Date 19 June 2008 GRAINGER MARITIME CORP. as Borrower -and- JOH. BERENBERG, GOSSLER & CO. KG
TBS
INTERNATIONAL LIMITED & SUBSIDIARIES EXHIBIT
99.1
Date 19
June 2008
GRAINGER
MARITIME CORP.
as
Borrower
-and-
JOH.
BERENBERG, XXXXXXX & CO. KG
as
Lender
__________________________________
__________________________________
relating
to
a USD
13,000,000.00 facility for
the
part-refinancing of mv "OTTAWA PRINCESS"
INDEX
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Clause Page
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APPENDIX
A Accounts
Pledge
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APPENDIX
B Guarantees
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APPENDIX
C Assignment
of Insurances
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APPENDIX
D Assignment
of Earnings
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APPENDIX
E Mortgage
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APPENDIX
F Managers'
Subordination Undertakings
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APPENDIX
G Quadripartite
Agreement
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APPENDIX
H Drawdown
Notice
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APPENDIX
I General
Business Conditions
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THIS AGREEMENT is made on 19
June 2008
BETWEEN
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(1)
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Grainger Maritime Corp.,
a corporation established in Xxxxxxxx Islands whose registered
office is at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Xxxxxxxx Xxxxxxx, XX 00000 (the "Borrower");
and
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|
(2)
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Joh. Berenberg, Xxxxxxx &
Co. KG, a financial institution established under the laws of
Germany with its registered office at Xxxxx Xxxxxxxxxxxxx 00, 00000
Xxxxxxx, Xxxxxxx (the "Lender").
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BACKGROUND
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(A)
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The
Borrower is the registered owner of the 22.800 dwt vessel mv "OTTAWA
PRINCESS", built 1987 with Austin & Pickersgill Ltd.,
Sunderland, IMO no. 8503046 (the "Ship").
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(B)
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The
Ship is registered in the name of the Borrower with the Panamanian ship
registry. By virtue of a bareboat charter dated 23 January 2008 (the
"Bareboat
Charter") made between the Borrower and Intermodal Shipping, Inc.,
Ground Floor, Casa Maritima, 000 Xxx. Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx,
Xxxxxxxxxxx (the "Bareboat Charterer") the
Ship is flying the flag of the
Philippines.
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(C)
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The
Bareboat Charterer has concluded a time-charter contract dated
23 January 2008 with PACIFIC RIM SHIPPING CORP. of Majuro, Xxxxxxxx
Islands (the "PACIFIC
RIM") for a
fixed period of 24 months ("PACIFIC RIM
Charter").
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(D)
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By
time charter dated 23 January 2008 made between PACIFIC RIM and the
Borrower the Borrower chartered the Ship from PACIFIC RIM for a charter
period of 24 months +/- 2 months (the "Grainger
Charter").
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(E)
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By
time charter dated 23 January 2008 made between the Borrower and TBS
Worldwide Services Inc. of Majuro, Xxxxxxxx Islands ("TBS") TBS chartered the
Ship from the Borrower for a charter period of 24 months +/-
2 months (the "TBS
Charter").
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(F)
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The
Borrower has concluded a management contract in respect of the technical
management of the Ship dated 20 March 2008 (the "Management Contract")
with Roymar Ship Management Inc., 000 Xxxxxxx Xxxx Xxxxxx, Xxxxxxxxx Xxx
Xxxx 00000, XXX (the "Manager").
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(G)
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TBS
has concluded a management contract in respect of the commercial
management of the Ship dated 8 February 2004 (the "Management Contract"),
inter alia, with TBS Shipping Services Inc. of New York, USA (the "Manager").
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(H)
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The
renewal of the special survey of the Ship by Germanischer Xxxxx (the
"Classification
Society") is due in July 2012 (the "Special
Survey").
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(I)
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The
Borrower has requested the Lender to grant a facility of up to
USD 13,000,000.00 for the purpose to refinance part of the
acquisition costs of the Ship.
