Contract
Exhibit 99.7
Date 3
April 2009
as
Borrower
- and
-
THE
BANKS AND FINANCIAL INSTITUTIONS
listed
in Schedule 1
as
Lenders
- and
-
HSH
NORDBANK AG
as Agent
and Security Trustee
- and
-
HSH
NORDBANK AG
as Swap
Bank
_______________________________________
_______________________________________
relating
to a secured loan facility
of
(originally) up to US$51,500,000
XXXXXX,
XXXXXX & XXXXXXXX
Piraeus
INDEX
| Clause |
Page
|
|
|
1
|
INTERPRETATION
|
2
|
|
2
|
AGREEMENT
OF THE CREDITOR PARTIES
|
2
|
|
3
|
CONDITIONS
PRECEDENT
|
3
|
|
4
|
REPRESENTATIONS
AND WARRANTIES
|
3
|
|
5
|
AMENDMENTS
TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
3
|
|
6
|
FURTHER
ASSURANCES
|
6
|
|
7
|
FEES
AND EXPENSES
|
6
|
|
8
|
COMMUNICATIONS
|
7
|
|
9
|
SUPPLEMENTAL
|
7
|
|
10
|
LAW
AND JURISDICTION
|
7
|
|
SCHEDULE
1 LENDERS AND CONTRIBUTIONS
|
8
|
|
|
SCHEDULE
2
|
9
|
|
|
PART
B FORM OF COMPLIANCE CERTIFICATE
|
9
|
|
|
EXECUTION
PAGES
|
10
|
|
THIS AGREEMENT is made on 3
April 2009
BETWEEN
|
(1)
|
PARAGON SHIPPING INC. as
Borrower;
|
|
(2)
|
THE BANKS AND FINANCIAL
INSTITUTIONS listed in Schedule 1 herein, as Lenders;
|
|
(3)
|
HSH NORDBANK
AG, acting through its office at Xxxxxxx-Xxxxxxxxx-Xxxxx 00,
X-00000, Xxxxxxx, Xxxxxxx as Agent;
|
|
(4)
|
HSH NORDBANK AG, acting
through its office at Xxxxxxx-Xxxxxxxxx-Xxxxx 00, X-00000, Xxxxxxx,
Xxxxxxx, as Security
Trustee; and
|
|
(5)
|
HSH NORDBANK
AG, acting
through its office at Xxxxxxxxxxx 0, X-00000, Xxxx, Xxxxxxx as Swap
Bank.
|
BACKGROUND
|
(A)
|
By
a loan agreement dated 31 July 2008 (the “Loan Agreement”) and
made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the
Security Trustee and (iii) the Swap Bank, the Lenders agreed to make
available to the Borrower a secured loan facility in an amount of
(originally) up to US$51,500,000, of which an amount of US$46,250,000 is
outstanding by way of principal on the date
hereof.
|
|
(B)
|
The
Borrower has requested that the Lenders give their
consent:
|
|
|
(i)
|
to
waive the application of the security cover provisions in clause 15.1 of
the Loan Agreement during the period commencing 1 January 2009 and ending
4 January 2010 (the “Waiver
Period”);
|
|
|
(ii)
|
to
waive the Borrower’s financial covenants set out in clauses 12.4(a) and
12.4(c) of the Loan Agreement during the Waiver Period;
and
|
|
|
(iii)
|
to
allow it to renegotiate of the Initial
Charterparties.
