged to the extent specified in
the Transfer Certificate;
|
|
(c)
|
the
Transferee Lender becomes a Lender with the Contribution previously held
by the Transferor Lender (or the part thereof specified in the Transfer
Certificate) and a Commitment of an amount specified in the Transfer
Certificate;
|
|
(d)
|
the
Transferee Lender becomes bound by all the provisions of the Finance
Documents which are applicable to the Lenders generally, including those
about pro-rata sharing and the exclusion of liability on the part of, and
the indemnification of, the Agent and the Security Trustee and, to the
extent that the Transferee Lender becomes bound by those provisions (other
than those relating to exclusion of liability), the Transferor Lender
ceases to be bound by them;
|
|
(e)
|
any
part of the Loan which the Transferee Lender advances after the Transfer
Certificate’s effective date ranks in point of priority and security in
the same way as it would have ranked had it been advanced by the
transferor, assuming that any defects in the transferor’s title and any
rights or equities of the Borrower or any Security Party against the
Transferor Lender had not existed;
|
61
|
(f)
|
the
Transferee Lender becomes entitled to all the rights under the Finance
Documents which are applicable to the Lenders generally, including but not
limited to those relating to the Majority Lenders and those under Clause
5.5 and Clause 20, and to the extent that the Transferee Lender becomes
entitled to such rights, the Transferor Lender ceases to be entitled to
them; and
|
|
(g)
|
in
respect of any breach of a warranty, undertaking, condition or other
provision of a Finance Document or any misrepresentation made in or in
connection with a Finance Document, the Transferee Lender shall be
entitled to recover damages by reference to the loss incurred by it as a
result of the breach or misrepresentation, irrespective of whether the
original Lender would have incurred a loss of that kind or
amount.
|
The
rights and equities of the Borrower or any Security Party referred to above
include, but are not limited to, any right of set off and any other kind of
cross-claim.
|
26.8
|
Maintenance of register of
Lenders. During the Security Period the Agent shall
maintain a register in which it shall record the name, Commitment,
Contribution and administrative details (including the lending office)
from time to time of each Lender holding a Transfer Certificate and the
effective date (in accordance with Clause 26.4) of the Transfer
Certificate; and the Agent shall make the register available for
inspection by any Lender, the Security Trustee and the Borrower during
normal banking hours, subject to receiving at least 5 Business Days prior
notice.
|
|
26.9
|
Reliance on register of
Lenders. The entries on that register shall, in the
absence of manifest error, be conclusive in determining the identities of
the Lenders and the amounts of their Commitments and Contributions and the
effective dates of Transfer Certificates and may be relied upon by the
Agent and the other parties to the Finance Documents for all purposes
relating to the Finance Documents.
|
|
26.10
|
Authorisation of Agent to sign
Transfer Certificates. The Borrower, the Security
Trustee and each Lender irrevocably authorise the Agent to sign Transfer
Certificates on its behalf.
|
|
26.11
|
Registration
fee. In respect of any Transfer Certificate, the Agent
shall be entitled to recover a registration fee of $2,000 from the
Transferor Lender or (at the Agent’s option) the Transferee
Lender.
|
|
26.12
|
Sub-participation; subrogation
assignment. A Lender may sub-participate all or any part
of its rights and/or obligations under or in connection with the Finance
Documents without the consent of, or any notice to, the Borrower, any
Security Party, the Agent or the Security Trustee; and the Lenders may
assign, in any manner and terms agreed by the Majority Lenders, the Agent
and the Security Trustee, all or any part of those rights to an insurer or
surety who has become subrogated to
them.
|
|
26.13
|
Disclosure of
information. A Lender may disclose to a potential
Transferee Lender or sub-participant any information which the Lender has
received in relation to the Borrower, any Security Party or their affairs
under or in connection with any Finance Document, unless the information
is clearly of a confidential
nature.
|
|
26.14
|
Change of lending
office. A Lender may change its lending office by giving
notice to the Agent and the change shall become effective on the later
of:
|
|
(a)
|
the
date on which the Agent receives the notice;
and
|
|
(b)
|
the
date, if any, specified in the notice as the date on which the change will
come into effect.
|
62
|
26.15
|
Notification. On
receiving such a notice, the Agent shall notify the Borrower and the
Security Trustee; and, until the Agent receives such a notice, it shall be
entitled to assume that a Lender is acting through the lending office of
which the Agent last had notice.
|
|
27
|
VARIATIONS
AND WAIVERS
|
|
27.1
|
Variations, waivers etc. by
Majority Lenders. Subject to Clause 27.2, a document
shall be effective to vary, waive, suspend or limit any provision of a
Finance Document, or any Creditor Party’s rights or remedies under such a
provision or the general law, only if the document is signed, or
specifically agreed to by fax, by the Borrower, by the Agent on behalf of
the Majority Lenders, by the Agent and the Security Trustee in their own
rights, and, if the document relates to a Finance Document to which a
Security Party is party, by that Security
Party.
|
|
27.2
|
Variations, waivers etc.