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IT IS AGREED as
follows:
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1
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INTERPRETATION
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1.1 Definitions. In
this Agreement:
"Accounts Pledge" means a document
creating security in respect of the Operating Accounts in favour of the Lender,
executed or to be executed by the Borrower in the form set out in Appendix A or
as otherwise acceptable to the Lender;
"Beneficial
Shareholder" has the meaning assigned to it in Clause
9.1;
"Business Day" means
a day on which banks are open in Frankfurt/Main, London and New York
City;
"Classification Society" has
the meaning assigned to it in Recital (B);
"Disbursement" has
the meaning assigned to it in Clause 3.2;
"Drawdown Notice" has the
meaning assigned to it in Clause 3.1;
"Earnings" means all
moneys whatsoever which are now, or later become, payable (actually or
contingently) to the Borrower and which arise out of the use or operation of the
Ship, including (but not limited to):
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(a)
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all
freight, hire and passage moneys, compensation payable to the Borrower in
the event of requisition of the Ship for hire, remuneration for salvage
and towage services, demurrage and detention moneys and damages for breach
(or payments for variation or termination) of any charterparty or other
contract for the employment of the
Ship;
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(b)
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all
moneys which are at any time payable under the Insurances in respect of
loss of earnings; and
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(c)
|
if
and whenever the Ship is employed on terms whereby any moneys falling
within (a) or (b) are pooled or shared with any other person, that
proportion of the net receipts of the relevant pooling or sharing
arrangement which is attributable to the
Ship;
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"Event of
Default" means any of the events or circumstances described in
Clause 13;
"Finance
Documents" means:
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(a)
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this
Agreement, the Security Documents, the Charter Guarantee, and the Master
Agreement;
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(b)
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any
other document (whether creating a security interest or not) which is
executed at any time by the Borrower 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 Lender under this Agreement or any
of the documents referred to in this definition;
and
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(c)
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the
Managers' Subordination
Undertakings;
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(d)
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the
Quadripartite Agreement;
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"General
Assignment" means a general assignment of the Earnings, the
Insurances and any requisition compensation in respect of the Ship in favour of
the Lender, executed or to be executed by the Borrower, together with notices of
assignment and loss payable clause, in the forms set out in Appendix C and D or
as otherwise acceptable to the Lender;
"Grainger
Charter" has the meaning assigned to it in Recital
(D);
"Guarantees" means
guarantees issued by the Guarantors in the form set out in Appendix B or as
otherwise acceptable to the Lender;
"Guarantors" means
TBS International Limited, Suite 306, Commerce Building, One Chancery
Lane, Xxxxxxxx XX 12, Bermuda and TBS Worldwide Services Inc., Trust Company
Complex, Ajeltake Road, Ajeltake Island Majuro, Xxxxxxxx Xxxxxxx, XX
00000;
"Insurances" means:
|
(a)
|
all
policies and contracts of insurance, including entries of the Ship in any
protection and indemnity or war risks association, which are effected in
respect of the Ship, the Earnings or otherwise in relation to her;
and
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(b)
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all
rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a
premium;
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"Interest
Period" means a period determined in accordance with Clause
6;
"Lender" means Joh.
Berenberg, Xxxxxxx & Co. KG, whose principal office is at Xxxxx
Xxxxxxxxxxxxx 00, 00000 Xxxxxxx, Xxxxxxx, or its direct or indirect successor or
assignee;
"LIBOR" means, for an Interest
Period, the rate per annum equal to the offered quotation for deposits in United
States Dollars for a period equal to, or as near as possible equal to, the
relevant Interest Period (rounded upwards to the next 1/16 of 1.00 per cent.)
which appears on Telerate Page 3750 at or about 11.00 a.m. (London time) on the
Quotation Date for that Interest Period (and, for the purposes of this
Agreement, "Telerate Page
3750" means the display designated as "Page 3750" on the Telerate Service
or such other page as may replace Page 3750 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 as the information vendor for the
purpose of displaying the British Bankers' Association Interest Settlement Rates
for United States Dollars); or, if the Lender determines that Dollar deposits
for any such period are not being made available to it by leading banks in the
London Interbank Market in the ordinary course of business, a rate from time to
time determined by the Lender by reference to the cost of funds to it for a
period equal to that Interest Period from such other sources as the Lender may
from time to time determine;
"Loan" has the
meaning assigned to it in Clause 2, and includes, where the context so permits,
any amount from time to time outstanding thereunder;
"Manager" has the
meaning assigned to it in Recitals (F) and (G);
"Management
Contract" has the meaning assigned to it in Recitals (F) and
(G);
"Managers' Subordination
Undertakings" has the meaning assigned to it in Clause 4.1(m)
in the form set out in Appendix F or as otherwise acceptable to the
Lender;
"Margin" means
1,7 per cent. per annum ;
"Market Value" means
the value of the Ship at the time of the conclusion of this Agreement as
determined by Ingenieurbüro Weselmann, Hamburg, or another expert acceptable to
the Lender, such valuation to be renewed from time to time upon Lender’s
request;
"Master Agreement" has the
meaning assigned to it in Clause 6.6;
"Mortgage" means a
first priority Panamanian ship mortgage on the Ship in favour of the Lender,
executed or to be executed by the Borrower in the form set out in Appendix E or
as otherwise acceptable to the Lender;
"Operating
Accounts" means any account of the Borrower with the Lender
under the master no. 23281;
"PACIFIC RIM" has
the meaning assigned to it in Recital (C);
"PACIFIC RIM
Charter" has the meaning assigned to it in Recital
(C);
"Quadripartite
Agreement" means a quadripartite agreement to be made between
the Borrower, the Bareboat Charterer, PACIFIC RIM and the Lender in the form set
out in Appendix G or as otherwise acceptable to the Lender;
"Repayment
Date" means a date on which a repayment is required to be made
under Clause 8.2;
"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 in connection
with any Finance Document (including, for the avoidance of all doubt, the Master
Agreement and any transactions concluded thereunder) or any judgment relating to
any Finance Document; and for this purpose, there shall be disregarded any total
or partial discharge of these liabilities, or variation of their terms, which is
effected by, or in connection with, any bankruptcy, liquidation, arrangement or
other procedure under the insolvency laws of any country;
"Security Documents" means the
Guarantees, the General Assignment, the Accounts Pledge and the
Mortgage;
"Security
Party" means the Borrower and each Guarantor, and any other
person (except the Lender and the Bareboat Charterer) 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 subparagraph (b)
of the definition of “Finance Documents”;
"Ship" has the
meaning assigned to it in Recital (A);
"Special Survey" has
the meaning assigned to it in Recital (B).
"Security
Period" means the period commencing on the date of this
Agreement and ending on the date on which all amounts payable by the Borrower or
any other Security Party under the Finance Documents have been
paid;
"TBS" has the
meaning assigned to it in Recital (E);
"TBS Charter" has
the meaning assigned to it in Recital (E);
"Termination Date
" has the meaning assigned to it in Clause 3.3.
