Exhibit 99.1
Date 16 February 2009
PUEBLO HOLDINGS LTD. and
SURF MARITIME CO.
as joint and several Borrowers
-and-
THE BANKS AND FINANCIAL INSTITUTIONS
LISTED IN SCHEDULE 1
as Lenders
-and-
DEKABANK DEUTSCHE GIROZENTRALE
as Bookrunner and Arranger
-and-
DEKABANK DEUTSCHE GIROZENTRALE
as Agent and Security Trustee
----------
LOAN AGREEMENT
----------
relating to a facility of up to US$120,000,000 to part-finance
the acquisition of two capesize newbuilding dry bulk carriers
to be constructed or any other vessels of the same type and size
as may be approved by the Lenders
XXXXXX, XXXXXX & XXXXXXXX
PIRAEUS
INDEX
CLAUSE PAGE
------ ----
1 INTERPRETATION 4
2 FACILITY 20
3 POSITION OF THE LENDERS 20
4 DRAWDOWN 21
5 INTEREST 23
6 INTEREST PERIODS 25
7 DEFAULT INTEREST 25
8 REPAYMENT AND PREPAYMENT 26
9 CONDITIONS PRECEDENT 28
10 REPRESENTATIONS AND WARRANTIES 29
11 GENERAL UNDERTAKINGS 32
12 CORPORATE UNDERTAKINGS 35
13 INSURANCE 36
14 SHIP COVENANTS 41
15 SECURITY COVER 45
16 PAYMENTS AND CALCULATIONS 47
17 APPLICATION OF RECEIPTS 48
18 APPLICATION OF EARNINGS 49
19 EVENTS OF DEFAULT 50
20 FEES AND EXPENSES 54
21 INDEMNITIES 56
22 NO SET-OFF OR TAX DEDUCTION 58
23 ILLEGALITY, ETC 58
24 INCREASED COSTS 59
25 SET-OFF 60
26 JOINT AND SEVERAL LIABILITY 61
27 TRANSFERS AND CHANGES IN LENDING OFFICES 61
28 VARIATIONS AND WAIVERS 64
29 NOTICES 65
30 SUPPLEMENTAL 67
31 LAW AND JURISDICTION 67
SCHEDULE 1 LENDERS AND COMMITMENTS
SCHEDULE 2 THE SHIPS, THE SHIPBUILDING
CONTRACTS, THE APPROVED CHARTERS
SCHEDULE 3 DRAWDOWN NOTICE
SCHEDULE 4 CONDITION PRECEDENT DOCUMENTS
SCHEDULE 5 TRANSFER CERTIFICATE
SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE
SCHEDULE 7 INDENTURE EXCERPT
EXECUTION PAGES 69
THIS AGREEMENT is made on 16 February 2009
BETWEEN:
(1) PUEBLO HOLDINGS LTD. and SURF MARITIME CO. as joint and several BORROWERS;
(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as LENDERS;
(3) DEKABANK DEUTSCHE GIROZENTRALE, as BOOKRUNNER;
(4) DEKABANK DEUTSCHE GIROZENTRALE, as ARRANGER;
(5) DEKABANK DEUTSCHE GIROZENTRALE, as AGENT; and
(6) DEKABANK DEUTSCHE GIROZENTRALE, as SECURITY TRUSTEE.
BACKGROUND
The Lenders have agreed to make available to the Borrowers as joint and several
borrowers a term loan facility of up to the lesser of (a) $120,000,000 and (b)
60 per cent. of the aggregate Initial Market Value of the Ships for the purpose
of financing part of the acquisition cost of each Ship.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 DEFINITIONS. Subject to Clause 1.5, in this Agreement:
ACCOUNT BANK" means a first class bank or financial institution nominated
by the Borrowers and approved by the Agent as the bank or financial
institution with which each Earnings Account will be opened and maintained;
"ADVANCES" means, together, the Ship A Advance and the Ship B Advance and
in the singular means either of them;
"ACCOUNTS PLEDGE" means in relation to each Earnings Account, a deed
creating security in respect of the Earnings Account to be executed by the
relevant Borrower in favour of all of the Creditor Parties in the Agreed
Form and in the plural means both of them;
"AFFECTED LENDER" has the meaning given in Clause 5.7;
"AGENCY AND TRUST AGREEMENT" means the agency and trust agreement executed
or to be executed between the Borrowers, the Lenders, the Bookrunner, the
Arranger, the Agent and the Security Trustee in the Agreed Form;
"AGENT" means DekaBank Deutsche Girozentrale, acting in such capacity
through its office at Mainzer Xxxxxxxx(xxxx)x 00, 00000 Xxxxxxxxx xx Xxxx,
Xxxxxxx, or any successor of it appointed under clause 5 of the Agency and
Trust Agreement;
"AGREED FORM" means in relation to any document, that document in the form
reasonably approved in writing by the Agent (acting on the instructions of
the Lenders) or as otherwise approved in accordance with any other approved
procedure specified in any relevant provision of any Finance Document;
"APPROVED BROKER" means each of X. Xxxxxxxx & Company Limited of London,
England, Xxxxx Xxxxxxxx Xxxxxx X.X. of Paris, France, X.X. Xxxxxx
Shipbrokers A.S. of Oslo, Norway, Arrow Sale & Purchase (UK) Ltd. of
London, England, Xxxxxxx Xxxxxx & Xxxxx of London, England, Fearnley AS of
Oslo, Norway and Maersk Shipbrokers of Copenhagen and any other firm of
brokers as may be accepted by the Agent in its sole discretion and, in the
plural, means all of them;
"APPROVED FLAG" means the Greek, Bahamas, Panamanian, Maltese, Liberian or
Xxxxxxxx Islands flag or such flag as the Agent may, with the authorisation
of the Majority Lenders, approve as the flag on which a Ship shall be
registered;
"APPROVED FLAG STATE" means any country in which the Agent may with the
authorisation of the Majority Lenders, approve that a Ship be registered;
"APPROVED CHARTER" means:
(a) in relation to Ship A, the Ship A Charter;
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(b) in relation to Ship B, the Ship B Charter; and
(c) any other Charter approved by the Majority Lenders and insured by the
Charter Insurer,
and, in the plural, means all of them;
"APPROVED CHARTERER" means:
(a) in relation to Ship A, during the period when the Ship A Charter is in
place, the company referred to in the first column of Part C of
Schedule 2 as being the charterer of Ship A; and
(b) in relation to Ship B, during the period when the Ship B Charter is in
place, the company referred to in the first column of Part C of
Schedule 2 as being the Charterer of Ship B; and
(c) in relation to any other Approved Charter, any charterer of that Ship
approved by the Majority Lenders,
and, in the plural, means all of them;
"APPROVED MANAGER" means in relation to a Ship, Navios Shipmanagement Inc.
a corporation incorporated under the laws of the Xxxxxxxx Islands and
having its registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, the Xxxxxxxx Xxxxxxx, XX 00000 or any other
company which the Agent may, with the authorisation of the Lenders, approve
from time to time as the commercial, technical and operational manager of a
Ship;
"ARRANGER" means DekaBank Deutsche Girozentrale, acting in such capacity
through its office at Mainzer Xxxxxxxx(xxxx)x 00, 00000 Xxxxxxxxx xx Xxxx,
Xxxxxxx;
"ASSIGNMENT OF WARRANTY CLAIMS" means, in relation to each Ship, a deed of
assignment in respect of the rights and benefits under any Warranty Claims
to be executed by the relevant Borrower in favour of the Security Trustee,
in the Agreed Form, and, in the plural, means both of them;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on:
(a) in the case of each Advance, the Final Availability Date relevant to
that Advance (or, in each case, 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;
"BOOKRUNNER" means DekaBank Deutsche Girozentrale, acting in such capacity
through its office at Mainzer Xxxxxxxx(xxxx)x 00, 00000 Xxxxxxxxx xx Xxxx,
Xxxxxxx;
"BORROWER A" means Pueblo Holdings Ltd., a corporation incorporated under
the laws of the Xxxxxxxx Islands and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Xxxxxxxx
Xxxxxxx, XX 00000 (and includes its respective successors);
"BORROWER B" means Surf Maritime Co., a corporation incorporated under the
laws of the Xxxxxxxx Islands and having its registered office at Trust
Company Complex, Ajeltake
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Road, Ajeltake Island, Majuro, the Xxxxxxxx Xxxxxxx, XX 00000 (and includes
its respective successors);
"BORROWERS" means together Borrower A and Borrower B and, in the singular,
means either of them;
"BUILDER" means the company referred to in the first column of Part B of
Schedule 2;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
are open in London, Frankfurt, Athens, Piraeus (and, in relation to any day
on which a payment is required to be made to the Builder, also in Seoul)
and, in respect of a day on which a payment is required to be made under a
Finance Document, also in New York City;
"CHARTER" means, in relation to a Ship, any time charterparty or other
contract of employment (other than the Initial Charter relative to the
Ship) in respect of that Ship for a term of more than 11 consecutive months
in duration or any bareboat charter to be entered into by the Borrower
owning that Ship and an Approved Charterer on such terms and conditions
acceptable to the Lenders (in their sole and absolute discretion) as the
same may be amended, supplemented from time to time, and in the plural,
means all of them;
"CHARTER ASSIGNMENT" means, in relation to each Approved Charter, a deed of
assignment of the rights of the relevant Borrower in respect of that
Approved Charter and any guarantee of such Approved Charter (if such a
guarantee is provided to the Borrower owning that Ship) in favour of the
Security Trustee, in the Agreed Form and, in the plural, means all of them;
"CHARTER INSURER" means the company listed as insurer in Part D of Schedule
2;
COMMITMENT" means, in relation to a Lender, the amount set opposite its
name in Schedule 1, or, as the case may require, the amount specified in
the relevant Transfer Certificate, as that amount may be reduced, cancelled
or terminated in accordance with this Agreement (and "TOTAL COMMITMENTS"
means the aggregate of the Commitments of all the Lenders);
"COMPLIANCE DATE" means 30 June and 31 December in each calendar year (or
such other dates as of which the Corporate Guarantor prepares the
consolidated financial statements which it is required to deliver to the
Agent pursuant to Clause 11.6 of this Agreement);
"COMPLIANCE CERTIFICATE" means a certificate in the form set out in
Schedule 6 (or in any other form which the Agent, acting with the
authorisation of all the Lenders, approves or requires);
"CONTRACTUAL CURRENCY" has the meaning given in Clause 21.5;
"CONTRIBUTION" means, in relation to a Lender, the part of the Loan which
is owing to that Lender;
"CORPORATE GUARANTOR" means Navios Maritime Holdings Inc., a corporation
incorporated under the laws of the Xxxxxxxx Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, the Xxxxxxxx Xxxxxxx, XX 00000;
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"CORPORATE GUARANTEE" means a guarantee to be given by the Corporate
Guarantor in favour of the Security Trustee guaranteeing the obligations of
the Borrowers under this Agreement and the other Finance Documents in the
Agreed Form PROVIDED HOWEVER that during the validity of both of the
Initial Charters and as long as no Event of Default exists, the amount
guaranteed under such Corporate Guarantee shall be limited to 75 per cent.