requiring agreement of all Lenders. However, as regards
the following, Clause 27.1 applies as if the words “by the Agent on behalf
of the Majority Lenders” were replaced by the words “by or on behalf of
every Lender and the Swap Bank”:
|
|
(a)
|
a
change in the applicable Margin or in the definition of
LIBOR;
|
|
(b)
|
a
change to the date for, or the amount of, any payment of principal,
interest, fees, or other sum payable under this
Agreement;
|
|
(c)
|
a
change to any Lender’s Commitment;
|
|
(d)
|
an
extension of the Availability
Period;
|
|
(e)
|
a
change to the definition of “Majority Lenders” or “Finance
Documents”;
|
|
(f)
|
a
change to the preamble or to Clause 2, 3, 4, 5.1, 8.1, 8.2, 17, 18, 19 or
30;
|
|
(g)
|
a
change to this Clause 27;
|
|
(h)
|
any
release of, or material variation to, a Security Interest, guarantee,
indemnity or subordination arrangement set out in a Finance Document;
and
|
|
(i)
|
any
other change or matter as regards which this Agreement or another Finance
Document expressly provides that each Lender’s consent is
required.
|
|
27.3
|
Exclusion of other or implied
variations. Except for a document which satisfies the
requirements of Clauses 27.1 and 27.2, no document, and no act, course of
conduct, failure or neglect to act, delay or acquiescence on the part of
the Creditor Parties or any of them (or any person acting on behalf of any
of them) shall result in the Creditor Parties or any of them (or any
person acting on behalf of any of them) being taken to have varied,
waived, suspended or limited, or being precluded (permanently or
temporarily) from enforcing, relying on or
exercising:
|
|
(a)
|
a
provision of this Agreement or another Finance Document;
or
|
|
(b)
|
an
Event of Default; or
|
|
(c)
|
a
breach by the Borrower or a Security Party of an obligation under a
Finance Document or the general law;
or
|
|
(d)
|
any
right or remedy conferred by any Finance Document or by the general
law;
|
63
|
|
and
there shall not be implied into any Finance Document any term or condition
requiring any such provision to be enforced, or such right or remedy to be
exercised, within a certain or reasonable
time.
|
|
28
|
NOTICES
|
|
28.1
|
General. Unless
otherwise specifically provided, any notice under or in connection with
any Finance Document shall be given by registered letter or fax; and
references in the Finance Documents to written notices, notices in writing
and notices signed by particular persons shall be construed
accordingly.
|
|
28.2
|
Addresses for
communications. A notice shall be
sent:
|
|
(a)
|
to
the Borrower:
|
|
| 00 Xxxxxxxxx Xxxxxx | ||
| 000 00 Xxxxx | ||
| Xxxxxx | ||
| Fax No: x(00) 000 000 0000 | ||
| Attn: the Chief Financial Officer |
|
(b)
|
to
a Lender:
|
At
the address opposite its name in Schedule 1 or (as the case may require)
in the relevant Transfer Certificate;
and
|
|
(c)
|
the
Agent and
|
Commerzbank
AG
|
|
|
the
Security Trustee:
|
Global
Shipping
|
|
|
Ness
7-9
|
|
|
X-00000
Xxxxxxx
|
|
|
Germany
|
| Fax No: x(00) 00 00 00 0000 | |
| Attn: Xxxxx Xxxxxxxxx/Claas Xxxxxxxxx |
or to
such other address as the relevant party may notify the Agent or, if the
relevant party is the Agent or the Security Trustee, the Borrower, the Lenders
and the Security Parties.
|
28.3
|
Effective date of
notices. Subject to Clauses 28.4 and
28.5:
|
|
(a)
|
a
notice which is delivered personally shall be deemed to be served, and
shall take effect, at the time when it is
delivered;
|
|
(b)
|
a
notice which is delivered by registered letter shall be deemed to be
served, and shall take effect, 5 Business Days after being deposited in
the post postage prepaid in an envelope addressed to it at the relevant
address; and
|
|
(c)
|
a
notice which is sent by fax shall be deemed to be served, and shall take
effect, 2 hours after its transmission is
completed.
|
|
28.4
|
Service outside business
hours. However, if under Clause 28.3 a notice would be
deemed to be served:
|
|
(a)
|
on
a day which is not a business day in the place of receipt;
or
|
|
(b)
|
on
such a business day, but after 5 p.m. local
time;
|
the
notice shall (subject to Clause 28.5) be deemed to be served, and shall take
effect, at 9 a.m. on the next day which is such a business day.
64
| 28.5 | Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect. |
|
28.6
|
Valid
notices. A notice under or in connection with a Finance
Document shall not be invalid by reason that its contents or the manner of
serving it do not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served
if:
|
|
(a)
|
the
failure to serve it in accordance with the requirements of this Agreement
or other Finance Document, as the case may be, has not caused any party to
suffer any significant loss or
prejudice; or
|
|
(b)
|
in
the case of incorrect and/or incomplete contents, it should have been
reasonably clear to the party on which the notice was served what the
correct or missing particulars should have
been.
|
|
28.7
|
English
language. Any notice under or in connection with a
Finance Document shall be in
English.
|
|
28.8
|
Meaning of
“notice”. In this Clause “notice” includes any demand,
consent, authorisation, approval, instruction, waiver or other
communication.
|
|
28.9
|
Electronic
communication
|
|
(a)
|
Any
communication to be made between the Agent or the Security Trustee and a
Lender or the Swap Bank under or in connection with the Finance Documents
may be made by electronic mail or other electronic means, if the Agent,
the Security Trustee and the relevant Lender or the Swap
Bank:
|
|
|
(i)
|
agree
that, unless and until notified to the contrary, this is to be an accepted
form of communication;
|
|
|
(ii)
|
notify
each other in writing of their electronic mail address and/or any other
information required to enable the sending and receipt of information by
that means; and
|
|
|
(iii)
|
notify
each other of any change to their address or any other such information
supplied by them.