"Total
Loss" means:
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(a)
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actual
or constructive or compromised or agreed or arranged total loss of the
Ship,
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(b)
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requisition
for title or other compulsory acquisition of the Ship otherwise than by
requisition for hire,
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(c)
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capture,
seizure, arrest, detention or confiscation of the Ship by any government
or by persons acting or purporting to act on behalf of any government
unless the Ship be released and restored to the Owner from such capture,
seizure, arrest, detention or confiscation within 1 month after the
occurrence thereof.
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"United States Dollars" and
“USD” means the lawful
currency for the time being of the United States of America;
"Valuation Report" has the
meaning referred to in Clause 4.1(i).
1.2 Construction of certain
terms. In this Agreement a reference to:
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(a)
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a
Finance Document or any other document is a reference to it as amended or
supplemented, whether before the date of this Agreement or otherwise;
and
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(b)
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a
provision of any law includes any amendment, extension, re-enactment or
replacement, whether made before the date of this Agreement or
otherwise.
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2
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FACILITY
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2.1
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Amount of
facility. The Lender, subject to the terms of this
Agreement, shall make available to the Borrower a term loan in the amount
of the lower of (i) up to USD 13,000,000.00 and (ii) 57 %
of the Market Value of the Ship (the "Loan").
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2.2
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Purpose. The
Loan shall be used for the sole purpose to refinance part of the
acquisition costs of the Ship.
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2.3
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Currency. The
currency of the Loan is United States
Dollars.
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3
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DRAWDOWN
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3.1
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Request for advance of
Loan. Subject to the other provisions of this Agreement,
the Borrower may request the Loan to be made by ensuring that the Lender
receives a completed drawdown notice in the form of Appendix H (the "Drawdown Notice") not
later than 11.00 a.m. (Hamburg time) 5 (five) Business Days prior to the
drawdown date.
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3.2
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Disbursement. The Lender
shall disburse the Loan directly to the Borrower in one amount upon all
conditions precedent for the disbursement according to Clause 4 having
been met (the "Disbursement").
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3.3
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Termination
Date. The Lender shall be entitled to refuse to make the
Disbursement of the Loan if the Loan is not being drawn on or before
23 June 2008 ("Termination
Date").
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4
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CONDITIONS
PRECEDENT
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The
Lender's obligation to make the Disbursement is subject to the following
conditions precedent:
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4.1
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Receipt of
documents. On, or before the service of the Drawdown
Notice, the Lender shall receive the following documents in form and
substance satisfactory to it:
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(a)
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copies
of the certificate of incorporation, goodstanding certificate and
constitutional documents (including Articles of Association) of each
Security Party;
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(b)
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copies
of resolutions of the shareholders and directors of each Security Party
authorising the execution of each of the Finance Documents to which each
Security Party is a party;
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(c)
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the
original of any power of attorney under which any Finance Document is
executed on behalf of each Security
Party;
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(d)
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copies
of all consents which the Borrower requires to enter into, or make any
payment under, any Finance
Document;
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(e)
|
a
duly executed original of each Finance Document together with all notices
of assignment and acknowledgements required to be delivered to the Lender
pursuant to their terms;
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(f)
|
copies
of the Bareboat Charter, the PACIFIC RIM Charter, the Grainger Charter and
the TBS Charter;
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(g)
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copies
of the Management Contracts;
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(h)
|
documentary
evidence that the Mortgage has been duly registered against the Ship as a
valid first priority ship mortgage in accordance with the laws of
Panama;
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(i)
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a
valuation and inspection report of the Ship, carried out by Ingenieurbüro
Weselmann, Hamburg, confirming the value of the Ship to be at least
USD 23,000,000.00 and confirming that the Ship is in an acceptable
condition (the "Valuation
Report");
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(j)
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certificate
of entry of a first-class Protection and Indemnity Association of the
International Group, rated at least BBB- (with S&P) and acceptable to
the Lender evidencing the entry of the Ship with the respective
association;
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(k)
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cover
notes of the respective insurances for the Ship evidencing satisfactory
insurance cover of the Ship by a western insurance company or western
insurance companies;
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(l)
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an
insurance opinion on the insurances effected for the Ship satisfactory to
the Lender;
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(m)
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subordination
undertakings duly executed by each Manager whereby each Manager
subordinates all its claims under the respective Management Contract to
all of the Lender’s claims under this Agreement and the Security Documents
(the "Managers'
Subordination
Undertakings");
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(n)
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a
process agent agreement duly signed and executed on behalf of the Borrower
and by authorised representatives of the process agent in Germany whereby
the Borrower appoints an agent for the purposes of accepting service of
legal documents in Germany and the agent accepts such
appointment;
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(o)
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copy
of the balance sheet and profit and loss account of the Borrower and the
Guarantors of the year 2007;
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(p)
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favourable
legal opinions from lawyers appointed by the Lender on such matters
concerning the laws of Panama and such other relevant jurisdictions other
than Germany as the Lender may reasonably require;
and
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(q)
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such
other documents that the Lender may request pursuant to this Agreement or
another Finance Document.
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4.2
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Fulfilment of other conditions
precedent. On, or before the service of the Drawdown
Notice, the additional conditions precedent must be
present:
|
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(a)
|
the
Lender having received such of the fees referred to in Clauses 5 and 14.1
that are payable prior to the
Disbursement;
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(b)
|
[intentionally left
blank]
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(c)
|
the
Borrower having opened the Operating
Accounts;
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(d)
|
the
Ship being acceptable to the
Lender;
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(e)
|
no
Event of Default having occurred or potentially resulting from the
borrowing of the Loan; and
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(f)
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the
representations and warranties in Clause 9 and those of any other 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.
