LOAN AGREEMENT for a term loan of up to US$70,000,000 to OLYMPIAN ZEUS OWNERS INC. and OLYMPIAN APOLLO OWNERS INC. provided by THE BANKS AND FINANCIAL INSTITUTIONS SET OUT IN SCHEDULE 1 Arranger, Agent, Security Agent and Account Bank NORDEA BANK...

Exhibit 4.119

Private & Confidential

LOAN AGREEMENT

for a term loan of up to US$70,000,000

to

OLYMPIAN ZEUS OWNERS INC.

and

OLYMPIAN APOLLO OWNERS INC.

provided by

THE BANKS AND FINANCIAL INSTITUTIONS SET OUT IN SCHEDULE 1

Arranger, Agent, Security Agent

and Account Bank

NORDEA BANK FINLAND PLC, LONDON BRANCH

Swap Provider

NORDEA BANK FINLAND PLC

LOGO

Contents

 

Clause    Page  

1       Purpose and definitions

      1   

2       The Total Commitment and the Advances

      16   

3       Interest and Interest Periods

      18   

4       Repayment and prepayment

      20   

5       Fees, commitment commission and expenses

      23   

6       Payments and taxes; accounts and calculations

      24   

7       Representations and warranties

      26   

8       Undertakings

      31   

9       Conditions

      38   

10     Events of Default

      39   

11     Indemnities

      43   

12     Unlawfulness and increased costs

      45   

13     Security, set-off and pro-rata payments

      46   

14     Operating Accounts

      48   

15     Assignment, transfer and lending office

      49   

16     Arranger, Agent and Security Agent

      53   

17     Notices and other matters

      61   

18     Governing law and jurisdiction

      64   

Schedule 1 The Banks and their Commitments

      66   

Schedule 2 Form of Drawdown Notice

      67   

Schedule 3 Documents and evidence required as conditions precedent to the Loan being made

      68   

Schedule 4 Form of Transfer Certificate

      74   

Schedule 5 Form of Trust Deed

      78   

Schedule 6 Form of Mortgage

      79   

Schedule 7 Form of Deed of Covenant

      80   

Schedule 8 Form of Asclepius Guarantee

      81   

Schedule 9 Form of DryShips Guarantee

      82   

Schedule 10 Form of Manager’s Undertaking

      83   

Schedule 11 Form of Master Swap Agreement

      84   

Schedule 12 Form of Swap Assignment

      85   

Schedule 13 Form of Operating Account Assignment

      86   

Schedule 14 Mandatory Cost formula

      87   

THIS AGREEMENT is dated 7 February 2011 and made BETWEEN:

 

(1) OLYMPIAN ZEUS OWNERS INC. and OLYMPIAN APOLLO OWNERS INC. as joint and several Borrowers;

 

(2) NORDEA BANK FINLAND PLC, LONDON BRANCH as Arranger, Agent, Security Agent and Account Bank;

 

(3) THE BANKS AND FINANCIAL INSTITUTIONS whose names and addresses are set out in schedule 1 as Banks; and

 

(4) NORDEA BANK FINLAND PLC as Swap Provider.

IT IS AGREED as follows:

 

1 Purpose and definitions

 

1.1 Purpose

This Agreement sets out the terms and conditions upon and subject to which the Banks agree, according to their several obligations, to make available to the Borrowers, jointly and severally, in two (2) Advances, a loan of up to Seventy million Dollars ($70,000,000) for the purposes of:

 

  (a) financing part of the construction and acquisition cost of the Ships under the Contracts; and

 

  (b) financing general corporate and working capital needs of the Borrowers,

 

1.2 Definitions

In this Agreement, unless the context otherwise requires:

“Account Bank” means Nordea Bank Finland plc, a company incorporated in Finland with its registered office at Xxxxxxxxxxxxxxxx 00X, XX-00000 Xxxxxxxx, Xxxxxxx, acting for the purposes of this Agreement through its branch at 0xx Xxxxx, Xxxx Xxxxx House, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other bank as may be designated by the Agent as the Account Bank for the purposes of this Agreement and includes its successors in title;

“Advance” means each borrowing of a proportion of the Total Commitment by the Borrowers or (as the context may require) the principal amount of such borrowing owing to the Banks under this Agreement at any relevant time and:

 

  (a) in relation to the Zeus Ship, means the Zeus Advance; or

 

  (b) in relation to the Apollo Ship, means the Apollo Advance,

and “Advances” means either or both of them;