of the Secured Liabilities;
"CREDIT DEFAULT INSURANCE" means in relation to each Initial Charter, the
insurance policy dated 10 October 2007 and entered into between the
Corporate Guarantor and the Charter Insurer;
"CREDIT DEFAULT INSURANCE ASSIGNMENT" means in respect to both Ships an
assignment of the rights and benefits of the Corporate Guarantor under the
Credit Default Insurance related to the Ships in favour of the Security
Trustee in the Agreed Form;
"CREDITOR PARTY" means the Agent, the Bookrunner, the Arranger, the
Security Trustee or any Lender, whether as at the date of this Agreement or
at any later time;
"DELIVERY DATE" means, in respect of a Ship, the date on which title to and
possession of such Ship is transferred from the Builder to the relevant
Borrower pursuant to the relevant Shipbuilding Contract;
"DOLLARS" and "$" means the lawful currency for the time being of the
United States of America;
"DRAWDOWN DATE" means, in relation to an Advance, the date requested by the
Borrowers for such Advance to be made, or (as the context requires) the
date on which that 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, acting with the authorisation of all the
Lenders, approves or reasonably requires);
"EARNINGS" means in relation to a Ship, all moneys whatsoever which are
now, or later become, payable (actually or contingently) to the Borrower
owning that Ship or the Security Trustee and which arise out of the use or
operation of such Ship, including (but not limited to):
(a) all freight, hire and passage moneys, compensation payable to the
Borrower owning that Ship or the Security Trustee in the event of
requisition of such 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 such Ship;
(b) all moneys which are at any time payable under Insurances in respect
of loss of earnings including, without limitation, Credit Default
Insurances in respect of Initial Charter; and
(c) if and whenever a 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 such Ship;
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"EARNINGS ACCOUNT" means in relation to each Ship, an account in the name
of the Borrower owning that Ship with the Account Bank in Piraeus, Greece
designated "name of the relevant Borrower- Earnings Account" or any other
account (with that or another office of the Account Bank) which is
designated by the Agent as the Earnings Account in relation to each Ship
for the purposes of this Agreement and, in the plural, means both of them;
"ENVIRONMENTAL CLAIM" means:
(a) any claim by any governmental, judicial or regulatory authority which
arises out of an Environmental Incident or an alleged Environmental
Incident or which relates to any Environmental Law; or
(b) any claim by any other person which relates to an Environmental
Incident or to an alleged Environmental Incident,
and "CLAIM" means a claim for damages, compensation, fines, penalties or
any other payment of any kind whether or not similar to the foregoing; an
order or direction to take, or not to take, certain action or to desist
from or suspend certain action; and any form of enforcement or regulatory
action, including the arrest or attachment of any asset;
"ENVIRONMENTAL INCIDENT" means, in relation to each Ship:
(a) any release of Environmentally Sensitive Material from such Ship; or
(b) any incident in which Environmentally Sensitive Material is released
from a vessel other than the relevant Ship and which involves a
collision between such Ship and such other vessel or some other
incident of navigation or operation, in either case, in connection
with which such Ship is actually or potentially liable to be arrested,
attached, detained or injuncted and/or such Ship and/or the owner
thereof and/or any operator or manager of such Ship is at fault or
allegedly at fault or otherwise liable to any legal or administrative
action; or
(c) any other incident in which Environmentally Sensitive Material is
released otherwise than from a Ship and in connection with which a
Ship is actually or potentially liable to be arrested and/or where the
owner thereof and/or any operator or manager of such Ship is at fault
or allegedly at fault or otherwise liable to any legal or
administrative action;
"ENVIRONMENTAL LAW" means any law relating to pollution or protection of
the environment, to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products and any other
substance (including any chemical, gas or other hazardous or noxious
substance) which is (or is capable of being or becoming) polluting, toxic
or hazardous;
"EVENT OF DEFAULT" means any of the events or circumstances described in
Clause 19.1;
"FINAL AVAILABILITY DATE" means in relation to:
(a) the Ship A Advance, the Intended Delivery Date of Ship A;
(b) the Ship B Advance, the Intended Delivery Date of Ship B;
8
in each case such later date as the Agent may, with the authorisation of
all the Lenders, agree with the Borrowers;
"FINAL MATURITY DATE" means in relation to each Advance, the date falling
on the tenth anniversary of the Delivery Date of the Ship financed by that
Advance;
"FINANCE DOCUMENTS" means:
(a) this Agreement;
(b) the Agency and Trust Agreement;
(c) the Corporate Guarantee;
(d) the General Assignments;
(e) the Assignments of Warranty Claims;
(f) the Accounts Pledges;
(g) the Mortgages;
(h) the Charter Assignments;
(i) the Managers' Undertakings;
(j) the Credit Default Insurance Assignment; and
(k) any other document (whether creating a Security Interest or not) which
is executed at any time by any Borrower, the Corporate Guarantor 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 other
documents referred to in this definition;
"FINANCIAL INDEBTEDNESS" means, in relation to a person (the "DEBTOR"), a
liability of the debtor (in the case of the Corporate Guarantor, a
liability in excess of $7,000,000):
(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
under a guarantee, indemnity or similar obligation entered into by the
debtor in respect of a liability of another person which would fall within
paragraphs (a) to (e) if the references to the debtor referred to the other
person; "FINANCIAL YEAR" means, in relation to the
9
Corporate Guarantor, each period of 1 year commencing on 1 January in
respect of which its audited accounts are or ought to be prepared;
"GENERAL ASSIGNMENT" means, in relation to each Ship, a general assignment
of the Earnings, the Insurances and any Requisition Compensation of such
Ship to be executed by the Borrower which is the owner of such Ship in
favour of the Security Trustee in the Agreed Form and, in the plural, means
both of them;
"GROUP" means the Corporate Guarantor and its subsidiaries (whether direct
or indirect and including, but not limited to, each Borrower and the
Approved Manager) from time to time during the Security Period and "MEMBER
OF THE GROUP" shall be construed accordingly;
"IACS" means the International Association of Classification Societies;
"INDENTURE" means the Indenture dated as of 18 December 2006 issued by the
Corporate Guarantor and others for 9 1/2% Senior Notes due on 18 December
2014;
"INDENTURE EXCERPT" means the excerpt from the Indenture set out in
Schedule 7;
"INITIAL CHARTER" means, in relation to:
(d) Ship A, the Ship A Charter; and
(e) Ship B, the Ship B Charter, and, in the plural, means both of them;
"INITIAL MARKET VALUE" means, in relation to each Ship, the Market Value
thereof as at the Drawdown Date of the Advance related to such Ship
determined in accordance with the valuations referred to in paragraph 6 of
Part B of Schedule 4;
"INSURANCES" means in relation to each Ship:
(a) all policies and contracts of insurance, including entries of such
Ship in any protection and indemnity or war risks association, which
are effected in respect of such Ship, its Earnings or otherwise in
relation to it; and
(b) all rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;
"INTENDED DELIVERY DATE" means, in relation to a Ship, the date on which it
is intended that title and possession of such Ship is transferred from the
Builder to the relevant Borrower pursuant to the Shipbuilding Contract
applicable to that Ship, being namely:
(a) in relation to Ship A, 30 September 2009; and
(b) in relation to Ship B, 30 June 2009;
or any other date as may be agreed pursuant to the applicable Shipbuilding
Contract;
"INTEREST PERIOD" means a period determined in accordance with Clause 6;
"ISM CODE" means, in relation to its application to the relevant Approved
Manager, each Borrower and its Ship and its operation:
10
(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 Organisation pursuant to
Resolution A.788(19) adopted on 25 November 1995,
as the same may be amended, supplemented or replaced from time to time;
"ISM CODE DOCUMENTATION" includes:
(a) the document of compliance (DOC) and safety management certificate
(SMC) issued pursuant to the ISM Code in relation to the Ships or any
of them 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 Ships' compliance or the compliance of
the Borrowers (or either of them) with the ISM Code which the Agent
may require;
"ISM SMS" means, in relation to each Ship, the safety management system for
such Ship which is required to be developed, implemented and maintained by
the Borrowers 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 each Ship's flag state and any jurisdiction on which a
Ship is operated;
"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;
"ISSC" means a valid and current international ship security certificate
issued under the ISPS Code;
"LENDER" means, subject to Clause 27.6:
(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 Agent under
11
Clause 27.14) 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;
(and includes their respective successors);
"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 Quotation Date for that
Interest Period (and, for the purposes or this Agreement, "Reuters BBA
Page LIBOR 01" means the display designated as "Reuters BBA Page LIBOR
01" on the Reuters Money News Service or such other page as may
replace Reuters BBA Page LIBOR 01 on that service or on such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for Dollars); or
(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 (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the rates
per annum notified to the Agent by each Lender as the rate at which
deposits in Dollars are offered to that Lender by leading banks in the
London Interbank Market at that Lender's request at or about 11.00
a.m. (London time) on the Quotation Date for that Interest Period for
a period equal to that Interest Period and for delivery on the first
Business Day of it;
"LOAN" 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 the Loan has been made, Lenders whose Commitments total at
least 66.66 per cent. of the Total Commitments; and
(b) after the Loan has been made, Lenders whose Contributions total at
least 66.66 per cent. of the Loan;
"MANAGEMENT AGREEMENT" means, in relation to each Ship, an agreement made
or to be made between (i) the relevant Borrower and (ii) the Approved
Manager in respect of the commercial and technical management of that Ship
to be in form and substance in all respects acceptable to the Lenders and,
in the plural, means both of them;
"MANAGER'S UNDERTAKING" means, in relation to each Ship, the letter of
undertaking executed or to be executed by the Approved Manager in favour of
the Security Trustee in the Agreed Form agreeing certain matters in
relation to the commercial and technical management of such Ship and
subordinating the rights of the Approved Manager against such Ship and the
Borrower which is the owner of such Ship to the rights of the Creditor
Parties under the Finance Documents and, in the plural, means both of them;
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"MARGIN" means, 1.90 per cent. per annum;
"MARKET VALUE" means, in respect of each Ship, the market value thereof
determined from time to time in accordance with Clause 15.3;
"MATERIAL ADVERSE CHANGE" means any event or series of events which, in the
opinion of the Majority Lenders, is likely to have a Material Adverse
Effect;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on:
(a) the business, property, assets, liabilities, operations or condition
(financial or otherwise) of the Borrowers and/or any Security Party
taken as a whole;
(b) the ability of either Borrower and/or any Security Party to (i)
perform any of its obligations or (ii) discharge any of its
liabilities, under any Finance Document as they fall due; or
(c) the validity or enforceability of any Finance Document;
"MORTGAGE" means, in relation to each Ship, a first preferred or as the
case may be, priority ship mortgage on that Ship under the relevant
Approved Flag (and including any collateral deed of covenant if required
under the laws of the relevant Approved Flag State) executed or to be
executed by the relevant Borrower in favour of the Security Trustee, in
each case to be in the Agreed Form and, in the plural, means both of them;
"NEGOTIATION PERIOD" has the meaning given in Clause 5.10;
"NOTIFYING LENDER" has the meaning given in Clause 23.1 or Clause 24.1 as
the context requires;
"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 master's and crew's wages in accordance with usual
maritime practice;
(c) liens for salvage;
(d) liens arising by operation of law for not more than 2 months' prepaid
hire under any charter in relation to any 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 Borrower owning
such Ship in good faith by appropriate steps) and subject, in the case
of liens for repair or maintenance, to Clause 14.14(g);
(f) any Security Interest created in favour of a plaintiff or defendant in
any proceedings or arbitration as security for costs and expenses
where a Borrower is actively prosecuting or defending such proceedings
or arbitration in good faith;
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(g) Security Interests arising by operation of law in respect of taxes
which are not overdue for payment or in respect of taxes being
contested in good faith by appropriate steps and in respect of which
appropriate reserves have been made; and
(h) the Indenture;
"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 has the centre of its main interests or
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 branch or 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, whether as
main or territorial or ancillary proceedings, or which would have such
jurisdiction if their assistance were requested by the courts of a
country referred to in paragraphs (b) or (c);
"PURCHASE PRICE" means:
(a) in respect of Ship A the total amount of $109,000,000 payable to the
Builder pursuant to the Shipbuilding Contract A; and
(b) in respect of Ship B the total amount of $108,500,000 payable to the
Builder pursuant to the Shipbuilding Contract B;
"QUOTATION DATE" means, in relation to any Interest Period (or any other
period for which an interest rate is to be determined under any provision
of a Finance Document), the day on which quotations would ordinarily be
given by leading banks in the London Interbank Market for deposits in the
currency in relation to which such rate is to be determined for delivery on
the first day of that Interest Period or other period;
"RELEVANT PERSON" has the meaning given in Clause 19.9;
"REPAYMENT DATE" means a date on which a repayment is required to be made
under Clause 8;
"REQUISITION COMPENSATION" includes, in relation to a Ship, 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";
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"SECURITY COVER RATIO" means the ratio which is determined, at any time, by
comparing the aggregate of the amounts referred to in paragraphs (a) and
(b) of Clause 15.1 against the Loan at the relevant time;
"SECURED LIABILITIES" means all liabilities which the Borrowers, the
Security Parties or any of them have, at the date of this Agreement or at
any later time or times, under or in connection with any Finance Document
or any judgment relating to any Finance Document; and for this purpose,
there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in
connection with, any bankruptcy, liquidation, arrangement or other
procedure under the insolvency laws of any country;
"SECURITY INTEREST" means:
(a) a mortgage, charge (whether fixed or floating), pledge, assignment, trust,
trust receipt, consignment, any maritime or other lien of any kind;
(b) any other security interest of a kind not included in paragraph (a) of this
definition;
(c) a conditional sale agreement (including an agreement to sell subject to
retention of title), hire purchase agreement, lease or contract of bailment
that in effect secures payment or performance of a liability or obligation;
(d) right of set-off or flawed asset arrangement that in effect secures payment
or performance of a liability or obligation; and
(e) without limiting the generality of the preceding paragraphs of this
definition, any other transaction or instrument that in substance or by
operation of law, now or in the future, creates an interest, right or claim
in relation to property (real or personal) that secures the payment or
performance of a liability or obligation, without regard to:
(i) the form of the transaction or instrument; or
(ii) the identity of the person who has title to the relevant property
PROVIDED HOWEVER THAT, in the case of the Corporate Guarantor, Security
Interest shall be deemed to include any of the interests described under
(a) to (e) (inclusive) above as long as same constitute a Material Adverse
Change;
"SECURITY PARTY" means the Approved Manager, the Corporate Guarantor 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 last paragraph of
the definition of "Finance Documents";
"SECURITY PERIOD" means the period commencing on the date of this Agreement
and ending on the date on which the Agent notifies the Borrowers, the
Security Parties and the Lenders and the other Creditor Parties that:
(a) all amounts which have become due for payment by either 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;
15
(c) neither either 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 all the Lenders do not consider
that there is a significant risk that any payment or transaction under
a Finance Document would be set aside, or would have to be reversed or
adjusted, in any present or possible future bankruptcy of a Borrower
or a Security Party or in any present or possible 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 DekaBank Deutsche Girozentrale, acting in such
capacity through its office at Mainzer Xxxxxxxx(xxxx)x 00, 00000 Xxxxxxxxx
xx Xxxx, Xxxxxxx, or any successor of it appointed under clause 5 of the
Agency and Trust Agreement;
"SELLER" means:
(a) in relation to Ship A, the company referred to in the second column of
Part B of Schedule 2 as the seller of Ship A (the "SELLER A"); and
(b) in relation to Ship B, the company referred to in the second column of
Part B of Schedule 2 as the seller of Ship B (the "SELLER B");
"SHIP A" means the ship described in Part A of Schedule 2;
"SHIP A SHIPBUILDING CONTRACT" means the shipbuilding contract in respect
of Ship A described in Part B of Schedule 2, as the same may be further
supplemented and/or amended from time to time;
"SHIP A ADVANCE" means an amount of up to $60,000,000 to be made available
by the Lenders pursuant to Clause 2.1(a) as that amount may be reduced,
cancelled or terminated in accordance with this Agreement or, where the
context so requires, the principal amount of such Advance which has been
advanced to the Borrowers and which is for the time being outstanding under
this Agreement;
"SHIP A CHARTER" means the time charterparty in respect of Ship A as
described in Part C of Schedule 2 as the same may be further supplemented
and/or amended from time to time;
"SHIP B" means the ship described in Part A of Schedule 2;
"SHIP B SHIPBUILDING CONTRACT" means the shipbuilding contract in respect
of Ship B described in Part B of Schedule 2, as the same may be further
supplemented and/or amended from time to time;
"SHIP B ADVANCE" means an amount of up to $60,000,000 to be made available
by the Lenders pursuant to Clause 2.1(b) as that amount may be reduced,
cancelled or terminated in accordance with this Agreement or, where the
context so requires, the principal amount of such Advance which has been
advanced to the Borrowers and which is for the time being outstanding under
this Agreement;
"SHIP B CHARTER" means the time charterparty in respect of Ship B as
described in Part C of Schedule 2, as the same may be further supplemented
and/or amended from time to time;
"SHIPS" means, together, Ship A and Ship B and, in the singular, means
either of them;
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"SHIPBUILDING CONTRACTS" means together, Ship A Shipbuilding Contract and
Ship B Shipbuilding Contract and, in the singular, means either of them;
"SUMMARY OF TERMS" means the summary of terms dated 23 December 2008 issued
by the Agent and accepted by the Corporate Guarantor on 29 December 2008;
"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 that
Ship, whether for full consideration, a consideration less than its
proper value, a nominal consideration or without any consideration,
which is effected by any government or official authority or by any
person or persons claiming to be or to represent a government or
official authority (excluding a requisition for hire for a fixed
period not exceeding 1 year without any right to an extension) unless
it is within 1 month redelivered to the relevant Borrower's full
control;
(c) any arrest, capture, seizure or detention of that Ship (including any
hijacking or theft) unless it is within 1 month redelivered to the
relevant Borrower's full control;
"TOTAL LOSS DATE" means, in relation to each Ship:
(a) in the case of an actual loss of that 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 that Ship, the earliest of:
(i) the date on which a notice of abandonment is given to the
insurers; and
(ii) the date of any compromise, arrangement or agreement made by or
on behalf of the Borrower who is the owner thereof with that
Ship's insurers in which the insurers agree to treat that Ship as
a total loss; and
(c) in the case of any other type of total loss, on the date (or the most
likely date) on which it appears to the Agent that the event
constituting the total loss occurred;
"TRANSFER CERTIFICATE" has the meaning given in Clause 27.2;
"TRUST PROPERTY" has the meaning given in clause 3.1 of the Agency and
Trust Agreement;
"US GAAP" means generally accepted accounting principles as from time to
time in effect in the United States of America; and
"WARRANTY CLAIMS" means, in respect of each Shipbuilding Contract, the
claims that the relevant Borrower may have against the Builder in respect
of the warranty for the relevant Ship provided by the Builder pursuant to
the terms of such Shipbuilding Contract.