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5
|
FEES
|
Arrangement
fee. The Borrower shall pay to the Lender an arrangement fee
of USD 65,000.00 which was due and payable upon acceptance of
the term sheet. The Borrower hereby accepts that the arrangement fee is fully
earned upon the signing of this Agreement and shall not be refunded by the
Lender irrespective of whether or not the Loan will be disbursed.
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6
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INTEREST
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6.1
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When
due. Interest on the Loan in respect of each Interest
Period shall be due and payable by the Borrower on the last day of that
Interest Period.
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6.2
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Rate of
interest. Subject to the other provisions of this
Agreement, the rate of interest on the Loan in respect of an Interest
Period shall be the aggregate of the Margin and LIBOR for that Interest
Period.
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6.3
|
Commencement of Interest
Periods. The first Interest Period shall commence on the
drawdown date and each subsequent Interest Period shall commence on the
expiry of the preceding Interest
Period.
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6.4
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Duration of Interest
Periods. Each Interest Period shall be 3, 6, 9 or 12
months. Should the Borrower fail to select an Interest Period, the Lender
has the option to select an Interest Period in his reasonable
discretion.
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6.5
|
Non-availability of
deposits. If, after the Borrower has selected an
Interest Period longer than 3 months, the Lender notifies the Borrower by
11.00 a.m. (Hamburg time) on the third Business Day before the
commencement of the Interest Period that it is not satisfied that deposits
in United States Dollars for a period equal to the Interest Period will be
available to it in the London Interbank Market when the Interest Period
commences, the Interest Period shall be of 3
months.
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6.6
|
Interest Rate Swap
Facility. The Borrower has the option to hedge the risk
of fluctuations of the interest payable by the Borrower under this
Agreement. Any interest rate swaps may only be concluded with the Lender
as swap bank on terms of the master agreement for financial derivatives
transactions (together with any transactions concluded thereunder the
"Master
Agreement") ("Rahmenvertrag für
Finanztermingeschäfte").
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7
|
DEFAULT
INTEREST
|
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7.1
|
Payment of default
interest. The Borrower shall pay interest in accordance
with the following provisions on any amount payable by the Borrower under
any Finance Document which the Lender does not receive on or before the
date on which that amount is due for
payment.
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7.2
|
Default rate of
interest. Interest shall accrue on an overdue amount
from (and including) the date on which that amount is due for payment
until the date of actual payment (as well after as before judgment) at the
rate of 2 per cent. per annum above (i) in the case of an overdue amount
of principal, the higher of the rates set out at Clauses 7.3(a) and (b)
and (ii) in the case of any other overdue amount, the rate set out at
Clause 7.3(b); provided
that the Borrower shall be permitted to prove that the damage
suffered by the Lender on account of the default is less than the rates
referred to in Clause 7.3, in which case the Borrower shall compensate the
actual damage so proven, if any.
|
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);
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(b)
|
the
Margin plus, in respect of successive periods of any duration (including
at call) up to 3 months which the Lender may select from time to time,
LIBOR.
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7.4
|
Notification of interest
periods and default rates. The Lender shall promptly
notify the Borrower of each interest rate determined by it under Clause
7.3 and of each period selected by it for the purposes of Clause 7.3(b);
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 Lender's
notification.
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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.
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8
|
REPAYMENT
AND PREPAYMENT
|
|
8.1
|
Term of the Loan. The
term of the Loan is limited to 48 months after the Disbursement, but
not later than 30 June 2012.
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8.2
|
Repayment. The Loan
shall be repaid in sixteen (16) consecutive quarterly instalments of
USD 812,500.00 each. The first repayment instalment shall be due and
payable 3 months after drawdown.
|
|
8.3
|
Prepayment. The
Borrower may prepay the whole or any part of the Loan on the last day of
an Interest Period, provided that (i) any partial prepayments shall be at
least USD 100,000.00 or a higher multiple thereof and (ii) the Lender
has received from the Borrower at least 10 Business Days’ prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made.
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8.4
|
Compulsory
prepayment. The Borrower shall be obliged to prepay the
entire Loan if the Ship is (i) sold or (ii) a Total
Loss.i
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8.5
|
Amounts payable on
prepayment. A prepayment shall be made together with
accrued interest (and any other amount payable) 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
15.
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8.6
|
Application of partial
prepayment. Any prepayments shall be applied against the
repayment instalments specified in Clause 8.2 in inverse order of
maturity.
|
|
8.7
|
No
reborrowing. Loan amounts may not be
reborrowed.
|
|
9
|
REPRESENTATIONS
AND WARRANTIES
|
The
Borrower represents and warrants to the Lender as follows:
|
9.1
|
Status. The
Borrower is duly established as a private company under the laws of the
Xxxxxxxx Islands and it is beneficially owned by Xxxxxxxxx Holdings Ltd.,
a Xxxxxxxx Islands company(the "Beneficial
Shareholder"). The Beneficial Shareholder itself is a wholly owned
subsidiary of TBS International Limited, Suite 306, Commerce Building, One
Xxxxxxxx Xxxx, Xxxxxxxx XX 00,
Xxxxxxx.
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9.2
|
Corporate
power. The Borrower has the corporate capacity, and has
taken all corporate action and obtained all consents necessary for
it:
|
|
(a)
|
to
own and operate the Ship and have it registered under its name at the
Panamanian register;
|
|
(b)
|
to
execute the Finance Documents to which it is a party;
and
|
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(c)
|
to
borrow under this Agreement and to make all the payments contemplated by,
and to comply with, the Finance
Documents.