|
|
(C)
|
The
Lenders’ consent to the Borrower’s requests referred to in Recital (B) are
subject to the following
conditions:
|
|
|
(i)
|
the
Borrower not prepaying, or providing additional security for, any of the
other facilities entered into by the Borrower with other banks and
financial institutions, unless it also prepays, or provides additional
security for the Loan pro rata to the Lenders’ share in the aggregate
Financial Indebtedness of the Borrower to all banks and financial
institutions;
|
|
|
(ii)
|
the
Borrower not restructuring any of the other facilities entered into by the
Borrower with other banks and financial institutions in a way that would
disadvantage the Lenders or any of the other Creditor
Parties;
|
|
|
(iii)
|
provision
of quarterly reports of any developments in relation to the Ship and the
financial position of the Borrower (including, without limitation, details
of all existing facilities);
|
|
|
(iv)
|
the
Margin increasing to 2 per cent. per annum during the period commencing on
1 January 2009 and ending on the Margin Review
Date;
|
2
|
|
(v)
|
restricting
the payment of dividends and/or the purchase of shares in the Borrower as
part of the Borrower’s share buy-back scheme during the Waiver Period to a
maximum of $0.50 per share per annum (or $0.125 per
quarter);
|
|
|
(vi)
|
maintaining
in the Debt Service Reserve Account an amount equal to, or greater than
the aggregate of $750,000 and Six Months’ Debt Service (as defined in this
Agreement); and
|
|
|
(vii)
|
any
renegotiation of the Initial Charterparties to be subject to the daily
charterhire being sufficient to cover all cash obligations and expenses
(including, without limitation, debt service, operating expenses and
commissions).
|
|
(D)
|
This
Agreement sets out the terms and conditions on which the Creditor Parties
agree, with effect on and from the Effective Date, to amend the Loan
Agreement.
|
IT IS AGREED as
follows:
|
1
|
INTERPRETATION
|
|
1.1
|
Defined
expressions. Words and expressions defined in the Loan
Agreement and the other Finance Documents shall have the same meanings
when used in this Agreement unless the context otherwise
requires.
|
|
1.2
|
Definitions. In
this Agreement, unless the contrary intention
appears:
|
“Effective
Date” means the date on which the conditions precedent in
Clause 3 are satisfied;
“Loan
Agreement” means the loan agreement dated 31 July 2008
referred to in Recital (A); and
“Mortgage
Addendum” means an addendum to the Mortgage executed or to be
executed by the Owner in favour of the Security Trustee in such form as the
Agent may approve or require.
|
1.3
|
Application of construction and
interpretation provisions of Loan Agreement. Clauses 1.2
and 1.5 of the Loan Agreement apply, with any necessary modifications, to
this Agreement.
|
|
2
|
AGREEMENT
OF THE CREDITOR PARTIES
|
|
2.1
|
Agreement of the
Lenders. The Lenders agree, subject to and upon the
terms and conditions of this
Agreement:
|
|
(a)
|
to
waive the application of the security cover provisions set out in clause
15.1 of the Loan Agreement during the Waiver
Period;
|
|
(b)
|
to
waive the Borrower’s financial covenants set out in Clauses 12.4(a) and
12.4(c) of the Loan Agreement during the Waiver Period;
and
|
|
(c)
|
to
allow the Borrower to renegotiate the Initial
Charterparties.
|
|
2.2
|
Agreement of the Creditor
Parties. The Creditor Parties agree, subject to and upon
the terms and conditions of this Agreement, to the consequential amendment
of the Loan Agreement and the other Finance Documents in connection with
the matters referred to in Clause
2.1.
|
3
|
2.3
|
Effective Date. The
agreement of the Lenders and the other Creditor Parties contained in
Clauses 2.1 and 2.2 shall have effect on and from the Effective
Date.
|
|
3
|
CONDITIONS
PRECEDENT
|
|
3.1
|
General. The
agreement of the Lenders and the other Creditor Parties contained in
Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions
precedent in Clause 3.2.