1.2 CONSTRUCTION OF CERTAIN TERMS. In this Agreement:
"ADMINISTRATION NOTICE" means a notice appointing an administrator, a
notice of intended appointment and any other notice which is required by
law (generally or in the case
17
concerned) to be filed with the court or given to a person prior to, or in
connection with, the appointment of an administrator;
"APPROVED" means, for the purposes of Clause 13, approved in writing by the
Agent;
"ASSET" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or other
payment;
"COMPANY" includes any partnership, joint venture and unincorporated
association;
"CONSENT" includes an authorisation, consent, approval, resolution,
licence, exemption, filing, registration, notarisation and legalisation;
"CONTINGENT LIABILITY" means a liability which is not certain to arise
and/or the amount of which remains unascertained;
"DOCUMENT" includes a deed; also a letter, fax or telex;
"CHARTER" means any Charter where any remaining duration shall be taken
into account especially for the purposes of calculating Market Value;
"EXCESS RISKS" means, in relation to each Ship, the proportion of claims
for general average, salvage and salvage charges not recoverable under the
hull and machinery policies in respect of that Ship in consequence of its
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 order or decree, any form of delegated legislation, 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 each Ship, all insurances
effected, or which the Borrower who is the owner thereof is obliged to
effect, under Clause 13 or any other provision of this Agreement or another
Finance Document;
"PARENT COMPANY" has the meaning given in Clause 1.4;
"PERSON" includes any company; any state, political sub-division of a state
and local or municipal authority; and any international organisation;
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"POLICY", in relation to any insurance, includes a slip, cover note,
certificate of entry or other document evidencing the contract of insurance
or its terms;
"PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
protection and indemnity association managed in London, including pollution
risks and the proportion (if any) of any sums payable to any other person
or persons in case of collision which are not recoverable under the hull
and machinery policies by reason of the incorporation in them of Clause 6
of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the
Institute Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time
Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause
(1/10/71) or any equivalent provision;
"REGULATION" includes any regulation, rule, official directive, request or
guideline whether or not having the force of law of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
"SUBSIDIARY" has the meaning given in Clause 1.4;
"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" includes the risk of mines and all risks excluded by clause 29
of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the
Institute Time Clauses (Hulls)(1/11/95) or clause 33 of the Institute Time
Clauses (Hulls) (1/10/83).
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; and
19
(b) P has direct or indirect control over a majority of the voting rights
attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove a majority of the
directors of S; or
and any company of which S is a subsidiary is a parent company of S.
1.5 GENERAL INTERPRETATION. In this Agreement:
(a) references in Clause 1.1 to a Finance Document or any other document being
in the form of a particular appendix include references to that form with
any modifications to that form which the Agent (with the authorisation of
all the Lenders in the case of substantial modifications) approves or
reasonably requires;
(b) references to, or to a provision of, a Finance Document or any other
document are references to it as amended or supplemented, whether before
the date of this Agreement or otherwise;
(c) references to, or to a provision of, any law include any amendment,
extension, re-enactment or replacement, whether made before the date of
this Agreement or otherwise;
(d) words denoting the singular number shall include the plural and vice versa;
and
(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6 HEADINGS. In interpreting a Finance Document or any provision of a Finance
Document, all clause, sub-clause and other headings in that and any other
Finance Document shall be entirely disregarded.
2 FACILITY
2.1 AMOUNTS AND PURPOSES OF ADVANCES. Subject to the other provisions of this
Agreement, the Lenders shall make a term loan facility not exceeding the
lesser of (i) $120,000,000 and (ii) 60 per cent. of the aggregate Initial
Market Value of the Ships available to the Borrowers in two Advances, one
in respect of each Ship as follows:
(a) the Ship A Advance shall be in the principal amount of up to the lesser of
(i) $60,000,000 and (ii) 60 per cent. of the Initial Market Value of Ship A
to be made available by the Lenders to the Borrowers for the purpose of
assisting Borrower A in financing part of the acquisition cost of Ship A;
and
(b) the Ship B Advance shall be in the principal amount of up to the lesser of
(i) $60,000,000 and (ii) 60 per cent. of the Initial Market Value of Ship B
to be made available by the Lenders to the Borrowers for the purpose of
assisting Borrower B in financing part of the acquisition cost of Ship B.
2.2 LENDERS' PARTICIPATIONS IN ADVANCES. Subject to the other provisions of
this Agreement, each Lender shall participate in each Advance in the
proportion which, as at the relevant Drawdown Date, its Commitment bears to
the Total Commitments.
2.3 PURPOSE OF ADVANCES. The Borrowers undertake with each Creditor Party to
use each Advance only for the purpose stated in the preamble to this
Agreement.
3 POSITION OF THE LENDERS
3.1 INTERESTS OF LENDERS SEVERAL. The rights of the Lenders under this
Agreement are several.
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3.2 INDIVIDUAL LENDER'S RIGHT OF ACTION. Each Lender shall be entitled, having
obtained the prior consent of all the Lenders to xxx for any amount which
has become due and payable by the Borrowers to it under this Agreement
without joining the Agent, the Security Trustee or any other Lender as
additional parties in the proceedings.
3.3 PROCEEDINGS BY INDIVIDUAL LENDER. No Lender may, without the prior consent
of all the Lenders, bring proceedings in respect of:
(a) any other liability or obligation of the Borrowers or any of them or a
Security Party under or connected with a Finance Document; or
(b) any misrepresentation or breach of warranty by the Borrowers or any of them
or a Security Party in or connected with a Finance Document.
3.4 OBLIGATIONS OF LENDERS SEVERAL. The obligations of the Lenders under this
Agreement are several; and a failure by a Lender to perform its obligations
under this Agreement shall not result in:
(a) the obligations of any other Lender being increased; nor
(b) any Borrower, any Security Party or any other Lender 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 to perform its obligations under this Agreement.
3.5 PARTIES BOUND BY CERTAIN ACTIONS OF MAJORITY LENDERS. Each Lender, each
Borrower and each Security Party shall be bound by:
(a) any determination made, or action taken, by the Majority Lenders under any
provision of a Finance Document;
(b) any instruction or authorisation given by the Majority Lenders to the Agent
or the Security Trustee under or in connection with any Finance Document;
(c) any action taken (or in good faith purportedly taken) by the Agent or the
Security Trustee in accordance with such an instruction or authorisation.
3.6 RELIANCE ON ACTION OF AGENT. However, the Borrowers 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.
3.7 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 Borrowers may
request an Advance to be made by ensuring that the Agent receives a
completed Drawdown
21
Notice not later than 11.00 a.m. (Frankfurt time) 2 Business Days prior to
the intended Drawdown Date.
4.2 AVAILABILITY. The conditions referred to in Clause 4.1 are that:
(a) the Drawdown Date has to be a Business Day during the Availability Period;
(b) each Advance shall be in the principal amount of up to the lesser of (i)
$60,000,000 and (b) 60 per cent. of the Initial Market Value of the Ship to
be financed by that Advance;
(c) the aggregate amount of the Advances shall not exceed $120,000,000; and
(d) if any part of the Total Commitments has not been borrowed before the Final
Availability Date relating to Advance B, the Total Commitments shall on
that date be permanently cancelled by an amount equal to such undrawn
amount.
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 thereof;
(b) the amount of that Lender's participation in such Advance; and
(c) the duration of the first Interest Period relating to such Advance.
4.4 DRAWDOWN NOTICE IRREVOCABLE. Each Drawdown Notice must be signed by a
director or other authorised person of each Borrower; and once served, a
Drawdown Notice cannot be revoked without the prior consent of the Agent,
acting on the authority of all the 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 Borrowers the amount due from
that Lender under Clause 2.2.
4.6 DISBURSEMENT OF ADVANCE. Subject to the provisions of this Agreement, the
Agent shall on the relevant Drawdown Date pay to the Borrowers the amounts
which the Agent receives from the Lenders under Clause 4.5; and that
payment to the Borrowers shall be made:
(a) to the account(s) which the Borrowers specify in the Drawdown Notice; and
(b) in the like funds as the Agent received the payments from the Lenders.
PROVIDED THAT notwithstanding the provisions of this Clause 4.6, an Advance
or any part thereof to be used to part-finance amounts payable pursuant to
the relevant Shipbuilding Contract upon delivery of the relevant Ship may,
upon drawdown thereof, be placed in a suspense account in the name and to
the order of the Agent held with a bank nominated by the Borrowers, and
shall only be released to the Builder as the case may be, upon satisfaction
of the conditions precedent set out in Part B of Schedule 4, and
PROVIDED FURTHER THAT in case the Borrowers have already paid out of their
own funds part of the amount to be financed by the proceeds of an Advance,
the Lenders shall pay such amount of the Advance to the account specified
in Clause 4.6(a) upon the Borrowers providing to the Agent evidence
satisfactory to the Agent in its discretion that such payment has been
affected to the appropriate parties.
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4.7 DISBURSEMENT OF ADVANCE TO THIRD PARTY. The payment by the Agent under
Clause 4.6 to the Builder shall constitute the making of an Advance and the
Borrowers shall at that time become indebted, as principal and direct
obligor, to each Lender in an amount equal to that Lender's Contribution in
that Advance.
5 INTEREST
5.1 PAYMENT OF NORMAL INTEREST. Subject to the provisions of this Agreement,
interest on each Advance in respect of each Interest Period shall be paid
by the Borrowers on the last day of that Interest Period.
5.2 NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement, the
rate of interest on each Advance in respect of an Interest Period shall be
the aggregate of (a) the Margin and (b) LIBOR for that Interest Period
PROVIDED THAT where the Borrowers request, and the Lenders agree to, an
Interest Period of longer than twelve months, the applicable rate of
interest shall be the aggregate of the Margin and the fixed rate agreed
between the Lenders and the Borrowers and advised by the Agent to the
Borrowers.
5.3 PAYMENT OF ACCRUED INTEREST. In the case of an Interest Period longer than
6 months, accrued interest shall be paid every 6 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 Borrowers and each Lender of:
(a) each rate of interest; and
(b) the duration of each Interest Period;
as soon as reasonably practicable after each is determined.
5.5 OBLIGATION OF LENDERS TO QUOTE. Each Lender shall use all reasonable
efforts to supply any quotation required of it for the purposes of fixing a
rate of interest under this Agreement.
5.6 ABSENCE OF QUOTATIONS BY LENDERS. If any Lender fails to supply a quotation
when required, the Agent shall determine the relevant rate of interest in
accordance with the following provisions of this Clause 5.
5.7 MARKET DISRUPTION. The following provisions of this Clause 5 apply if:
(a) at least until 11.00 a.m. (London) time 1 Business Day before the start of
an Interest Period, any Lender notifies the Agent that LIBOR fixed by the
Agent would not accurately reflect the cost to that Lender of funding its
Contribution (or any part of it) 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
(b) at least until 11.00 a.m. (London time) 1 Business Day before the start of
an Interest Period, the Agent is notified by a Lender (the "AFFECTED
LENDER") that for any reason it is unable to obtain Dollars in the London
Interbank Market in order to fund its Contribution (or any part of it)
during the Interest Period.
5.8 NOTIFICATION OF MARKET DISRUPTION. The Agent shall promptly notify the
Borrowers and each of the Lenders stating the circumstances falling within
Clause 5.7 which have caused its notice to be given.
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5.9 SUSPENSION OF DRAWDOWN. If the Agent's notice under Clause 5.8 is served
before an Advance is made then:
(a) in a case falling within Clause 5.7(a), the Advance to take place after
Clauses 5.10, 5.11 and 5.12 have been applied; and
(b) in a case falling within Clause 5.7(b), the Affected Lender's obligation to
participate in the Loan shall be suspended while the circumstances referred
to in the Agent's notice continue.
5.10 NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. Notwithstanding whether the
Agent's notice under Clause 5.8 is served before or after an Advance is
made, the Borrowers, the Agent and the Lenders or (as the case may be) the
Affected Lender shall use reasonable endeavours to agree, within the 30
days after the date on which the Agent serves its notice under Clause 5.8
(the "NEGOTIATION PERIOD"), an alternative interest rate or (as the case
may be) an alternative basis for the Lenders or (as the case may be) the
Affected Lender to fund or continue to fund their or its Contribution to
the relevant Advance or Advances during the Interest Period concerned.
5.11 APPLICATION OF AGREED ALTERNATIVE RATE OF INTEREST. Any alternative
interest rate or an alternative basis which is agreed during the
Negotiation Period shall take effect in accordance with the terms agreed.
5.12 ALTERNATIVE RATE OF INTEREST IN ABSENCE OF AGREEMENT. If an alternative
interest rate or alternative basis is not agreed within the Negotiation
Period, and the relevant circumstances are continuing at the end of the
Negotiation Period, then the Agent shall, with the agreement of each Lender
or (as the case may be) the Affected Lender, set an interest period and
interest rate representing the cost of funding of the Lenders or (as the
case may be) the Affected Lender in Dollars or in any available currency of
their or its Contribution to the relevant Advance or Advances plus the
Margin PROVIDED THAT they will provide the Borrowers with supporting
documentation; 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.
5.13 NOTICE OF PREPAYMENT. If the Borrowers do not agree with an interest rate
set by the Agent under Clause 5.10, the Borrowers may give the Agent not
less than 15 Business Days' notice of their intention to prepay the
relevant Advance or Advances at the end of the interest period set by the
Agent.
5.14 PREPAYMENT; TERMINATION OF COMMITMENTS. A notice under Clause 5.13 shall be
irrevocable; the Agent shall promptly notify the Lenders or (as the case
may require) the Affected Lender of the Borrowers' notice of intended
prepayment; and:
(a) on the date on which the Agent serves that notice, the Total Commitments or
(as the case may require) the Commitment of the Affected Lender so far as
they relate to the relevant Advance or Advances shall be cancelled; and
(b) on the last Business Day of the interest period set by the Agent, the
Borrowers shall prepay (without premium or penalty) the Loan or, as the
case may be, the Affected Lender's Contribution, together with accrued
interest thereon at the applicable rate plus the Margin and, if the
prepayment or repayment is not made on the last day of the interest period
set by the Agent, any sums payable under Clause 21.1(b).
5.15 APPLICATION OF PREPAYMENT. The provisions of Clause 8 shall apply in
relation to the prepayment.
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6 INTEREST PERIODS
6.1 COMMENCEMENT OF INTEREST PERIODS. The first Interest Period applicable to
an Advance shall commence on the Drawdown Date thereof and each subsequent
Interest Period shall commence on the expiry of the preceding Interest
Period.
6.2 DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 6.3 and 6.4, each
Interest Period in respect of each Advance shall be:
(a) 6 or 12 months as notified by the Borrowers to the Agent not later than
11.00 a.m. (Frankfurt time) 3 Business Days before the commencement of the
Interest Period; or
(b) 6 months, if the Borrowers fail to notify the Agent by the time specified
in paragraph (a); or
(c) such other period as the Agent with the authorisation of the Lenders may
agree with the Borrowers.
6.3 DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENTS. In respect of an
amount due to be repaid under Clause 8 on a particular Repayment Date, an
Interest Period shall end on that Repayment Date.
6.4 NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
after the Borrowers have selected and the Lenders have agreed an Interest
Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m.
(Frankfurt time) on the third Business Day before the commencement of the
Interest Period that it is not satisfied that deposits in Dollars for a
period equal to the Interest Period will be available to it in the London
Interbank Market when the Interest Period commences, the Interest Period
shall be of 6 months.
7 DEFAULT INTEREST
7.1 PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrowers shall pay
interest in accordance with the following provisions of this Clause 7 on
any amount payable by the Borrowers or either of them under any Finance
Document which the Agent, the Security Trustee or the other designated
payee does not receive on or before the relevant date, that is:
(a) the date on which the Finance Documents provide that such amount is due for
payment; or
(b) if a Finance Document provides that such amount is payable on demand, the
date on which the demand is served; or
(c) if such amount has become immediately due and payable under Clause 19.4,
the date on which it became immediately due and payable.