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9.3
|
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):
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(a)
|
constitute
the Borrower’s legal, valid and binding obligations enforceable against
the Borrower in accordance with their respective terms;
and
|
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(b)
|
create
legal, valid and binding security interests enforceable in accordance with
their respective terms;
|
|
|
subject
to any relevant insolvency laws affecting creditors' rights
generally.
|
|
9.4
|
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 other requirement; 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.
|
|
9.5
|
Fulfilment of classification
requirements. The Vessel complies with all requirements imposed by
the Classification Society.
|
|
10
|
COVENANTS
|
The
Borrower undertakes with the Lender to comply with the following provisions of
this Clause 10 at all times during the Security Period, except as the Lender may
otherwise permit:
|
10.1
|
Corporate
Covenants. The Borrower
shall
|
|
(a)
|
maintain
its ownership structure and its separate corporate existence under the
laws of the Xxxxxxxx Islands and will not enter into any form of
amalgamation, merger or de-merger or any form of reconstruction or
reorganisation;
|
|
(b)
|
not
carry on any business other than the ownership and operation of the Ship;
and
|
|
(c)
|
procure
that the Beneficial Shareholder shall not dispose of its interest without
the Lender’s prior consent.
|
10.2 Ship Covenants. The
Borrower shall
|
(a)
|
maintain
the Ship at all times during the Security Period in a good and seaworthy
condition and arrange to have any damages to the Ship repaired without
delay;
|
|
(b)
|
if
at any time the Market Value of the Ship falls short of 177 per cent. of
the Secured Liabilities, promptly upon the Lender’s request either (i)
prepay such part of the Loan which is equal to the shortfall, together
with prepayment compensation as defined in Clause 15 or (ii) provide such
additional ship mortgage or other security in favour of the Lender as is
acceptable to the Lender and having a market value which is equal to the
shortfall or (iii) effect a
combination of (i) and (ii) above;
|
|
(c)
|
not
change the name, registry or flag of the Ship or make any modification to
the Ship which would or might materially alter the structure, type or
performance characteristics of the Ship or materially reduce the value of
the Ship;
|
|
(d)
|
bear
the expense of an annual valuation of the Ship by an independent surveyor
acceptable to the Lender;
|
|
(e)
|
ensure
that the Ship remains with class societies acceptable to the Lender
including the Classification
Society;
|
|
(f)
|
upon
the Lender’s request submit evidence of employment of the
Ship;
|
|
(g)
|
ensure
that the Ship shall not trade or embark ports in countries on which trade
constraints or other limitations have been
imposed;
|
|
(h)
|
ensure
that the commercial and technical management of the Ship shall be carried
out by the respective Manager and not effect any changes to the management
of the Ship without the Lender’s prior
approval;
|
|
(i)
|
not
enter into any charter agreement for the Ship with a term of more than
24 months without the Lender’s prior approval with the exception of
charter agreements with companies which are under indirect or direct
control of the Beneficial
Shareholder;
|
|
(j)
|
at
all times comply, and cause each Manager to comply, with International
Safety Management Code (ISM)
requirements;
|
|
(k)
|
notify
the Lender forthwith by fax, confirmed by letter, of any occurrence in
consequence whereof the Ship has become or is, by the passing of time or
otherwise, likely to become a Total
Loss;
|
|
(l)
|
ensure
that the next Special Survey is not due before 30 June
2012.
|
10.3 Insurance
Covenants. The Borrower shall
|
(a)
|
effect
insurances against fire and usual marine risks, including hull and
machinery (including drugs), war risks and excess risks, with western
insurance companies or brokers which are approved by the Lender, such
insurances to be the higher of (i) 120 per cent. of the Secured
Liabilities or (ii) 100 per cent. of the Market Value of the
Vessel;
|
|
(b)
|
enter
the Ship with a P&I-Club of the International Group Insurance, rated
at least BBB- (with S&P);
|
|
(c)
|
bear
the costs of a Mortgagee’s Interest Insurance including Mortgagee’s
Additional Perils (Pollution) in the amount of 120 per cent. each of the
maximum amount of the Loan, which will be arranged through the Lender’s
broker; and
|
|
(d)
|
evidence
the renewal of the insurances by providing cover notes from the insurers
two weeks prior to the end of each insurance
period.
|
10.4 Financial
Covenants. The Borrower shall send to the Lender:
|
|
(a)
|
as
soon as possible, but in no event later than 180 calendar days after the
end of each financial year of TBS International Ltd., the accounts
(balance sheet and profit and loss accounts) of TBS International Ltd.;
such accounts to be prepared in accordance with all applicable laws and
accounting principles generally accepted in Bermuda consistently applied,
to give a true and fair view of the state of affairs of TBS International
Ltd. at the date of those accounts and of its profit for the period to
which those accounts relate and fully to disclose or provide for all
significant liabilities of TBS International Ltd.;
and
|
|
|
(b)
|
as
soon as possible, but in no event later than 60 days after the end of each
quarter in each financial year of TBS International Ltd., management
accounts (in a format approved by the Lender) which show the results of
the operation of the Ship during the preceding financial
quarter.