|
|
3.2
|
Conditions
precedent. The conditions referred to in Clause 3.1 are
that the Agent shall have received the following documents and evidence in
all respects in form and substance satisfactory to the Agent and its
lawyers on or before the Effective
Date:
|
|
(a)
|
documents
of the kind specified in paragraphs 3, 4 and 5 of Schedule 4, Part A to
the Loan Agreement in relation to the Borrower and the Owner in connection
with their execution of this Agreement and the Mortgage Addendum, updated
with appropriate modifications to refer to this
Agreement;
|
|
(b)
|
an
original of this Agreement duly executed by the parties to it and
counter-signed by the Owner and the Approved
Manager;
|
|
(c)
|
receipt
of an original Mortgage Addendum duly signed by the Owner and evidence
satisfactory to the Agent and its lawyers that the same has been
registered as a valid addendum to the Mortgage in accordance with the laws
of Liberia;
|
|
(d)
|
evidence
that the balance standing to the credit of the Debt Service Reserve
Account is at least equal to the aggregate of $750,000 and an amount equal
to Six Months’ Debt Service;
|
|
(e)
|
favourable
opinions from lawyers appointed by the Agent on such matters concerning
the laws of Xxxxxxxx Islands and Liberia and such other relevant
jurisdictions as the Agent may
require;
|
|
(f)
|
evidence
that the fee referred to in Clause 7 of this Agreement has been received
in full by the Agent; and
|
|
(g)
|
any
other document or evidence as the Agent may request in writing from the
Borrower.
|
|
4
|
REPRESENTATIONS
AND WARRANTIES
|
|
4.1
|
Repetition of Loan Agreement
representations and warranties. The Borrower represents
and warrants to the Creditor Parties that the representations and
warranties in clause 10 of the Loan Agreement remain true and not
misleading if repeated on the date of this
Agreement.
|
|
4.2
|
Repetition of Finance Document
representations and warranties. The Borrower and each of
the other Security Parties represents and warrants to the Creditor Parties
that the representations and warranties in the Finance Documents (other
than the Loan Agreement) to which it is a party remain true and not
misleading if repeated on the date of this
Agreement.
|
|
5
|
AMENDMENTS
TO LOAN AGREEMENT AND OTHER FINANCE
DOCUMENTS
|
|
5.1
|
Specific amendments to Loan
Agreement. With effect on and from the Effective Date
the Loan Agreement shall be amended as
follows:
|
|
(a)
|
by
adding the following definitions in Clause 1.1
thereof:
|
4
““Lenders’
Share” means, at any relevant time, the Loan expressed as a
percentage of the Total Bank Debt”;
““Mortgage Addendum” means an
addendum to the Mortgage executed or to be executed by the Owner in favour of
the Security Trustee in such form as the Agent may approve or
require;”;
““Six Months’ Debt
Service” means, on any date, the amount of principal and
interest in respect of the Financial Indebtedness of the Borrower under this
Agreement payable during the consecutive 6-month period immediately following
such date;”;
““Total Bank
Debt” means the aggregate Financial Indebtedness of the
Borrower to all banks and financial institutions (including the
Lenders);”;
““Waiver Period” means the
period commencing on 1 January 2009 and ending on 4 January 2010;”;
|
(b)
|
by
deleting the definition of “Margin” in Clause 1.1 thereof in its entirety
and substituting the same with:
|
|
|
““Margin” means, subject
to Clause 5.15, 2 per cent. per annum, during the period commencing on 1
January 2009 and ending on the Margin Review
Date;”
|
|
(d)
|
by
adding at the beginning of Clause 11.6(d) thereof the
words:
|
“as soon
as possible, but in no event later than 21 days after the end of each quarterly
period referred to in Clause 11.6(b), reports detailing any developments in
relation to the Ship and the financial position of the Borrower (including,
without limitation, details of all Financial Indebtedness incurred by the
Borrower) and”;
|
(e)
|
by
adding a new Clause 11.23 as
follows:
|
| “11.23 | Pari passu treatment of Creditor Parties. The Borrower shall not: |
|
|
(a)
|
prepay,
or provide additional security for, any other Financial Indebtedness
incurred by the Borrower (or agree to prepay or provide additional