7.2 DEFAULT RATE OF INTEREST. Interest shall accrue on an overdue amount from
(and including) the relevant date until the date of actual payment (as well
after as before judgment) at the rate per annum determined by the Agent to
be 2 per cent. above:
(a) in the case of an overdue amount of principal, the higher of the rates set
out at Clauses 7.3 (a) and (b); or
(b) in the case of any other overdue amount, the rate set out at Clause 7.3(b).
25
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 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 Borrowers of each interest rate
determined by the Agent under Clause 7.3 and of each period selected by
the Agent for the purposes of paragraph (b) of that Clause; but this shall
not be taken to imply that the Borrowers are liable to pay such interest
only with effect from the date of the Agent's notification.
7.5 PAYMENT OF ACCRUED DEFAULT INTEREST. Subject to the other provisions of
this Agreement, any interest due under this Clause shall be paid on the
last day of the period by reference to which it was determined; and the
payment shall be made to the Agent for the account of the Creditor Party
to which the overdue amount is due.
7.6 COMPOUNDING OF DEFAULT INTEREST. Any such interest which is not paid at
the end of the period by reference to which it was determined shall
thereupon be compounded.
8 REPAYMENT AND PREPAYMENT
8.1 AMOUNT OF REPAYMENT INSTALMENTS. The Borrowers shall repay each Advance by
20 consecutive semi-annual repayment instalments as follows:
(a) in the case of the first to the fourth instalments (inclusive), in the
amount of $3,250,000 each;
(b) in the case of the fifth to the eighth instalments (inclusive) in the
amount of $3,500,000 each;
(c) in the case of the ninth to the fourteenth instalments (inclusive) in the
amount of $3,750,000 each; and
(d) in the case of the fifteenth to the twentieth instalments (inclusive) in
the amount of $1,750,000 each;
PROVIDED THAT if the amount of either Advance drawdown is less than
$60,000,000 then the repayments instalments applicable to that Advance
shall be reduced pro rata by an amount in aggregate equal to such undrawn
amount.
8.2 REPAYMENT DATES. The first instalment of each Advance shall be repaid on
the date falling 6 months after the Drawdown Date of such Advance, each
subsequent instalment shall be repaid at semi-annual intervals thereafter
and the last instalment of such Advance shall be repaid on the date
falling on the earlier of (a) the tenth anniversary of the Drawdown Date
of such Advance and (b) the Final Maturity Date of such Advance.
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8.3 FINAL REPAYMENT DATE. On the final Repayment Date, the Borrowers shall
additionally pay to the Agent for the account of the Creditor Parties all
other sums then accrued or owing under any Finance Document.
8.4 VOLUNTARY PREPAYMENT. Subject to the following conditions, the Borrowers
may prepay the whole or any part of the Loan or any Advance 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) a partial prepayment shall be $1,000,000 or a multiple of $1,000,000
(b) the Agent has received from the Borrowers at least 5 Business Days' prior
written notice specifying the amount to be prepaid and the date on which
the prepayment is to be made; and
(c) the Borrowers have provided evidence satisfactory to the Agent that any
consent required by the Borrowers or any of them or any Security Party in
connection with the prepayment has been obtained and remains in force, and
that any regulation relevant to this Agreement which affects a 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 authorisation
of all the Lenders, and the amount specified in the prepayment notice
shall become due and payable by the Borrowers on the date for prepayment
specified in the prepayment notice.
8.7 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 Borrowers
under Clause 8.5(c).
8.8 MANDATORY PREPAYMENT. Without prejudice to the provisions of Clause 15,
the Borrowers shall be obliged to prepay the is sold, becomes a Total Loss
or is refinanced:
(a) in the case of a sale, on or before the date on which the sale is
completed by delivery of the Ship to the buyer;
(b) in the case of a Total Loss, on the earlier of the date falling 120 days
after the Total Loss Date and the date of receipt by the Security Trustee
of the proceeds of insurance relating to such Total Loss; or
(c) in the case the Ship is refinanced, on the date on which the Mortgage is
discharged to enable the Ship to be refinanced
PROVIDED HOWEVER THAT if after such prepayment the Security Cover Ratio is
less than the ratio referred to in Clause 15.1, the Borrowers shall prepay
such additional amount which, after giving credit to the prepayment,
results in the Security Cover Ratio being equal to the Security Cover
Ratio required to be maintained pursuant to Clause 15.1.
Subject to no Event of Default or any Potential Event of Default being in
occurrence or continuing at the time a prepayment is made under this
Clause 8.8, any balance arising from the proceeds of a Ship which is sold
or becomes a Total Loss after the prepayment required by this Clause 8.8
has been made shall be released to the Borrowers or to such other person
as the Borrowers may direct.
8.9 AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 21 or
otherwise) in respect of the
27
amount prepaid and, if the prepayment is not made on the last day of an
Interest Period together with any sums payable under Clause 21.1(b) but
without premium or penalty.
8.10 PREPAYMENT FEE. If an Advance is prepaid as a result of a sale or
refinancing of a Ship by a bank or financial institution (other than the
Lender) on or prior to the sixth anniversary of the second Drawdown Date,
the Borrowers shall pay, together with such prepaid amount, to the Agent a
prepayment fee equal to the 0.50 per cent of the amount of such Advance
immediately prior to such prepayment.
8.11 APPLICATION OF PARTIAL PREPAYMENT. Each partial prepayment shall be
applied:
(a) if made pursuant to Clause 8.4, against the repayment instalments
specified in Clause 8.1 pro rata;
(b) if made pursuant to Clause 8.8, first towards full repayment of the
Advance related to the Ship being sold, refinanced or becoming a Total
Loss and thereafter towards pro rata reduction of the repayment
instalments specified in Clause 8.1 of the other Advance.
8.12 NO REBORROWING. No amount prepaid may be reborrowed.
9 CONDITIONS PRECEDENT
9.1 DOCUMENTS, FEES AND NO DEFAULT. Each Lender's obligation to contribute to
an Advance is subject to the following conditions precedent:
(a) that, on or before the service of the Drawdown Notice relative to Advance
A to be drawn down, the Agent receives the documents described in Part A
of Schedule 4 in form and substance satisfactory to the Agent and its
lawyers;
(b) that, on the Drawdown Date of any Advance but prior to such Advance, the
Agent receives the documents described in Part B of Schedule 4 in form and
substance satisfactory to it and its lawyers;
(c) that, on the Drawdown Date of each Advance, the Agent receives the fees
referred to in Clause 20.1 related to such Advance and has received
payment of the expenses referred to in Clause 20.2; and
(d) that both at the date of each Drawdown Notice and at each Drawdown Date:
(i) no 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 a
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 5.7 has occurred
and is continuing; and
(iv) there has been no Material Adverse Change in the financial
condition, state of affairs or prospects of the Borrowers or either
of them or the Corporate Guarantor from that applying at the date of
this Agreement;
(e) that, if the ratio set out in Clause 15.1 were applied immediately
following the making of the relevant Advance, the Borrowers would not be
obliged to provide additional security or prepay part of the Loan under
that Clause;
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(f) that the Agent has received, and found to be acceptable to it, any further
opinions, consents, agreements and documents in connection with the
Finance Documents which the Agent may, with the authorisation of all the
Lenders, request by notice to the Borrowers prior to the relevant Drawdown
Date.
9.2 WAIVER OF CONDITIONS PRECEDENT. If all the Lenders, at their discretion,
permit an Advance to be borrowed before certain of the conditions referred
to in Clause 9.1 are satisfied, the Borrowers shall ensure that those
conditions are satisfied within 5 Business Days after the relevant
Drawdown Date (or such longer period as the Agent may, with the
authorisation of all the Lenders, specify).
10 REPRESENTATIONS AND WARRANTIES
10.1 GENERAL. Each Borrower represents and warrants to each Creditor Party as
follows.
10.2 STATUS. Each Borrower is duly incorporated and validly existing and in
good standing under the laws of the Republic of Xxxxxxxx Islands;
10.3 SHARE CAPITAL AND OWNERSHIP. Each Borrower has an authorised share capital
of 500 registered and/or bearer shares without par value, all of which
shares have been issued in bearer form and are wholly owned directly or
indirectly by the Corporate Guarantor and all those shares are held free
of any Security Interest or other claim.
10.4 CORPORATE POWER. Each Borrower has the corporate capacity, and has taken
all corporate action and obtained all consents necessary for it:
(a) to execute the relevant Shipbuilding Contract, to purchase and pay for its
Ship under the relevant Shipbuilding Contract and register its Ship in its
name under an Approved Flag;
(b) to enter into, and perform its obligations under, the Approved Charter to
which it is a party
(c) to execute the Finance Documents to which it is a party; and
(d) to borrow under this Agreement and to make all the payments contemplated
by, and to comply with, those Finance Documents to which such 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 a 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 such Borrower's legal, valid and binding obligations
enforceable against such 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 to which each Borrower is a party except for Permitted Security
Interests:
29
(a) such 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 each Borrower of each Finance Document to
which it is a party and the borrowing by that Borrower of the Loan, and
its compliance with each Finance Document will not involve or lead to a
contravention of:
(a) any law or regulation; or
(b) the constitutional documents of that Borrower; or
(c) any contractual or other obligation or restriction which is binding on
that Borrower or any of its assets,
and will not have a Material Adverse Effect.
10.9 SUBORDINATION OF INDENTURE. The obligations of:
(a) the Borrowers, if any, under the Indenture and the Notes or the Guarantees
(as each term is defined in the Indenture) issued thereunder are fully
subordinated to the obligations of the Borrowers under this Agreement and
the other Finance Documents; and
(b) the Corporate Guarantor, under the Indenture and the Notes (as such term
is defined in the Indenture) issued thereunder are fully subordinated to
the obligations of the Corporate Guarantor under the Corporate Guarantee
to the extent of the value of the assets securing this Agreement.
10.10 NO WITHHOLDING TAXES. All payments which a 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.
10.11 NO DEFAULT. No Event of Default has occurred and is continuing.
10.12 INFORMATION. All information which has been provided in writing by or on
behalf of the Borrowers or any Security Party to any Creditor Party in
connection with any Finance Document 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 are true, correct and not
misleading and present fairly and accurately the financial position of the
Borrowers; and there has been no change in the financial position or state
of affairs of any Borrower, or the Corporate Guarantor from that disclosed
in the latest of those accounts which is likely to have a Material Adverse
Effect.
10.13 NO LITIGATION. No legal or administrative action involving any Borrower or
any Security Party (including action relating to any alleged or actual
breach of the ISM Code or the ISPS Code) has been commenced or taken or,
to any Borrower's knowledge, is likely to be commenced or taken which, in
either case would be likely to have a Material Adverse Effect.
10.14 VALIDITY AND COMPLETENESS OF INITIAL CHARTERS AND SHIPBUILDING CONTRACTS.
(a) The copies of each Initial Charter and each Shipbuilding Contract
delivered to the Agent before the date of this Agreement are true and
complete copies;
30
(b) each Initial Charter and each Shipbuilding Contract constitutes valid,
binding and enforceable obligations of the Builder and the relevant
Approved Charterer, the Builder and the Borrower which is party to it
respectively in accordance with its terms;
(c) neither the Builder nor either of the Borrowers is in breach of its
respective obligations under the terms of each Initial Charter and each
Shipbuilding Contract; and
(d) other than those already advised to the Agent and which have been
documented prior to the date of this Agreement, no amendments or additions
to either Initial Charter or either Shipbuilding Contracts have been
agreed nor have the Borrowers, the relevant Approved Charterer and the
Builder (or any of them) waived any of their respective rights under
either Initial Charter or either Shipbuilding Contract.
10.15 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 Borrower, an Approved Charterer or the Builder
or any third party in connection with the purchase y a Borrower of a Ship
at the relevant Purchase Price of the chartering of a Ship other than as
disclosed to the Agent in writing on or prior to the date of this
Agreement.
10.16 COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement, each
Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and 11.14.
10.17 TAXES PAID. Each Borrower has paid all taxes applicable to, or imposed on
or in relation to such Borrower, its business or its Ship.
10.18 ISM CODE AND ISPS CODE COMPLIANCE. All requirements of the ISM Code and
the ISPS Code as they relate to a Borrower, the Approved Manager and a
Ship shall be complied on or prior to the Delivery Date of that Ship.
10.19 NO MONEY LAUNDERING. Each Borrower:
(a) will not, and will procure that no Security Party, to the extent
applicable, will, in connection with this Agreement or any of the other
Finance Documents, contravene or permit any subsidiary to contravene, 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) and
comparable United States Federal and state laws. Each Borrower shall
further submit any documents and declarations on request, if such
documents or declarations are required by any Creditor Party to comply
with its domestic money laundering and/or legal identification
requirements; and
(b) confirm that it is the beneficiary within the meaning of Section 8 of the
German Anti Money Laundering Act (Gesetz uber das Aufspuren von Gewinnen
aus schweren Straftaten (Geldwaschegesetz)), with such Borrower acting for
its own account and not for or on behalf of any other person for each part
of the Loan made or to be made available to it under this Agreement. That
is to say, it acts for its own account and not for or on behalf of anyone
else and under its full responsibility and exclusively for the purposes
specified in this Agreement.
Each Borrower will promptly inform the Agent by written notice, if it
ceases to be a beneficiary and will provide in writing the name and
address of the beneficiary.
The Agent shall promptly notify the Lenders of any written notice it
receives under this Clause 10.18.
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11 GENERAL UNDERTAKINGS
11.1 GENERAL. Each Borrower undertakes with each Creditor Party to comply with
the following provisions of this Clause 11 at all times during the
Security Period except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.
11.2 TITLE; NEGATIVE PLEDGE AND PARI PASSU RANKING. Each Borrower will:
(a) hold the legal title to, and own the entire beneficial interest in:
(i) from the date hereof, the Approved Charter and the Shipbuilding
Contract to which it is a party; and
(ii) the Ship it is acquiring and her Insurances and her Earnings from
the Delivery Date applicable thereto and at all times thereafter,
its Ship,
free from all Security Interests and other interests and rights of every
kind, except for those created by the Finance Documents and the effect of
assignments contained in 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; and
(c) procure that its liabilities under the Finance Documents to which it is a
party do and will rank at least pari passu with all its other present and
future unsecured liabilities, except for liabilities which are mandatorily
preferred by law.
11.3 NO DISPOSAL OF ASSETS. Neither Borrower will 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 NO OTHER LIABILITIES OR OBLIGATIONS TO BE INCURRED. Neither Borrower will
incur any liability or obligation except liabilities and obligations under
the Shipbuilding Contract and the Finance Documents to which it is a party
and liabilities or obligations reasonably incurred in the ordinary course
of its business of operating and chartering its Ship and all other matters
reasonably incidental thereto.
11.5 INFORMATION PROVIDED TO BE ACCURATE. All financial and other information
which is provided in writing by or on behalf of a 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 Borrowers will send to the Agent:
(a) as soon as possible, but in no event later than 180 days after the end of
each Financial Year of the Borrowers (commencing with the Financial Year
ended 31 December 2008) the annual audited consolidated accounts of the
Corporate Guarantor for that Financial Year; and
(b) as soon as possible, but in no event later than 90 days after the end of
each financial quarter in each Financial Year of the Borrowers ending on
31 March, 30 June, and 30 September (commencing with the financial
statements for the financial quarter ending on 31 March 2009) the
unaudited consolidated quarterly accounts of the Corporate
32
Guarantor which are certified as to their correctness by the chief
financial officer of the Corporate Guarantor; and
(c) promptly after each request by the Agent, such further financial
information about the Borrowers, the Corporate Guarantor, the Approved
Manager and the Corporate Guarantor as the Agent may reasonably require.