“Agent” means Nordea Bank Finland plc, a company incorporated in Finland with its registered office at Xxxxxxxxxxxxxxxx 00X, XX-00000 Xxxxxxxx, Xxxxxxx, acting for the purposes of this Agreement through its branch at 0xx Xxxxx, Xxxx Xxxxx House, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other person as may be appointed as agent by the Banks and the Swap Provider pursuant to clause 16.13 and includes its successors in title;

 

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“Apollo Advance” means an Advance of up to Thirty eight million Dollars ($38,000,000) made or (as the context may require) to be made available to the Borrowers for the purpose of (a) financing part of the acquisition cost of the Apollo Ship by the Apollo Borrower pursuant to the Apollo Contract and (b) financing general corporate and working capital needs of the Apollo Borrower;

“Apollo Borrower” means Olympian Apollo Owners Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Xxxxxxxx Islands MH96960 and includes its successors in title;

“Apollo Contract” means the shipbuilding contract dated 22 November 2010 as amended by an addendum No. 1 dated 3 December 2010 and an addendum No. 2 dated 10 December 2010, all made between the Builder and the Apollo Borrower as may be further amended and supplemented from time to time, relating to the sale by the Builder and the purchase by the Apollo Borrower, of the Apollo Ship;

“Apollo Contract Price” means the purchase price payable by the Apollo Borrower to the Builder for the Apollo Ship under the Apollo Contract, being Sixty nine million seven hundred and fifty thousand Dollars ($69,750,000) or such other sum as is determined by the Agent under the terms of the Apollo Contract to be the purchase price of the Apollo Ship thereunder;

“Apollo Deed of Covenant” means the deed of covenant collateral to the Apollo Mortgage executed or (as the context may require) to be executed by the Apollo Borrower in favour of the Security Agent in the form set out in schedule 7;

“Apollo Management Agreement” means the agreement dated 1 January 2011, made between the Apollo Borrower and the Manager or any other agreement previously approved in writing by the Agent between the Apollo Borrower and the Manager, providing (Inter alia) for the Manager to carry out the technical and commercial management at the Apollo Ship;

“Apollo Manager’s Undertaking” means the undertaking and assignment in respect of the Apollo Ship executed or (as the context may require) to be executed by the Manager in favour of the Security Agent in the form set out in schedule 10;

“Apollo Mortgage” means the first priority statutory Maltese mortgage of the Apollo Ship executed or (as the context may require) to be executed by the Apollo Borrower in favour of the Security Agent in the form set out in schedule 6;

“Apollo Operating Account” means an interest bearing Dollar account of the Apollo Borrower opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Apollo Operating Account for the purposes of this Agreement;

“Apollo Operating Account Assignment” means a first priority assignment executed or (as the context may require) to be executed by the Apollo Borrower in favour of the Security Agent in respect of the Apollo Operating Account in the form set out in schedule 13;

“Apollo Ship” means the (approximately) 158,300 dwt, crude oil tanker, known on the date of this Agreement as Hull No. 1887 and under construction at the Builder’s yard in Geoje Island, Korea and to be delivered to the Apollo Borrower and registered in its ownership on the Delivery Date through the relevant Registry and under the laws and flag of the relevant Flag State with the name Vilamoura;

“Applicable Accounting Principles” means the most recent and up-to-date US GAAP applicable at any relevant time;

“Approved Shipbrokers” means, together, X. Xxxxxxxx and Company Ltd of London, England, Arrow Research Ltd. of London, England, Braemar Seascope Ltd. of London, England, Simpsons Xxxxxx & Young of London, England, Fearnleys A/S of Oslo, Norway and XX Xxxxxx Shipbrokers of Oslo, Norway and includes their respective successors in title and “Approved Shipbroker” means any of them;

 

2

“Arranger” means Nordea Bank Finland plc, a company incorporated in Finland with its registered office at Xxxxxxxxxxxxxxxx 00X, XX-00000 Xxxxxxxx, Xxxxxxx, acting for the purposes of this Agreement through its branch at 0xx Xxxxx, Xxxx Xxxxx House, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3), as arranger and bookrunner, and includes its successors in title;

“Asclepius Guarantee” means the corporate guarantee executed or (as the context may require) to be executed by the Asclepius Guarantor in favour of the Security Agent in the form set out in schedule 8;

“Asclepius Guarantor” means Olympian Asclepius Holdings Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Xxxxxxxx Islands MH96960 and includes its successors in title;

“Balloon Instalment” means:

 

  (a) in relation to the Zeus Advance, the Zeus Balloon Instalment (as defined in clause 4.1.1); or

 

  (b) in relation to the Apollo Advance, the Apollo Balloon Instalment (as defined in clause 4.1.2);