security) unless it also prepays, or provides additional security for, the
Loan which is equal, or equivalent, to the Lenders’ Share (in the Agent’s
sole and absolute discretion);
and
|
|
|
(b)
|
restructure
any other Financial Indebtedness incurred by the Borrower in a way that
(in the Agent’s sole and absolute discretion) would disadvantage the
Creditor Parties.”;
|
|
(f)
|
by
adding the following a new paragraph (b) in Clause
12.3:
|
|
|
“(b)
|
subject
to the proviso below, during the Waiver Period declare or pay any
dividend;”;
|
|
(g)
|
by
re-designating paragraphs (b), (c), (d), (e) and (f) of Clause 12.3
thereof as paragraphs (c), (d), (e), (f) and (g)
respectively;
|
|
(h)
|
by
adding at the end of the new Clause 12.3(c) thereof the
words:
|
“save
that the Borrower shall be entitled, subject to the proviso below, during the
Waiver Period to buy back shares in the Borrower”;
|
(i)
|
by
adding a “hanging” paragraph at the end of Clause 12.3 thereof as
follows:
|
5
|
|
“Provided that during the
Waiver Period, the Borrower shall be entitled to either declare or pay
dividends pursuant to paragraph (b) above or buy back its shares pursuant
to paragraph (c) above subject to the aggregate of (1) all dividend
payments and (2) all amounts paid in buying back shares in the Borrower
not exceeding in any financial quarter $0.125 multiplied by the number of
shares in the Borrower’s share capital in issue at the relevant
time;”;
|
|
(j)
|
by
adding the words “(other than during the Waiver Period in the case of
Clauses 12.4(a) and 12.4(c) below)” after the words “at all times” in the
first line of Clause 12.4 thereof;
|
|
(k)
|
by
deleting the amount of $500,000 from each of Clauses 11.21(a) and 12.4(b)
thereof and substituting the same with “$750,000 (and, until the earlier
of (i) the end of the Waiver Period and (ii) such date as the Agent is
satisfied that the Borrower is in compliance with all its obligations
under this Agreement and the other Finance Documents, an additional amount
equal to Six Months Debt Service);
and”
|
|
(l)
|
by
adding at the end of Clause 12.5 thereof the
following:
|
“The
Borrower will deliver to the Agent a Compliance Certificate (i) in the form set
out in Part B of Schedule 6 in respect of each financial quarter falling within
the Waiver Period (until the financial quarter ending 30 September 2009) and
(ii) in the form set out in Part A of Schedule 6 in respect of the financial
quarter ending on 31 December 2009 and for each subsequent financial
quarter. For the purposes of the financial quarter ending on 31
December 2009 the Market Value of the Ship and each other Fleet
Vessel shall be determined on the basis of valuations dated 4 January 2010 (or
such later date as the Agent acting on the instructions of the Majority Lenders,
may agree).”;
|
(m)
|
by
adding the following words after the end of Clause 14.13(c)
thereof:
|
“Provided that the terms of the
Initial Charterparties may be renegotiated by the Borrower if the renegotiated
net daily charterhire rate is sufficient (in the Agent’s sole and absolute
discretion) to cover all the payment obligations of the Borrower and the Owner
during the term of the Initial Charterparties (which term shall not be reduced
from that agreed when the Initial Charterparties were entered into). The payment
obligations of the Borrower and the Owner shall include, without limitation, the
Borrower’s obligation to pay principal, and interest in respect of, the Loan
pursuant to this Agreement (assuming an interest rate of 6 per cent. per annum
plus the applicable Margin and that the Loan will be repaid in accordance with
Clause 8.1), the operating expenses of the Ship and all commission payments to
be made by the Owner in connection with the Ship.”;
|
(n)
|
by
adding the words “at any time other than during the Waiver Period” after
the words “the Borrower” in the second line of Clause 15.1 thereof;
and
|
|
(o)
|
by
amending the existing heading in Schedule 6 to the Loan Agreement to read
“Part A - Form of Compliance Certificate (to be used except during Waiver
Period)” and adding at the end of Schedule 6 (as a new Part B to that
Schedule) the form of Compliance Certificate set out in Schedule 3 to this
Agreement.