11.7 FORM OF FINANCIAL STATEMENTS. All accounts (audited and unaudited)
delivered under Clause 11.6 will:
(a) be prepared in accordance with all applicable laws and US GAAP
consistently applied;
(b) in the case of the annual audited accounts of the Corporate Guarantor, be
audited by an internationally renowned accounting firm whose report shall
not include any material qualifications;
(c) give a true and fair view of the state of affairs of the relevant person
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 Corporate
Guarantor.
11.8 CONSENTS. Each Borrower will maintain in force and promptly obtain or
renew, and will promptly send certified copies to the Agent of, all
consents required:
(a) for such Borrower to perform its obligations under any Finance Document to
which it is a party;
(b) for the validity or enforceability of any Finance Document to which it is
a party;
(c) for such Borrower to continue to own and operate the Ship owned by it,
and such Borrower will comply with the terms of all such consents.
11.9 MAINTENANCE OF SECURITY INTERESTS. The Borrowers will:
(a) at their 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), 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 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.
11.10 NOTIFICATION OF LITIGATION. Each Borrower will provide the Agent with
details of any legal or administrative action involving that Borrower, any
Security Party, the Approved Manager or any Ship, its Earnings or its
Insurances exceeding $500,000 as soon as such action is instituted or it
becomes apparent to that Borrower that it is likely to be instituted,
unless it is clear to that Borrower and the Lenders that the legal or
administrative action cannot be considered material and relevant in the
context of any Finance Document.
11.11 NO AMENDMENT TO THE SHIPBUILDING CONTRACTS. Each Borrower agrees not to
enter into any amendment or supplement to, or waive or fail to enforce,
the Shipbuilding Contract to which it is a party or any of its provisions.
33
11.12 NO AMENDMENT TO THE APPROVED CHARTERS. Each Borrower will ensure that no
Borrower shall agree to any amendment or supplement to, or waive or fail
to enforce, any Approved Charter to which it is a party or any of its
provisions.
11.13 PRINCIPAL PLACE OF BUSINESS. Each Borrower confirms that its business
operation and management shall be conducted as presently conducted and,
throughout the Security Period, will (i) maintain its place of business
and keep its corporate documents and records, at the address stated at
Clause 29.2(a); and (ii) neither Borrower nor the Corporate Guarantor will
establish, or do anything as a result of which it would be deemed to have,
a place of business or operations or management effected from England or
the United States of America.
11.14 NOTIFICATION OF DEFAULT. The Borrowers will notify the Agent as soon as a
Borrower becomes aware of:
(a) the occurrence of an Event of Default; or
(b) any matter which indicates that an Event of Default may have occurred,
and will keep the Agent fully up-to-date with all developments.
11.15 PROVISION OF FURTHER INFORMATION. The Borrowers will, as soon as
practicable after receiving the request, provide the Agent with any
additional financial or other information relating:
(a) to the Borrowers, the Ships, the Earnings or the Insurances; or
(b) to any other matter relevant to, or to any provision of, a Finance
Document,
which may reasonably be requested by the Agent, the Security Trustee or
any Lender at any time.
11.16 PROVISION OF COPIES AND TRANSLATION OF DOCUMENTS. The Borrowers 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 Borrowers will
provide a certified English translation prepared by a translator approved
by the Agent.
11.17 CHARTER ASSIGNMENT. A Borrower shall, in the case it enters into a
Charter, at the request of the Agent, execute in favour of the Security
Trustee a Charter Assignment in respect of that Charter and shall deliver
to the Agent such other documents equivalent to those referred to at
paragraphs 3, 4 and 5 of Part A of Schedule 4 hereof.
11.18 FINANCIAL COVENANTS. The Borrowers shall procure that:
(a) the ratio of Consolidated Cash Flow (defined and applied as set out in the
Indenture Excerpt, which definition shall not be varied without the
Lenders' consent, irrespective of any variation of the Indenture itself)
to Fixed Charges (defined and applied as set out in the Indenture Excerpt,
which definition shall not be varied without the Lenders' consent,
irrespective of any variation of the Indenture itself) on a 12 month
trailing basis shall at all times be at least 2 to 1; and
(b) Total Liabilities divided by the Total Assets (adjusted for market values
of vessels calculated in accordance with Clause 15.3) shall not exceed
75%.
For the purposes of this Clause 11.18 the following expressions shall have
the following meanings:
34
"TOTAL ASSETS" and "TOTAL LIABILITIES" means respectively the total assets
and total liabilities of the Corporate Guarantor as evidenced at any
relevant time by its financial statements as described in Clause 11.6, in
which they shall have been calculated by reference to the meanings
assigned to them in accordance with US GAAP provided that the value of any
vessel shall be calculated in accordance with Clause 15.3 and not as set
out in the latest financial statements.
11.19 INDENTURE. The Borrowers shall procure that the Corporate Guarantor shall
comply with all of the obligations undertaken by the Corporate Guarantor
under the Indenture which are set out in the Indenture Excerpt and the
Borrowers further agree that:
(a) any terms defined in the Indenture shall have those meanings when used in
the Indenture Excerpt;
(b) no waiver or variation of any term of the Indenture by any person shall
waive or vary the Borrowers' obligations hereunder to comply with the
obligations in the Indenture Excerpt, except with the consent of the
Agent;
(c) the Borrowers shall continue to be bound by their, or as the case may be,
the Corporate Guarantor's obligations as set out in the Indenture Excerpt
following a Covenant Defeasance (as defined in the Indenture) or a Legal
Defeasance (as defined in the Indenture) or other termination or
cancellation of the Indenture;
(d) the Borrowers will not, and will procure that the Corporate Guarantor will
not, vary any term of the Indenture without the prior written consent of
the Lenders.
11.20 COMPLIANCE CHECK. Compliance with these Financial Covenants contained in
Clause 11.18 shall be determined by reference (a) to the unaudited
consolidated accounts for the first six months in each Financial Year of
the Corporate Guarantor and (b) to the audited consolidated accounts for
that Financial Year of the Corporate Guarantor for each Financial Year
delivered to the Agent pursuant to this Agreement. The Borrowers shall
deliver to the Agent semi-annually, at the same time they deliver the
consolidated accounts to the Agent pursuant to Clause 11.18, a Compliance
Certificate signed by the chief financial officer of the Corporate
Guarantor.
11.21 GENERAL AND ADMINISTRATIVE COSTS. The Borrowers and the Corporate
Guarantor shall ensure that the payment of all the general and
administrative costs of the Borrowers 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 Borrowers and the Corporate
Guarantor under this Agreement and the other Finance Documents throughout
the Security Period.
11.22 KNOW YOUR CUSTOMER. The Borrowers will provide to (or procure that there
is sent to) the Agent such documents and evidence as any Creditor Party
shall require in relation to each of the Borrowers or any Security Party,
based on applicable laws and regulations and each Creditor Party's own
internal guidelines relating to the verification of the identity and
knowledge of its customers.
12 CORPORATE UNDERTAKINGS
12.1 GENERAL. Each Borrower also undertakes with each Creditor Party to comply
with the following provisions of this Clause 12 at all times during the
Security Period except as the Agent may, with the authorisation of the
Majority Lenders, otherwise permit.
12.2 MAINTENANCE OF STATUS. Each Borrower will maintain its separate corporate
existence and remain in good standing under the laws of the Republic of
the Xxxxxxxx Islands.
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12.3 NEGATIVE UNDERTAKINGS. No Borrower will:
(a) change the nature of its business; or
(b) provide any form of credit or financial assistance to:
(i) a person who is directly or indirectly interested in such 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 such Borrower than
those which it could obtain in a bargain made at arms' length;
(c) open or maintain any account with any bank or financial institution except
accounts with the Account Bank for the purposes of the Finance Documents;
(d) 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;
(e) issue, allot or grant any person a right or permit the occurrence of any
Security Interest to any shares in its capital or repurchase or reduce its
issued share capital;
(f) enter into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation; or
(g) incur any further indebtedness or enter into any form of guarantee except
indebtedness reasonably incurred in the ordinary course of its business.
12.4 OWNERSHIP/MANAGEMENT. The Borrowers undertake to ensure that, throughout
the Security Period and without the prior written consent of the Agent,
there shall be no change in the beneficial ownership of any of the shares
in either of the Borrowers or in the control or management of either of
the Borrowers except for changes approved in writing by the Agent or which
result in the shares being beneficially owned by a member of the Group.
12.5 SUBORDINATION OF RIGHTS. The Borrower shall ensure and procure that all
its obligations in respect of any loan made available to it by any member
of the Group shall be fully subordinated to the rights of the Creditor
Parties under the Finance Documents under terms and conditions acceptable
by the Agent (acting upon the instructions of the Majority Lenders):
13 INSURANCE
13.1 GENERAL. Each Borrower undertakes with each Creditor Party to comply with
the following provisions of this Clause 13 at all times during the
Security Period (after a Ship has been delivered to it pursuant to the
relevant Shipbuilding Contract) except as the Agent may, with the
authorisation of the Majority the Lenders, otherwise permit.
13.2 MAINTENANCE OF OBLIGATORY INSURANCES. Each Borrower shall keep the Ship
owned by it insured at the expense of such Borrower against:
(a) fire and usual marine risks (including hull and machinery and excess
risks);
36
(b) war risks;
(c) protection and indemnity risks;
(d) in respect of the Initial Charters, Credit Default Insurance; and
(e) any other risks against which the Security Trustee considers, having
regard to practices and other circumstances prevailing at the relevant
time, it would in the opinion of the Security Trustee be reasonable for
such Borrower to insure and which are mutually agreed between the Security
Trustee and such Borrower.
13.3 TERMS OF OBLIGATORY INSURANCES. Each Borrower 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) the market value of its
Ship and (ii) an amount so that the aggregate insured values of the Ships
at any time subject to a Mortgage is at least 120 per cent. of the Loan;
and
(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 (for the
time being $1,000,000,000) under basic protection and indemnity club entry
(with the international group of protection and indemnity clubs) and in
the international marine insurance market;
(d) in relation to protection and indemnity risks in respect of the full
tonnage of the Ship owned by it; and
(e) on such terms as shall from time to time be approved in writing by the
Agent.
13.4 FURTHER PROTECTIONS FOR THE CREDITOR PARTIES. In addition to the terms set
out in Clause 13.3, each Borrower shall procure that the obligatory
insurances shall:
(a) upon the occurrence of an Event of Default and while it is continuing
(except in relation to risks referred to in Clause 13.2(c)), name (or be
amended to name) the Security Trustee as additional named assured for its
rights and interests, warranted no operational interest and with full
waiver of rights of subrogation against the Lender, but without the
Security Trustee thereby being liable to pay (but having the right to pay)
premiums, calls or other assessments in respect of such insurance and
shall procure that no other assured shall be additionally named without
the prior written consent of the Security Trustee;
(b) name the Security Trustee as loss payee with such directions for payment
as the Security Trustee may specify;
(c) provide that all payments by or on behalf of the insurers under the
obligatory insurances to the Security Trustee shall be made without
set-off, counterclaim or deductions or condition whatsoever;
(d) provide that the insurers shall waive, to the fullest extent permitted by
the applicable 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 Borrowers or any Creditor Party) in circumstances
where the insurers have fully discharged their liabilities and obligations
under the relevant obligatory insurances;
37
(e) provide that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Security
Trustee;
(f) provide that the Security Trustee may make proof of loss if such Borrower
fails to do so; and
(g) provide that if any obligatory insurance is cancelled, or if any
substantial change is made in the coverage which adversely affects the
interest of the Security Trustee, or if any obligatory insurance is
allowed to lapse for non-payment of premium, such cancellation, charge or
lapse shall not be effective with respect to the Security Trustee for 14
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. Each Borrower shall:
(a) at least 14 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 such Borrower proposes to renew that obligatory insurance
and of the proposed terms of renewal; and
(ii) in case of any substantial change in insurance cover, obtain the
Agent's approval to the matters referred to in paragraph (i);
(b) at least 7 days before the expiry of any obligatory insurance, renew that
obligatory insurance; and
(c) procure that the 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. Each Borrower shall ensure
that all brokers provide the Security Trustee with pro forma copies of all
policies relating to the obligatory insurances which they are to effect or
renew and of a letter or letters or undertaking in a form required by the
Lenders and including undertakings by the 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 7 days before the
expiry of the obligatory insurances, in the event of their not having
received notice of renewal instructions from such Borrower or its agents
and, in the event of their receiving instructions to renew, they will
promptly notify the Security Trustee of the terms of the instructions; and
(e) they will not set off against any sum recoverable in respect of a claim
relating to the Ship owned by such Borrower under such obligatory
insurances any premiums or other amounts due to them or any other person
whether in respect of the Ship owned by such Borrower 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
38
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 owned buy such Borrower forthwith upon being
so requested by the Security Trustee.
13.7 COPIES OF CERTIFICATES OF ENTRY. Each Borrower shall provide or ensure
that any protection and indemnity and/or war risks associations in which
the Ship owned by such Borrower is entered provides the Security Trustee
with:
(a) a certified copy of the certificate of entry for such Ship;
(b) a letter or letters of undertaking in such form as may be required by the
Security Trustee;
(c) a certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority in relation to such Ship;
(d) where required to be issued under the terms of insurance/indemnity
provided by such 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 such Borrower
in relation to such Ship in accordance with the requirements of such
protection and indemnity association; and
(e) a certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority in relation to such Ship.
13.8 DEPOSIT OF ORIGINAL POLICIES. Each Borrower shall ensure that all policies
relating to obligatory insurances are deposited with the brokers through
which the insurances are effected or renewed.
13.9 PAYMENT OF PREMIUMS. Each Borrower 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. Each Borrower 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. Neither Borrower shall employ its Ship nor
permit her to be employed, outside the cover provided by any obligatory
insurances.
13.12 COMPLIANCE WITH TERMS OF INSURANCES. Neither Borrower shall do nor omit to
do (nor permit to be done or not to be done) any act or thing which would
or might render any obligatory insurance invalid, void, voidable or
unenforceable or render any sum payable under an obligatory insurance
repayable in whole or in part; and, in particular:
(a) each Borrower shall take all necessary action and comply with all
requirements which may from time to time be applicable to the obligatory
insurances, and (without limiting the obligation contained in Clause
13.7(c)) ensure that the obligatory insurances are not made subject to any
exclusions or qualifications to which the Security Trustee has not given
its prior approval;
(b) neither Borrower shall make any changes relating to the classification or
classification society or manager or operator of the Ship owned by such
Borrower approved by the underwriters of the obligatory insurances; and
39
(c) neither Borrower 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. Neither Borrower shall make or agree to
any alteration to the terms of any obligatory insurance nor waive any
right relating to any obligatory insurance.
13.14 SETTLEMENT OF CLAIMS. Neither Borrower 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. Following the occurrence of an
Event of Default, each Borrower shall provide the Security Trustee, at the
time of each such communication, copies of all written communications
between that Borrower 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 Borrower'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 Borrower and any of the
persons referred to in paragraphs (a) or (b) relating wholly or
partly to the effecting or maintenance of the obligatory insurances.