|
|
(b)
|
Any
electronic communication made between the Agent and a Lender or the
Security Trustee or the Swap Bank will be effective only when actually
received in readable form and in the case of any electronic communication
made by a Lender or the Swap Bank to the Agent or the Security Trustee
only if it is addressed in such a manner as the Agent or Security Trustee
shall specify for this purpose.
|
|
29
|
SUPPLEMENTAL
|
|
29.1
|
Rights cumulative,
non-exclusive. The rights and remedies which the Finance
Documents give to each Creditor Party
are:
|
|
(a)
|
cumulative;
|
|
(b)
|
may
be exercised as often as appears expedient;
and
|
|
(c)
|
shall
not, unless a Finance Document explicitly and specifically states so, be
taken to exclude or limit any right or remedy conferred by any
law.
|
65
|
29.2
|
Severability of
provisions. If any provision of a Finance Document is or
subsequently becomes void, unenforceable or illegal, that shall not affect
the validity, enforceability or legality of the other provisions of that
Finance Document or of the provisions of any other Finance
Document.
|
|
29.3
|
Third party
rights. A person who is not a party to this Agreement
has no right under the Contracts (Rights of Third Parties) Xxx 0000 to
enforce or to enjoy the benefit of any term of this
Agreement.
|
|
29.4
|
Counterparts. A
Finance Document may be executed in any number of
counterparts.
|
|
30
|
LAW
AND JURISDICTION
|
|
30.1
|
English
law. This Agreement shall be governed by, and construed
in accordance with, English law.
|
|
30.2
|
Exclusive English
jurisdiction. Subject to Clause 30.3, the courts of
England shall have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with this
Agreement.
|
|
30.3
|
Choice of forum for the
exclusive benefit of the Creditor Parties. Clause 30.2
is for the exclusive benefit of the Creditor Parties, each of which
reserves the right:
|
|
(a)
|
to
commence proceedings in relation to any matter which arises out of or in
connection with this Agreement in the courts of any country other than
England and which have or claim jurisdiction to that matter;
and
|
|
(b)
|
to
commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without
commencing proceedings in England.
|
The
Borrower shall not commence any proceedings in any country other than England in
relation to a matter which arises out of or in connection with this
Agreement.
|
30.4
|
Process
Agent. The Borrower irrevocably appoints HTD Services
Limited at their office for the time being, presently at Irongate House,
Duke’s Place, London EC3A 7HX, England, to act as its Agent to receive and
accept on its behalf any process or other document relating to any
proceedings in the English courts which are connected with this
Agreement.
|
|
30.5
|
Creditor Party rights
unaffected. Nothing in this Clause 30 shall exclude or
limit any right which any Creditor Party may have (whether under the law
of any country, an international convention or otherwise) with regard to
the bringing of proceedings, the service of process, the recognition or
enforcement of a judgment or any similar or related matter in any
jurisdiction.
|
|
30.6
|
Meaning of
“proceedings”. In this Clause 30, “proceedings” means
proceedings of any kind, including an application for a provisional or
protective measure.
|
AS WITNESS the hands of the
duly authorised officers or attorneys of the parties the day and year first
before written.
66
SCHEDULE
1
LENDERS
AND COMMITMENTS
|
Lender
|
Lending
Office
|
Commitment
(US
Dollars)
|
|
Commerzbank
XX
|
Xxxx
7-9
X-00000
Xxxxxxx
Germany
|
250,000,000
*
|
*
Please refer to Clause 2.4 pursuant to which the Commitment of Commerzbank AG is
limited to $200,000,000
67
SCHEDULE
2
DETAILS
OF EXISTING SHIPS AND OWNERS
|
1
|
Name
of Ship:
|
“PEARL
SEAS”
|
|
Flag:
|
Xxxxxxxx
Islands
|
|
|
IMO
Number:
|
393260
|
|
|
Official
Number:
|
2965
|
|
|
Dwt:
|
74,473
|
|
|
Class
Society and notation:
|
RINA
(C; Bulk Carrier ESP; AUT-UMS)
|
|
|
Year
built:
|
2006
|
|
|
Owner:
|
Xxxxx
Marine Co.
|
|
|
2
|
Name
of Ship:
|
“SAPPHIRE
SEAS”
|
|
Flag:
|
Liberia
|
|
|
IMO
Number:
|
9301146
|
|
|
Official
Number:
|
13497
|
|
|
Dwt:
|
53,702
|
|
|
Class
Society and notation:
|
Germanischer
Xxxxx Xxxx 100 A5 ESP IW C1D11 Bulk Carrier, Machinery MC
AUT
|
|
|
Year
built:
|
2005
|
|
|
Owner:
|
Protea
International Inc.
|
|
|
3
|
Name
of Ship:
|
“DIAMOND
SEAS”
|
|
Current
Flag:
|
Malta
|
|
|
Flag
when acquired by Owner:
|
Liberia
|
|
|
IMO
Number:
|
9244219
|
|
|
Official
Number:
|
13494
|
|
|
Dwt:
|
74,274
|
|
|
Class
Society and notation:
|
Lloyd’s
Register 100A1 bulk carrier, strengthened for heavy cargoes, holds 2,4,6
may be empty, ESN ESP, LI LMC UMS
|
|
|
Year
built:
|
2001
|
|
|
Owner:
|
Reading
Navigation Co.
