Date 28 June 2006
BARONESS HOLDINGS INC.
as Borrower
- and -
DNB NOR BANK ASA
as Lender
----------
LOAN AGREEMENT
----------
relating to a US$6,580,000 loan
XXXXXX, XXXXXX & XXXXXXXX
PIRAEUS
INDEX
CLAUSE PAGE
----
1 INTERPRETATION 1
2 FACILITY 12
3 DRAWDOWN 12
4 INTEREST 13
5 INTEREST PERIODS 14
6 DEFAULT INTEREST 15
7 REPAYMENT AND PREPAYMENT 16
8 CONDITIONS PRECEDENT 17
9 REPRESENTATIONS AND WARRANTIES 18
10 GENERAL UNDERTAKINGS 20
11 CORPORATE UNDERTAKINGS 23
12 INSURANCE 23
13 SHIP COVENANTS 27
14 SECURITY COVER 31
15 PAYMENTS AND CALCULATIONS 32
16 APPLICATION OF RECEIPTS 33
17 APPLICATION OF EARNINGS 33
18 EVENTS OF DEFAULT 34
19 FEES AND EXPENSES 38
20 INDEMNITIES 38
21 NO SET-OFF OR TAX DEDUCTION 40
22 ILLEGALITY, ETC 41
23 INCREASED COSTS 41
24 SET-OFF 42
25 TRANSFERS AND CHANGES IN LENDING OFFICE 43
26 VARIATIONS AND WAIVERS 43
27 NOTICES 44
28 SUPPLEMENTAL 45
29 LAW AND JURISDICTION 46
SCHEDULE 1 DRAWDOWN NOTICE 47
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS 48
EXECUTION PAGE 51
THIS AGREEMENT is made on 28 June 2006
BETWEEN
(1) BARONESS HOLDINGS INC., a corporation incorporated and existing under the
laws of the Xxxxxxxx Islands whose registered address is at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, the Xxxxxxxx Xxxxxxx
XX00000 as "BORROWER"; and
(2) DNB NOR BANK ASA of Norway acting through its office at 00 Xx Xxxxxxx'x
Xxxx, Xxxxxx XX0X 0XX, Xxxxxxx as "LENDER".
BACKGROUND
(A) The Lender has agreed to make available to the Borrower a loan facility of
up to $6,580,000 for the purpose of financing 70 per cent. of the purchase
price of the Panamanian flag vessel m.v. "BATANGAS" from Batangas Shipping
Ltd.
(B) The Borrower may, if it wishes, from time to time hedge its exposure under
this Agreement to interest rate fluctuations by entering into interest
rate swap transactions with the Lender.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 DEFINITIONS. Subject to Clause 1.5, in this Agreement:
"ACCOUNTS SECURITY DEED" means a deed creating security in respect of the
Earnings Accounts and the Retention Account in favour of the Lender, in
such form as the Lender may approve or require;
"APPROVED MANAGER" means Anglo-Eastern Ship Management Ltd. acting through
its office at 23/F, 000 Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxx Xxxx or any other
company which the Lender may approve from time to time as the commercial
and/or technical manager of the Ship;
"ASSET COVER RATIO" means, at any relevant time, the ratio of (i) the
average of the Loan outstanding for the 90 days immediately prior to and
including a Margin Calculation Date less the aggregate of any amounts
standing to the credit of the Earnings Accounts on that Margin Calculation
Date to (ii) the aggregate Market Value of the Ship on that Margin
Calculation Date;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on 31 July 2006;
"BAREBOAT CHARTER" means the bareboat charterparty agreement dated 13 June
2006 and entered into between the Bareboat Charterer and the Borrower;
"BAREBOAT CHARTER PERIOD" means the period during which the Ship is
operating under the Bareboat Charter;
"BAREBOAT CHARTERER" means Petredec S.A., a company incorporated and
existing under the laws of Bermuda;
"BUSINESS DAY" means a day on which banks are open in London 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 the Ship, any time charter or other
contract for its employment (other than the Bareboat Charter) for a term
of at least 13 months, or capable of exceeding 13 months, whether or not
already in existence at the date of this Agreement, to be performed at any
time during the Security Period;
"CHARTER ASSIGNMENT" means in relation to the Ship, a specific assignment
of the rights of the Borrower under any Charter pursuant to Clause 13.15
and any guarantee of such Charter, to be executed by the Borrower in
favour of the Lender in such form as the Lender may approve or require;
"CONFIRMATION" and "EARLY TERMINATION DATE", in relation to any continuing
Transaction, have the meanings given in the Master Agreement;
"CONTRACTUAL CURRENCY" has the meaning given in Clause 20.4;
"CORPORATE GUARANTEE" means the guarantee of the obligations of the
Borrower under this Agreement and the Finance Documents executed or to be
executed by the Corporate Guarantor in favour of the Lender in such form
as the Lender may approve or require;
"CORPORATE GUARANTOR" means Stealthgas Inc., a corporation incorporated
and existing under the laws of the Xxxxxxxx Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, the Xxxxxxxx Xxxxxxx, XX00000;
"DOLLARS" and "$" means the lawful currency for the time being of the
United States of America;
"DRAWDOWN DATE" means the date requested by the Borrower for the Loan to
be advanced, or (as the context requires) the date on which the Loan is
actually advanced;
"DRAWDOWN NOTICE" means a notice in the form set out in Schedule 1 (or in
any other form which the Lender approves or requires);
"EARNINGS" means all moneys whatsoever which are now, or later become,
payable (actually or contingently) to the Borrower and which arise out of
the use or operation of the Ship, including (but not limited to):
(a) all freight, hire and passage moneys, compensation payable to the
Borrower in the event of requisition of the Ship for hire,
remuneration for salvage and towage services, demurrage and
detention moneys and damages for breach (or payments for variation
or termination) of any charterparty or other contract for the
employment of the Ship;
(b) all moneys which are at any time payable under Insurances in respect
of loss of earnings; and
(c) if and whenever the Ship is employed on terms whereby any moneys
falling within paragraphs (a) or (b) are pooled or shared with any
other person, that proportion of the net receipts of the relevant
pooling or sharing arrangement which is attributable to the Ship;
"EARNINGS ACCOUNT" means an account in the name of the Borrower with the
Lender in England designated "Baroness Holdings Inc. - Earnings Account"
or any other account (with that or another office of the Lender) which is
designated by the Lender as the Earnings Account for the purposes of this
Agreement;
"ENVIRONMENTAL CLAIM" means:
2
(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:
(a) any release of Environmentally Sensitive Material from the Ship; or
(b) any incident in which Environmentally Sensitive Material is released
from a vessel other than the Ship and which involves a collision
between the Ship and such other vessel or some other incident of
navigation or operation, in either case, in connection with which
the Ship is actually or potentially liable to be arrested, attached,
detained or injuncted and/or the Ship and/or the Borrower and/or any
operator or manager of the Ship is at fault or allegedly at fault or
otherwise liable to any legal or administrative action; or
(c) any other incident in which Environmentally Sensitive Material is
released otherwise than from the Ship and in connection with which
the Ship is actually or potentially liable to be arrested and/or
where the Borrower and/or any operator or manager of the Ship is at
fault or allegedly at fault or otherwise liable to any legal or
administrative action;
"ENVIRONMENTAL LAW" means any law relating to pollution or protection of
the environment, to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products and any other
substance (including any chemical, gas or other hazardous or noxious
substance) which is (or is capable of being or becoming) polluting, toxic
or hazardous;
"EVENT OF DEFAULT" means any of the events or circumstances described in
Clause 18.1;
"FINANCE DOCUMENTS" means:
(a) this Agreement;
(b) the Corporate Guarantee;
(c) the Master Agreement;
(d) the Mortgage;
(e) the General Assignment;
(f) the Master Agreement Assignment;
(g) the Accounts Security Deed;
3
(h) the Shares Pledge;
(i) the Tripartite Agreement;
(j) any Charter Assignment; and
(k) any other document (whether creating a Security Interest or not)
which is executed at any time by the Borrower or any other person as
security for, or to establish any form of subordination or
priorities arrangement in relation to, any amount payable to the
Lender under this Agreement or any of the other documents referred
to in this definition;
"FINANCIAL INDEBTEDNESS" means, in relation to a person (the "DEBTOR"), a
liability of the debtor:
(a) for principal, interest or any other sum payable in respect of any
moneys borrowed or raised by the debtor;
(b) under any loan stock, bond, note or other security issued by the
debtor;
(c) under any acceptance credit, guarantee or letter of credit facility
made available to the debtor;
(d) under a financial lease, a deferred purchase consideration
arrangement or any other agreement having the commercial effect of a
borrowing or raising of money by the debtor;
(e) under any foreign exchange transaction any interest or currency swap
or any other kind of derivative transaction entered into by the
debtor or, if the agreement under which any such transaction is
entered into requires netting of mutual liabilities, the liability
of the debtor for the net amount; or
(f) under a guarantee, indemnity or similar obligation entered into by
the debtor in respect of a liability of another person which would
fall within (a) to (e) if the references to the debtor referred to
the other person;
"GENERAL ASSIGNMENT" means a general assignment of the Earnings, the
Insurances and any Requisition Compensation of the Ship, in such form as
the Lender may approve or require;
"INSURANCES" means:
(a) all policies and contracts of insurance, including entries of the
Ship in any protection and indemnity or war risks association, which
are effected in respect of the Ship, her Earnings or otherwise in
relation to her; and
(b) all rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;
"INTEREST PERIOD" means a period determined in accordance with Clause 5;
"ISM CODE" means, in relation to its application to the Borrower, the Ship
and its operation:
(a) 'The International Management Code for the Safe Operation of Ship
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)
4
on 4 November 1993 and incorporated on 19 November 1994 into chapter
IX of the International Convention for the Safety of Life at Sea
1974 (SOLAS 1974); and
(b) all further resolutions, circulars, codes, guidelines, regulations
and recommendations which are now or in the future issued by or on
behalf of the International Maritime Organisation or any other
entity with responsibility for implementing the ISM Code, including
without limitation, the 'Guidelines on implementation or
administering of the International Safety Management (ISM) Code by
Administrations' produced by the International Maritime
Organisations pursuant to Resolution A.788(19) adopted on 25
November 1995,
as the same may be amended, supplemented or replaced from time to time;
"ISM CODE DOCUMENTATION" includes:
(a) the document of compliance (DOC) and safety management certificate
(SMC) issued pursuant to the ISM Code in relation to each Ship
within the periods specified by the ISM Code; and
(b) all other documents and data which are relevant to the ISM SMS and
its implementation and verification which the Lender may require;
and
(c) any other documents which are prepared or which are otherwise
relevant to establish and maintain the Ship's or the Borrower's
compliance with the ISM Code which the Lender may require;
"ISM SMS" means the safety management system for the Ship which is
required to be developed, implemented and maintained under the ISM Code;
"LENDER" means DnB NOR Bank ASA, acting through its office at 00 Xx.