13.16 PROVISION OF INFORMATION. In addition, each Borrower 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 13.16 below or dealing with or considering any matters relating
to any such insurances,
and such 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 PERILS 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 marine insurance in an amount of 110 per cent of
the Loan providing for the indemnification of the Creditor Parties for any
losses under or in connection with any Finance Document which directly or
indirectly result from loss of or damage to a Ship or a liability of such
Ship or of the Borrower which is the owner
40
thereof, being a loss or damage which is prima facie covered by an
obligatory insurance but in respect of which there is a non-payment (or
reduced payment) by the underwriters by reason of, or on the basis of an
allegation concerning:
(i) any act or omission on the part of such Borrower, of any operator,
charterer, manager or sub-manager of the Ship or of any officer,
employee or agent of such Borrower or of any such person, including
any breach of warranty or condition or any non-disclosure relating to
such obligatory insurance;
(ii) any act or omission, whether deliberate, negligent or accidental, or
any knowledge or privity of such Borrower, any other person referred
to in paragraph (i) above, or of any officer, employee or agent of
such Borrower or of such a person, including the casting away or
damaging of such Ship and/or such Ship being unseaworthy; and/or
(iii) any other matter capable of being insured against under a mortgagee's
interest marine insurance policy whether or not similar to the
foregoing;
(b) a mortgagee's interest additional perils policy in an amount of not less
than 110 per cent. of the Loan providing for the indemnification of the
Creditor Parties against, among other things, any possible losses or other
consequences of any Environmental Claim, including the risk of
expropriation, arrest or any form of detention of such Ship, the
imposition of any Security Interest over such Ship and/or any other matter
capable of being insured against under a mortgagee's interest additional
perils policy whether or not similar to the foregoing,
and the Borrowers shall upon demand fully indemnify the Security Trustee
in respect of all premiums and other expenses which are incurred in
connection with or with a view to effecting, maintaining or renewing any
such insurance or dealing with, or considering, any matter arising out of
any such insurance.
13.18 REVIEW OF INSURANCE REQUIREMENTS. The Security Trustee 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 reasonable opinion of the Security Trustee,
significant and capable of affecting the Borrowers or the Ships and their
insurance (including, without limitation, changes in the availability or
the cost of insurance coverage or the risks to which the Borrowers may be
subject), and may appoint at a maximum of once per year insurance
consultants in relation to this review at the cost of the Borrowers.
14 SHIP COVENANTS
14.1 GENERAL. Each Borrower also undertakes with each Creditor Party to comply
with the following provisions of this Clause 14 at all times during the
Security Period (after a Ship has been delivered pursuant to the relevant
Shipbuilding Contract) each except as the Agent, with the authorisation of
the Majority Lenders, may otherwise permit.
14.2 SHIP'S NAME AND REGISTRATION. Each Borrower shall register the Ship owned
by it 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 such Ship.
14.3 REPAIR AND CLASSIFICATION. Each Borrower shall keep its Ship in a good and
safe sea and cargo worthy condition and state of repair:
(a) consistent with first-class ship ownership and management practice;
41
(b) so as to maintain such Ship with the highest classification available for
vessels of the same age, type and specification as such Ship with an
approved classification society which is a member of IACS (except for the
Chinese Classification Society of the People's Republic of China and the
Russian Maritime Registry of Shipping in Russia) and which is acceptable
to the Agent free of all overdue recommendations and conditions; and
(c) so as to comply with all laws and regulations applicable to vessels
registered at ports in the applicable Approved Flag State, or to vessels
trading to any jurisdiction to which that Ship may trade from time to
time, including but not limited to the ISM Code, the ISM Code
Documentation, the ISPS Code and the ISPS Code Documentation.
14.4 CLASSIFICATION SOCIETY UNDERTAKING. Each Borrower shall instruct the
classification society of the Ship owned by it to do all or any of the
following after the occurrence of an Event of Default or (and procure that
the classification society undertakes with the Security Trustee at such
time):
(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 held by the classification society in relation to the Ship;
(b) to allow the Security Trustee (or its agents), at any time and from time
to time, to inspect the original class and related records of the Borrower
and the Ship at the offices of the classification society and to take
copies of them;
(c) to notify the Security Trustee immediately in writing if the
classification society:
(i) receives notification from that Borrower or any person that that
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 that Ship's class under the rules or terms and conditions
of that Borrower's or that Ship's membership of the classification
society;
(d) following receipt of a written request from the Security Trustee:
(i) to confirm that that Borrower 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 that Borrower 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. Each Borrower shall not make any modification or repairs to,
or replacement of, the Ship owned by it or equipment installed on her
which would or might materially alter the structure, type or performance
characteristics of that Ship or materially reduce its value.
14.6 REMOVAL OF PARTS. Each Borrower shall not remove any material part of the
Ship owned by it, or any item of equipment installed on, that 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 that Borrower and subject to the security
constituted by the relevant
42
Mortgage PROVIDED THAT a Borrower may install equipment owned by a third
party if the equipment can be removed without any risk of damage to the
Ship owned by it.
14.7 SURVEYS. Each Borrower 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 all the Lenders provide the Security
Trustee, with copies of all survey reports.
14.8 INSPECTION. Without prejudice to the Borrower's obligations pursuant to
Clause 14.7, each Borrower 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 without interruption to such Ship's normal
schedule, or interference with its operation, to inspect its condition or
to satisfy themselves about proposed or executed repairs and shall afford
all proper facilities for such inspections (including, without limitation,
submitting the Ship for a technical physical survey). All fees and
expenses incurred in relation to the appointment of the surveyors and the
preparation and issuing of all technical reports pursuant to this Clause
14.9 shall be the account of the Borrowers. PROVIDED THAT so long as a
Ship is found to be in a satisfactory condition to the Agent and no
continuing Event of Default shall be in existence, the Borrowers shall not
be obliged to pay the fees and expenses incurred in connection with the
inspection of that Ship more than once in any twelve-month period.
14.9 PREVENTION OF AND RELEASE FROM ARREST. Each Borrower 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, the Earnings
or the Insurances;
(b) all taxes, dues and other amounts charged in respect of the Ship, the
Earnings or the Insurances; and
(c) all other outgoings whatsoever in respect of the Ship owned by it, the
Earnings or the Insurances;
and, forthwith upon receiving notice of the arrest of the Ship owned by
it, or of its detention in exercise or purported exercise of any lien or
claim, that Borrower shall procure its release by providing bail or
otherwise as the circumstances may require.
14.10 COMPLIANCE WITH LAWS ETC. Each Borrower shall (and shall procure that 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 its Ship,
its ownership, operation and management or to the business of such
Borrower (including, but not limited to, the International Management Code
for the Safe Operation of Ships and for Pollution Prevention);
(b) not employ its Ship nor allow its 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 it to enter or trade to any zone
which is declared a war zone by any government or by that Ship's war risks
insurers unless the prior written consent of the all the Lenders has been
given and the Borrowers have (at its expense) effected any special,
additional or modified insurance cover which the Lenders may require.
14.11 PROVISION OF INFORMATION. The Borrowers shall promptly provide the
Security Trustee with any information which the Lenders request regarding:
43
(a) the Ships, their employment, position and engagements;
(b) the Earnings and payments and amounts due to a Ship's master and crew;
(c) any expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of a Ship and any payments made in
respect of a Ship;
(d) any towages and salvages;
(e) its own, the Approved Manager's or a Ship's compliance with the ISM Code
and the ISPS Code,
and, upon the Security Trustee's request, provide copies of any current
charter relating to a Ship, of any current charter guarantee and copies of
the ISM Code Documentation and the ISPS Code Documentation.
14.12 NOTIFICATION OF CERTAIN EVENTS. The Borrowers shall immediately notify the
Security Trustee by fax, confirmed forthwith, by letter of:
(a) any casualty which is or is likely to be or to become a Major Casualty;
(b) any occurrence as a result of which a Ship has become or is, by the
passing of time or otherwise, likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
(d) any arrest or detention of a Ship, any exercise or purported exercise of
any lien on either Ship or the Earnings or any requisition of either Ship
for hire that is not lifted within 7 days;
(e) any intended dry docking of a Ship;
(f) any Environmental Claim made against a Borrower or in connection with a
Ship, or any Environmental Incident;
(g) any other matter, event or incident, actual or threatened, the effect of
which will or could lead to the ISM Code or the ISPS Code not being
complied with;
and the Borrowers shall keep the Security Trustee advised in writing on a
regular basis and in such detail as the Security Trustee shall require of
the relevant Borrower'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. Neither Borrower
shall in relation to the Ship owned by it:
(a) let that Ship on demise charter for any period;
(b) enter into any time or consecutive voyage charter in respect of that Ship
for a term which exceeds, or which by virtue of any optional extensions
may exceed, 11 months;
(c) enter into any charter in relation to that Ship under which more than 2
months' hire (or the equivalent) is payable in advance;
(d) charter that Ship otherwise than on bona fide arm's length terms at the
time when the Ship is fixed;
44
(e) except with the prior written consent of the Agent, 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;
(f) de-activate or lay up that Ship; or
(g) put its Ship into the possession of any person for the purpose of work
being done upon her in an amount exceeding or likely to exceed $1,000,000
(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 relevant Ship or her Earnings
for the cost of such work or for any other reason.
14.14 NOTICE OF MORTGAGE. Each Borrower shall keep the Mortgage registered
against its Ship as a valid first priority mortgage, carry on board its
Ship a certified copy of such Mortgage and place and maintain in a
conspicuous place in the navigation room and the Master's cabin of the
Ship a framed printed notice stating that the Ship is mortgaged by such
Borrower to the Security Trustee.
14.15 SHARING OF EARNINGS. Neither Borrower shall:
(a) enter into any agreement or arrangement for the sharing of any Earnings;
or
(b) enter into any agreement or arrangement for the postponement of any date
on which any Earnings are due; the reduction of the amount of any Earnings
or otherwise for the release or adverse alteration of any right of the
Borrower 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 ISPS CODE. Each Borrower shall comply, and procure that the Approved
Manager complies, with the ISPS Code and in particular, without
limitation, shall:
(a) procure that each Ship and the Approved Manager comply with the ISPS Code;
(b) maintain for each Ship an ISM SMS and an ISSC; and
(c) notify the Agent immediately in writing of any actual or threatened
withdrawal, suspension, cancellation or material modification of the ISSC.
15 SECURITY COVER
15.1 MINIMUM REQUIRED SECURITY COVER. Clause 15.2 applies if the Agent notifies
the Borrower that:
(a) the aggregate of the Market Values of the Ships; plus
(b) the net realisable value of any additional security previously provided
under this Clause 15
is, at any time during the Security Period below 120 per cent. of an
amount equal to the Loan less any cash held in accounts pledged to the
Lenders.
15.2 PROVISION OF ADDITIONAL SECURITY; PREPAYMENT. If the Agent serves a notice
on the Borrowers under Clause 15.1, the Borrowers shall, within 1 month
after the date on which the Agent's notice is served, either:
45
(a) provide, or ensure that a third party provides, additional security which,
in the opinion of all the Lenders, has a net realisable value at least
equal to the shortfall and is documented in such terms as the Agent may,
with the authorisation of all the Lenders, approve or require; or
(b) prepay such part (at least) of the Loan as will eliminate the shortfall.
In Clause 15.1 and in this Clause 15.2 "SECURITY" means a Security
Interest over an asset or assets acceptable to the Lender (whether
securing the Borrower's liabilities under the Finance Documents or a
guarantee in respect of those liabilities), or a guarantee, letter of
credit or other security in respect of the Borrower's liabilities under
the Finance Documents.
15.3 VALUATION OF A SHIP. The Market Value of a Ship at any date is that shown
by a valuation prepared:
(a) as at a date not more than 14 days previously;
(b) by an Approved Broker;
(c) without physical inspection of that Ship (unless reasonably required by
the Agent);
(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, taking
into account any existing charter;
PROVIDED THAT if the Agent does not reasonably accept the valuation
obtained by the Borrower by advising the Borrower in writing within 3
Business Days of the Borrower advising the Agent of such valuation, the
Agent may, at the cost of the Borrowers, obtain a second valuation in
accordance with paragraphs (a) to (d) of this Clause 15.3 and the Market
Value of the relevant Ship will be the average of such 2 valuations.
15.4 VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
additional security which is provided under Clause 15.2 and which consists
of a Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause 15.3.
15.5 VALUATIONS BINDING. Any valuation under Clause 15.2, 15.3 or 15.4 shall be
binding and conclusive as regards the Borrowers, as shall be any valuation
which the Lenders make of any additional security which does not consist
of or include a Security Interest.
15.6 PROVISION OF INFORMATION. The Borrowers shall promptly provide the Agent
and any Approved Broker or expert acting under Clause 15.3 or 15.4 with
any information which the Agent or the shipbroker or expert may request
for the purposes of the valuation; and, if the Borrowers fail to provide
the information by the date specified in the request, the valuation may be
made on any basis and assumptions which the Approved Broker or the Lenders
(or the expert appointed by them) consider prudent.
15.7 PAYMENT OF VALUATION EXPENSES. Without prejudice to the generality of the
Borrowers' obligations under Clauses 20.2, 20.3 and 21.3, the Borrowers
shall, on demand, pay the Agent the amount of the fees and expenses of any
Approved Broker or expert instructed by the Agent under this Clause and
all legal and other expenses incurred by any Creditor Party in connection
with any matter arising out of this Clause.
15.8 FREQUENCY OF VALUATIONS. The Agent shall (at the cost of the Borrowers)
obtain a valuation of each Ship which is required to determine its Market
Value pursuant to this Clause 15.3 once every calendar year together with
the Financial Year end Compliance
46
Certificate thereafter throughout the Security Period commencing with the
valuation to be provided or prior to the Delivery Date for such Ship.
15.9 APPLICATION OF PREPAYMENT. Clause 8.11 (b) shall apply in relation to any
prepayment pursuant to Clause 15.2(b).
15.10 RELEASE OF ADDITIONAL SECURITY. If a Borrower or a third party has
provided additional security as specified in Clause 15.1(b) and the
Borrowers at a later time provide the Agent with a valuation of each Ship
made in accordance with Clause 15.3, each evidencing that the aggregate
Market Value of the Ships exceeds 120 per cent. of the Loan, the
additional security (or the relevant part thereof) shall be released at
the Borrowers' expense to the extent that the minimum security cover
specified in Clause 15.1 would be maintained following such release
PROVIDED at that time there is no Event of Default nor will an Event of
Default occur as a result of such release.
16 PAYMENTS AND CALCULATIONS
16.1 CURRENCY AND METHOD OF PAYMENTS. All payments to be made by the Lenders or
by the Borrowers under a Finance Document shall be made to the Agent or to
the Security Trustee, in the case of an amount payable to it:
(a) by not later than 11.00 a.m. (New York City time) on the due date;
(b) in same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Agent shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement);
(c) in the case of an amount payable by a Lender to the Agent or by a Borrower
to the Agent or any Lender, to the account of the Agent with a bank in New
York: "Pueblo Holdings Ltd. and Surf Maritime Co."), or to such other
account with such other bank as the Agent may from time to time notify to
the Borrowers and the other Creditor Parties; and
(d) in the case of an amount payable to the Security Trustee, to such account
as it may from time to time notify to the Borrowers and the other Creditor
Parties.
16.2 PAYMENT ON NON-BUSINESS DAY. If any payment by a 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 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 or the Security Trustee shall be made available
by the Agent to that Lender or, as the case may be, the Security Trustee
by payment, with funds having
47
the same value as the funds received, to such account as that Lender or
the Security Trustee may have notified to the Agent not less than 5
Business Days previously; and
(b) amounts to be applied in satisfying amounts of a particular category which
are due to the Lenders generally shall be distributed by the Agent to each
Lender pro rata to the amount in that category which is due to it.