|
|
|
4
|
Name
of Ship:
|
“CLEAN
SEAS”
|
|
Flag:
|
Cayman
Islands
|
|
|
IMO
Number:
|
9109366
|
|
|
Official
Number:
|
739766
|
|
|
Dwt:
|
46,640
|
|
|
Class
Society and notation:
|
Nippon
Kaiji Kyokai NS*(BC)(ESP)/MNS*
|
|
|
Year
built:
|
1995
|
|
|
Owner:
|
Explorer
Shipholding Limited
|
|
|
5
|
Name
of Ship:
|
“KIND
SEAS”
|
|
Flag:
|
Xxxxxxxx
Islands
|
|
|
IMO
Number:
|
9205847
|
|
|
Official
Number:
|
2172
|
|
|
Dwt:
|
72,493
|
|
|
Class
Society and notation:
|
Nippon
Kaiji Kyokai NS*(BC, SHC 2,4,6 E)(ESP)/MNS*
|
|
|
Year
built:
|
1999
|
|
|
Owner:
|
Fairplay
Maritime Ltd.
|
68
SCHEDULE
3
DRAWDOWN
NOTICE
To: Commerzbank
XX
Xxxx
7-9
D-20457
Hamburg
Germany
Attention:
Loans
Administration [
] 2007
DRAWDOWN
NOTICE
|
1
|
We
refer to the loan agreement (the “Loan Agreement”) dated
[l] 2007 and
made between ourselves as Borrower, the Lenders referred to therein
yourselves as Agent, Arranger, Swap Bank and as Security Trustee in
connection with a revolving credit facility of up to
US$250,000,000. Terms defined in the Loan Agreement have their
defined meanings when used in this Drawdown
Notice.
|
|
2
|
We
request to borrow [the Existing Ships Advance] [an Acquisition [l] Advance in
relation to [l]] as
follows:
|
|
(a)
|
Amount
of Advance: $[ ];
|
|
(b)
|
Drawdown
Date: [ ];
|
|
(c)
|
Duration
of the first Interest Period shall be [ ]
months;
|
|
(d)
|
Payment
instructions : account of [ ] and numbered [ ] with
[ ] of [ ].
|
|
3
|
We
represent and warrant that:
|
|
(a)
|
the
representations and warranties in Clause 10 of the Loan Agreement would
remain true and not misleading if repeated on the date of this notice with
reference to the circumstances now
existing;
|
|
(b)
|
no
Event of Default or Potential Event of Default has occurred or will result
from the borrowing of the Loan.
|
|
4
|
This
notice cannot be revoked without the prior consent of the Majority
Lenders.
|
|
5
|
[We
authorise you to deduct all accrued commitment fee and all other facility
fees applicable to the Advance referred to in Clause 20.1 from the amount
of the Advance].
|
[Name of
Signatory]
________________________________
for and
on behalf of
69
SCHEDULE
4
CONDITION
PRECEDENT DOCUMENTS
PART
A
The
following are the documents referred to in Clause 9.1(a).
|
1
|
A
duly executed original of each of:
|
|
(a)
|
this
Agreement;
|
|
(b)
|
the
Agency and Trust Deed;
|
|
(c)
|
the
Fee Letter;
|
|
(d)
|
the
Master Agreement;
|
|
(e)
|
the
Guarantees;
|
|
(f)
|
the
Master Agreement Assignment;
|
|
(g)
|
the
Existing Ship Earnings Accounts
Pledges;
|
|
(h)
|
the
Retention Account Pledge;
|
|
(i)
|
the
Reserve Account Pledge;
|
|
(j)
|
the
Epic Account Pledge; and
|
|
(k)
|
the
Epic Guarantee.
|
|
2
|
Copies
of the certificate of incorporation and constitutional documents of the
Borrower, each Owner and Epic.
|
|
3
|
Copies
of resolutions of the shareholders and directors of the Borrower, of each
Owner and Epic authorising the execution of each of the Finance Documents
to which the Borrower, that Owner and Epic is a party and, in the case of
the Borrower, authorising named officers to give the Drawdown Notices and
other notices under this Agreement.
|
|
4
|
The
original of any power of attorney under which any Finance Document is
executed on behalf of the Borrower, an Owner and
Epic.
|
|
5
|
Copies
of all consents which the Borrower, any Owner and Epic requires to enter
into, or make any payment under, any Finance
Document.
|
|
6
|
The
originals of any mandates or other documents required in connection with
the opening or operation of each Target Ship Earnings Account, the
Retention Account, the Reserve Account and the Epic
Account.
|
|
7
|
Evidence
satisfactory to the Agent that each Owner is a direct or indirect
wholly-owned subsidiary of the
Borrower.
|
70
|
8
|
All
documentation required by each Creditor Party in relation to the Borrower
and any Security Party pursuant to that Creditor Party’s “know your
customer” requirements.
|
|
9
|
Documentary
evidence that the Agent for service of process named in Clause 30 has
accepted its appointment.
|
|
10
|
Favourable
legal opinions from lawyers appointed by the Agent on such matters
concerning the laws of the Xxxxxxxx Islands and Liberia, and such other
relevant jurisdictions as the Agent may
require.
|
|
11
|
If
the Agent so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Agent.
|
PART
B
The
following are the documents referred to in Clause 9.1(b).