Xxxxxxx'x Xxxx, Xxxxxx XX0X 0XX, Xxxxxxx (or through another branch
notified to the Borrower under Clause 25.6) or its successor or assign;
"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 Telerate Page 3750 at or
about 11.00 a.m. (London time) on the second Business Day prior to
the commencement of that Interest Period (and, for the purposes of
this Agreement, "Telerate Page 3750" means the display designated as
"Page 3750" on the Telerate Service or such other page as may
replace Page 3750 on that service for the purpose of displaying
rates comparable to that rate) or on such other service as may be
nominated by the British Bankers' Association as the information
vendor for the purpose of displaying the British Bankers'
Association Interest Settlement Rates for Dollars; or
(b) in relation to an Interest Period of any other duration or if no
rate is quoted on Telerate Page 3750, the rate per annum determined
by the Lender to be the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the
rates per annum determined by the Lender as the rate at which
deposits in Dollars are offered to the Lender by leading banks in
the London Interbank Market at the Lender's request at or about
11.00 a.m. (Rotterdam 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;
5
"MAJOR CASUALTY" means any casualty to the Ship in respect of which the
claim or the aggregate of the claims against all insurers, before
adjustment for any relevant franchise or deductible, exceeds $500,000 or
the equivalent in any other currency;
"MARGIN" means at all times when the Asset Cover Ratio is:
(b) equal to or lower than 130 per cent., 0.85 per cent. per annum;
(c) higher than 130 per cent. and lower than 150 per cent., 0.75 per
cent. per annum; and
(d) equal to or higher than 150 per cent., 0.70 per cent. per annum;
"MARGIN CALCULATION DATE" has the meaning given to it in Clause 4.12;
"MARKET VALUE" means the market value of the Ship at any date determined
in accordance with Clause 14.3;
"MASTER AGREEMENT" means the master agreement (on the 1992 ISDA
(Multicurrency - Crossborder) form) made or to be made between the
Borrower and the Lender and includes all Transactions from time to time
entered into and Confirmations from time to time exchanged thereunder;
"MASTER AGREEMENT ASSIGNMENT" means the assignment of the Master Agreement
in favour of the Lender executed or to be executed by the Borrower, in
such form as the Lender may approve or require;
"MOA" means the memorandum of agreement dated 13 June 2006 made between
the Borrower (as nominee of the Corporate Guarantor) as buyer and Batangas
Shipping Ltd. as seller;
"MORTGAGE" means the first preferred Panamanian ship mortgage on the Ship
to be in such form as the Lender may approve or require;
"NEGOTIATION PERIOD" has the meaning given in Clause 4.6;
"PAYMENT CURRENCY" has the meaning given in Clause 20.4;
"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 the 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
the Ship, provided such liens do not secure amounts more than 30
days overdue (unless the overdue amount is being contested by the
Borrower in good faith by appropriate steps) and subject, in the
case of liens for repair or maintenance, to Clause 13.12(g);
6
(f) any Security Interest created in favour of a plaintiff or defendant
in any proceedings or arbitration as security for costs and expenses
where the Borrower is actively prosecuting or defending such
proceedings or arbitration in good faith; and
(g) Security Interests arising by operation of law in respect of taxes
which are not overdue for payment or in respect of taxes being
contested in good faith by appropriate steps and in respect of which
appropriate reserves have been made;
"PERTINENT DOCUMENT" means:
(a) any Finance Document;
(b) any policy or contract of insurance contemplated by or referred to
in Clause 12 or any other provision of this Agreement or another
Finance Document;
(c) any other document contemplated by or referred to in any Finance
Document; and
(d) any document which has been or is at any time sent by or to the
Lender in contemplation of or in connection with any Finance
Document or any policy, contract or document falling within
paragraphs (b) or (c);
"PERTINENT JURISDICTION", in relation to a company, means:
(a) England and Wales;
(b) the country under the laws of which the company is incorporated or
formed;
(c) a country in which the company's central management and control is
or has recently been exercised;
(d) a country in which the overall net income of the company is subject
to corporation tax, income tax or any similar tax;
(e) a country in which assets of the company (other than securities
issued by, or loans to, related companies) having a substantial
value are situated, in which the company maintains a permanent place
of business, or in which a Security Interest created by the company
must or should be registered in order to ensure its validity or
priority; and
(f) a country the courts of which have jurisdiction to make a winding
up, administration or similar order in relation to the company or
which would have such jurisdiction if their assistance were
requested by the courts of a country referred to in paragraphs (b)
or (c) above;
"PERTINENT MATTER" means:
(a) any transaction or matter contemplated by, arising out of, or in
connection with a Pertinent Document; or
(b) any statement relating to a Pertinent Document or to a transaction
or matter falling within paragraph (a),
and covers any such transaction, matter or statement, whether entered
into, arising or made at any time before the signing of this Agreement or
on or at any time after that signing;
7
"POTENTIAL EVENT OF DEFAULT" means an event or circumstance which, with
the giving of any notice, the lapse of time, a determination of the Lender
and/or the satisfaction of any other condition, would constitute an Event
of Default;
"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 18.7;
"REPAYMENT DATE" means a date on which a repayment is required to be made
under Clause 7;
"REQUISITION COMPENSATION" includes all compensation or other moneys
payable by reason of any act or event such as is referred to in paragraph
(b) of the definition of "Total Loss";
"RETENTION ACCOUNT" means an account in the name of the Borrower with the
Lender in England designated "Baroness Holdings Inc. - Retention Account"
or any other account (with that or another office of the Lender) which is
designated by the Lender as the Retention Account for the purposes of this
Agreement;
"SECURED LIABILITIES" means all liabilities which the Borrower, the
Security Parties or any of them have, at the date of this Agreement or at
any later time or times, under or in connection with any Finance Document
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 COVER RATIO" means at any time, the ratio of:
(a) the aggregate of:
(i) the aggregate Market Value of the Ship; and
(ii) the net realisable value of any additional security
previously provided under Clause 14 of this Agreement; to
(b) the aggregate of the Loan and any Swap Exposure at any relevant
time;
"SECURITY INTEREST" means:
(a) a mortgage, charge (whether fixed or floating) or pledge, any
maritime or other lien or any other security interest of any kind;
(b) the security rights of a plaintiff under an action in rem; and
(c) any arrangement entered into by a person (A) the effect of which is
to place another person (B) in a position which is similar, in
economic terms, to the position in which B would have been had he
held a security interest over an asset of A; but this paragraph (c)
does not apply to a right of set off or combination of accounts
conferred by the standard terms of business of a bank or financial
institution;
8
"SECURITY PARTY" means the Corporate Guarantor, the Shareholder and any
other person (except the Lender) 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 Lender notifies the Borrower
and the Security Parties that:
(a) all amounts which have become due for payment by the Borrower or any
Security Party under the Finance Documents have been paid;
(b) no amount is owing or has accrued (without yet having become due for
payment) under any Finance Document;
(c) neither the Borrower nor any Security Party has any future or
contingent liability under Clause 19, 20, or 21 or any other
provision of this Agreement or another Finance Document; and
(d) the Lender does 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;
"SELLER" means Batangas Shipping Ltd., a company incorporated in Panama
whose registered office is in Panama City;
"SHARES PLEDGE" means the pledge of all the shares of and in the Borrower,
executed or to be executed by the Shareholder in favour of the Lender in
such form as the Lender may approve or require;
"SHAREHOLDER" means Xxxxxx Trading Company, a corporation incorporated and
existing under the laws of the Xxxxxxxx Islands and having its registered
address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Xxxxxxxx Xxxxxxx XX00000;
"SHIP" means the 1995-built LPG carrier of 3,300 cubic metres currently
registered under Panamanian flag in the ownership of the Seller with the
name "BATANGAS" which is to be purchased by the Borrower pursuant to the
MOA and re-registered in its ownership under the Panamanian flag with the
same name;
"SWAP EXPOSURE" means, as at any relevant date the aggregate net amount in
Dollars which would be payable by the Borrower to the Lender under (and
calculated in accordance with) section 6(e) (Payments on Early
Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Transactions
entered into between the Borrower and the Lender;
"TOTAL LOSS" means:
(a) actual, constructive, compromised, agreed or arranged total loss of
the Ship;
(b) any expropriation, confiscation, requisition or acquisition of the
Ship, whether for full consideration, a consideration less than its
proper value, a nominal consideration or without any consideration,
which is effected by any government or official authority or by any
person or persons claiming to be or to represent a government or
official authority (excluding a requisition for hire for a fixed
period
9
not exceeding 1 year without any right to an extension) unless it is
within 1 month redelivered to the Borrower's full control;
(c) any arrest, capture, seizure or detention of the Ship (including any
hijacking or theft) unless it is within 30 days redelivered to the
Borrower's full control;
"TOTAL LOSS DATE" means:
(a) in the case of an actual loss of the Ship, the date on which it
occurred or, if that is unknown, the date when the Ship was last
heard of;
(b) in the case of a constructive, compromised, agreed or arranged total
loss of the Ship, the earliest of:
(i) the date on which a notice of abandonment is given to the
insurers; and
(ii) the date of any compromise, arrangement or agreement made by
or on behalf of the Borrower with the Ship's insurers in
which the insurers agree to treat the Ship as a total loss;
and
(c) in the case of any other type of total loss, on the date (or the
most likely date) on which it appears to the Lender that the event
constituting the total loss occurred;
"TRANSACTION" has the meaning given in the Master Agreement; and
"TRIPARTITE AGREEMENT" means an agreement dealing with (inter alia) the
operation of the Ship during the Bareboat Charter Period, made or to be
made between (i) the Borrower, (ii) the Bareboat Charterer and (iii) the
Lender, in such form as the Lender may approve or require.
1.2 CONSTRUCTION OF CERTAIN TERMS. In this Agreement:
"APPROVED" means, for the purposes of Clause 12, approved in writing by
the Lender;
"ASSET" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or other
payment;
"COMPANY" includes any partnership, joint venture and unincorporated
association;
"CONSENT" includes an authorisation, consent, approval, resolution,
licence, exemption, filing, registration, notarisation and legalisation;
"CONTINGENT LIABILITY" means a liability which is not certain to arise
and/or the amount of which remains unascertained;
"DOCUMENT" includes a deed; also a letter or fax;
"EXCESS RISKS" means the proportion of claims for general average, salvage
and salvage charges not recoverable under the hull and machinery policies
in respect of the Ship in consequence of its insured value being less than
the value at which the Ship is assessed for the purpose of such claims;
"EXPENSE" means any kind of cost, charge or expense (including all legal
costs, charges and expenses) and any applicable value added or other tax;
10
"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 all insurances effected, or which the
Borrower is obliged to effect, under Clause 12 or any other provision of
this Agreement or another Finance Document;
"PARENT COMPANY" has the meaning given in Clause 1.4;
"PERSON" includes any company; any state, political sub-division of a
state and local or municipal authority; and any international
organisation;
"POLICY", in relation to any insurance, includes a slip, cover note,
certificate of entry or other document evidencing the contract of
insurance or its terms;
"PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
protection and indemnity association managed in London, including
pollution risks and the proportion (if any) of any sums payable to any
other person or persons in case of collision which are not recoverable
under the hull and machinery policies by reason of the incorporation in
them of clause 1 of the Institute Time Clauses (Hulls)(l/10/83) or clause
8 of the Institute Time Clauses (Hulls)(l/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;
"REGULATION" includes any regulation, rule, official directive, request or
guideline whether or not having the force of law of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
"SUBSIDIARY" has the meaning given in Clause 1.4;
"TAX" includes any present or future tax, duty, impost, levy or charge of
any kind which is imposed by any state, any political sub-division of a
state or any local or municipal authority (including any such imposed in
connection with exchange controls), and any connected penalty, interest or
fine; and
"WAR RISKS" includes the risk of mines and all risks excluded by clause 23
of the Institute Time Clauses (Hulls)(l/10/83) or clause 24 of the
Institute Time Clauses (Hulls)(l/11/1995).
1.3 MEANING OF "MONTH". A period of one or more "MONTHS" ends on the day in
the relevant calendar month numerically corresponding to the day of the
calendar month on which the period started ("THE NUMERICALLY CORRESPONDING
DAY"), but:
(a) on the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day; or
11
(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 days,
and "MONTH" and "MONTHLY" shall be construed accordingly.
1.4 MEANING OF "SUBSIDIARY". A company (S) is a subsidiary of another company
(P) if:
(a) a majority of the issued shares in S (or a majority of the issued shares
in S which carry unlimited rights to capital and income distributions) are
directly owned by P or are indirectly attributable to P; or
(b) P has direct or indirect control over a majority of the voting rights
attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove a majority of the
directors of S; or
(d) P otherwise has the direct or indirect power to ensure that the affairs of
S are conducted in accordance with the wishes of P,
and any company of which S is a subsidiary is a parent company of S.
1.5 GENERAL INTERPRETATION. In this Agreement:
(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 Lender 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 AMOUNT OF FACILITY. Subject to the other provisions of this Agreement, the
Lender shall make a loan facility of up to $6,580,000 available to the
Borrower.
2.2 PURPOSE OF LOAN. The Borrower undertakes with the Lender to use the Loan
only for the purpose stated in the preamble to this Agreement.
3 DRAWDOWN
3.1 REQUEST FOR ADVANCE OF LOAN. Subject to the following conditions, the
Borrower may request the Loan to be made by ensuring that the Lender
receives a completed Drawdown Notice not later than 11.00 a.m. (London
time) 3 Business Days prior to the intended
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Drawdown Date, subject to the Drawdown Date being a Business Day during
the Availability Period.
3.2 DRAWDOWN NOTICE IRREVOCABLE. A Drawdown Notice must be signed by a
director or other authorised person of the Borrower; and once served, a
Drawdown Notice cannot be revoked without the prior consent of the Lender.
3.3 DISBURSEMENT OF LOAN. Subject to the provisions of this Agreement, the
Lender shall on the Drawdown Date make available the Loan to the Borrower;
and payment to the Borrower shall be made to the account which the
Borrower specifies in the Drawdown Notice.
3.4 DISBURSEMENT OF LOAN TO THIRD PARTY. The payment of by the Lender under
Clause 3.3 to the Seller shall constitute the making of the Loan and the
Borrower shall at that time become indebted, as principal and direct
obligor, to the Lender in an amount equal to the Loan.
4 INTEREST
4.1 PAYMENT OF NORMAL INTEREST. Subject to the provisions of this Agreement,
interest on the Loan in respect of each Interest Period shall be paid by
the Borrower on the last day of that Interest Period.
4.2 NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement, the
rate of interest on the Loan in respect of an Interest Period shall be the
aggregate of the applicable Margin and LIBOR for that Interest Period.
4.3 PAYMENT OF ACCRUED INTEREST. In the case of an Interest Period longer than
3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest Period.
4.4 NOTIFICATION OF MARKET DISRUPTION. The Lender shall promptly notify the
Borrower if no rate is quoted on Telerate Page 3750 or if for any reason
the Lender is unable to obtain Dollars in the London Interbank Market in
order to fund the Loan (or any part of it) during any Interest Period,
stating the circumstances which have caused such notice to be given.
4.5 SUSPENSION OF DRAWDOWN. If the Lender's notice under Clause 4.4 is served
before the Loan is advanced, the Lender's obligation to advance the Loan
shall be suspended while the circumstances referred to in the Lender's
notice continue.
4.6 NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. If the Lender's notice under
Clause 4.4 is served after the Loan is advanced, the Borrower and the
Lender shall use reasonable endeavours to agree, within the 30 days after
the date on which the Lender serves its notice under Clause 4.4 (the
"NEGOTIATION PERIOD"), an alternative interest rate or (as the case may
be) an alternative basis for the Lender to fund or continue to fund the
Loan during the Interest Period concerned.
4.7 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.
4.8 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 Lender shall set an interest period and
interest rate representing the cost of funding of the Lender in Dollars or
in any available currency of the Loan plus the applicable Margin; and the
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procedure provided for by this Clause 4.8 shall be repeated if the
relevant circumstances are continuing at the end of the interest period so
set by the Lender.
4.9 NOTICE OF PREPAYMENT. If the Borrower does not agree with an interest rate
set by the Lender under Clause 4.8, the Borrower may give the Lender not
less than 10 Business Days' notice of its intention to prepay at the end
of the interest period set by the Lender.
4.10 PREPAYMENT. A notice under Clause 4.9 shall be irrevocable; and on the
last Business Day of the interest period set by the Lender, the Borrower
shall prepay (without premium or penalty) the Loan, together with accrued
interest thereon at the applicable rate plus the applicable Margin.