16.5 PERMITTED DEDUCTIONS BY AGENT. Notwithstanding any other provision of this
Agreement or any other Finance Document, the Agent may, before making an
amount available to a Lender, deduct and withhold from that amount any sum
which is then due and payable to the Agent from that Lender under any
Finance Document or any sum which the Agent is then entitled under any
Finance Document to require that Lender to pay on demand.
16.6 AGENT ONLY OBLIGED TO PAY WHEN MONIES RECEIVED. Notwithstanding any other
provision of this Agreement or any other Finance Document, the Agent shall
not be obliged to make available to the Borrowers or any Lender any sum
which the Agent is expecting to receive for remittance or distribution to
the Borrowers or that Lender until the Agent has satisfied itself that it
has received that sum.
16.7 REFUND TO AGENT OF MONIES NOT RECEIVED. If and to the extent that the
Agent makes available a sum to a Borrower or a Lender, without first
having received that sum, the Borrower concerned or (as the case may be)
the Lender 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 each Borrower and each Security Party
under the Finance Documents and all payments in respect of those amounts
made by any 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 any 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 a Borrower or a Security
Party to a Creditor Party, those accounts shall be prima facie evidence
that that amount is owing to that Creditor Party.
17 APPLICATION OF RECEIPTS
17.1 NORMAL ORDER OF APPLICATION. Except as any Finance Document may otherwise
provide, any sums which are received or recovered by any Creditor Party
under or by virtue of any Finance Document shall be applied:
(a) FIRST: in or towards satisfaction of any amounts then due and payable
under the Finance Documents in the following order and proportions:
48
(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
Borrowers under Clauses 20, 21 and 22 of this Agreement or by the
Borrowers or any Security Party under any corresponding or similar
provision in any other Finance Document);
(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
(iii) thirdly, in or towards satisfaction of the Loan;
(b) SECONDLY: in retention of an amount equal to any amount not then due and
payable under any Finance Document but which the Agent, by notice to the
Borrowers, the Security Parties and the other Creditor Parties, states in
its opinion will or may become due and payable in the future and, upon
those amounts becoming due and payable, in or towards satisfaction of them
in accordance with the foregoing provisions of this Clause; and
(c) THIRDLY: any surplus shall be paid to the Borrowers or to any other person
appearing to be entitled to it.
17.2 VARIATION OF ORDER OF APPLICATION. The Agent may, with the authorisation
of all the Lenders, by notice to the Borrowers, the other 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 17.2 shall override any right of appropriation
possessed, and any appropriation made, by the Borrowers or any other
Security Party.
18 APPLICATION OF EARNINGS
18.1 PAYMENT OF EARNINGS. Each Borrower undertakes with each Creditor Party to
ensure that, throughout the Security Period (and subject only to the
provisions of the General Assignments), all the Earnings of the Ship owned
by it are paid to the Earnings Account for that Ship.
18.2 LOCATION OF ACCOUNTS. Each Borrower shall promptly :
(a) comply with any requirement of the Agent as to the location or re-location
of the Earnings Accounts (or either of them);
(b) execute any documents which the Agent specifies to create or maintain in
favour of the Security Trustee a Security Interest over (and/or rights of
set-off, consolidation or other rights in relation to) the Earnings
Accounts.
18.3 MINIMUM LIQUIDITY. The Borrowers shall ensure and procure that, at any
time and in respect of each Advance, there shall be credited to the
Earnings Account(s) amounts at least equal to the aggregate of (i) the
next repayment instalment of each such Advance
49
falling due and (ii) any interest to accrue until the next repayment date
of each such Advance.
18.4 DEBITS FOR EXPENSES ETC. The Agent shall be entitled (but not obliged)
from time to time to debit any Earnings Account without prior notice in
order to discharge any amount due and payable under Clause 20 or 21 to a
Creditor Party or payment of which any Creditor Party has become entitled
to demand under Clause 20 or 21.
19 EVENTS OF DEFAULT
19.1 EVENTS OF DEFAULT. An Event of Default occurs if:
(a) either 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;
(b) any breach occurs of Clause 9.2, 11.2, 11.3, 11.18, 11.19, 12.2, 12.3,
12.4, 12.5, 13.2, 13.3, 15.1, 18.1 or 18.3; or
(c) any breach by either Borrower or any Security Party occurs of any
provision of a Finance Document (other than a breach covered by paragraphs
(a) or (b)) if, in the opinion of all the Lenders, such default is capable
of remedy, and such default continues unremedied 15 Business 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 either Borrower or any Security Party occurs of any
provision of a Finance Document (other than a breach covered by paragraphs
(a), (b) or (c)); or
(e) any representation, warranty or statement made by, or by an officer of, a
Borrower or a 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
(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) any Security Interest securing any Financial Indebtedness of a
Relevant Person becomes enforceable; or
(g) any of the following occurs in relation to any Financial Indebtedness of a
Borrower:
(i) a lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Borrower is terminated by the lessor or owner or
becomes capable of being terminated as a consequence of any
termination event; or
(ii) 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 Borrower 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
(h) any of the following occurs in relation to a Relevant Person:
(i) a Relevant Person becomes unable to pay its debts as they fall due;
or
(ii) any asset of a Relevant Person (other than the Corporate Guarantor)
is subject to any form of execution, attachment, arrest,
sequestration or distress in respect of a sum of, $500,000 or more
or the equivalent in another currency and, in the case of the
Corporate Guarantor, is subject to any form of execution,
attachment, arrest, sequestration or distress which is likely to
have a Material Adverse Effect; or
(iii) any administrative or other receiver is appointed over any asset of
a Relevant Person; or
(iv) an administrator is appointed (whether by the court or otherwise) in
respect of a Relevant Person; or
(v) any formal declaration of bankruptcy or any formal statement to the
effect that a Relevant Person is insolvent or likely to become
insolvent is made by a Relevant Person or by the directors of a
Relevant Person or, in any proceedings, by a lawyer acting for a
Relevant Person; or
(vi) a provisional liquidator is appointed in respect of a Relevant
Person, a winding up order is made in relation to a Relevant Person
or a winding up resolution is passed by a Relevant Person; or
(vii) a resolution is passed, an administration notice is given or filed,
an application or petition to a court is made or presented or any
other step is taken by (aa) a Relevant Person, (bb) the members or
directors of a Relevant Person, (cc) a holder of Security Interests
which together relate to all or substantially all of the assets of a
Relevant Person, or (dd) a government minister or public or
regulatory authority of a Pertinent Jurisdiction for or with a view
to the winding up of that or another Relevant Person or the
appointment of a provisional liquidator or administrator in respect
of that or another Relevant Person, or that or another Relevant
Person ceasing or suspending business operations or payments to
creditors, save that this paragraph does not apply to a fully
solvent winding up of a Relevant Person other than the Borrowers or
the Corporate Guarantor which is, or is to be, effected for the
purposes of an amalgamation or reconstruction previously approved by
all the Lenders and effected not later than 3 months after the
commencement of the winding up; or
(viii) an administration notice is given or filed, an application or
petition to a court is made or presented or any other step is taken
by a creditor of a Relevant Person (other than a holder of Security
Interests which together relate to all or substantially all of the
assets of a Relevant Person) for the winding up of a Relevant Person
or the appointment of a provisional liquidator or administrator in
respect of a Relevant Person in any Pertinent Jurisdiction, unless
the proposed winding up, appointment of a provisional liquidator or
administration is being contested in good faith, on substantial
grounds and not with a view to some other insolvency law procedure
being implemented instead and either (aa) the application or
petition is dismissed or withdrawn within 30 days of being made or
presented, or (bb) within 30 days of the administration notice being
given or filed, or the other relevant steps being taken, other
action is taken which will ensure that there will be no
administration and (in both cases (aa) or (bb)) the Relevant Person
will continue to carry on business in the ordinary way and without
being the subject of any actual, interim or pending insolvency law
procedure; or
(ix) a Relevant Person or its directors take any steps (whether by making
or presenting an application or petition to a court, or submitting
or presenting a document
51
setting out a proposal or proposed terms, or otherwise) with a view
to obtaining, in relation to that or another Relevant Person, any
form of moratorium, suspension or deferral of payments,
reorganisation of debt (or certain debt) or arrangement with all or
a substantial proportion (by number or value) of creditors or of any
class of them or any such moratorium, suspension or deferral of
payments, reorganisation or arrangement is effected by court order,
by the filing of documents with a court, by means of a contract or
in any other way at all; or
(x) any meeting of the members or directors, or of any committee of the
board or senior management, of a Relevant Person is held or summoned
for the purpose of considering a resolution or proposal to authorise
or take any action of a type described in paragraphs (iv) to (ix) or
a step preparatory to such action, or (with or without such a
meeting) the members, directors or such a committee resolve or agree
that such an action or step should be taken or should be taken if
certain conditions materialise or fail to materialise; or
(xi) in a Pertinent Jurisdiction other than England, any event occurs,
any proceedings are opened or commenced or any step is taken which,
in the opinion of all the Lenders, is similar to any of the
foregoing; or
(i) either Borrower or any Security Party ceases or suspends carrying on its
business or a part of its business which, in the opinion of all the
Lenders, is material in the context of this Agreement; or
(j) it becomes unlawful in any Pertinent Jurisdiction or impossible:
(i) for either Borrower or any Security Party to discharge any liability
under a Finance Document or to comply with any other obligation
which all the Lenders consider material under a Finance Document;
and
(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
(k) any consent necessary to enable either Borrower to own, operate or charter
the Ship owned by it or to enable either Borrower or any Security Party to
comply with any provision which all the 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
(l) it reasonably appears to the Lenders that, without their prior consent, a
change has occurred or probably has occurred after the date of this
Agreement in the beneficial ownership of any of the shares in either
Borrower, or in the control of the voting rights attaching to any of those
shares which results in the Borrowers not being in compliance with their
obligations under Clause 12.4; or
(m) any provision which the 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
(n) the security constituted by a Finance Document is in any way imperilled or
in jeopardy; or
(o) (without limiting the generality of paragraph (m) above), either Credit
Default Insurance with respect to the Initial Charters, ceases to exist;
52
(p) any other event occurs or any other circumstances arise or develop
including, without limitation:
(i) a change in the financial position, state of affairs or prospects of
any Borrower or any other Security Party; or
(ii) any accident or other event involving a Ship or another vessel
owned, chartered or operated by a Relevant Person; or
(iii) commencement of legal or administrative action involving the
Borrowers the Ships or any Security Party
which constitutes a Material Adverse Change.
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 Borrowers a notice stating that the Commitments and all
other obligations of each Lender to the Borrowers under this
Agreement are terminated; and/or
(ii) serve on the Borrowers a notice stating that if the Event of Default
is not remedied, in the case of an Event of Default falling within
Clause 19.1(a), within 5 days and in any other case, within 30 days,
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), 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 Lender, the Security Trustee shall take
any action which, as a result of the Event of Default or any notice served
under paragraph (a) (i) or (ii), 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 Clauses
19.2(a)(i), the Commitments and all other obligations of each Lender to
the Borrowers under this Agreement shall terminate.
19.4 ACCELERATION OF LOAN. On the service of a notice under Clause 19.2(a)(ii),
the Loan, all accrued interest and all other amounts accrued or owing from
the Borrowers 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
Clauses 19.2 (a)(i) and (ii) simultaneously or on different dates and it
and/or the Security Trustee may take any action referred to in Clause 19.2
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
or the text of any notice which the Agent serves on the Borrowers under
Clause 19.2; but the notice shall become effective when it is served on
the Borrowers, and no failure or delay by the Agent to send
53
a copy or the text of the notice to any other person shall invalidate the
notice or provide a 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
a 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 directly and mainly caused by
the dishonesty 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
Borrowers, the Corporate Guarantor and any other Security Party.
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.
20 FEES AND EXPENSES
20.1 ARRANGEMENT, COMMITMENT AND AGENCY FEES. The Borrowers shall pay to the
Agent:
(a) a commitment fee (for distribution among the Lenders pro rata to their
Commitments) at the rate of 0.40 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 the earlier of (i) the Final
Availability Date of the Ship B Advance, (ii) if earlier, the Drawdown
Date of the Ship B Advance and (iii) the date on which the Total
Commitments are fully cancelled or terminated, such fee to be paid
quarterly in arrears and on the last day of such period;
(b) an arrangement fee (for distribution among the Lenders at the sole
discretion of the Agent), equal to 0.80 per cent of the amount of the
Total Commitments payable as follows:
(i) 50 per cent. of such arrangement fee has been paid on the date of
acceptance of the Summary of Terms; and
(ii) the remaining 50 per cent shall be paid in two equal instalments,
each equal to 0.40 per cent. of the maximum amount of each Advance
each such instalment to be paid on the Drawdown Date of such
Advance,
PROVIDED THAT :
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(A) the first instalment of the arrangement fee referred to in
paragraph (i) above shall be non-refundable irrespective
whether any part of the Total Commitments are drawn down
hereunder for any other reason whatsoever; and
(B) in case the Agent determines that the arrangement fee needs to
be increased in order to achieve for a successful syndication
of the Total Commitment or any part thereof, the amount of the
arrangement fee to be paid and the manner of payment thereof
may, at the discretion of the Agent and in cooperation with
the Borrowers and the Corporate Guarantor each of whom shall
act reasonably, be adjusted and increased up to an amount not
exceeding in aggregate 1.20 per cent of the amount of the
Total Commitments; and
(c) if at any time there are at least 2 Lenders, an agency fee equal to
$10,000 for each Ship which is subject to a Mortgage payable annually in
advance.
20.2 COSTS OF NEGOTIATION, PREPARATION ETC. The Borrowers shall pay to the
Agent on its demand the amount of all reasonable 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
expenses incurred by the Lenders with respect to the legal opinions
stipulated in Schedule 4).
20.3 COSTS OF VARIATIONS, AMENDMENTS, ENFORCEMENT ETC. The Borrowers shall pay
to the Agent, on the Agent's demand, for the account of the Creditor Party
concerned, the amount of all expenses incurred by a Creditor Party 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 or the Creditor Party 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; or
(d) 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 such Ship pursuant to Clause 13.18; and
(e) any step taken by the Lender 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 (d) 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 Borrowers 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 claims, expenses,
liabilities and losses resulting from any failure or delay by the Borrower
to pay such a tax.
20.5 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 20 and which indicates
(without necessarily specifying a detailed
55
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 Borrowers shall
fully indemnify the Agent and each Lender on the Agent's demand and the
Security Trustee on its demand in respect of all claims, expenses,
liabilities and losses which are made or brought against or 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) the Loan not being borrowed on the date specified in the Drawdown Notice
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 a 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 Borrowers
on the amount concerned under Clause 7);
(d) the occurrence and/or continuance of an 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
claim, expense, liability 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 Borrowers shall fully indemnify each
Creditor Party severally on their respective demands in respect of all
claims, expenses, liabilities and losses and expenses of every kind
("LIABILITY ITEMS") which may be made or brought against or incurred by a
Creditor Party, in any country, as a result of or in connection with:
(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; and
(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
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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 Agent's or (as the case
may be) the Security Trustee'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 20.3 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 or any regulation relating to safety at sea, pollution or the
protection of the environment, including but not limited to the ISM Code
and the ISPS Code.