|
1
|
Evidence
that an amount of not less than $2,500,000 is standing to the credit of
the Reserve Account.
|
|
2
|
Documentary
evidence that:
|
|
(a)
|
each
Existing Ship is definitively and permanently registered in the name of
its Owner under the applicable Approved
Flag;
|
|
(b)
|
each
Existing Ship is in the absolute and unencumbered ownership of its Owner
save as contemplated by the Finance Documents to which that Owner is a
party;
|
|
(c)
|
each
Existing Ship maintains the highest available class with such first-class
classification society which is a member of IACS as the Agent may approve
free of all overdue recommendations and conditions of such classification
society;
|
|
(d)
|
each
Mortgage relative to an Existing Ship has been duly registered against
that Existing Ship as a valid first preferred or, as the case may be,
priority statutory mortgage in accordance with the laws of applicable
Approved Flag State; and
|
|
(e)
|
each
Existing Ship is insured in accordance with the provisions of this
Agreement and all requirements therein in respect of such insurances have
been complied with.
|
|
3
|
A
copy of the Management Agreement and a duly executed original of the
Manager’s Undertaking in relation to each Existing
Ship.
|
|
4
|
Copies
of:
|
|
(a)
|
the
document of compliance (DOC) and safety management certificate
(SMC) referred to in paragraph (a) of the definition of the ISM Code
Documentation in respect of each Existing Ship and the applicable Approved
Manager certified as true and in effect by the Owner of such Existing
Ship; and
|
|
(b)
|
the
ISPS Code Documentation in respect of each Existing Ship and the Owner
thereof certified as true and in effect by that
Owner.
|
|
5
|
Two
valuations (at the cost of the Borrower) of each Existing Ship addressed
to the Agent, stated to be for the purpose of this Agreement and dated not
earlier than 15 days
|
71
|
|
before
the Drawdown Date for the Existing Ships Advance, each from an Approved
Broker.
|
|
6
|
A
compliance certificate (in the form set out in Schedule 6) demonstrating
the compliance by the Borrower (or not, as the case may be) with the
provisions of Clause 12.4 (such compliance to be determined by reference
to the audited annual consolidated accounts of the Group for the Financial
Year ended 31 December 2006) signed by the chief financial officer of the
Borrower.
|
|
7
|
Favourable
legal opinions from lawyers appointed by the Agent on such matters
concerning the laws of the Xxxxxxxx Islands, Liberia and the
Cayman Islands and such other relevant jurisdictions as the Agent may
require.
|
|
8
|
A
favourable opinion (at the cost of the Borrower) from an independent
insurance consultant acceptable to the Agent on such matters relating to
the insurances of the Existing Ships as the Agent may
require.
|
|
9
|
If
the Agent so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Agent.
|
PART
C
The
following are the documents referred to in Clause 9.1(c).
“Relevant Ship” means, in
relation to an Acquisition Advance, the Ship which is to be part-financed by
that Advance.
|
1
|
A
duly executed original of the Mortgage, the Deed of Covenant (if
applicable), the General Assignment, the Target Ship Earnings Account
Pledge and (if applicable) the Charterparty Assignment for the Relevant
Ship (and of each document to be delivered under each of
them).
|
|
2
|
Documentary
evidence that:
|
|
(a)
|
the
Relevant Ship has been unconditionally delivered to, and accepted by, the
relevant Owner under the relevant MOA and the full purchase price payable
under that MOA has been duly paid;
|
|
(b)
|
the
Relevant Ship is definitively and permanently registered in the name of
the relevant Owner under an Approved
Flag;
|
|
(c)
|
the
Relevant Ship is in the absolute and unencumbered ownership of the
relevant Owner save as contemplated by the Finance
Documents;
|
|
(d)
|
the
Relevant Ship maintains the highest available class with such first-class
classification society which is a member of IACS as the Agent may approve
free of all recommendations and conditions of such classification
society;
|
|
(e)
|
the
Mortgage relative to the Relevant Ship has been duly registered or
recorded (as the case may be) against the Relevant Ship as a valid first
priority or preferred ship mortgage in accordance with the laws of the
relevant Approved Flag State; and
|
|
(f)
|
the
Relevant Ship is insured in accordance with the provisions of this
Agreement and all requirements therein in respect of insurances have been
complied with.
|
|
3
|
A
copy of the Management Agreement and a duly executed original of the
Manager’s Undertaking in relation to the Relevant
Ship.
|
|
4
|
Copies
of:
|
72
|
(a)
|
the
document of compliance (DOC) and safety management certificate (SMC)
referred to in paragraph (a) of the definition of the ISM Code
Documentation in respect of the Relevant Ship and the Approved Manager
certified as true and in effect by the Owner of the Relevant Ship;
and
|
|
(b)
|
the
ISPS Code Documentation in respect of the Relevant Ship and the Owner
thereof certified as true and in effect by the relevant
Owner.
|
|
5
|
If
the Relevant Ship is on the relevant Drawdown Date more than 3 years old,
a survey report in respect of that Relevant Ship dated not later than 5
days prior to the relevant Drawdown Date in form, scope and substance
satisfactory to the Agent and its legal and technical
advisers.
|
|
6
|
Two
valuations of the Relevant Ship and of all other Ships subject to a
Mortgage at the relevant Drawdown Date, addressed to the Agent, stated to
be for the purpose of this Agreement and dated not earlier than 30 days
before the relevant Drawdown Date, each prepared (at the expense of the
Borrower) by an Approved Broker in accordance with Clause 15.4 which shows
the value of the Relevant Ship and each other Ship in an amount acceptable
to the Agent.