|
10.5 General
Covenants. The Borrower shall
|
(a)
|
hold
the legal title to, and own the entire beneficial interest in, the Ship
free from all security interests and other interests and rights of every
kind, except for those created by the Finance Documents, and not create or
permit to arise any security interest over any other asset, present or
future;
|
|
(b)
|
not
without the Lender’s prior written consent assign, transfer, lease or
otherwise dispose of (otherwise than to the Lender) all or a substantial
part of its assets, whether by one transaction or a number of
transactions, whether related or not, or 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;
|
|
(c)
|
not
incur any liability or obligation except liabilities and obligations under
the Bareboat Charter, the Grainger Charter and/or the TBS Charter and the
Finance Documents and liabilities or obligations incurred in the ordinary
course of operating and chartering the Ship or provide any form of credit
or financial assistance to any person;
and
|
|
(d)
|
notify
the Lender as soon as it becomes aware of the occurrence of an Event of
Default or any matter which indicates that an Event of Default may have
occurred and thereafter keep the Lender fully up-to-date with all
developments.
|
|
11
|
SECURITIES
|
11.1 General. The
Secured Liabilities shall be secured by the following Security
Documents:
|
(a)
|
the
Mortgage;
|
|
(b)
|
the
Guarantees;
|
|
(c)
|
the
General Assignment; and
|
|
(d)
|
the
Accounts Pledge.
|
|
12
|
PAYMENTS
AND CALCULATIONS
|
|
12.1
|
Currency and method of
payments All payments to be made by the Borrower to the
Lender under a Finance Document shall be made to the
Lender:
|
|
(a)
|
by
not later than 11.00 a.m. (Hamburg time) on the due
date;
|
|
(b)
|
in
same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Lender shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement);
|
|
(c)
|
to
such account of the Lender as the Lender may from time to time notify to
the Borrower; and
|
|
(d)
|
any
amounts payable to be received free of any
charges.
|
|
12.2
|
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.
|
|
12.3
|
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.
|
|
12.4
|
Lender
account. The Lender shall maintain an account showing
the amounts advanced by the Lender and all other sums owing to the Lender
from the Borrower and any other Security Party under the Finance Documents
and all payments in respect of those amounts made by the Borrower and any
other Security Party.
|
|
12.5
|
Account prima facie
evidence. If the account maintained under Clause 12.4
shows an amount to be owed by the Borrower or any other Security Party to
the Lender, that account shall be prima facie evidence that that amount is
owed to the Lender.
|
|
13
|
EVENTS
OF DEFAULT
|
|
13.1
|
Events of
Default. An Event of Default is present if any event
constituting an important reason under German law shall occur, such
as:
|
|
(a)
|
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 by any Security Party occurs of any provision of a Finance Document
(other than a breach covered by paragraph (a));
or
|
|
(c)
|
any
representation, warranty or statement made by, or by an officer of any
Security Party in a Finance Document or in the Drawdown Notice or any
other notice or document relating to a Finance Document is untrue or
misleading when it is made; or
|
|
(d)
|
any
financial indebtedness of any Security Party is not paid when due or
becomes prematurely payable or capable of being prematurely declared
payable as a consequence of a default with respect thereto or any security
interest over any assets of any Security Party is enforced or becomes
capable of being enforced; or
|
|
(e)
|
any
order shall be made by any competent court or resolution passed by any
Security Party for the appointment of a liquidator, administrator or
receiver of, or for the winding-up of any Security Party;
or
|
|
(f)
|
an
encumbrancer takes possession of or a receiver is appointed of the whole
or, in the opinion of the Lender, any material part of the assets of any
Security Party or a distress, execution or other process is levied or
enforced upon or sued out against the whole or, in the opinion of the
Lender, a material part of the assets of any Security Party;
or
|
|
(g)
|
any
Security Party shall stop payment or shall be unable to, or shall admit
inability to, pay its debts as they fall due, or shall be adjudicated or
found bankrupt or insolvent, or shall enter into any composition or other
arrangement with its creditors generally;
or
|
|
(h)
|
any
event shall occur which under the law of any jurisdiction to which any
Security Party is subject has an effect equivalent or similar to any of
the events referred to in Clause 13.1(e), (f) or (g);
or
|
|
(i)
|
any
Security Party ceases or suspends carrying on its business or a part of
its business which, in the opinion of the Lender, is material in the
context of this Agreement; or
|
|
(j)
|
it
becomes unlawful or impossible (i) for any Security Party to discharge any
liability under a Finance Document or to comply with any other obligation
which the Lender considers material under a Finance Document or (ii) for
the Lender to exercise or enforce any right under, or to enforce any
security interest created by, a Finance Document;
or
|
|
(k)
|
the
Ship becomes a Total Loss and, within 90 days (or any longer period agreed
to by the Lender) after the date on which Total Loss occurs, the Lender
does not receive insurance proceeds relating to the Total Loss in at least
the amount for which the Ship is required to be insured under Clause 11 as
at the date of the event or circumstances giving rise to the Total Loss;
or
|
|
(l)
|
any
material provision of a Finance Document proves to have been or becomes
invalid or unenforceable, or a security interest created by a Security
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 Security Document is in any way imperilled or in
jeopardy; or
|
|
(n)
|
arrest
of the Ship and the arrest is not lifted latest within 10 calendar days;
or
|
|
(o)
|
any
breach by the Borrower, the Bareboat Charterer, PACIFIC RIM and/or TBS
occurs of any provision under the Quadripartite
Agreement.