4.11 APPLICATION OF PREPAYMENT. The provisions of Clause 7 shall apply in
relation to the prepayment.
4.12 CALCULATION OF ASSET COVER RATIO. The Lender shall calculate the Asset
Cover Value Ratio on the Drawdown Date and every 12 months thereafter
(each a "MARGIN CALCULATION DATE") for the purposes of calculating the
Margin and shall advise the Borrower in writing, within 10 Business Days
of each Margin Calculation Date, of the Margin which will apply for the
12-month period commencing on the relevant Margin Calculation Date
PROVIDED THAT in respect of each Margin Calculation Date other than the
first Margin Calculation Date, the Lender shall only be obliged to advise
the Borrower of the Margin which will apply for the 12-month period
commencing on the relevant Margin Calculation Date if that Margin will be
different to the Margin which applies immediately prior to the relevant
Margin Calculation Date.
For the purposes of calculating the Asset Cover Ratio pursuant to this
Clause 4.12, the Market Value of the Ship shall be determined no more than
30 days prior to the relevant Margin Calculation Date.
5 INTEREST PERIODS
5.1 COMMENCEMENT OF INTEREST PERIODS. The first Interest Period shall commence
on the Drawdown Date and each subsequent Interest Period shall commence on
the expiry of the preceding Interest Period.
5.2 DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 5.3 and 5.4, each
Interest Period shall be:
(a) 1, 2, 3, 6, 9 or 12 months as notified by the Borrower to the Lender not
later than 11.00 a.m. (London time) 3 Business Days before the
commencement of the Interest Period;
(b) 3 months, if the Borrower fails to notify the Lender by the time specified
in paragraph (a); or
(c) such other longer period as the Lender may agree with the Borrower.
5.3 DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENTS. In respect of an
amount due to be repaid under Clause 7 on a particular Repayment Date, an
Interest Period shall end on that Repayment Date.
5.4 NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
after the Borrower has selected and the Lender has agreed an Interest
Period longer than 3 months, the Lender notifies the Borrower by 11.00
a.m. (London time) on the third Business Day before the commencement of
the Interest Period that it is not satisfied that deposits in Dollars for
a period equal to the Interest Period will be available to it in the
London
14
Interbank Market when the Interest Period commences, the Interest Period
shall be of 3 months.
6 DEFAULT INTEREST
6.1 PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrower shall pay
interest in accordance with the following provisions of this Clause 6 on
any amount payable by the Borrower under any Finance Document which the
Lender 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 18.4,
the date on which it became immediately due and payable.
6.2 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
Lender to be 1.5 per cent. above:
(a) in the case of an overdue amount of principal, the higher of the rates set
out at Clauses 6.3(a) and (b); or
(b) in the case of any other overdue amount, the rate set out at Clause
6.3(b).
6.3 CALCULATION OF DEFAULT RATE OF INTEREST. The rates referred to in Clause
6.2 are:
(a) the rate applicable to the overdue principal amount immediately prior to
the relevant date (but only for any unexpired part of any then current
Interest Period applicable to it);
(b) the applicable Margin plus, in respect of successive periods of any
duration (including at call) up to 3 months which the Lender may select
from time to time:
(i) LIBOR; or
(ii) if the Lender determines that Dollar deposits for any such period
are not being made available to it by leading banks in the London
Interbank Market in the ordinary course of business, a rate from
time to time determined by the Lender by reference to the cost of
funds to it from such other sources as the Lender may from time to
time determine.
6.4 NOTIFICATION OF INTEREST PERIODS AND DEFAULT RATES. The Lender shall
promptly notify the Borrower of each interest rate determined by it under
Clause 6.3 and of each period selected by it for the purposes of paragraph
(b) of that Clause; but this shall not be taken to imply that the Borrower
is liable to pay such interest only with effect from the date of the
Lender's notification.
6.5 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.
6.6 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.
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6.7 APPLICATION TO MASTER AGREEMENT. For the avoidance of doubt this Clause 6
does not apply to any amount payable under the Master Agreement in respect
of any continuing Transaction as to which section 2(e) (Default Interest,
Other Amounts) of the Master Agreement shall apply.
7 REPAYMENT AND PREPAYMENT
7.1 AMOUNT OF REPAYMENT INSTALMENTS. The Borrower shall repay the Loan by:
(a) 20 consecutive six-monthly instalments of:
(i) in the case of the first and second instalments, $473,760 each;
(ii) in the case of the third to sixth instalments (inclusive), $315,840
each; and
(iii) in the case of the seventh to twentieth instalments (inclusive),
$236,880 each; and
(b) a balloon instalment of $1,052,800 (as such amount may be increased
through the operation of Clause 7.11, the "BALLOON INSTALMENT").
7.2 REPAYMENT DATES.
(a) The first instalment shall be repaid on the date falling 6 months after
the earlier of:
(i) the Drawdown Date; and
(ii) 31 January 2007 (or such later date as the Lender may agree with
the Borrower); and
(b) the last instalment, along with the Balloon Instalment, shall be repaid on
the earlier of:
(i) the date falling on the tenth anniversary of the Drawdown Date; and
(ii) 31 July 2016 (or such later date as the Lender may agree with the
Borrower).
7.3 FINAL REPAYMENT DATE. On the final Repayment Date, the Borrower shall
additionally pay to the Lender all other sums then accrued or owing under
any Finance Document.
7.4 VOLUNTARY PREPAYMENT. Subject to the following conditions, the Borrower
may prepay the whole or any part of the Loan on the last day of an
Interest Period.
7.5 CONDITIONS FOR VOLUNTARY PREPAYMENT. The conditions referred to in Clause
7.4 are that:
(a) a partial prepayment shall be $250,000 or a multiple of $250,000;
(b) the Lender has received from the Borrower at least 5 days' prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made; and
(c) the Borrower has provided evidence satisfactory to the Lender that any
consent required by the Borrower or any Security Party in connection with
the prepayment has been obtained and remains in force, and that any
regulation relevant to this Agreement which affects the Borrower or any
Security Party has been complied with.
7.6 EFFECT OF NOTICE OF PREPAYMENT. A prepayment notice may not be withdrawn
or amended without the consent of the Lender and the amount specified in
the prepayment
16
notice shall become due and payable by the Borrower on the date for
prepayment specified in the prepayment notice.
7.7 MANDATORY PREPAYMENT. Without prejudice to the provisions of Clause 14,
the Borrower shall be obliged to prepay the whole of the Loan if the Ship
is sold or becomes a Total Loss:
(a) in the case of a sale, on or before the date on which the sale is
completed by delivery of the Ship to the buyer; or
(b) in the case of a Total Loss, on the earlier of the date falling 120 days
after the Total Loss Date and the date of receipt by the Lender of the
proceeds of insurance relating to such Total Loss.
7.8 AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 20 or
otherwise) in respect of the amount prepaid and, if the prepayment is not
made on the last day of an Interest Period together with any sums payable
under Clause 20.1(b) but without premium or penalty.
7.9 APPLICATION OF PARTIAL PREPAYMENT. Each partial prepayment shall be
applied pro rata against the repayment instalments, including, without
limitation, the balloon instalment, specified in Clause 7.1.
7.10 NO REBORROWING. No amount prepaid may be reborrowed.
7.11 DEFERRAL OPTION. The Borrower may elect to defer the repayment of up to
one third of any three repayment instalments falling due after the
Repayment Date in relation to the seventh repayment instalment subject to
the following terms and conditions:
(a) the Borrower shall have sent to the Lender a notice at least 10 days prior
to the Repayment Date relative to the repayment instalment the payment of
part of which the Borrower is electing to defer specifying the amount to
be deferred (which amount shall not exceed one third of the relevant
repayment instalment);
(b) no Event of Default has occurred or is continuing either at the date of
the Borrower's said request or on the Repayment Date on which the deferred
instalment was due and payable; and
(c) each part of a repayment instalment which is deferred (which shall not
exceed, when added to the parts of all other repayment instalments which
have been deferred, $236,880 in aggregate) shall be added to the Balloon
Instalment which shall be increased by such amount.
8 CONDITIONS PRECEDENT
8.1 DOCUMENTS, FEES AND NO DEFAULT. The Lender's obligation to advance the
Loan is subject to the following conditions precedent:
(a) that, on or before the service of the Drawdown Notice, the Lender receives
the documents described in Part A of Schedule 2, in form and substance
satisfactory to it and its lawyers;
(b) that, on the Drawdown Date but prior to the advance of the Loan, the
Lender receives the documents described in Part B of Schedule 2 in form
and substance satisfactory to it and its lawyers;
17
(c) that, on the date of this Agreement, the Lender receives the arrangement
fee referred to in Clause 19.1 and has received payment of the expenses
referred to in Clause 19.2; and
(d) that both at the date of the Drawdown Notice and at the Drawdown Date:
(i) no Event of Default or Potential Event of Default has occurred and
is continuing or would result from the borrowing of the Loan;
(ii) the representations and warranties in Clause 9.1 and those of the
Borrower or any Security Party which are set out in the other
Finance Documents would be true and not misleading if repeated on
each of those dates with reference to the circumstances then
existing; and
(iii) none of the circumstances contemplated by Clause 4.4 has occurred
and is continuing; and
(e) that, if the ratio set out in Clause 14.1 were applied immediately
following the advance of the Loan, the Borrower would not be obliged to
provide additional security or prepay part of the Loan under that Clause;
and
(f) that the Lender has received, and found to be acceptable to it, any
further opinions, consents, agreements and documents in connection with
the Finance Documents which the Lender may request by notice to the
Borrower prior to the Drawdown Date.
8.2 WAIVERS OF CONDITIONS PRECEDENT. If the Lender, at its discretion, permits
the Loan to be borrowed before certain of the conditions referred to in
Clause 8.1 are satisfied, the Borrower shall ensure that those conditions
are satisfied within 5 Business Days after the Drawdown Date (or such
longer period as the Lender may specify).
9 REPRESENTATIONS AND WARRANTIES
9.1 GENERAL. The Borrower represents and warrants to the Lender as follows.
9.2 STATUS. The Borrower is duly incorporated and validly existing and in good
standing under the laws of the Xxxxxxxx Islands.
9.3 SHARE CAPITAL AND OWNERSHIP. The Borrower has an authorised share capital
divided into 100 registered and/or bearer shares of no par value, all of
which shares have been issued in registered form, and the legal title and
beneficial ownership of all such issued shares is held, free of any
Security Interest or other claim, by the Shareholder.
9.4 CORPORATE POWER. The Borrower, has the corporate capacity, and has taken
all corporate action and obtained all consents necessary for it:
(a) to execute the MOA, to purchase and pay for the Ship under the MOA and to
register the Ship in its name under Panamanian flag;
(b) to execute the Finance Documents to which the Borrower is a party; and
(c) to borrow under this Agreement, to enter into Transactions under the
Master Agreement and to make all the payments contemplated by, and to
comply with, those Finance Documents to which the Borrower is a party and
the Master Agreement.
9.5 CONSENTS IN FORCE. All the consents referred to in Clause 9.4 remain in
force and nothing has occurred which makes any of them liable to
revocation.
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9.6 LEGAL VALIDITY; EFFECTIVE SECURITY INTERESTS. The Finance Documents to
which The Borrower is a party, do now or, as the case may be, will, upon
execution and delivery (and, where applicable, registration as provided
for in the Finance Documents):
(a) constitute the Borrower's legal, valid and binding obligations enforceable
against the Borrower in accordance with their respective terms; and
(b) create legal, valid and binding Security Interests enforceable in
accordance with their respective terms over all the assets to which they,
by their terms, relate,
subject to any relevant insolvency laws affecting creditors' rights
generally.
9.7 NO THIRD PARTY SECURITY INTERESTS. Without limiting the generality of
Clause 9.6, at the time of the execution and delivery of each Finance
Document:
(a) the Borrower will have the right to create all the Security Interests
which that Finance Document purports to create; and
(b) no third party will have any Security Interest (except for Permitted
Security Interests) or any other interest, right or claim over, in or in
relation to any asset to which any such Security Interest, by its terms,
relates.
9.8 NO CONFLICTS. The execution by the Borrower of each Finance Document, and
the borrowing by the Borrower of the Loan, and its compliance with each
Finance Document to will not involve or lead to a contravention of:
(a) any law or regulation; or
(b) the constitutional documents of the Borrower; or
(c) any contractual or other obligation or restriction which is binding on the
Borrower or any of its assets.
9.9 NO WITHHOLDING TAXES. All payments which the Borrower is liable to make
under the Finance Documents may be made without deduction or withholding
for or on account of any tax payable under any law of any Pertinent
Jurisdiction.
9.10 NO DEFAULT. No Event of Default or Potential Event of Default has occurred
and is continuing.
9.11 INFORMATION. All information which has been provided in writing by or on
behalf of the Borrower or any Security Party to the Lender in connection
with any Finance Document satisfied the requirements of Clause 10.5; all
audited and unaudited accounts which have been so provided satisfied the
requirements of Clause 10.7; and there has been no material adverse change
in the financial position or state of affairs of the Borrower from that
disclosed in the latest of those accounts.
9.12 NO LITIGATION. No legal or administrative action involving the Borrower
(including action relating to any alleged or actual breach of the ISM
Code) has been commenced or taken or, to the Borrower's knowledge, is
likely to be commenced or taken.
9.13 VALIDITY AND COMPLETENESS OF MOA, ETC. Each of the MOA and the Bareboat
Charter constitutes valid, binding and enforceable obligations of the
parties thereto respectively in accordance with their terms, and:
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(a) the copy of each of the MOA and the Bareboat Charter delivered to the
Lender before the date of this Agreement is a true and complete copy
thereof (including, without limitation, any addenda thereto); and
(b) no amendments or additions to the MOA or the Bareboat Charter have been
agreed nor has the Borrower or any other party waived any of their
respective rights under the MOA or the Bareboat Charter.