|
|
7
|
Evidence
satisfactory to the Agent that the Owner of the Relevant Ship remains a
direct or indirect wholly-owned subsidiary of the
Borrower.
|
|
8
|
Documentary
evidence that there is standing in the credit of the Reserve Account an
amount not less than (a) $500,000 multiplied by (b) the number of Ships
subject to a Mortgage at that time (including, without limitation, the
Relevant Ship).
|
|
9
|
A
favourable legal opinion from lawyers appointed by the Agent on such
matters concerning the laws of the Approved Flag State where the Relevant
Ship is registered and such other relevant jurisdictions as the Agent may
require.
|
|
10
|
A
favourable opinion (at the cost of the Borrower) from an independent
insurance consultant acceptable to the Agent on such matters relating to
the insurances for the Relevant Ship as the Agent may
require.
|
|
11
|
If
the Agent so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Agent.
|
Every
other copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director or the secretary (or equivalent officer) of
the Borrower or any other person acceptable to the Agent in its sole
discretion.
73
SCHEDULE
5
TRANSFER
CERTIFICATE
The
Transferor and the Transferee accept exclusive responsibility for ensuring that
this Certificate and the transaction to which it relates comply with all legal
and regulatory requirements applicable to them respectively.
|
To:
|
Commerzbank
AG for itself and for and on behalf of the Borrower, each Security Party,
the Security Trustee and each Lender, as defined in the Loan Agreement
referred to below.
|
[ ]
|
1
|
This
Certificate relates to a Loan Agreement (the “Loan Agreement”) dated
[l]2007 and
made between (1) Paragon Shipping Inc. as borrower (the “Borrower”), (2) the
banks and financial institutions named therein as Lenders, (3) Commerzbank
AG as Agent, (4) Commerzbank AG as Arranger, (5) Commerzbank AG as
Security Trustee and (6) Commerzbank AG as Swap Bank in respect of a
revolving credit facility of up to
US$250,000,000.
|
|
2
|
In
this Certificate:
|
“the Relevant Parties” means
the Agent, the Borrower, each Security Party, the Security Trustee, the Swap
Bank and each Lender;
“the Transferor” means [full
name] of [lending office];
“the Transferee” means [full
name] of [lending office].
Terms
defined in the Loan Agreement shall, unless the contrary intention appears, have
the same meanings when used in this Certificate.
|
3
|
The
effective date of this Certificate is .........200 Provided that this
Certificate shall not come into effect unless it is signed by the Agent on
or before that date.
|
|
4
|
The
Transferor assigns to the Transferee absolutely all rights and interests
(present, future or contingent) which the Transferor has as Lender under
or by virtue of the Loan Agreement and every other Finance Document in
relation to [ ] per cent. of the Contribution outstanding to
the Transferor (or its predecessors in title) which is set out
below:
|
|
Contribution
|
Amount
transferred
|
|
5
|
By
virtue of this Transfer Certificate and Clause 26 of the Loan Agreement,
the Transferor is discharged [entirely from its Commitment which amounts
to $[ ]] [from [ ] per cent. of its Commitment,
which percentage represents $[ ]] and the Transferee acquires a
Commitment of $[ ].
|
74
|
6
|
The
Transferee undertakes with the Transferor and each of the Relevant Parties
that the Transferee will observe and perform all the obligations under the
Finance Documents which Clause 26 of the Loan Agreement provides will
become binding on it upon this Certificate taking
effect.
|
|
7
|
The
Agent, at the request of the Transferee (which request is hereby made)
accepts, for the Agent itself and for and on behalf of every other
Relevant Party, this Certificate as a Transfer Certificate taking effect
in accordance with Clause 26 of the Loan
Agreement.
|
|
8
|
The
Transferor:
|
|
(a)
|
warrants
to the Transferee and each Relevant
Party:
|
|
|
(i)
|
that
the Transferor has full capacity to enter into this transaction and has
taken all corporate action and obtained all consents which are in
connection with this transaction;
and
|
|
|
(ii)
|
that
this Certificate is valid and binding as regards the
Transferor;
|
|
(b)
|
warrants
to the Transferee that the Transferor is absolutely entitled, free of
encumbrances, to all the rights and interests covered by the assignment in
paragraph 4 above;
|
|
(c)
|
undertakes
with the Transferee that the Transferor will, at its own expense, execute
any documents which the Transferee reasonably requests for perfecting in
any relevant jurisdiction the Transferee’s title under this Certificate or
for a similar purpose.
|
9 The
Transferee:
|
(a)
|
confirms
that it has received a copy of the Loan Agreement and each other Finance
Document;
|
|
(b)
|
agrees
that it will have no rights of recourse on any ground against either the
Transferor, the Agent, the Security Trustee, the Swap Bank or any Lender
in the event that:
|
|
|
(i)
|
the
Finance Documents prove to be invalid or
ineffective,
|
|
|
(ii)
|
the
Borrower or any Security Party fails to observe or perform its
obligations, or to discharge its liabilities, under the Finance
Documents;
|
|
|
(iii)
|
it
proves impossible to realise any asset covered by a Security Interest
created by a Finance Document, or the proceeds of such assets are
insufficient to discharge the liabilities of the Borrower or any Security
Party under the Finance Documents;
|
|
(c)
|
agrees
that it will have no rights of recourse on any ground against the Agent,
the Security Trustee, the Swap Bank or any Lender in the event that this
Certificate proves to be invalid or
ineffective;
|
|
(d)
|
warrants
to the Transferor and each Relevant Party (i) that it has full capacity to
enter into this transaction and has taken all corporate action and
obtained all official consents which it needs to take or obtain in
connection with this transaction; and (ii) that this Certificate is valid
and binding as regards the Transferee;
and
|
|
(e)
|
confirms
the accuracy of the administrative details set out below regarding the
Transferee.