|
|
13.2
|
Actions following an Event of
Default. On, or at any time after, the occurrence of an
Event of Default the Lender may
|
|
(a)
|
serve
on the Borrower a notice terminating this Agreement;
and/or
|
|
(b)
|
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
|
|
(c)
|
take
any other action which, as a result of the Event of Default or any notice
served under paragraph (a) or (b), the Lender is entitled to take under
any Finance Document or any applicable
law.
|
|
13.3
|
Termination of
obligations. On the service of a notice under Clause
13.2 (a), all the obligations of the Lender to the Borrower under
this Agreement shall terminate.
|
|
13.4
|
Acceleration of
Loan. On the service of a notice under Clause
13.2 (b), 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.
|
|
14
|
EXPENSES
|
|
14.1
|
Costs of preparation and
enforcement. The Borrower shall pay to the Lender on its
demand the amount of all expenses incurred by the Lender, including
reasonable legal fees, in connection with (i) the negotiation,
preparation, amendment, implementation, execution or registration of any
Finance Document or any related document or with any transaction
contemplated by a Finance Document or a related document and the valuation
of any security provided or offered under the terms of this Agreement or
any other matter relating to such security and (ii) any steps taken by the
Lender 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, whether or not such as would be allowed under rules of court or
any taxation or other procedure carried out under such
rules.
|
|
14.2
|
Documentary
taxes. The Borrower shall promptly pay any tax payable
on or by reference to any Finance Document, and shall, on the Lender's
demand, fully indemnify the Lender against any liabilities and expenses
resulting from any failure or delay by the Borrower to pay such a
tax.
|
|
15
|
INDEMNITIES
|
|
15.1
|
Indemnities regarding the
borrowing and repayment of Loan. The Borrower shall
fully indemnify the Lender on its demand in respect of all claims,
expenses, liabilities and losses which are made or brought against or
incurred by the Lender as a result of or in connection
with:
|
|
(a)
|
the
Loan not being borrowed on the date specified in the Drawdown Notice for
any reason other than a default by the
Lender;
|
|
(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 that Borrower
on the amount concerned under Clause
8);
|
|
(d)
|
the
occurrence and/or continuance of an Event of Default and/or the
acceleration of repayment of the Loan under Clause
13;
|
|
|
and
in respect of any tax (other than tax on its overall net income) for which
the Lender is liable in connection with any amount paid or payable to the
Lender (whether for its own account or otherwise) under any Finance
Document.
|
|
15.2
|
Breakage
costs. Without limiting its generality, Clause 15.1
covers any claim, expense, liability or loss, including a loss of a
prospective profit, incurred by the Lender in liquidating or employing
deposits from third parties acquired or arranged to fund or maintain all
or any part of the Loan and/or any overdue amount (or an aggregate amount
which includes the Loan or any overdue
amount).
|
|
15.3
|
Currency
indemnity. If any sum due from any Security Party to the
Lender 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 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 Lender against the loss arising when the
amount of the payment actually received by the Lender is converted at the
rate of exchange then available to the Lender into the Contractual
Currency.
|
|
16
|
NO
SET-OFF OR TAX DEDUCTION
|
|
16.1
|
No
deductions. All amounts due from the Borrower under a
Finance Document shall be paid without any form of set-off, cross-claim or
condition and free and clear of any tax deduction except a tax deduction
which the Borrower is required by law to
make.
|
|
16.2
|
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 Lender 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;
and
|
|
(c)
|
the
amount due in respect of the payment shall be increased by the amount
necessary to ensure that the Lender 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,
|
“tax
deduction” being any deduction or withholding for or on account of any present
or future tax except tax on the Lender's overall net income.
|
17
|
INCREASED
COSTS
|
|
17.1
|
Increased
costs. This Clause 17 applies if the Lender notifies the
Borrower that as a result of:
|
|
(a)
|
the
introduction or alteration after the date of this Agreement of a law, or
an official requirement or an alteration after the date of this Agreement
in the manner in which a law is interpreted or applied (disregarding any
effect which relates to the application to payments under this Agreement
of a tax on the Lender's overall net income);
or
|
|
(b)
|
complying
with any official requirement (including any which relates to capital
adequacy or liquidity controls or which affects the manner in which the
Lender allocates capital resources to its obligations under this
Agreement) which is introduced, or altered, or the interpretation or
application of which is altered, after the date of this
Agreement,
|
|
|
the
Lender (or a parent company of it) has incurred or will incur an "increased
cost".
|
17.2 Meaning of "increased
cost". In this Clause 17, "increased cost"
means:
|
(a)
|
an
additional or increased cost incurred as a result of, or in connection
with, the Lender having entered into, or being a party to, this Agreement
or having taken an assignment of rights under this Agreement, of funding
or maintaining the Loan or performing its obligations under this
Agreement, or of having outstanding all or any part of the Loan or other
unpaid sums; or
|
|
(b)
|
a
reduction in the amount of any payment to the Lender under this Agreement
or in the effective return which such a payment represents to the Lender
or on its capital;
|
|
(c)
|
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
Loan or (as the case may require) the proportion of that cost attributable
to the Loan; or
|
|
(d)
|
a
liability to make a payment, or a return foregone, which is calculated by
reference to any amounts received or receivable by the Lender under this
Agreement;
|
|
|
but
not an item attributable to a change in the rate of tax on the overall net
income of the Lender (or a parent company of
it).
|
|
17.3
|
Payment of increased
costs. The Borrower shall pay to the Lender, on its
demand, the amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate it for the
increased cost.
|
|
17.4
|
Notice of
prepayment. If the Borrower is not willing to continue
to compensate the Lender for the increased cost under Clause 17.3, the
Borrower may give the Lender not less than 14 days' notice of its
intention to prepay the Loan at the end of an Interest
Period.