“Banking Day” means a day on which dealings in deposits in Dollars are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Athens and New York City (or any other relevant place of payment under clause 6);

“Banks” means the banks and financial institutions listed in schedule 1 and includes their respective successors in title and Transferee Banks and “Bank” means any of them;

“Basel II Accord” means the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement;

“Basel II Approach” means, in relation to a Bank, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by such Bank (or its holding company) for the purposes of implementing or complying with the Basel II Accord;

“Basel II Regulation” means, in relation to a Bank, (a) any law or regulation implementing the Basel II Accord or (b) any Basel II Approach adopted by such Bank;

“Basel III Accord” means, together, “Basel III: A global regulatory framework for more resilient banks and banking systems” and “Basel III: International framework for liquidity risk measurement, standards and monitoring” both published by the Basel Committee on Banking Supervision on 16th December, 2010, in either case in the form existing on the date of this Agreement;

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives and if the agreement under which any such transaction is entered requires netting of mutual liabilities, the Indebtedness for the net amount shall be taken into account as calculated on a “marked to market” basis, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

 

3

“Borrower”:

 

  (a) in relation to the Zeus Ship and/or the Zeus Advance means the Zeus Borrower; or

 

  (b) in relation to the Apollo Ship and/or the Apollo Advance means the Apollo Borrower,

and “Borrowers” means either or both of them;

“Borrowers’ Security Documents” means, at any relevant time, such of the Security Documents as shall have been executed by either of the Borrowers at such time;

“Builder” means Samsung Heavy Industries Co., Ltd. of 34th Floor, Samsung Life Insurance Xxxxxx Xxxxx 0000-00, Xxxxxx-Xxxx, Xxxxxx-Xx, Xxxxx, Xxxxx 137-857 and includes its successors in title;

“Capital Adequacy Law” means any law or any regulation (whether or not having the force of law, but, if not having the force of law, with which a Bank or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits or other banking or monetary controls or requirements which affect the manner in which a Bank allocates capital resources to its obligations hereunder (including, without limitation, those resulting from the implementation or application of or compliance with the Basel II Accord, the Basel III Accord or any Basel II Regulation);

“Casualty Amount” means Five hundred thousand Dollars ($500,000) or its equivalent in any other currency;

“Change of Control” means if:

 

  (a) two (2) or more persons acting in concert (other than the DryShips Guarantor); or

 

  (b) a person (other than the DryShips Guarantor):

 

  (i) acquire legally and/or beneficially, and either directly or indirectly, in excess of fifty per cent (50%) of the issued voting share capital of the Asclepius Guarantor at any time; and/or

 

  (ii) have the right or the ability to control, and either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent of it) of the Asclepius Guarantor or the Borrowers at any time;

“Charter” means, in relation to a Ship, any time charter, pool agreement (including the Initial Charter of such Ship) or other contract of employment in respect of that Ship with an original term in excess of twelve (12) months (taking into account any option to extend or renew contained therein) which is entered into by the relevant Borrower as owner of that Ship and any other person as its counterparty thereunder);

“Charter Assignment” means, in relation to a Ship, a specific assignment of any Charter (including the relevant Initial Charter) for that Ship executed or (as the context may require) to be executed by the relevant Borrower in favour of the Security Agent in such form as the Agent may require in its absolute discretion;

“Charterer” means, in relation to a Ship and a Charter (including the relevant Initial Charter) relevant to it, any such person which shall enter into such Charter in respect of that Ship as the relevant Borrower’s counterparty thereunder (including the relevant counterparty of the relevant Borrower under the relevant Initial Charter) during the Security Period;

“Classification” means, in relation to each Ship, the highest class available to a vessel of such Ship’s type with the relevant Classification Society or such other classification as the Agent (acting on the instructions of the Majority Banks) shall, at the request of the Borrower owning such Ship, have agreed in writing shall be treated as the Classification in relation to such Ship for the purposes of the relevant Ship Security Documents;

 

4

“Classification Society” means, in relation to each Ship, such classification society (being a member of the International Association of Classification Societies (“IACS”)) which the Agent (acting on the instructions of the Majority Banks) shall, at the request of the Borrower owning such Ship, have agreed in writing, shall be treated as the Classification Society in relation to such Ship for the purposes of the relevant Ship Security Documents;

“Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention for the Safety of Life at Sea 1974 (as amended) and includes any amendments or extensions thereto and any regulation issued pursuant thereto;

“Commitment” means, in relation to each Bank, the aggregate amount set out opposite such Bank’s name in the column headed “Commitment” in schedule 1, and/or, in the case of a Transferee Bank, the aggregate amount transferred as specified in the relevant Transfer Certificate, as reduced in each case by any relevant term of this Agreement;