|
75
|
10
|
The
Transferor and the Transferee each undertake with the Agent and the
Security Trustee severally, on demand, fully to indemnify the Agent and/or
the Security Trustee in respect of any claim, proceeding, liability or
expense (including all legal expenses) which they or either of them may
incur in connection with this Certificate or any matter arising out of it,
except such as are shown to have been mainly and directly caused by the
gross and culpable negligence or dishonesty of the Agent’s or the Security
Trustee’s own officers or
employees.
|
|
11
|
The
Transferee shall repay to the Transferor on demand so much of any sum paid
by the Transferor under paragraph 10 above as exceeds one-half of the
amount demanded by the Agent or the Security Trustee in respect of a
claim, proceeding, liability or expense which was not reasonably
foreseeable at the date of this Certificate; but nothing in this paragraph
shall affect the liability of each of the Transferor and the Transferee to
the Agent or the Security Trustee for the full amount demanded by
it.
|
|
[Name
of Transferor]
|
[Name
of Transferee]
|
| By: | By: |
| Date: | Date: |
Agent
Signed
for itself and for and on behalf of itself
as Agent
and for every other Relevant Party
COMMERZBANK
AG
By:
Date:
76
Administrative
Details of Transferee
Name of
Transferee:
Lending
Office:
Contact
Person
(Loan
Administration Department):
Telephone:
Telex:
Fax:
Contact
Person
(Credit
Administration Department):
Telephone:
Telex:
Fax:
Account
for payments:
|
Note:
|
This
Transfer Certificate alone may not be sufficient to transfer a
proportionate share of the Transferor’s interest in the security
constituted by the Finance Documents in the Transferor’s or Transferee’s
jurisdiction. It is the responsibility of each Lender to
ascertain whether any other documents are required for this
purpose.
|
77
SCHEDULE
6
FORM
OF COMPLIANCE CERTIFICATE
To: Commerzbank
XX
Xxxx
7-9
X-00000
Xxxxxxx
Germany
[l] 200[l]
Dear
Sirs,
We refer
to a loan agreement dated [l] 2007 (the “Loan Agreement”) made between
(amongst others) yourselves and ourselves in relation to a revolving credit
facility of up to $250,000,000.
Words and
expressions defined in the Loan Agreement shall have the same meaning when used
in this compliance certificate.
We
enclose with this certificate a copy of the [audited]/[unaudited] consolidated
accounts for the Group for the [Financial Year] [3-month period] ended [l]. The
accounts (i) have been prepared in accordance with all applicable laws and GAAP
all consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to
which the accounts relate and (iii) fully disclose or provide for all
significant liabilities of the Group.
We also
enclose copies of the valuations of all the Fleet Vessels which were used in
calculating the Market Value Adjusted Total Assets of the Group as at [l].
The
Borrower represents that no Event of Default or Potential Event of Default has
occurred as at the date of this certificate [except for the following matter or
event [set out all material
details of matter or event]]. In addition as of [l], the Borrower confirms
compliance with the financial covenants set out in Clause 12.4 of the Loan
Agreement for the 3 months ending as of the date to which the enclosed accounts
are prepared.
We now
certify that, as at [l]:
|
(a)
|
the
ratio of Total Liabilities to EBITDA is [l]:[l];
|
|
(b)
|
the
Market Value Adjusted Net Worth of the Group is $[l];
|
|
(c)
|
Liquid
Assets available to the Group are $[l] in aggregate of
which an aggregate amount of $[l] is standing to
the credit of the Reserve Account;
|
|
(d)
|
the
Leverage Ratio is [l]:[l];
and
|
|
(e)
|
the
Security Cover Percentage is [l] per
cent.
|
This
certificate shall be governed by, and construed in accordance with, English
law.
______________________________
[l]
Chief
Financial Officer of
78
SCHEDULE
7
MANDATORY
COST FORMULA
|
1
|
The
Mandatory Cost is an addition to the interest rate to compensate Lenders
for the cost of compliance with (a) the requirements of the Financial
Services Authority (or any other authority which replaces all or any of
its functions) or (b) the requirements of the European Central
Bank.
|
|
2
|
On
the first day of each Interest Period (or as soon as possible thereafter)
the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”)
for each Lender, in accordance with the paragraphs set out
below. The Mandatory Cost will be calculated by the Agent as a
weighted average of the Lenders’ Additional Cost Rates (weighted in
proportion to the percentage participation of each Lender in the Loan) and
will be expressed as a percentage rate per
annum.
|
|
3
|
The
Additional Cost Rate for any Lender lending from a lending office in a
Participating Member State will be the percentage notified by that Lender
to the Agent. This percentage will be certified by that Lender
in its notice to the Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lender’s participation in the Loan) of
complying with the minimum reserve requirements of the European Central
Bank in respect of loans made from that lending
office.