9.14 NO REBATES ETC. There is no agreement or understanding to allow or pay any
rebate, premium, commission discount or other benefit or payment
(howsoever described) to the Borrower, the Seller or any third party in
connection with the purchase by the Borrower of the Ship other than as
disclosed to the Lender in writing on or prior to the date of this
Agreement.
9.15 COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement, the
Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.
9.16 TAXES PAID. The Borrower has paid all taxes applicable to, or imposed on
or in relation to the Borrower, its business and the Ship.
9.17 ISM CODE COMPLIANCE. All requirements of the ISM Code as they relate to
the Borrower, the Approved Manager, the Bareboat Charterer and the Ship
have been complied with.
10 GENERAL UNDERTAKINGS
10.1 GENERAL. The Borrower undertakes with the Lender to comply with the
following provisions of this Clause 10 at all times during the Security
Period, except as the Lender may otherwise permit.
10.2 TITLE; NEGATIVE PLEDGE. The Borrower will:
(a) hold the legal title to, and own the entire beneficial interest in the
Ship, her Insurances and Earnings, 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 and except for Permitted Security Interests; and
(b) not create or permit to arise any Security Interest (except for Permitted
Security Interests) over any other asset, present or future including, but
not limited to, the Borrower's rights against the Lender under the Master
Agreement or all or any part of the Borrower's interest in any amount
payable to the Borrower by the Lender under the Master Agreement.
10.3 NO DISPOSAL OF ASSETS. The Borrower will not transfer, lease or otherwise
dispose of:
(a) all or a substantial part of its assets, whether by one transaction or a
number of transactions, whether related or not; or
(b) any debt payable to it or any other right (present, future or contingent
right) to receive a payment, including any right to damages or
compensation.
10.4 NO OTHER LIABILITIES OR OBLIGATIONS TO BE INCURRED. The Borrower will not
incur any liability or obligation except liabilities and obligations under
the MOA and the Finance Documents and liabilities or obligations
reasonably incurred in the ordinary course of operating and chartering the
Ship.
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10.5 INFORMATION PROVIDED TO BE ACCURATE. All financial and other information
which is provided in writing by or on behalf of the Borrower under or in
connection with any Finance Document will be true and not misleading and
will not omit any material fact or consideration.
10.6 PROVISION OF FINANCIAL STATEMENTS. The Borrower will send to the Lender:
(a) as soon as possible, but in no event later than 120 days after the end of
each financial year the audited accounts of the Borrower and the audited
consolidated accounts of the Corporate Guarantor; and
(b) as soon as possible, but in no event later than 60 days after the end of
each quarterly period in each financial year of the Borrower, the
unaudited quarterly accounts of the Borrower and the unaudited quarterly
consolidated accounts of the Corporate Guarantor,
in each case together with a certificate in the form set out in Schedule 3
signed by a director of the Borrower confirming that the Borrower is as at
the date of that certificate in compliance with the covenants specified in
this Agreement and the Finance Documents and confirming that no Event of
Default or Potential Event of Default has occurred.
10.7 FORM OF FINANCIAL STATEMENTS. All accounts and financial statements
(audited and unaudited) delivered under Clause 10.6 will:
(a) be prepared in accordance with all applicable laws and generally accepted
accounting principles consistently applied;
(b) give a true and fair view of the state of affairs of the relevant parties
at the date of those accounts and of their profit for the period to which
those accounts relate; and
(c) fully disclose or provide for all significant liabilities of the Borrower.
10.8 SHAREHOLDER AND CREDITOR NOTICES. The Borrower will send to the Lender, at
the same time as they are despatched, copies of all communications which
are despatched to the Borrower's shareholders or creditors or any class of
them.
10.9 CONSENTS. The Borrower will maintain in force and promptly obtain or
renew, and will promptly send certified copies to the Lender of, all
consents required:
(a) for the Borrower to perform its obligations under any Finance Document;
(b) for the validity or enforceability of any Finance Document; and
(c) for the Borrower to continue to own and operate the Ship, and
(d) for the Borrower to continue to perform its obligations under the Bareboat
Charter to which it is a party,
and the Borrower will comply with the terms of all such consents.
10.10 MAINTENANCE OF SECURITY INTERESTS. The Borrower will:
(a) at its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
(b) without limiting the generality of paragraph (a), 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
21
respect of any Finance Document, give any notice or take any other step
which may be 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.
10.11 NOTIFICATION OF LITIGATION. The Borrower will provide the Lender with
details of any legal or administrative action involving the Borrower, any
Security Party, the Approved Manager or the Ship, her Earnings or her
Insurances as soon as such action is instituted or it becomes apparent to
the Borrower that it is likely to be instituted, unless it is clear that
the legal or administrative action cannot be considered material in the
context of any Finance Document.
10.12 NO AMENDMENT TO BAREBOAT CHARTER, ETC. The Borrower will not agree to any
amendment or supplement to, or waive or fail to enforce, the MOA or the
Bareboat Charter or any of their respective provisions.
10.13 PRINCIPAL PLACE OF BUSINESS. The Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
stated at the commencement of this Agreement; and the Borrower will not
establish, or do anything as a result of which it would be deemed to have,
a place of business in the United Kingdom or the United States of America.
10.14 CONFIRMATION OF NO DEFAULT. The Borrower will, within 2 Business Days
after service by the Lender of a written request, serve on the Lender a
notice which is signed by the director of the Borrower and which:
(a) states that no Event of Default or Potential Event of Default has
occurred; or
(b) states that no Event of Default or Potential Event of Default has
occurred, except for a specified event or matter, of which all material
details are given.
10.15 NOTIFICATION OF DEFAULT. The Borrower will notify the Lender as soon as
the Borrower becomes aware of:
(a) the occurrence of an Event of Default or a Potential Event of Default; or
(b) any matter which indicates that an Event of Default or a Potential Event
of Default may have occurred,
and will keep the Lender fully up-to-date with all developments.
10.16 PROVISION OF FURTHER INFORMATION. The Borrower will as soon as practicable
after receiving the request, provide the Lender with any additional
financial or other information relating to:
(a) the Borrower, the Ship, the Earnings, the Insurances, the Bareboat
Charterer or the Corporate Guarantor; or
(b) to any other matter relevant to, or to any provision of, a Finance
Document,
which may be requested by the Lender at any time.
10.17 MINIMUM CASH BALANCE. On each Drawdown Date and on the first day of each
Interest Period (and in respect of any Interest Period of more than 6
months, six-monthly), the Borrower shall pay into the Retention Account an
amount equal to all interest payable on the Loan during such Interest
Period (or in the case of an Interest Period exceeding 6
22
months, during the following 6 months or up to the end of such Interest
Period, whichever is shorter).
11 CORPORATE UNDERTAKINGS
11.1 GENERAL. The Borrower also undertakes with the Lender to comply, or
procure compliance as the case may be, with the following provisions of
this Clause 11 at all times during the Security Period except as the
Lender may otherwise permit.
11.2 MAINTENANCE OF STATUS. The Borrower will maintain its separate corporate
existence and remain in good standing under the laws of its country of
incorporation.
11.3 NEGATIVE UNDERTAKINGS. The Borrower will not:
(a) carry on any business other than the ownership, chartering and operation
of the Ship; or
(b) following the occurrence of an Event of Default pay any dividend or make
any other form of distribution or effect any form of redemption, purchase
or return of share capital; or
(c) provide any form of credit or financial assistance to:
(i) a person who is directly or indirectly interested in the Borrower's
share or loan capital; or
(ii) any company in or with which such a person is directly or
indirectly interested or connected,
or enter into any transaction with or involving such a person or company
on terms which are, in any respect, less favourable to the Borrower than
those which it could obtain in a bargain made at arms' length;
(d) open or maintain any account with any bank or financial institution except
accounts with the Lender for the purposes of the Finance Documents;
(e) issue, allot or grant any person a right to any shares in its capital or
repurchase or reduce its issued share capital;
(f) acquire any shares or other securities other than US or UK Treasury bills
and certificates of deposit issued by major North American or European
banks, or enter into any transaction in a derivative (other than any
Transactions under the Master Agreement);
(g) enter into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation; or
(h) permit any immediate or without change in ownership of the shares from
that existing as at the date of this Agreement.
12 INSURANCE
12.1 GENERAL. The Borrower also undertakes with the Lender to comply, or as the
case may be, procure compliance, with the following provisions of this
Clause 12 at all times during the Security Period except as the Lender may
otherwise permit.
12.2 MAINTENANCE OF OBLIGATORY INSURANCES. The Borrower shall keep the Ship
insured at the expense of the Borrower against:
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(a) fire and usual marine risks (including hull and machinery and excess
risks);
(b) war risks;
(c) protection and indemnity risks; and
(d) any other risks against which the Lender considers, having regard to
practices and other circumstances prevailing at the relevant time, it
would in the opinion of the Lender be reasonable for the Borrower to
insure and which are specified by the Lender by notice to the Borrower.
12.3 TERMS OF OBLIGATORY INSURANCES. The 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) 110 per cent. of the
aggregate of the Loan and the Swap Exposure and (ii) the market value of
the Ship; 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 under
basic protection and indemnity club entry (with the international group of
protection and indemnity clubs) and in the international marine insurance
market (currently $1,000,000,000);
(d) in relation to protection and indemnity risks in respect of the full
tonnage of the Ship;
(e) on approved terms; and
(f) through approved brokers and with approved insurance companies and/or
underwriters or, in the case of war risks and protection and indemnity
risks, in approved war risks and protection and indemnity risks
associations.
12.4 FURTHER PROTECTIONS FOR THE LENDER. In addition to the terms set out in
Clause 12.3, the Borrower shall procure that the obligatory insurances
shall:
(a) whenever the Lender requires, name (or be amended to name) the Lender 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 Lender thereby being liable to pay (but having
the right to pay) premiums, calls or other assessments in respect of such
insurance;
(b) name the Lender as loss payee with such directions for payment as the
Lender may specify;
(c) provide that all payments by or on behalf of the insurers under the
obligatory insurances to the Lender shall be made without set-off,
counterclaim or deductions or condition whatsoever;
(d) provide that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Lender;
(e) provide that the Lender may make proof of loss if the Borrower fails to do
so.
12.5 RENEWAL OF OBLIGATORY INSURANCES. The Borrower shall:
(a) at least 7 days before the expiry of any obligatory insurance effected by
it:
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(i) notify the Lender of the brokers (or other insurers) and any
protection and indemnity or war risks association through or with
whom the Borrower proposes to renew that obligatory insurance and
of the proposed terms of renewal; and
(ii) obtain the Lender's approval to the matters referred to in
paragraph (i);
(b) at least 7 days before the expiry of any obligatory insurance effected by
it, renew that obligatory insurance in accordance with the Lender's
approval pursuant to paragraph (a); and
(c) procure that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall
promptly after the renewal notify the Lender in writing of the terms and
conditions of the renewal.
12.6 COPIES OF POLICIES; LETTERS OF UNDERTAKING. The Borrower shall ensure that
all approved brokers provide the Lender 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
Lender and including undertakings by the approved brokers that:
(a) they will have endorsed on each policy, immediately upon issue, a loss
payable clause and a notice of assignment complying with the provisions of
Clause 12.4;
(b) they will hold such policies, and the benefit of such insurances, to the
order of the Lender in accordance with the said loss payable clause;
(c) they will advise the Lender immediately of any material change to the
terms of the obligatory insurances;
(d) they will notify the Lender, not less than 10 days before the expiry of
the obligatory insurances, in the event of their not having received
notice of renewal instructions from the Borrower or its agents and, in the
event of their receiving instructions to renew, they will promptly notify
the Lender 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 under such obligatory insurances any premiums or
other amounts due to them or any other person whether in respect of the
Ship or otherwise, they waive any lien on the policies, or any sums
received under them, which they might have in respect of such premiums or
other amounts, and they will not cancel such obligatory insurances by
reason of non-payment of such premiums or other amounts, and will arrange
for a separate policy to be issued in respect of the Ship forthwith upon
being so requested by the Lender.
12.7 COPIES OF CERTIFICATES OF ENTRY. The Borrower shall ensure that any
protection and indemnity and/or war risks associations in which the Ship
is entered provides the Lender with:
(a) a certified copy of the certificate of entry for the Ship;
(b) a letter or letters of undertaking in such form as may be required or
approved by the Lender; and
(c) (if applicable to, or required in respect of, the Ship) 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 the Ship.
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12.8 DEPOSIT OF ORIGINAL POLICIES. The Borrower shall ensure that all policies
relating to obligatory insurances effected by it are deposited with the
approved brokers through which the insurances are effected or renewed.
12.9 PAYMENT OF PREMIUMS. The Borrower shall punctually pay all premiums or
other sums payable in respect of the obligatory insurances effected by it
and produce all relevant receipts when so required by the Lender.
12.10 GUARANTEES. The 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.
12.11 COMPLIANCE WITH TERMS OF INSURANCES. The Borrower shall neither do nor
omit to do (nor permit to be done or not to be done) any act or thing
which would or might render any obligatory insurance invalid, void,
voidable or unenforceable or render any sum payable under an obligatory
insurance repayable in whole or in part; and, in particular:
(a) the 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
12.7(c)) ensure that the obligatory insurances are not made subject to any
exclusions or qualifications to which the Lender has not given its prior
approval;
(b) the Borrower shall not make any changes relating to the classification or
classification society or manager or operator of the Ship approved by the
underwriters of the obligatory insurances;
(c) the Borrower shall make (and promptly supply copies to the Lender of) all
quarterly or other voyage declarations which may be required by the
protection and indemnity risks association in which the Ship is entered to
maintain cover for trading to the United States of America and Exclusive
Economic Zone (as defined in the United States Oil Pollution Act 1990 or
any other applicable legislation); and
(d) the Borrower shall not employ the Ship, 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.