|
|
5.2
|
Amendments to Finance
Documents. With effect on and from the Effective Date
each of the Finance Documents other than the Loan Agreement shall be, and
shall be deemed by this Agreement to have been, amended as
follows:
|
|
(a)
|
the
definition of, and references throughout each of the Finance Documents to,
the Loan Agreement and any of the other Finance Documents shall be
construed as if the same referred to the Loan Agreement and those Finance
Documents as amended and supplemented by this
Agreement;
|
6
|
(b)
|
by
construing all references in the Loan Agreement and in the Finance
Documents to a “Mortgage” as references to that Mortgage as amended and
supplemented by the Mortgage Addendum applicable thereto;
and
|
|
(c)
|
by
construing references throughout each of the Finance Documents to “this
Agreement”, “this Deed”, hereunder and other like expressions as if the
same referred to such Finance Documents as amended and supplemented by
this Agreement.
|
|
5.3
|
Finance Documents to remain in
full force and effect. The Finance Documents shall
remain in full force and effect as amended and supplemented
by:
|
|
(a)
|
the
amendments to the Finance Documents contained or referred to in Clauses
5.1 and 5.2; and
|
|
(b)
|
such
further or consequential modifications as may be necessary to give full
effect to the terms of this
Agreement.
|
|
6
|
FURTHER
ASSURANCES
|
|
6.1
|
Borrower’s and each Security
Party’s obligation to execute further documents etc. The Borrower
and each Security Party shall:
|
|
(a)
|
execute
and deliver to the Security Trustee (or as it may direct) any assignment,
mortgage, power of attorney, proxy or other document, governed by the law
of England or such other country as the Security Trustee may, in any
particular case, specify;
|
|
(b)
|
effect
any registration or notarisation, give any notice or take any other
step,
|
|
|
which
the Agent may, by notice to the Borrower, specify for any of the purposes
described in Clause 6.2 or for any similar or related
purpose.
|
|
6.2
|
Purposes of further
assurances. Those purposes
are:
|
|
(a)
|
validly
and effectively to create any Security Interest or right of any kind which
the Security Trustee intended should be created by or pursuant to the Loan
Agreement or any other Finance Document, each as amended and supplemented
by this Agreement, and
|
|
(b)
|
implementing
the terms and provisions of this
Agreement.
|
|
6.3
|
Terms of further
assurances. The Security Trustee may specify the terms
of any document to be executed by the Borrower or any Security Party under
Clause 6.1, and those terms may include any covenants, powers and
provisions which the Security Trustee considers appropriate to protect its
interests.
|
|
6.4
|
Obligation to comply with
notice. The Borrower or any Security Party shall comply
with a notice under Clause 6.1 by the date specified in the
notice.
|
|
7
|
FEES
AND EXPENSES
|
|
7.1
|
Fee. On the
date of this Agreement the Borrower shall pay to the Agent for the account
of the Lenders, a non-refundable waiver fee of $40,000, which shall be
distributed by the Agent equally to each of the
Lenders.
|
|
7.2
|
Expenses. The
provisions of clause 20 (fees and expenses) of the Loan Agreement shall
apply to this Agreement as if they were expressly incorporated in this
Agreement with any necessary
modifications.
|
7
|
8
|
COMMUNICATIONS
|
|
8.1
|
General. The
provisions of clause 28 (notices) of the Loan Agreement, as amended and
supplemented by this Agreement, shall apply to this Agreement as if they
were expressly incorporated in this Agreement with any necessary
modifications.
|
|
9
|
SUPPLEMENTAL
|
|
9.1
|
Counterparts. This
Agreement may be executed in any number of
counterparts.
|
|
9.2
|
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.
|
|
10
|
LAW
AND JURISDICTION
|
|
10.1
|
Governing
law. This Agreement shall be governed by and construed
in accordance with English law.
|
|
10.2
|
Incorporation of the Loan
Agreement provisions. The provisions of clause 30 (law
and jurisdiction) of the Loan Agreement, as amended and supplemented by
this Agreement, shall apply to this Agreement as if they were expressly
incorporated in this Agreement with any necessary
modifications.
|
THIS AGREEMENT has been duly
executed as a Deed on the date stated at the beginning of this
Agreement.