|
|
17.5
|
Prepayment. A
notice under Clause 17.4 shall be irrevocable; and on the date specified
in its notice of intended prepayment, the Borrower shall prepay (without
premium or penalty) the Loan, together with accrued interest thereon at
the applicable rate plus the
Margin.
|
17.6 Application of
prepayment. Clause 8.6 shall apply in relation to the
prepayment.
|
18
|
TRANSFERS
AND CHANGES IN LENDING OFFICES
|
|
18.1
|
Transfer by
Borrower. The Borrower may not, without the consent of
the Lender transfer or assign any of its rights, liabilities or
obligations under any Finance
Document.
|
|
18.2
|
Transfer by
Lender. The Lender may transfer and/ or assign and/or
deal with all or any of the rights and interests which it has under or by
virtue of the Finance Documents or change its lending office. The Borrower
agrees and consents to the sale or transfer by the Lender, whether now or
later, of the Loan in whole or in part to one or more banks and/or
financing institutions, and to its assignment of all or portion of the
Loan to one or more assignees that are purchasers, whether related or
unrelated to the Lender. The Lender may provide to any purchaser, or
potential purchaser, any information the Lender may have about the
Borrower or about any other matter relating to the Loan. Any bank and/or
financing institution to whom such information is disclosed shall be
obliged to keep all information disclosed to it confidential, and shall
not disclose it to any entity or person not in its employment other than
its professional consultants such as attorneys and accountants, and shall
agree to return to the Lender copies of any materials provided to it by
the Lender should it elect not to purchase part or whole of the Loan. In
the event of an assignment by the Lender, the Borrower agrees to execute
and deliver such amendments to this Agreement and the Finance Documents as
the Lender reasonably may request.
|
|
19
|
NOTICES
|
|
19.1
|
General. Unless
otherwise specifically provided, any notice under or in connection with
any Finance Document shall be given by letter, fax or telex and shall be
effective upon receipt; and references in the Finance Documents to written
notices, notices in writing and notices signed by particular persons shall
be construed accordingly.
|
19.2 Addresses for
communications. A notice shall be sent:
to the
Borrower: x/x
XXX Xxxxxxxxxxxxx Xxxxxxx
Xxxxx 000, Xxxxxxxx
Building
One Chancery Lane
Xxxxxxxx XX 12, Bermuda
Attention: Xxxxxxx X.
Xxxx
Fax No.: x(000) 000-0000
and
TBS Shipping Services
Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X.
Xxxxxx
Fax No.: x(000) 000-0000
to the
Lender: Joh.
Berenberg, Xxxxxxx & Co. KG
Xxxxx Xxxxxxxxxxxxx 00
00000
Xxxxxxx
Xxxxxxx
Phone
No.: (0000)
00 000 000
Fax
No: (0000)
00 000 00 000
or to such other address as the
relevant party may notify the other.
|
20
|
SUPPLEMENTAL
|
|
20.1
|
Rights
cumulative. The rights and remedies which the Finance
Documents give to the Lender are cumulative, may be exercised as often as
appears expedient and 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.
|
|
20.2
|
Severability. 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. The parties
hereto agree in such event to substitute valid, legal and enforceable
provisions for the invalid, illegal or unenforceable provisions so as to
implement the intentions of the parties hereto to the extent that this is
legally permitted. The same applies in case of
lacunae.
|
|
20.3
|
General Business
Conditions. The General Business Conditions of the
Lender as per Appendix I hereto shall apply to and form an integral part
of this loan agreement as if fully set forth herein. In case of any
discrepancy between the provisions of this Agreement and the General
Business Conditions the provisions of this Loan Agreement shall
prevail
|
|
21
|
LAW
AND JURISDICTION
|
|
21.1
|
German
law. This Agreement shall be governed by, and construed
in accordance with, German law. If a term has a specific English legal
meaning that - when translated into German - differs from or is not
reflected in the laws of Germany, such meaning shall be disregarded.
Instead, the German meaning of such term shall
prevail.
|
|
21.2
|
Exclusive German
jurisdiction. Subject to Clause 21.3, the courts of
Hamburg, Germany, shall have exclusive jurisdiction to settle any disputes
which may arise out of or in connection with this Agreement and any
Finance Document.
|
|
21.3
|
Lender's rights
unaffected. Nothing in this Clause 21 shall derogate,
exclude or limit any right which the Lender 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. The Borrower shall not commence any proceedings in any
country other than Germany in relation to a matter which arises out of or
in connection with this Agreement.
|
THIS AGREEMENT has been
entered into on the date stated at the beginning of this Agreement.
BORROWER
SIGNED
by
Xxxxx X.
Xxxxxx
) /s/ Xxxxx X. Xxxxxx
for and
on behalf
of
)
Grainger
Maritime
Corp.
)
LENDER
SIGNED
by
Xxxx X.
Xxxxx )
/s/ Xxxx X. Xxxxx
for and
on behalf
of
)
Joh. Berenberg, Xxxxxxx & Co.
KG )
APPENDIX
A
Accounts
Pledge
APPENDIX
B
Guarantees
APPENDIX
C
Assignment of
Insurances
APPENDIX
D
Assignment of
Earnings
APPENDIX
E
Mortgage
APPENDIX
F
Managers' Subordination
Undertakings
APPENDIX
G
Quadripartite
Agreement
APPENDIX
H
Drawdown
Notice
APPENDIX
I
General Business
Conditions