12.12 ALTERATION TO TERMS OF INSURANCES. The Borrower shall neither make or
agree to any alteration to the terms of any obligatory insurance nor waive
any right relating to any obligatory insurance.
12.13 SETTLEMENT OF CLAIMS. The Borrower shall not 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 Lender to collect or recover any
moneys which at any time become payable in respect of the obligatory
insurances.
12.14 PROVISION OF COPIES OF COMMUNICATIONS. The Borrower shall provide the
Lender, promptly following the Lender's reasonable request, copies of all
written communications between the Borrower and:
(a) the approved brokers; and
(b) the approved protection and indemnity and/or war risks associations; and
26
(c) the approved insurance companies and/or underwriters, which relate
directly or indirectly to:
(i) the 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 the 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.
12.15 PROVISION OF INFORMATION. In addition, the Borrower shall promptly provide
the Lender (or any persons which it may designate) with any information
which the Lender (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 12.16 below or dealing with or considering any matters relating
to any such insurances,
and the Borrower shall, forthwith upon demand, indemnify the Lender in
respect of all fees and other expenses incurred by or for the account of
the Lender in connection with any such report as is referred to in
paragraph (a).
12.16 MORTGAGEE'S INTEREST AND ADDITIONAL PERILS. The Lender shall be entitled
from time to time to effect, maintain and renew a mortgagee's interest
additional perils insurance in respect of the Ship, a mortgagee's
political risks insurance and a mortgagee's interest marine insurance each
in an amount equal to 110 per cent. of the aggregate of the Loan and the
Swap Exposure from time to time and on such terms, through such insurers
and generally in such manner as the Lender may from time to time consider
appropriate and the Borrower shall upon demand fully indemnify the Lender
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 insurance.
13 SHIP COVENANTS
13.1 GENERAL. The Borrower also undertakes with the Lender to comply with, or
to procure compliance with (as the case may be), with the following
provisions of this Clause 13 at all times during the Security Period,
except as the Lender may otherwise permit, such permission in the case of
Clause 13.2 and 13.12(e) to be in writing.
13.2 SHIP'S NAME AND REGISTRATION. The Borrower shall keep the Ship registered
in its name as a Panamanian ship and 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 the Ship.
13.3 REPAIR AND CLASSIFICATION. The Borrower shall keep the Ship in a good and
safe condition and state of repair:
(a) consistent with first-class ship ownership and management practice;
(b) so as to maintain the Ship's present class (being the highest
classification available for a vessel of the same type, age and
specification as the Ship with a classification society acceptable to the
Lender which is a member of the International Association of
27
Classification Societies) free of overdue recommendations and conditions
affecting the Ship's class; and
(c) so as to comply with all laws and regulations applicable to vessels
registered at ports in Panama or to vessels trading to any jurisdiction to
which the Ship may trade from time to time, including but not limited to
the ISM Code.
13.4 MODIFICATION. The Borrower shall not make or allow any modification or
repairs to, or replacement of, the Ship or equipment installed on the Ship
which would or might materially alter the structure, type or performance
characteristics of the Ship or materially reduce its value.
13.5 REMOVAL OF PARTS. The Borrower shall not remove or allow the removal of
any material part of the Ship, or any item of equipment installed on the
Ship, unless the part or item so removed is forthwith replaced by a
suitable part or item which is in the same condition as or better
condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Lender and
becomes on installation on the Ship the property of the Borrower and
subject to the security constituted by the Mortgage PROVIDED THAT the
Borrower may install equipment owned by a third party if the equipment can
be removed without any risk of damage to the Ship.
13.6 SURVEYS. The Borrower shall submit the Ship regularly to all periodical or
other surveys which may be required for classification purposes and, if so
required by the Lender provide the Lender, with copies of all survey
reports.
13.7 INSPECTION. The Borrower shall permit the Lender (by surveyors or other
persons appointed by it for that purpose) to board the Ship at all
reasonable times to inspect its condition or to satisfy themselves about
proposed or executed repairs and shall afford all proper facilities for
such inspections.
13.8 PREVENTION OF AND RELEASE FROM ARREST. The 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, her Earnings or her
Insurances;
(b) all taxes, dues and other amounts charged in respect of the Ship, her
Earnings or her Insurances; and
(c) all other outgoings whatsoever in respect of the Ship, her Earnings or her
Insurances,
and, forthwith upon receiving notice of the arrest of the Ship, or of its
detention in exercise or purported exercise of any lien or claim, the
Borrower shall procure its release by providing bail or otherwise as the
circumstances may require.
13.9 COMPLIANCE WITH LAWS ETC. The Borrower shall:
(a) comply, or procure compliance with the ISM Code, all Environmental Laws
and all other laws or regulations relating to the Ship, its ownership,
operation and management or to the business of the Borrower;
(b) not employ the 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
(c) in the event of hostilities in any part of the world (whether war is
declared or not), not cause or permit the Ship to enter or trade to any
zone which is declared a war zone by any government or by the Ship's war
risks insurers unless the prior written consent of the Lender has been
given and the Borrower has (at its expense) effected any special,
28
additional or modified insurance cover and provided the Lender with
evidence that the Ship maintains sufficient cover to enter into and trade
to the war zone.
13.10 PROVISION OF INFORMATION. The Borrower shall promptly provide the Lender
with any information which it requests regarding:
(a) the Ship, its employment, position and engagements;
(b) the Earnings and payments and amounts due to the Ship's master and crew;
(c) any expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship and any payments made in
respect of the Ship;
(d) any towages and salvages;
(e) its compliance, the Approved Manager's compliance, the compliance of the
Ship and the compliance by the Bareboat Charterer, with the ISM Code,
and, upon the Lender's request, provide copies of any current charter
relating to the Ship, of any current charter guarantee and of the Ship's
Document of Compliance.
13.11 NOTIFICATION OF CERTAIN EVENTS. The Borrower shall immediately notify the
Lender 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 the 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 the Ship, any exercise or purported exercise of
any lien on the Ship or its Earnings or any requisition of the Ship for
hire;
(e) any intended dry docking of the Ship owned by it which will, or is
reasonably expected to, last more than 14 days;
(f) any Environmental Claim made against the Borrower or in connection with
the Ship, or any Environmental Incident;
(g) any claim for breach of the ISM Code being made against the Borrower, the
Approved Manager or the Bareboat Charterer (as the case may be) or
otherwise in connection with the Ship; or
(h) any other matter, event or incident, actual or threatened, the effect of
which will or could lead to the ISM Code not being complied with,
and the Borrower shall keep the Lender advised in writing on a regular
basis and in such detail as the Lender shall require of the Borrower, the
Approved Manager, the Bareboat Charterer or any other person's response to
any of those events or matters.
13.12 RESTRICTIONS ON CHARTERING, APPOINTMENT OF MANAGERS ETC. The Borrower
shall not, in relation to the Ship:
29
(a) (other than pursuant to the Bareboat Charter) let the Ship on demise
charter for any period;
(b) enter into any time or consecutive voyage charter in respect of the Ship
for a term which exceeds, or which by virtue of any optional extensions
may exceed, 18 months;
(c) enter into any charter in relation to the Ship under which more than 2
months' hire (or the equivalent) is payable in advance;
(d) charter the Ship otherwise than on bona fide arm's length terms at the
time when the Ship is fixed;
(e) 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 the Ship; or
(g) put the Ship into the possession of any person for the purpose of work
being done upon her in an amount exceeding or likely to exceed $500,000
(or the equivalent in any other currency) unless that person has first
given to the Lender and in terms satisfactory to it a written undertaking
not to exercise any lien on the Ship or the Earnings for the cost of such
work or for any other reason.
13.13 NOTICE OF MORTGAGE. The Borrower shall keep the Mortgage registered
against the Ship as a valid first preferred mortgage, carry on board the
Ship a certified copy of the Mortgage and place and maintain in a
conspicuous place in the navigation room and the Master's cabin of the
Ship a framed printed notice stating that the Ship is mortgaged by the
Borrower to the Lender.
13.14 SHARING OF EARNINGS. The Borrower shall not enter into any agreement or
arrangement for the sharing of any Earnings (other than with any other
Security Party).
13.15 TIME CHARTER ASSIGNMENT. If the Borrower enters into any Charter (subject
to obtaining the consent of the Lender in accordance with Clause
13.12(b)), the Borrower shall, at the request of the Lender, execute in
favour of the Lender a Charter Assignment in relation to such Charter, and
shall deliver to the Lender such other documents equivalent to those
referred to at paragraphs 3, 4 and 5 of Part A of Schedule 2 hereof as the
Lender may require.
13.16 COMPLIANCE WITH INSURANCE AND SHIP COVENANTS. The Borrower shall procure
the performance by the Bareboat Charterer of all the covenants and
undertakings to be observed, performed and complied with, by or on behalf
of the Bareboat Charterer under Clause 12 (other than Clause 12.16) and
Clause 13 and, to the extent that the Bareboat Charterer duly performs and
discharges its obligations set out in this Clause 13.16 or to the further
extent that the Bareboat Charterer, by its performance of the Bareboat
Charter, performs and discharges further obligations of the Borrower
contained in the Finance Documents, then such performance and discharge
shall, to that extent, be deemed due performance and discharge of the
Borrower's obligations under the Finance Documents.
13.17 FREQUENCY OF VALUATIONS. The Borrower acknowledges and agrees that, for
the purpose of ascertaining the Market Value of the Ship for use in the
calculation of the Asset Cover Ratio pursuant to Clause 4.12, the Lender
may commission valuations of the Ship in accordance with Clause 14.3 up to
once per annum.
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14 SECURITY COVER
14.1 MINIMUM REQUIRED SECURITY COVER. Clause 14.2 applies if the Lender
notifies the Borrower that the Security Cover Ratio is below 1.25 to 1.
14.2 PROVISION OF ADDITIONAL SECURITY; PREPAYMENT. If the Lender serves a
notice on the Borrower under Clause 14.1, the Borrower shall, within 1
month after the date on which the Lender's notice is served, either:
(a) provide, or ensure that a third party provides, additional security which,
in the reasonable opinion of the Lender, has a net realisable value at
least equal to the shortfall in the Security Cover Ratio and is documented
in such terms as the Lender may approve or require; or
(b) prepay such part (at least) of the Loan as will eliminate the shortfall in
the Security Cover Ratio.
14.3 VALUATION OF SHIP. The market value of the Ship at any date is that shown
by the arithmetic average of two valuations, each prepared:
(a) in Dollars;
(b) as at a date not more than 14 days previously;
(c) by one of the following independent sale and purchase shipbrokers:
(i) Arrow Shipbroking;
(ii) Fearnleys AS;
(iii) X. Xxxxxxxx & Company Limited; and
(iv) Xxxxxxxxx'x Limited,
which the Borrower has appointed and the Lender has approved for the
purpose;
(d) with or without physical inspection of the relevant Ship (as the Lender
may require);
(e) on the basis of a sale for prompt delivery for cash on normal arm's length
commercial terms as between a willing seller and a willing buyer, free of
any existing charter or other contract of employment; and
(f) after deducting the estimated amount of the usual and reasonable expenses
which would be incurred in connection with the sale,
PROVIDED THAT if such two valuations differ by more than 15 per cent. then
the Lender will obtain a third independent valuation from a third
independent shipbroker from those listed in Clause 14.3(c) and the market
value of the relevant Ship shall be the arithmetic mean of such 3
valuations.
14.4 VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
additional security which is provided under Clause 14.2 and which consists
of a Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause 14.3.
31
14.5 VALUATIONS BINDING. Any valuation under Clause 14.2, 14.3 or 14.4 shall be
binding and conclusive as regards the Borrower, as shall be any valuation
which the Lender makes of any additional security which does not consist
of or include a Security Interest.
14.6 PROVISION OF INFORMATION. The Borrower shall promptly provide the Lender
and any shipbroker or expert acting under Clause 13.17, 14.3 or 14.4 with
any information which the Lender or the shipbroker or expert may request
for the purposes of the valuation; and, if the Borrower fails to provide
the information by the date specified in the request, the valuation may be
made on any basis and assumptions which the shipbroker or the Lender (or
the expert appointed by it) considers prudent.
14.7 PAYMENT OF VALUATION EXPENSES. Without prejudice to the generality of the
Borrower's obligations under Clauses 19.2, 19.3 and 20.3, the Borrower
shall, on demand, pay the Lender the amount of the fees and expenses of
any shipbroker or expert instructed by the Lender under this Clause and
Clause 13.17 and all legal and other expenses incurred by the Lender in
connection with any matter arising out of this Clause and Clause 13.17.
14.8 APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to any
prepayment pursuant to Clause 14.2(b).
15 PAYMENTS AND CALCULATIONS
15.1 CURRENCY AND METHOD OF PAYMENTS. All payments to be made by the Borrower
to the Lender under a Finance Document shall be made to the Lender:
(a) by not later than 11.00 a.m. (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 Lender shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement); and
(c) to the account of the Lender at The Bank of New York of 0000 Xxxxxx xx
Xxxxxxxx, Xxxxx 0, Xxx Xxxx XX 00000, U.S.A. (SWIFT address: XXXXXX0X;
Account No. 000- 0000-000), or to such other account with such other bank
as the Lender may from time to time notify to the Borrower.
15.2 PAYMENT ON NON-BUSINESS DAY. If any payment by the Borrower under a
Finance Document would otherwise fall due on a day which is not a Business
Day:
(a) the due date shall be extended to the next succeeding Business Day; or
(b) if the next succeeding Business Day falls in the next calendar month, the
due date shall be brought forward to the immediately preceding Business
Day,
and interest shall be payable during any extension under paragraph (a) at
the rate payable on the original due date.