8
SCHEDULE
1
LENDERS
AND CONTRIBUTIONS
|
Lender
|
Lending
Office
|
Contribution
(US
Dollars)
|
|
HSH
Nordbank XX
|
Xxxxxxx-Xxxxxxxxx-Xxxxx
00
X-00000,
Xxxxxxx
Xxxxxxx
|
51,500,000
|
9
SCHEDULE
2
PART
B
FORM
OF COMPLIANCE CERTIFICATE
(to be
used during Waiver Period)
To: HSH
Nordbank XX
Xxxxxxx-Xxxxxxxxx-Xxxxx
00
X-00000,
Xxxxxxx
Xxxxxxx
[l] 200[l]
Dear
Sirs,
We refer
to a loan agreement dated 31 July 2008 (as supplemented and amended by a
supplemental agreement dated [l] 2009, the “Loan Agreement”) made between
(amongst others) yourselves and ourselves in relation to a term loan facility of
(originally) up to $51,500,000.
Words and
expressions defined in the Loan Agreement shall have the same meaning when used
in this compliance certificate.
We
enclose with this certificate a copy of the [audited]/[unaudited] consolidated
accounts for the Group for the [Financial Year] [3-month period] ended [l]. The
accounts (i) have been prepared in accordance with all applicable laws and GAAP
all consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to
which the accounts relate and (iii) fully disclose or provide for all
significant liabilities of the Group.
The
Borrower represents that no Event of Default or Potential Event of Default has
occurred as at the date of this certificate [except for the following matter or
event [set out all material
details of matter or event]]. In addition as of [l], the Borrower confirms
compliance with the financial covenant set out in Clause 12.4(b) of the Loan
Agreement for the 3 months ending as of the date to which the enclosed accounts
are prepared.
We now
certify that, as at [l] the balance standing
to the credit of the Debt Service Reserve Account is $[l].
This
certificate shall be governed by, and construed in accordance with, English
law.
______________________________
[l]
Chief
Financial Officer of
10
EXECUTION
PAGES
|
THE
BORROWERS
|
|
|
SIGNED
by
|
)
|
|
for
and on behalf of
|
)
|
|
)
|
|
|
THE
LENDERS
|
|
|
LENDERS
|
|
|
SIGNED
by
|
)
|
|
for
and on behalf of
|
)
|
|
HSH NORDBANK AG
|
) |
|
THE
SWAP BANK
|
|
|
SIGNED
by
|
)
|
|
for
and on behalf of
|
)
|
|
HSH
NORDBANK AG
|
)
|
|
AGENT
|
|
|
SIGNED
by
|
)
|
|
for
and on behalf of
|
)
|
|
HSH
NORDBANK AG
|
)
|
|
SECURITY
TRUSTEE
|
|
|
SIGNED
by
|
)
|
|
for
and on behalf of
|
)
|
|
HSH
NORDBANK AG
|
)
|
|
Witness
to all the
|
)
|
|
above
signatures
|
)
|
|
Name:
|
|
|
Address:
|
11
COUNTERSIGNED this
day 3rd of April 2009 for and on behalf of each of the following Security
Parties which, by its execution hereof, confirms and acknowledges that it has
read and understood the terms and conditions of this supplemental letter, that
it agrees in all respects to the same and that the Finance Documents to which it
is a party shall remain in full force and effect and shall continue to stand as
security for the obligations of the Borrower under the Loan
Agreement.
|
__________________________________
|
__________________________________
|
|
for
and on behalf of
|
for
and on behalf of
|
|
PALOMA
MARINE S.A.
|
ALLSEAS
MARINE S.A.
|
SK 25744
0001 984021
12