“Compliance Certificate” means a certificate substantially in the form set out in the schedule to the Asclepius Guarantee;

“Compulsory Acquisition” means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of a Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title;

“Confirmation” shall have, in relation to any continuing Designated Transaction, the meaning ascribed to it in the Master Swap Agreement;

“Contract”:

 

  (a) in relation to Zeus Ship, means the Zeus Contract; or

 

  (b) in relation to the Apollo Ship, means the Apollo Contract,

and “Contracts” means either or both of them;

“Contract Price”:

 

  (a) in relation to the Zeus Ship and the Zeus Contract, the Zeus Contract Price; or

 

  (b) in relation to the Apollo Ship and the Apollo Contract the Apollo Contract Price,

and “Contract Prices” means either or both of them;

“Contribution” means, in relation to each Bank, the principal amount of the Loan owing to such Bank at any relevant time;

“Creditors” means, together, the Arranger, the Agent, the Security Agent, the Account Bank, the Swap Provider and the Banks and “Creditor” means any of them;

“Corporate Guarantees” means, together, the DryShips Guarantee and the Asclepius Guarantee and “Corporate Guarantee” means either of them;

“Corporate Guarantors” means, together, the DryShips Guarantor and the Asclepius Guarantor and “Corporate Guarantor” means either of them;

 

5

“Deed of Covenant”:

 

  (a) in relation to the Zeus Ship, means the Zeus Deed of Covenant; or

 

  (b) in relation to the Apollo Ship, means the Apollo Deed of Covenant,

and “Deeds of Covenant” means either or both of them;

“Default” means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

“Delivery Date” means the date on which the Apollo Ship is delivered to, and accepted by, the Apollo Borrower under the Apollo Contract;

“Designated Transaction” means a Transaction which is entered into by the Borrowers with the Swap Provider pursuant to the Master Swap Agreement as contemplated by clause 2.9;

“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the Code;

“Dollars” and “$” mean the lawful currency of the United States of America and, in respect of all payments to be made under any of the Security Documents, mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars);

“Drawdown Date” means any date, being a Banking Day falling during the Drawdown Period, on which an Advance is, or is to be, made available;

“Drawdown Notice” means, in relation to each Advance, a notice substantially in the form of schedule 2 in respect of such Advance;

“Drawdown Period” means, in relation to each Advance, the period commencing on the date of this Agreement and ending on the earlier of (a) the Termination Date, (b) the date on which the aggregate amount of the Advances is equal to the Total Commitment (c) the date on which the Total Commitment is reduced to zero pursuant to clauses 4.3, 10.2 or 12 or any other provision of this Agreement and (d) the date when both Advances have been drawn down (in full or in part);

“DryShips Guarantee” means the corporate guarantee executed or (as the context may require) to be executed by the DryShips Guarantor in favour of the Security Agent in the form set out in schedule 9;

“DryShips Guarantor” means DryShips Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Xxxxxxxx Islands MH96960 and includes its successors in title;

“Early Termination Date” shall have, in relation to any continuing Designated Transaction, the meaning ascribed to it in the Master Swap Agreement;

“Earnings” means, in relation to a Ship, all moneys whatsoever from time to time due or payable to the Borrower owning such Ship during the Security Period arising out of the use or operation of such Ship including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising out of pooling arrangements, compensation payable to such Borrower in event of requisition of such Ship for hire, remuneration for salvage or towage services, demurrage and detention moneys, and damages for breach (or payment for variation or termination) of any charterparty or other contract for the employment of such Ship;

 

6

“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements) having a similar effect;

“Environmental Affiliate” means any agent or employee of either Borrower or any other Relevant Party or any person having a contractual relationship with either Borrower or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from any Relevant Ship;

“Environmental Approval” means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law;

“Environmental Claim” means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship;

“Environmental Laws” means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants;

“Event of Default” means any of the events or circumstances described in clause 10.1;

“Fees Letter” means the fees letter of even date herewith made or (as the context may require) to be made between the Arranger, the Agent, the Borrowers and the Corporate Guarantors in respect of certain of the fees referred to in clause 5.1;

“Final Maturity Date” means the earlier of (a) the date falling sixty (60) months after the date of this Agreement and (b) 15 February 2016;

“Flag State” means, in relation to a Ship, the Republic of Malta or such other state or territory designated in writing by the Agent (acting on the instructions of the Majority Banks), at the request of the Borrower owning such Ship, as being the “Flag State” of such Ship for the purposes of the relevant Ship Security Documents;