15.3 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.
15.4 LENDER ACCOUNTS. The Lender shall maintain an account showing the amounts
advanced by the Lender and all other sums owing to the Lender from the
Borrower and each
32
Security Party under the Finance Documents and all payments in respect of
those amounts made by the Borrower and any Security Party.
15.5 ACCOUNTS PRIMA FACIE EVIDENCE. If the account maintained under Clauses
15.4 shows an amount to be owing by the Borrower or a Security Party to
the Lender, that account shall be prima facie evidence that amount is
owing to the Lender.
16 APPLICATION OF RECEIPTS
16.1 NORMAL ORDER OF APPLICATION. Except as any Finance Document may otherwise
provide, any sums which are received or recovered by the Lender under or
by virtue of any Finance Document shall be applied:
(a) FIRST: in or towards satisfaction of any amounts then due and payable
under the Finance Documents (or any of them) in such order of application
and/or such proportions as the Lender may specify by notice to the
Borrower and the Security Parties;
(b) SECONDLY: in retention of an amount equal to any amount not then due and
payable under any Finance Document but which the Lender, by notice to the
Borrower and the Security Parties, states in its opinion will or may
become due and payable in the future and, upon those amounts becoming due
and payable, in or towards satisfaction of them in accordance with the
provisions of this Clause; and
(c) THIRDLY: any surplus shall be paid to the Borrower or to any other person
appearing to be entitled to it.
16.2 VARIATION OF ORDER OF APPLICATION. The Lender may, at its reasonable
discretion, by notice to the Borrower and the Security Parties, provide
for a different manner of application from that set out in Clause 16.1
either as regards a specified sum or sums or as regards sums in a
specified category or categories.
16.3 NOTICE OF VARIATION OF ORDER OF APPLICATION. The Lender may give notices
under Clause 16.2 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.
16.4 APPROPRIATION RIGHTS OVERRIDDEN. This Clause 16 and any notice which the
Lender gives under Clause 16.2 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or any Security
Party.
17 APPLICATION OF EARNINGS
17.1 PAYMENT OF EARNINGS. The Borrower undertakes with the Lender to ensure
that, throughout the Security Period:
(a) (subject only to the provisions of the General Assignment), all the
Earnings of the Ship are paid to the Earnings Account; and
(b) all payments by the Lender to the Borrower under each Transaction are paid
to the Earnings Account.
17.2 RELEASE OF SURPLUS EARNINGS. Subject to no Event of Default or Potential
Event of Default then having occurred (after which the provisions of the
Accounts Security Deed apply), Earnings for the time being credited to the
Earnings Account shall be freely available to the Borrower to be used
firstly to pay the costs of operation of the Ship and
33
then, as to any remaining surpluses, for any other purposes permitted by
the terms of this Agreement.
17.3 INTEREST ACCRUED ON EARNINGS AND RETENTION ACCOUNTS. Any credit balance on
the Earnings Account and the Retention Account shall bear interest at the
rate from time to time offered by the Lender to its customers for Dollar
deposits of similar amounts and for periods similar to those for which
such balances appear to the Lender likely to remain on the relevant
Account.
17.4 RELEASE OF ACCRUED INTEREST. Interest accruing under Clause 17.3 shall be
credited to the Earnings Account monthly unless an Event of Default or
Potential Event of Default has occurred.
17.5 LOCATION OF ACCOUNTS. The Borrower shall promptly:
(a) comply with any requirement of the Lender as to the location or
re-location of the Earnings Account or the Retention Account (or either of
them); and
(b) execute any documents which the Lender specifies to create or maintain in
favour of the Lender a Security Interest over (and/or rights of set-off,
consolidation or other rights in relation to) the Earnings Account and the
Retention Account.
17.6 DEBITS FOR EXPENSES ETC. The Lender shall be entitled (but not obliged)
from time to time to debit the Earnings Account without prior notice in
order to discharge any amount due and payable to it under Clause 19 or 20
or payment of which it has become entitled to demand under Clause 19 or
20.
17.7 BORROWER'S OBLIGATIONS UNAFFECTED. The provisions of this Clause 17 do not
affect:
(a) the liability of the Borrower to make payments of principal and interest
on the due dates; or
(b) any other liability or obligation of the Borrower or any Security Party
under any Finance Document.
18 EVENTS OF DEFAULT
18.1 EVENTS OF DEFAULT. An Event of Default occurs if:
(a) the Borrower or any Security Party fails to pay when due or (if so
payable) on demand any sum payable under a Finance Document or under any
document relating to a Finance Document; or
(b) any breach occurs of Clause 8.2, 10.2, 10.3, 10.17, 11.2, 11.3 or 14.1;or
(c) any breach by the Borrower or any Security Party occurs of any provision
of a Finance Document (other than a breach covered by paragraph (a) or
(b)) if, in the opinion of the Lender, such default is capable of remedy
and such default continues unremedied 10 days after written notice from
the Lender requesting action to remedy the same; or
(d) (subject to any applicable grace period specified in any Finance Document)
any breach by the Borrower or any Security Party occurs of any provision
of a Finance Document (other than a breach caused by paragraph (a), (b) or
(c)); or
34
(e) any representation, warranty or statement made by, or by an officer of,
the Borrower or a Security Party in a Finance Document or in 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) a lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or
owner or becomes capable of being terminated as a consequence of
any termination event; or
(iv) any overdraft, loan, note issuance, acceptance credit, letter of
credit, guarantee, foreign exchange or other facility, or any swap
or other derivative contract or transaction, relating to any
Financial Indebtedness of a Relevant Person ceases to be available
or becomes capable of being terminated as a result of any event of
default, or cash cover is required, or becomes capable of being
required, in respect of such a facility as a result of any event of
default; or
(v) any Security Interest securing any Financial Indebtedness of a
Relevant Person becomes enforceable; or
(g) any of the following occurs in relation to a Relevant Person:
(i) a Relevant Person becomes, in the reasonable opinion of the Lender,
unable to pay its debts as they fall due; or
(ii) any assets of a Relevant Person are subject to any form of
execution, attachment, arrest, sequestration or distress in respect
of a sum of, or sums aggregating, $500,000 or more or the
equivalent in another currency and such execution, attachment,
arrest, sequestration or distress is not withdrawn within 14 days
of its commencement; or
(iii) any administrative or other receiver is appointed over any asset of
a Relevant Person; or
(iv) a Relevant Person makes any formal declaration of bankruptcy or any
formal statement to the effect that it is insolvent or likely to
become insolvent, or a winding up or administration order is made
in relation to a Relevant Person, or the members or directors of a
Relevant Person pass a resolution to the effect that it should be
wound up, placed in administration or cease to carry on business,
save that this paragraph does not apply to a fully solvent winding
up of a Relevant Person other than a Borrower which is, or is to
be, effected for the purposes of an amalgamation or reconstruction
previously approved by the Lender and effected not later than 3
months after the commencement of the winding up; or
(v) a petition is presented in any Pertinent Jurisdiction for the
winding up or administration, or the appointment of a provisional
liquidator, of a Relevant Person unless the petition is being
contested in good faith and on substantial grounds and is dismissed
or withdrawn within 30 days of the presentation of the petition; or
35
(vi) a Relevant Person petitions a court, or presents any proposal for,
any form of judicial or non-judicial suspension or deferral of
payments, reorganisation of its debt (or certain of its debt) or
arrangement with all or a substantial proportion (by number or
value) of its creditors or of any class of them or any such
suspension or deferral of payments, reorganisation or arrangement
is effected by court order, contract or otherwise; or
(vii) any meeting of the members or directors of a Relevant Person is
summoned for the purpose of considering a resolution or proposal to
authorise or take any action of a type described in paragraphs
(iii), (iv), (v) or (vi); or
(viii) in a Pertinent Jurisdiction other than England, any event occurs or
any procedure is commenced which, in the opinion of the Lender, is
similar to any of the foregoing; or
(h) the Borrower ceases or suspends carrying on its business or a part of its
business which, in the opinion of the Lender, is material in the context
of this Agreement; or
(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:
(i) for the Borrower or any Security Party to discharge any liability
under a Finance Document or to comply with any other obligation
which the Lender considers material under a Finance Document; or
(ii) for the Lender to exercise or enforce any right under, or to
enforce any Security Interest created by, a Finance Document; or
(j) any consent necessary to enable the Borrower or the Bareboat Charterer to
own, operate or charter the Ship or to enable the Borrower or any Security
Party to comply with any provision which the Lender considers material of
a Finance Document or the MOA; the Bareboat Charter expires without being
renewed, is revoked or becomes liable to revocation or any condition of
such a consent is not fulfilled; or
(k) any provision which the Lender considers, in its reasonable opinion,
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
(l) the security constituted by a Finance Document is in any way imperilled or
in jeopardy; or
(m) an Event of Default (as defined in Section 14 of the Master Agreement)
occurs;
(n) the Master Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect for any
reason except with the consent of the Lender; or
(o) 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 the Borrower, the ultimate beneficial shareholder of the
Borrower or the Corporate Guarantor; or
(ii) any accident or other event involving any Ship or another vessel
owned, chartered or operated by a Relevant Person,
36
in the light of which the Lender reasonably considers that there is a
significant risk that the Borrower or the Corporate Guarantor are, or will
later become, unable to discharge their liabilities under the Finance
Documents as they fall due.
18.2 ACTIONS FOLLOWING AN EVENT OF DEFAULT. On, or at any time after, the
occurrence of an Event of Default the Lender may:
(a) serve on the Borrower a notice stating that all obligations of the Lender
to the Borrower under this Agreement are terminated; and/or
(b) serve on the Borrower a notice stating that the Loan, all accrued interest
and all other amounts accrued or owing under this Agreement are
immediately due and payable or are due and payable on demand; and/or
(c) take any other action which, as a result of the Event of Default or any
notice served under paragraph (a) or (b), the Lender is entitled to take
under any Finance Document or any applicable law.
18.3 TERMINATION OF LOAN. On the service of a notice under Clause 18.2(a) all
the obligations of the Lender to the Borrower under this Agreement, shall
terminate.
18.4 ACCELERATION OF LOAN. On the service of a notice under Clause 18.2(b), the
Loan, all accrued interest and all other amounts accrued or owing from the
Borrower or any Security Party under this Agreement and every other
Finance Document shall become immediately due and payable or, as the case
may be, payable on demand.
18.5 MULTIPLE NOTICES; ACTION WITHOUT NOTICE. The Lender may serve notices
under Clauses 18.2(a) and (b) simultaneously or on different dates and it
may take any action referred to in Clause 18.2 if no such notice is served
or simultaneously with or at any time after the service of both or either
of such notices.
18.6 EXCLUSION OF LENDER LIABILITY. Neither the Lender nor any receiver or
manager appointed by the Lender, shall have any liability to the Borrower
or a Security Party:
(a) for any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or
delay to exercise such a right or to enforce such a Security Interest; or
(b) as mortgagee in possession or otherwise, for any income or principal
amount which might have been produced by or realised from any asset
comprised in such a Security Interest or for any reduction (however
caused) in the value of such an asset,
except that this does not exempt the Lender or a receiver or manager from
liability for losses shown to have been caused directly and mainly by the
dishonesty or the wilful misconduct of the Lender's own officers and
employees or (as the case may be) such receiver's or manager's own
partners or employees.
18.7 RELEVANT PERSONS. In this Clause 18 a "RELEVANT PERSON" means the
Borrower, a Security Party, and any company which is a subsidiary of the
Corporate Guarantor or the Borrower.
18.8 INTERPRETATION. In Clause 18.1(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 18.1(g) "PETITION" includes an application.
37
19 FEES AND EXPENSES
19.1 ARRANGEMENT FEE. The Borrower shall pay to the Lender on the date of this
Agreement a non-refundable arrangement fee of $15,000.
19.2 COSTS OF NEGOTIATION, PREPARATION ETC. The Borrower shall pay to the
Lender in a timely manner the amount of all expenses incurred by the
Lender 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.
19.3 COSTS OF VARIATIONS, AMENDMENTS, ENFORCEMENT ETC. The Borrower shall pay
to the Lender, on the Lender's demand, the amount of all expenses incurred
by the Lender in connection with:
(a) any amendment or supplement to a Finance Document, or any proposal for
such an amendment to be made;
(b) any consent or waiver by the Lender concerned under or in connection with
a Finance Document, or any request for such a consent or waiver;
(c) the valuation of any security provided or offered under Clause 14 or any
other matter relating to such security; or
(d) any step taken by the Lender with a view to the protection, exercise or
enforcement of any right or Security Interest created by a Finance
Document or for any similar purpose.
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.
19.4 DOCUMENTARY TAXES. The Borrower shall promptly pay any tax payable on or
by reference to any Finance Document, and shall, on the Lender's demand,
fully indemnify the Lender against any claims, expenses, liabilities and
losses resulting from any failure or delay by the Borrower to pay such a
tax.
19.5 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 19 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.
20 INDEMNITIES
20.1 INDEMNITIES REGARDING BORROWING AND REPAYMENT OF LOAN. The Borrower shall
fully indemnify the Lender on its demand in respect of all claims,
expenses, liabilities and losses which are made or brought against or
incurred by the Lender, or which the Lender 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;
(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;
38
(c) any failure (for whatever reason) by the Borrower to make payment of any
amount due under a Finance Document on the due date or, if so payable, on
demand (after giving credit for any default interest paid by the Borrower
on the amount concerned under Clause 6);
(d) the occurrence and/or continuance of an Event of Default or a Potential
Event of Default and/or the acceleration of repayment of the Loan under
Clause 18,
and in respect of any tax (other than tax on its overall net income) for
which the Lender is liable in connection with any amount paid or payable
to the Lender (whether for its own account or otherwise) under any Finance
Document.