21.5 CURRENCY INDEMNITY. If any sum due from a 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 any 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 Borrowers 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
(London 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 Borrowers 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 a Borrower to the Agent or the Security Trustee for
distribution to a Lender shall be treated as a sum due to that Lender.
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22 NO SET-OFF OR TAX DEDUCTION
22.1 NO DEDUCTIONS. All amounts due from a 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 a
Borrower is required by law to make.
22.2 GROSSING-UP FOR TAXES. If a Borrower is required by law to make a tax
deduction from any payment:
(a) the Borrowers shall notify the Agent as soon as it becomes aware of the
requirement;
(b) such 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 Borrowers 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.
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 Borrowers,
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.
23.3 PREPAYMENT; TERMINATION OF COMMITMENT. On the Agent notifying the
Borrowers under Clause 23.1 and 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 Borrowers shall prepay the
Notifying Lender's Contribution in accordance with Clause 8.
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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 a regulation or an alteration after the date of this Agreement in the
manner in which a law is interpreted or applied by any competent authority
(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 regulation having compulsory effect
(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) which is introduced, or
altered, or the interpretation or application of which is altered, after
the date of this Agreement,
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;
(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 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
(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; or
(c) the effect of complying with the regulations set out in the "International
Convergence of Capital Standards, a Revised Framework" published by the
Basle Committee on Banking Supervision in June 2004 as implemented in the
EU by the Capital Requirements Directive (2006/48/EC and 2006/49/EC) is
that the Notifying Lender (or a parent company of it) has incurred or will
incur an increased cost (as defined in sub-paragraphs (i) to (iv) above)
when compared to the cost of complying with such regulations as determined
by the Notifying Lender (or a parent company of it) on the date of this
Agreement.
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.
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24.2 NOTIFICATION TO BORROWERS OF CLAIM FOR INCREASED COSTS. The Agent shall
promptly notify the Borrowers 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 Borrowers shall pay to the Agent, on the
Agent's demand, for the account of the Notifying Lender the amounts which
the Agent from time to time notifies the Borrowers 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 Borrowers are not willing to continue to
compensate the Notifying Lender for the increased cost under Clause 24.3,
the Borrowers may give the Agent not less than 15 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
Borrowers' 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 Borrowers
shall prepay (without premium or penalty) the Notifying Lender's
Contribution, together with accrued interest thereon at the applicable
rate plus the Margin.
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 any Borrower at any office in any
country of that Creditor Party in or towards satisfaction of any sum then
due from the Borrowers or any of them 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 a
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.
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 Borrowers or any of them 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.
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25.4 NO SECURITY INTEREST. This Clause 25 gives each Creditor Party a
contractual right of set-off only, and does not create any equitable
charge or other Security Interest over any credit balance of the Borrowers
(or any of them).
26 JOINT AND SEVERAL LIABILITY
26.1 GENERAL. All liabilities and obligations of the Borrowers under this
Agreement shall, whether expressed to be so or not, be several and, if and
to the extent consistent with Clause 26.2, joint.
26.2 NO IMPAIRMENT OF BORROWERS' OBLIGATIONS. The liabilities and obligations
of a Borrower shall not be impaired by:
(a) this Agreement being or later becoming void, unenforceable or illegal as
regards either one or both of the other Borrower;
(b) any Lender, the Agent or the Security Trustee entering into any
rescheduling, refinancing or other arrangement of any kind with the other
Borrower;
(c) any Lender, the Agent or the Security Trustee releasing the other Borrower
or any Security Interest created by a Finance Document; or
(d) any combination of the foregoing.
26.3 PRINCIPAL DEBTORS. Each Borrower declares that it is and will, throughout
the Security Period, remain a principal debtor for all amounts owing under
this Agreement and the Finance Documents and neither the Borrower shall in
any circumstances be construed to be a surety for the obligations of the
other Borrower under this Agreement.
26.4 SUBORDINATION. Subject to Clause 26.5, during the Security Period, neither
Borrower shall:
(a) claim any amount which may be due to it from the other Borrower whether in
respect of a payment made, or matter arising out of, this Agreement or any
Finance Document, or any matter unconnected with this Agreement or any
Finance Document; or
(b) take or enforce any form of security from the other Borrower for such an
amount, or in any other way seek to have recourse in respect of such an
amount against any asset of either one or both of the other Borrowers; or
(c) set off such an amount against any sum due from it to the other Borrower;
or
(d) prove or claim for such an amount in any liquidation, administration,
arrangement or similar procedure involving the other Borrower or other
Security Party; or
(e) exercise or assert any combination of the foregoing.
26.5 BORROWERS' REQUIRED ACTION. If during the Security Period, the Agent, by
notice to a Borrower, requires it to take any action referred to in
paragraphs (a) to (d) of Clause 26.4, in relation to the other Borrower,
that Borrower shall take that action as soon as practicable after
receiving the Agent's notice.
27 TRANSFERS AND CHANGES IN LENDING OFFICES
27.1 TRANSFER BY A BORROWER. Neither Borrower may, without the prior written
consent of the Agent, given on the instructions of all the Lenders:
(a) transfer any of its rights, liabilities or obligations under any Finance
Documents; and
61
(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.
27.2 TRANSFER BY A LENDER. Subject to Clause 27.4 and the other terms and
conditions of this Clause 27.2, 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, any third party (a "TRANSFEREE LENDER") by
delivering to the Agent a completed certificate in the form set out in
Schedule 5 with any modifications approved or required by the Agent (a
"TRANSFER CERTIFICATE") executed by the Transferor Lender and the
Transferee Lender.
A transfer pursuant to this Clause 27.2 shall require the prior consent of
the Borrowers, which shall not be unreasonably withheld or delayed
PROVIDED THAT the consent of the Borrowers shall not be required in the
case of:
(a) a transfer where the Transferee Lender is an affiliate of the
Transferor lender;
(b) an Event of Default which is continuing; and
(c) a transfer to the first two Transferee Lenders (in which case only
consultation with the Borrowers is required)
PROVIDED FURTHER THAT the aggregate of such right and/or obligation that
may be transferred by the Lenders together with all such rights and/or
obligations which may have been transferred to lenders other than the
present Lenders (present Lenders means the Lenders on the date of
execution of this Agreement) shall not exceed 50 per cent. of the total
rights and/or obligations of the Total Commitments or, as the case may be,
the Total Contributions.
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 Agreement.
27.3 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 Borrowers, the
Security Parties, the Security Trustee and each of the other Lenders;
(b) on behalf of the Transferee Lender, send to the Borrowers 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.
27.4 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.
27.5 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
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to, any Borrower, any Security Party or the Security Trustee unless it is
effected, evidenced or perfected by a Transfer Certificate.
27.6 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 Agent may, if it sees fit, by notice to the successor
and the Borrowers and the Security Trustee waive the need for the
execution and delivery of a Transfer Certificate; and, upon service of the
Agent's notice, the successor shall become a Lender with the same
Commitment and Contribution as were held by the predecessor Lender.
27.7 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 either 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 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 either Borrower or any Security Party against
the Transferor Lender had not existed;
(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 under Clause 5.7 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 a 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.
27.8 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
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any Lender, the Security Trustee and either Borrower during normal banking
hours, subject to receiving at least 3 Business Days prior notice.
27.9 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.
27.10 AUTHORISATION OF AGENT TO SIGN TRANSFER CERTIFICATES. Each Borrower, the
Security Trustee, each Lender irrevocably authorise the Agent to sign
Transfer Certificates on its behalf.
27.11 REGISTRATION FEE. In respect of any Transfer Certificate, the Agent shall
be entitled to recover a registration fee of $2,500 (and all costs, fees
and expenses incidental to the transfer (including, but not limited to
legal fees and expenses)) from the Transferor Lender or (at the Agent's
option) the Transferee Lender.
27.12 SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. A Lender may sub-participate
part of its rights and/or obligations under or in connection with the
Finance Documents provided however that the aggregate of such
sub-participations at any time does not exceed 50 per cent. of the total
rights and/or obligations of the Lenders under or in connection with the
Finance Documents, without the consent of, or any notice to, any Borrower,
any Security Party, the Agent and the Security Trustee; and the Lenders
may assign, in any manner and terms agreed by all the 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.
27.13 DISCLOSURE OF INFORMATION. A Lender may disclose to a potential Transferee
Lender, or sub-participant as well as any rating agency, trustee,
professional adviser or accountant any information which the Lender has
received in relation to any Borrower, any Security Party or their affairs
under or in connection with any Finance Document which the Agent may
consider necessary or appropriate to be disclosed in order to ensure a
successful potential syndication, transfer or sub-participation. In such
case, the Agent shall be released form its obligation of secrecy and
confidentiality PROVIDED however, that if a potential Transferee Lender or
sub-participant, as well as any rating agency, trustee, professional
adviser or accountant is not already by law subject to any rules of
confidentiality, the Agent shall request the execution of a
confidentiality agreement by such potential Transferee Lender,
sub-participant, rating agency, trustee or accountant.
27.14 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.
27.15 NOTIFICATION. On receiving such a notice, the Agent shall notify the
Borrowers 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.
28 VARIATIONS AND WAIVERS
28.1 VARIATIONS, WAIVERS ETC. BY LENDERS. 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 Borrowers, by the Agent on behalf of the Majority
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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.
28.2 EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
satisfies the requirements of Clause 28.1, 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 a Borrower or any other 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;
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.
29 NOTICES
29.1 GENERAL. Unless otherwise specifically provided, any notice under or in
connection with any Finance Document shall be given by letter, fax or
telex; and references in the Finance Documents to written notices, notices
in writing and notices signed by particular persons shall be construed
accordingly.
29.2 ADDRESSES FOR COMMUNICATIONS. A notice shall be sent:
(a) to each Borrower: 00 Xxxx Xxxxxxx,
Xxxxxxx 000 00,
Xxxxxx
Fax No: x00 000 0000000
(b) to a Lender: At the address below its name in Schedule 1
(or as the case may require) in the relevant
Transfer Certificate.
(c) to the Agent, Security DekaBank Deutsche Girozentrale
Trustee, Bookrunner Mainzer Xxxxxxxx(xxxx)x 00
xxx Xxxxxxxx: 00000 Xxxxxxxxx xx Xxxx
Xxxxxxx
Fax No: x00 000 000 00000
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 Borrowers,
the Lenders and the Security Parties.
29.3 EFFECTIVE DATE OF NOTICES. Subject to Clauses 29.4 and 29.5:
(a) a notice which is delivered personally or posted shall be deemed to be
served, and shall take effect, at the time when it is delivered;
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(b) a notice which is sent by telex or fax shall be deemed to be served, and
shall take effect, 2 hours after its transmission is completed.
29.4 SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 29.3 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 29.5) be deemed to be served, and
shall take effect, at 9 a.m. on the next day which is such a business day.
29.5 ILLEGIBLE NOTICES. Clauses 29.3 and 29.4 do not apply if the recipient of
a notice notifies the sender within 1 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.
29.6 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.
29.7 ELECTRONIC COMMUNICATION. Any communication to be made between the Agent
and a Lender under or in connection with the Finance Documents may be made
by electronic mail or other electronic means, if the Agent and the
relevant Lender:
(a) agree that, unless and until notified to the contrary, this is to be an
accepted form of communication;
(b) 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
(c) notify each other of any change to their respective addresses or any other
such information supplied to them.
Any electronic communication made between the Agent and a Lender will be
effective only when actually received in readable form and, in the case of
any electronic communication made by a Lender to the Agent, only if it is
addressed in such a manner as the Agent shall specify for this purpose.
29.8 ENGLISH LANGUAGE. Any notice under or in connection with a Finance
Document shall be in English.
29.9 MEANING OF "NOTICE". In this Clause 28, "NOTICE" includes any demand,
consent, authorisation, approval, instruction, waiver or other
communication.
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30 SUPPLEMENTAL
30.1 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.
30.2 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.
30.3 COUNTERPARTS. A Finance Document may be executed in any number of
counterparts.
30.4 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.
31 LAW AND JURISDICTION
31.1 ENGLISH LAW. This Agreement and any non-contractual obligations arising
out of or in connection with it shall be governed by, and construed in
accordance with, English law.
31.2 EXCLUSIVE ENGLISH JURISDICTION. Subject to Clause 31.3, the courts of
England shall have exclusive jurisdiction to settle any Disputes.
31.3 CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF CREDITOR PARTIES. Clause 31.2
is for the exclusive benefit of the Creditor Parties, each of which
reserves the rights:
(a) to commence proceedings in relation to any Dispute in the courts of any
country other than England and which have or claim jurisdiction to that
Dispute; 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.
Neither Borrower shall commence any proceedings in any country other than
England in relation to a Dispute.
31.4 PROCESS AGENT. Each Borrower irrevocably appoints Messrs HFW Nominees
Limited at their office for the time being, presently at Friary Court, 65
Crutched Friars, Xxxxxx XX0X 0XX, Xxxxxxx 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
or any other Finance Document.
31.5 CREDITOR PARTY RIGHTS UNAFFECTED. Nothing in this Clause 31 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.
31.6 MEANING OF "PROCEEDINGS". In this Clause 31, "PROCEEDINGS" means
proceedings of any kind, including an application for a provisional or
protective measure and a "DISPUTE"
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means any dispute arising out of or in connection with this Agreement
(including a dispute relating to the existence, validity or termination of
this Agreement) or any non-contractual obligation arising out of or in
connection with this Agreement.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
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EXECUTION PAGES
BORROWERS
SIGNED by Xxxx Xxxxxxx )
)
for and on behalf of ) /s/ Xxxx Xxxxxxx
PUEBLO HOLDINGS LTD. )
in the presence of: Efstratios )
Paschalidis
SIGNED by Xxxx Xxxxxxx )
)
for and on behalf of ) /s/ Xxxx Xxxxxxx
SURF MARITIME CO. )
in the presence of: Efstratios )
Paschalidis
LENDERS
SIGNED by )
)
for and on behalf of ) /s/ Xxxxx Xxxxxxxxxxx
DEKABANK DEUTSCHE ) /s/ Xxxxxx Xxxxxxx
GIROZENTRALE )
in the presence of: Xxxxxx Xxxxxxx )
AGENT
SIGNED by )
)
for and on behalf of ) /s/ Xxxxx Xxxxxxxxxxx
DEKABANK DEUTSCHE ) /s/ Xxxxxx Xxxxxxx
GIROZENTRALE )
in the presence of: Xxxxxx Xxxxxxx )
SECURITY TRUSTEE
SIGNED by )
)
for and on behalf of ) /s/ Xxxxx Xxxxxxxxxxx
DEKABANK DEUTSCHE ) /s/ Xxxxxx Xxxxxxx
GIROZENTRALE )
in the presence of: Xxxxxx Xxxxxxx )
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BOOKRUNNER
SIGNED by )
)
for and on behalf of ) /s/ Xxxxx Xxxxxxxxxxx
DEKABANK DEUTSCHE ) /s/ Xxxxxx Xxxxxxx
GIROZENTRALE )
in the presence of: Xxxxxx Xxxxxxx )
ARRANGER
SIGNED by )
)
for and on behalf of ) /s/ Xxxxx Xxxxxxxxxxx
DEKABANK DEUTSCHE ) /s/ Xxxxxx Xxxxxxx
GIROZENTRALE )
in the presence of: Xxxxxx Xxxxxxx )
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