|
|
4
|
The
Additional Cost Rate for any Lender lending from a lending office in the
United Kingdom will be calculated by the Agent as
follows:
|
|
E x
0.01
|
per
cent. per annum
|
||||
|
300
|
Where:
|
|
E
|
is
designed to compensate Lenders for amounts payable under the Fees Rules
and is calculated by the Agent as being the average of the most recent
rates of charge supplied by the Lenders to the Agent pursuant to paragraph
6 below and expressed in pounds per
£1,000,000.
|
|
5
|
For
the purposes of this Schedule:
|
|
(a)
|
“Special Deposits” has
the meaning given to it from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of
England;
|
|
(b)
|
“Fees Rules” means the
rules on periodic fees contained in the FSA Supervision Manual or such
other law or regulation as may be in force from time to time in respect of
the payment of fees for the acceptance of
deposits;
|
|
(f)
|
“Fee Tariffs” means the
fee tariffs specified in the Fees Rules under the activity group A.1
Deposit acceptors (ignoring any minimum fee or zero rated fee required
pursuant to the Fees Rules but taking into account any applicable discount
rate);
|
|
(g)
|
“Participating Member
State” means any member state of the European Union that adopts or
has adopted the euro as its lawful currency in accordance with legislation
of the European Union relating to European Monetary Union;
and
|
79
|
(h)
|
“Tariff Base” has the
meaning given to it in, and will be calculated in accordance with, the
Fees Rules.
|
|
6
|
If
requested by the Agent, each Lender lending from a lending office in the
United Kingdom shall, as soon as practicable after publication by the
Financial Services Authority, supply to the Agent, the rate of charge
payable by that Lender to the Financial Services Authority pursuant to the
Fees Rules in respect of the relevant financial year of the Financial
Services Authority (calculated for this purpose by that Lender as being
the average of the Fee Tariffs applicable to that Lender for that
financial year) and expressed in pounds per £1,000,000 of the Tariff Base
of that Lender.
|
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7
|
Each
Lender shall supply any information required by the Agent for the purpose
of calculating its Additional Cost Rate. In particular, but
without limitation, each Lender shall supply the following information in
writing on or prior to the date on which it becomes a
Lender:
|
|
(a)
|
the
jurisdiction of its lending office;
and
|
|
(b)
|
any
other information that the Agent may reasonably require for such
purpose.
|
Each
Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.
|
8
|
The
rates of charge of each Lender lending from a lending office in the United
Kingdom for the purpose of calculating E shall be determined by the Agent
based upon the information supplied to it pursuant to paragraph 6 above
and on the assumption that, unless a Lender notifies the Agent to the
contrary, each Lender’s obligations in relation to cash ratio deposits and
Special Deposits are the same as those of a typical bank from its
jurisdiction of incorporation with a lending office in the same
jurisdiction as its lending office.
|
|
9
|
The
Agent shall have no liability to any person if such determination results
in an Additional Cost Rate which over or under compensates any Lender and
shall be entitled to assume that the information provided by any Lender
pursuant to paragraphs 3, 6 and 7 above is true and correct in all
respects.
|
|
10
|
The
Agent shall distribute the additional amounts received as a result of the
Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for
each Lender based on the information provided by each Lender pursuant to
paragraphs 3, 6 and 7 above.
|
|
11
|
Any
determination by the Agent pursuant to this Schedule in relation to a
formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
to a Lender shall, in the absence of manifest error, be conclusive and
binding on all parties.
|
The Agent
may from time to time, after consultation with the Borrower and the Lenders,
determine and notify to all parties any amendments which are required to be made
to this Schedule in order to comply with any change in law,
regulation or any requirements from time to time imposed by the Financial
Services Authority or the European Central Bank (or, in any case, any other
authority which replaces all or any of its functions) and any such determination
shall, in the absence of manifest error, be conclusive and binding on all
parties
80
SCHEDULE
8
DESIGNATION
NOTICE
To: Commerzbank
AG
Xxxxxxxxxxxxx
00,
00000
Xxxxxxxxx xx Xxxx
Xxxxxxx
[l]
Dear
Sirs
Loan
Agreement dated [l]
2007 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders,
(iii) yourselves as Agent, Arranger and Security Trustee and (iv) yourselves as
Swap Bank (the “Loan Agreement”)
We refer
to:
|
1
|
the
Loan Agreement;
|
|
2
|
the
Master Agreement dated [l] made between
ourselves and [l];
and
|
|
3
|
a
Confirmation delivered pursuant to the said Master Agreement dated [l] and addressed by
[l] to
us.
|
In
accordance with the terms of the Loan Agreement, we hereby give you notice of
the said Confirmation and hereby confirm that the Transaction evidenced by it
will be designated as a “Designated Transaction” for the purposes of the Loan
Agreement and the Finance Documents.
Yours
faithfully,
.................................................
for and
on behalf of
PARAGON
SHIPPING INC.
81
EXECUTION
PAGES
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BORROWER
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| SIGNED by |
)
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| for and on behalf of |
)
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| PARAGON SHIPPING INC. |
)
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LENDERS
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| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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SWAP
BANK
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| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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AGENT
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| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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SECURITY
TRUSTEE
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| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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82
| ARRANGER | ||
| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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| SIGNED by |
)
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| for and on behalf of |
)
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| COMMERZBANK AG |
)
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| Witness to all the |
)
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| above signatures |
)
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)
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||
| Name: | ||
| Address: |
SK 25744 0001 876100