20.2 BREAKAGE COSTS. Without limiting its generality, Clause 20.1 covers any
claim, expense, liability or loss, including a loss of a prospective
profit, incurred by the Lender:
(a) in liquidating or employing deposits from third parties acquired or
arranged to fund or maintain all or any part of the Loan and/or any
overdue amount (or an aggregate amount which includes the Loan or any
overdue amount); 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) to hedge
any exposure arising under this Agreement or a number of transactions of
which this Agreement is one.
20.3 MISCELLANEOUS INDEMNITIES. The Borrower shall fully indemnify the Lender
on its demand in respect of all claims, expenses, liabilities and losses
which may be made or brought against or incurred by the Lender, 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 Lender or by any receiver
appointed under a Finance Document;
(b) any other Pertinent Matter,
other than claims, expenses, liabilities and losses which are shown to
have been directly and mainly caused by the dishonesty or wilful
misconduct of the officers or employees of the Lender.
Without prejudice to its generality, this Clause 20.3 covers any claims,
expenses, liabilities and losses which arise, or are asserted, under or in
connection with any law relating to safety at sea, the ISM Code or any
Environmental Law.
20.4 CURRENCY INDEMNITY. If any sum due from the Borrower or any Security Party
to the Lender under a Finance Document or under any order or judgment
relating to a Finance Document has to be converted from the currency in
which the Finance Document provided for the sum to be paid (the
"CONTRACTUAL CURRENCY") into another currency (the "PAYMENT CURRENCY") for
the purpose of:
(a) making or lodging any claim or proof against the Borrower or any Security
Party, whether in its liquidation, any arrangement involving it or
otherwise; or
(b) obtaining an order or judgment from any court or other tribunal; or
(c) enforcing any such order or judgment,
39
the Borrower shall indemnify the Lender against the loss arising when the
amount of the payment actually received by the Lender is converted at the
available rate of exchange into the Contractual Currency.
In this Clause 20.4, the "AVAILABLE RATE OF EXCHANGE" means the rate at
which the Lender 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 20.4 creates a separate liability of the Borrower which is
distinct from its other liabilities under the Finance Documents and which
shall not be merged in any judgment or order relating to those other
liabilities.
20.5 APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 20.4
does not apply in respect of sums due from the Borrower to the Lender
under or in connection with the Master Agreement as to which sums the
provisions of Section 8 (Contractual Currency) of the Master Agreement
shall apply.
20.6 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 20 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.
21 NO SET-OFF OR TAX DEDUCTION
21.1 NO DEDUCTIONS. All amounts due from the Borrower under a Finance Document
shall be paid:
(a) without any form of set-off, cross-claim or condition; and
(b) free and clear of any tax deduction except a tax deduction which the
Borrower is required by law to make.
21.2 GROSSING-UP FOR TAXES. If the Borrower is required by law to make a tax
deduction from any payment:
(a) the Borrower shall notify the Lender as soon as it becomes aware of the
requirement;
(b) the Borrower shall pay the tax deducted to the appropriate taxation
authority promptly, and in any event before any fine or penalty arises;
and
(c) the amount due in respect of the payment shall be increased by the amount
necessary to ensure that the Lender receives and retains (free from any
liability relating to the tax deduction) a net amount which, after the tax
deduction, is equal to the full amount which it would otherwise have
received.
21.3 EVIDENCE OF PAYMENT OF TAXES. Within one month after making any tax
deduction, the Borrower shall deliver to the Lender documentary evidence
satisfactory to the Lender that the tax had been paid to the appropriate
taxation authority.
21.4 EXCLUSION OF TAX ON OVERALL NET INCOME. In this Clause 21 "TAX DEDUCTION"
means any deduction or withholding for or on account of any present or
future tax except tax on the Lender's overall net income.
21.5 APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 21
does not apply in respect of sums due from the Borrower to the Lender
under or in connection
40
with the Master Agreement as to which sums the provisions of Section 2(d)
(Deduction or Withholding for Tax) of the Master Agreement shall apply.
22 ILLEGALITY, ETC
22.1 ILLEGALITY. This Clause 22 applies if the Lender notifies the Borrower
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 Lender to maintain or give effect to any of its obligations under
this Agreement in the manner contemplated by this Agreement.
22.2 NOTIFICATION AND EFFECT OF ILLEGALITY. On the Lender notifying the
Borrower under Clause 22.1, the Lender's obligation to make the Loan shall
terminate; and thereupon or, if later, on the date specified in the
Lender's notice under Clause 22.1 as the date on which the notified event
would become effective the Borrower shall prepay the Loan in full in
accordance with Clause 7.
22.3 MITIGATION. If circumstances arise which would result in a notification
under Clause 22.1 then, without in any way limiting the rights of the
Lender under Clause 22.3, the Lender shall use reasonable endeavours to
transfer its obligations, liabilities and rights under this Agreement and
the Finance Documents to another office or financial institution not
affected by the circumstances but the Lender shall not be under any
obligation to take any such action if, in its opinion, to do would or
might:
(a) have an adverse effect on its business, operations or financial condition;
or
(b) involve it in any activity which is unlawful or prohibited or any activity
that is contrary to, or inconsistent with, any regulation; or
(c) involve it in any expense (unless indemnified to its satisfaction) or tax
disadvantage.
23 INCREASED COSTS
23.1 INCREASED COSTS. This Clause 23 applies if the Lender notifies the
Borrower that it considers that as a result of:
(a) the introduction or alteration after the date of this Agreement of a law
or an alteration after the date of this Agreement in the manner in which a
law is interpreted or applied (disregarding any effect which relates to
the application to payments under this Agreement of a tax on the Lender's
overall net income); or
(b) complying with any regulation (including any which relates to capital
adequacy or liquidity controls or which affects the manner in which the
Lender allocates capital resources to its obligations under this
Agreement) which is introduced, or altered, or the interpretation or
application of which is altered, after the date of this Agreement,
the Lender (or a parent company of it) has incurred or will incur an
"INCREASED COST".
23.2 MEANING OF "INCREASED COST". In this Clause 23, "INCREASED COST" means:
41
(a) an additional or increased cost incurred as a result of, or in connection
with, the Lender having entered into, or being a party to, this Agreement
or having taken an assignment of rights under this Agreement, of funding
or maintaining the Loan or performing its obligations under this
Agreement, or of having outstanding all or any part of the Loan or other
unpaid sums; or
(b) a reduction in the amount of any payment to the Lender under this
Agreement or in the effective return which such a payment represents to
the Lender or on its capital;
(c) an additional or increased cost of funding all or maintaining all or any
of the advances comprised in a class of advances formed by or including
the Loan or (as the case may require) the proportion of that cost
attributable to the Loan; or
(d) a liability to make a payment, or a return foregone, which is calculated
by reference to any amounts received or receivable by the Lender under
this Agreement,
but not an item attributable to a change in the rate of tax on the overall
net income of the Lender (or a parent company of it) or an item covered by
the indemnity for tax in Clause 20.1 or by Clause 21.
For the purposes of this Clause 23.2 the Lender may in good faith allocate
or spread costs and/or losses among its assets and liabilities (or any
class of its assets and liabilities) on such basis as it considers
appropriate.
23.3 PAYMENT OF INCREASED COSTS. The Borrower shall pay to the Lender, on its
demand, the amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate it for the
increased cost.
23.4 NOTICE OF PREPAYMENT. If the Borrower is not willing to continue to
compensate the Lender for the increased cost under Clause 23.3, the
Borrower may give the Lender not less than 14 days' notice of its
intention to prepay the Loan at the end of an Interest Period.
23.5 PREPAYMENT. A notice under Clause 23.4 shall be irrevocable; and on the
date specified in the Borrower's notice of intended prepayment, the Loan
shall terminate and the Borrower shall prepay (without premium or penalty)
the Loan, together with accrued interest thereon at the applicable rate
plus the applicable Margin.
23.6 APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to the
prepayment.
24 SET-OFF
24.1 APPLICATION OF CREDIT BALANCES. The Lender may without prior notice:
(a) apply any balance (whether or not then due) which at any time stands to
the credit of any account in the name of the Borrower at any office in any
country of the Lender in or towards satisfaction of any sum then due from
the Borrower to the Lender under any of the Finance Documents; and
(b) for that purpose:
(i) break, or alter the maturity of, all or any part of a deposit of
the Borrower;
(ii) convert or translate all or any part of a deposit or other credit
balance into Dollars; and
42
(iii) enter into any other transaction or make any entry with regard to
the credit balance which the Lender considers appropriate.
24.2 EXISTING RIGHTS UNAFFECTED. The Lender shall not be obliged to exercise
any of its rights under Clause 24.1; 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 the Lender is
entitled (whether under the general law or any document).
24.3 NO SECURITY INTEREST. This Clause 24 gives the Lender a contractual right
of set-off only, and does not create any equitable charge or other
Security Interest over any credit balance of the Borrower.
25 TRANSFERS AND CHANGES IN LENDING OFFICE
25.1 TRANSFER BY BORROWER. The Borrower may not, without the consent of the
Lender, transfer any of its rights or obligations under any Finance
Document.
25.2 ASSIGNMENT BY LENDER. The Lender may assign all or any of the rights and
interests which it has under or by virtue of the Finance Documents without
the consent of the Borrower.
25.3 RIGHTS OF ASSIGNEE. 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, a
direct or indirect assignee of any of the Lender's rights or interests
under or by virtue of the Finance Documents shall be entitled to recover
damages by reference to the loss incurred by that assignee as a result of
the breach or misrepresentation irrespective of whether the Lender would
have incurred a loss of that kind or amount.
25.4 SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. The Lender may sub-participate
all or any part of its rights and/or obligations under or in connection
with the Finance Documents without the consent of, or any notice to, the
Borrower; and the Lender may assign, in any manner and terms agreed by it,
all or any part of those rights to an insurer or surety who has become
subrogated to them.
25.5 DISCLOSURE OF INFORMATION. The Lender may disclose to a potential assignee
or sub-participant any information which the Lender has received in
relation to the Borrower, any Security Party or their affairs under or in
connection with any Finance Document, unless the information is clearly of
a confidential nature.
25.6 CHANGE OF LENDING OFFICE. The Lender may change its lending office by
giving notice to the Borrower and the change shall become effective on the
later of:
(a) the date on which the Borrower receives the notice; and
(b) the date, if any, specified in the notice as the date on which the change
will come into effect.
26 VARIATIONS AND WAIVERS
26.1 VARIATIONS, WAIVERS ETC. BY LENDER. A document shall be effective to vary,
waive, suspend or limit any provision of a Finance Document, or the
Lender's rights or remedies under such a provision or the general law,
only if the document is signed, or specifically agreed to by fax, by the
Borrower and the Lender and, if the document relates to a Finance Document
to which a Security Party is party, by that Security Party.
43
26.2 EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
satisfies the requirements of Clause 26.1, no document, and no act, course
of conduct, failure or neglect to act, delay or acquiescence on the part
of the Lender (or any person acting on its behalf) shall result in the
Lender (or any person acting on its behalf) being taken to have varied,
waived, suspended or limited, or being precluded (permanently or
temporarily) from enforcing, relying on or exercising:
(a) a provision of this Agreement or another Finance Document; or
(b) an Event of Default; or
(c) a breach by the Borrower or a Security Party of an obligation under a
Finance Document or the general law; or
(d) any right or remedy conferred by any Finance Document or by the general
law;
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.
27 NOTICES
27.1 GENERAL. Unless otherwise specifically provided, any notice under or in
connection with any Finance Document shall be given by letter or fax; and
references in the Finance Documents to written notices, notices in writing
and notices signed by particular persons shall be construed accordingly.
27.2 ADDRESSES FOR COMMUNICATIONS. A notice shall be sent:
(a) to the Borrower: 000 Xxxxxxxxx Xxxxxx
Xxxxxxxx 000 00
Xxxxxx
Fax No: x00 000 000 0000
(b) to the Lender: DnB NOR Bank ASA
00 Xx. Xxxxxxx'x Xxxx
Xxxxxx
XX0X 0XX
Xxxxxxx
Fax No: x00 000 000 0000
Attn: Shipping Department
or to such other address as the relevant party may notify the other.
27.3 EFFECTIVE DATE OF NOTICES. Subject to Clauses 27.4 and 27.5:
(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; and
(b) a notice which is sent by fax shall be deemed to be served, and shall take
effect, 2 hours after its transmission is completed.
27.4 SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 27.3 a notice
would be deemed to be served:
44
(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 27.5) be deemed to be served, and
shall take effect, at 9 a.m. on the next day which is such a business day.
27.5 ILLEGIBLE NOTICES. Clauses 27.3 and 27.4 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.
27.6 ENGLISH LANGUAGE. Any notice under or in connection with a Finance
Document shall be in English.
27.7 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.
27.8 MEANING OF "NOTICE". In this Clause 28 "NOTICE" includes any demand,
consent, authorisation, approval, instruction, waiver or other
communication.
28 SUPPLEMENTAL
28.1 RIGHTS CUMULATIVE, NON-EXCLUSIVE. The rights and remedies which the
Finance Documents give to the Lender 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.
28.2 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.
28.3 COUNTERPARTS. A Finance Document may be executed in any number of
counterparts.
28.4 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.
45
29 LAW AND JURISDICTION
29.1 ENGLISH LAW. This Agreement shall be governed by, and construed in
accordance with, English law.
29.2 EXCLUSIVE ENGLISH JURISDICTION. Subject to Clause 29.3, the courts of
England shall have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement.
29.3 CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF THE LENDER. Clause 29.2 is
for the exclusive benefit of the Lender, which reserves the rights:
(a) to commence proceedings in relation to any matter which arises out of or
in connection with this Agreement in the courts of any country other than
England and which have or claim jurisdiction to that matter; and
(b) to commence such proceedings in the courts of any such country or
countries concurrently with or in addition to proceedings in England or
without commencing proceedings in England. The Borrower shall not commence
any proceedings in any country other than England in relation to a matter
which arises out of or in connection with this Agreement.
29.4 PROCESS AGENT. The Borrower irrevocably appoints Xxxxxxxx Xxxxxx at its
registered office for the time being, presently at Beaufort House, 00 Xx.
Xxxxxxx Xxxxxx, 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.
29.5 LENDER'S RIGHTS UNAFFECTED. Nothing in this Clause 29 shall exclude or
limit any right which the Lender may have (whether under the law of any
country, an international convention or otherwise) with regard to the
bringing of proceedings, the service of process, the recognition or
enforcement of a judgment or any similar or related matter in any
jurisdiction.
29.6 MEANING OF "PROCEEDINGS". In this Clause 29, "PROCEEDINGS" means
proceedings of any kind, including an application for a provisional or
protective measure.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
46
SCHEDULE 1
DRAWDOWN NOTICE
To: DnB NOR Bank ASA
00 Xx. Xxxxxxx'x Xxxx
Xxxxxx
XX0X 0XX
Xxxxxxx
Attention: Client Services
June 2006
DRAWDOWN NOTICE
We refer to the loan agreement (the "LOAN AGREEMENT") dated __ June 2006 and
made between ourselves, as Borrower, and yourselves, as Lender, in connection
with a facility of up to US$6,580,000. Terms defined in the Loan Agreement have
their defined meanings when used in this Drawdown Notice.
1 We request to borrow the Loan as follows:
(a) Amount: US$6,580,000;
(b) Drawdown Date: __ June 2006;
(c) Duration of the first Interest Period shall be [__] months;
(d) Payment instructions : account in our name and numbered [___] with
[___] of [___].
2 We represent and warrant that:
(a) the representations and warranties in Clause 9 of the Loan Agreement would
remain true and not misleading if repeated on the date of this notice with
reference to the circumstances now existing;
(b) no Event of Default or Potential Event of Default has occurred or will
result from the borrowing of the Loan.
3 This notice cannot be revoked without the prior consent of the Lender.
[Name of Signatory]
--------------------------
Director
for and on behalf of
BARONESS HOLDINGS INC.
47
SCHEDULE 2
CONDITION PRECEDENT DOCUMENTS
PART A
The following are the documents referred to in Clause 8.1(a).
1 A duly executed original of each Finance Document (and of each document
required to be delivered by each Finance Document) other than those
referred to in Part B.
2 Copies of the constitutional documents of the Borrower and each Security
Party.
3 Copies of resolutions of the shareholders and directors of the Borrower
and each Security Party authorising the execution of each of the Finance
Documents to which the Borrower or that Security Party is a party and, in
the case of a Borrower, authorising named officers to give the Drawdown
Notice and other notices under this Agreement and ratifying the execution
of the MOA.
4 The original of any power of attorney under which any Finance Document is
executed on behalf of the Borrower or a Security Party.
5 Copies of all consents which the Borrower or any Security Party requires
to enter into, or make any payment under, any Finance Document or the MOA.
6 The originals of any mandates or other documents required in connection
with the opening or operation of the Earnings Account and the Retention
Account and all other information required by the Lender in relation to
its "know your customer" regulations (whether in connection with the
opening of the Earnings Account, the Retention Account or otherwise).
7 A valuation of the Ship, addressed to the Lender, stated to be for the
purposes of this Agreement and dated not earlier than 30 days before the
Drawdown Date, to be prepared in accordance with the provisions of Clause
14.3 by 2 of the independent London sale and purchase shipbrokers referred
to in Clause 14.3, as selected by the Lender and which shows a value for
the Ship of not less than 125 per cent. of the Loan.
8 At the option of the Lender, a survey report addressed to the Lender
stated to be for the purposes of this Agreement and dated not earlier than
30 days before the Drawdown Date, from an independent marine surveyor
selected by the Lender in respect of the physical condition of the Ship.
9 Copies of the MOA, the Bareboat Charter and all addenda thereto and of all
documents signed or issued by the Borrower or any of the other parties
thereto under or in connection with any of them.
10 Documentary evidence that the agent for service of process named in Clause
29 has accepted its appointment.
11 If the Lender so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Lender.
48
PART B
The following are the documents referred to in Clause 8.1(b).
1 A duly executed original of the Mortgage and the General Assignment (and
of each document to be delivered pursuant to each of them).
2 Documentary evidence that:
(a) the Ship has been unconditionally delivered by the Seller to, and accepted
by, the Borrower under the MOA and the whole of the purchase price in
respect of the Ship (in addition to the part to be financed by the Loan)
has been duly paid;
(b) the Ship is definitively and permanently or provisionally registered in
the name of the Borrower under the Panamanian flag;
(c) the Ship is in the absolute and unencumbered ownership of the Borrower
save as contemplated by the Finance Documents;
(d) the Ship maintains the class as set out in Clause 13.3(b) with the
relevant Classification Society free of all overdue recommendations and
conditions of such Classification Society;
(e) the Mortgage relating to the Ship has been duly registered against the
Ship as a valid first preferred Panamanian ship mortgage in accordance
with the laws of Panama; and
(f) the Ship is insured in accordance with the provisions of this Agreement
and all requirements therein in respect of insurances have been complied
with.
3 Documents establishing that the Ship will, as from the Drawdown Date, be
managed by the Approved Manager on terms acceptable to the Lender,
together with:
(a) a letter of undertaking executed by the Approved Manager in favour of the
Lender in the terms required by the Lender agreeing certain matters in
relation to the management of the Ship and subordinating the rights of the
Approved Manager against the Ship and the Borrower to the rights of the
Lender under the Finance Documents; and
(b) copies of the Approved Manager's Document of Compliance and of the Ship's
Safety Management Certificate (together with any other details of the
applicable safety management system which the Lender requires).
4 Favourable legal opinions from lawyers appointed by the Lender on such
matters concerning the laws of the Panama, the Xxxxxxxx Islands and such
other relevant jurisdiction as the Lender may require.
49
SCHEDULE 3
COMPLIANCE CERTIFICATE
We, [___] and [___], being directors of Baroness Holdings Inc. (the
"BORROWER"), hereby confirm that at the date of this certificate:
(a) the Borrower is in compliance with (i) the covenants specified in the loan
agreement dated ___ June 2006 and made between (i) the Borrower and (ii)
DnB NOR Bank ASA (the "LOAN AGREEMENT") and (ii) the covenants specified
in each Finance Document (as defined in the Loan Agreement) to which the
Borrower is a party; and
(b) [no Event of Default or Potential Event of Default has occurred]/[no Event
of Default or Potential Event has occurred other than [___]].
------------------------
Director
for and on behalf of
BARONESS HOLDINGS INC.
Dated: [___]
50
EXECUTION PAGE
BORROWER
SIGNED by XXXXXXXXXX XXXXXX )
for and on behalf of ) /s/ Xxxxxxxxxx Xxxxxx
BARONESS HOLDINGS INC. ) --------------------------------
in the presence of: )
/s/ Xxxxxxxxx Xxxxxxxxxxxx
----------------------------------
Name: XXXXXXXXX XXXXXXXXXXXX
SOLICITOR
Address: XXXXXX, XXXXXX & XXXXXXXX
2 DEFTERAS MERARCHIAS
XXXXXXX 000 00 - XXXXXX
LENDER
SIGNED by XXXX XXXXXXX )
for and on behalf of ) /s/ Xxxx Xxxxxxx
DNB NOR BANK ASA ) --------------------------------
in the presence of: )
/s/ Xxxxxxxxx Xxxxxxxxxxxx
----------------------------------
Name: XXXXXXXXX XXXXXXXXXXXX
SOLICITOR
Address: XXXXXX, XXXXXX & XXXXXXXX
2 DEFTERAS XXXXXXXXXX
XXXXXXX 000 00 - XXXXXX
51
BARONESS HOLDINGS INC.
--------------------------------------------------------------------------------
X.X.XXX 0000, XXXXXX
AJELTAKE ROAD, AJELTAKE ISLAND, MAJURO, MH96960,
XXXXXXXX ISLANDS
--------------------------------------------------------------------------------
1115/XX.xx/Xxxxxxxx
28th of June, 2006
To: DNB NOR BANK ASA
00 Xx. Xxxxxxx'x Xxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Mrs. Xxxxxxx Longford/Xx. Xxxx Xxxxxx
DRAWDOWN NOTICE
We refer to the loan agreement (the "LOAN AGREEMENT") dated June 28th, 2006 and
made between ourselves, as Borrower, and yourselves, as Lender, in connection
with a facility of up to US$6,580,000. Terms defined in the Loan Agreement have
their defined meanings when used in this Drawdown Notice.
We request to borrow the Loan as follows:
Amount: US$ 6,580,000.
Drawdown Date: June 29th, 2006
Duration of the first Interest Period shall be 6 months.
Payment instructions :
From the financing proceeds, you are kindly requested to remit US Dollars
6,580,000 along with buyers' equity portion in the amount of US Dollars
1,880,000 by debiting 'NORTHERN YIELD SHIPPING LIMITED' USD Account Nr.00000000
the same day to.
FORTIS BANK S.A./N.V.
SINGAPORE BRANCH
00 XXXXXX XXXXXX
#00-00 XXXXXXXXX 000000
TEL: x000- 000 0000, FAX: x000- 000 0000
IN FAVOUR AND TO THE ORDER OF:
STEALTHGAS INC OF XXXXXXXX ISLANDS
or its nominee 'BARONESS HOLDINGS INC', of Xxxxxxxx Islands,
as Buyers of LPGC tanker 'BATANGAS', Panamanian flag.
The above amount represents payment of the balance purchase price (90%) ninety
percent of LPGC tanker 'BATANGAS', Panamanian flag, as per M.O.A. dated 13th of
June, 2006.
Funds to be released in favour of the Sellers, upon written instructions
provided by Buyers and only upon delivery of the vessel to the buyers and
exchange of documents, as per relevant M.O.A. provisions.
Above written release instructions from the Buyers are to be provided by any one
of the following persons acting singly:
1) Xxxxxxx Xxxxxx, Greek passport NR. O 942519
2) Xxxxxxxx Xxxxxxxx, Greek passport NR. A 762408
3) Xxxxxxxxxxx Xxxxxx, Greek passport NR. O 987338
4) Xxxxxxxxxx Xxxxxx, Greek passport NR. O 930090
5) Sofia Damigou, Greek passport NR. N 887032
6) Chua Xxxxx Xxxx Singapore Passport NR. X0000000X
7) Xx Xxx Xxxx Xxxxxx Singapore Passport NR. X0000000X
In the event that the closing will not take place by July 7th, 2006 and unless
you have received amended instructions to the contrary, funds to be
automatically returned on the same date to the remitting Bank, i.e. DnB NOR Bank
ASA, London Branch.
Also, any surplus funds (including accrued interest on the 10% deposit)
following the closing are to be returned to DnB NOR Bank ASA, London Branch,
into account number 00000000, in favour of 'BARONESS HOLDINGS INC'.
Kindly fax confirm remittance directly to FORTIS BANK S.A./ N.V., SINGAPORE
BRANCH, 00 XXXXXX XXXXXX, #00-00, XXXXXXXXX 000000, to the FAX Nr. +656- 536
3835, advising them full details of remittance.
We represent and warrant that:
the representations and warranties in Clause 9 of the Loan Agreement would
remain true and not misleading if repeated on the date of this notice with
reference to the circumstances now existing.
no Event of Default or Potential Event of Default has occurred or will
result from the borrowing of the Loan.
This notice cannot be revoked without the prior consent of the Lender.
[Name of Signatory]
/s/ Xxxxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxx
------------------------------------- ---------------------------------------
XXXXXXXX XXXXXXXX XXXXXX XXXXXXX
Director
for and on behalf of
BARONESS HOLDINGS INC.
To: DnB NOR Bank ASA
00 Xx Xxxxxxx'x Xxxx
Xxxxxx XX0X 0XX
Xxxxxxx
28 June 2006
Dear Sirs
LOAN AGREEMENT DATED 28 JUNE 2006 (THE "LOAN AGREEMENT") MADE BETWEEN US AS
BORROWER AND YOU AS LENDER (THE "LENDER")
We refer to the Loan Agreement. Words and expressions defined in the Loan
Agreement shall have the same meaning when used in this letter.
We hereby undertake to procure that the Vafias family (either directly and/or
through companies beneficially owned by the Vafias family and/or trusts or
foundations of which members of the Vafias family are beneficiaries) will at all
times during the Security Period own and control at least 30 per cent. of the
issued share capital of the Corporate Guarantor.
We hereby agree and acknowledge that a breach of the undertaking contained in
this letter shall constitute an Event of Default entitling the Lender to take
any action referred to in Clause 18.2 of the Loan Agreement.
This letter shall be governed by and construed in accordance with English law
and the provisions of clauses 26, 27, 28 and 29 of the Loan Agreement shall
apply (mutatis mutandis) to this letter as if they were set out in full herein.
Yours faithfully
/s/ Xxxxxxxxxx Xxxxxx
---------------------------------------
for and on behalf of
BARONESS HOLDINGS INC.
COUNTERSIGNED this 28 day of June 2006 by the undersigned which, by its
execution thereof, confirms and acknowledges it has read and understood the
terms and conditions of the above letter and that it agrees in all respects to
the same.
/s/ Xxxx Xxxxxxx
-------------------------------------
XXXX XXXXXXX
for and on behalf of
DNB NOR BANK ASA