“Government Entity” means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, Instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant;

“Group” means, together, the Asclepius Guarantor and its Subsidiaries from time to time (including, for the avoidance of doubt, the Borrowers) and “member of the Group” shall only mean the Asclepius Guarantor or any of its Subsidiaries;

“Indebtedness” means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent;

“Initial Charter” means:

 

  (a) in relation to the Zeus Ship, a pool agreement and/or charterparty providing for its employment in the Heidmar’s Sigma Tankers Inc. pool on terms and conditions in all respects acceptable to the Agent; or

 

7

  (b) in relation to the Apollo Ship, a pool agreement and/or charterparty providing for its employment in the Blue Fin Tankers Inc. pool on terms and conditions In all respects acceptable to the Agent,

and “Initial Charters” means either or both of them;

“Insurances” means, in relation to a Ship, all policies and contracts of insurance (which expression includes all entries of such Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of the Borrower owning such Ship (whether in the sole name of such Borrower, or in the joint names of such Borrower and the Secured Creditors and/or the Security Agent and/or any other Creditor or otherwise) in respect of such Ship and her Earnings or otherwise howsoever in connection with such Ship and all benefits thereof (including claims of whatsoever nature and return of premiums);

“Interest Payment Date” means the last day of an Interest Period;

“Interest Period” means, in relation to an Advance, each period for the calculation of interest in respect of such Advance, ascertained in accordance with clauses 3.2 and 3.3;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter Xl-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto;

“ISSC” means, in relation to each Ship, an International Ship Security Certificate issued in respect of such Ship pursuant to the ISPS Code;

“LIBOR” means, in relation to any amount and for any period, the offered rate (if any) for deposits of Dollars for such amount and for the period which is,

 

  (a) the rate for such period as displayed on Reuters page LIBOR 01 (British Bankers’ Association Interest Settlement Rates) (or such other page as may replace such page LIBOR 01 on such system or on any other system of the information vendor for the time being designated by the British Bankers’ Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers’ Association’s Recommended Terms and Conditions (“BBAIRS” terms) applicable at the relevant time) at or about 11:00 a.m. (London time) on the Quotation Date for such period; or

 

  (b)

if on such date no such rate is displayed, the rate (rounded upwards to the nearest  1/16th of one per cent) quoted to the Agent by the Reference Bank at the request of the Agent as the Reference Bank’s offered rate for deposits of Dollars in an amount equal or approximately equal to the amount in relation to which LIBOR is to be determined and for a period equivalent to such period to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period;

“Loan” means the aggregate principal amount owing to the Banks under this Agreement at any relevant time;

“Majority Banks” means, at any relevant time, Banks (a) the aggregate of whose Contributions exceeds sixty-six point six per cent (66.6%) of the Loan or (b) (if no principal amounts are outstanding under this Agreement) the aggregate of whose Commitments exceeds sixty-six point six per cent (66.6%) of the Total Commitment;

“Management Agreement”:

 

  (a) in relation to the Zeus Ship, means the Zeus Management Agreement; or

 

8

  (b) in relation to the Apollo Ship, means the Apollo Management Agreement,

and “Management Agreements” means either or both of them;

“Manager” means TMS Tankers Ltd. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Xxxxxxxx Islands MH96960 or any other person appointed by a Borrower, with the prior written consent of the Majority Banks as the technical and commercial manager of such Borrower’s Ship and includes its successors in title;

“Manager’s Undertaking”:

 

  (a) in relation to the Zeus Ship, means the Zeus Manager’s Undertaking; or

 

  (b) in relation to the Apollo Ship, means the Apollo Manager’s Undertaking,

and “Manager’s Undertakings” means either or both of them;

“Mandatory Cost” means, in relation to any period, a percentage calculated by the Agent for such period at an annual rate determined by the application of the formula set out in schedule 14;

“Margin” means two point seven five per cent (2.75%) per annum;

“Master Swap Agreement” means the agreement made or (as the context may require) to be made between the Swap Provider and the Borrowers, comprising a 2002 ISDA Master Agreement (including a schedule thereto and a credit support annex thereto) in the form set out in schedule 11 and includes any Designated Transactions from time to time entered into pursuant thereto and any Confirmations (as defined therein) from time to time exchanged thereunder and governed thereby;

“Material Adverse Effect” means a material adverse effect:

 

  (a) on the business, assets, nature of assets, operations, prospects, liabilities or condition (financial or otherwise) of any Security Party, any member of the Group or the Group as a whole; or

 

  (b) on the ability of any of the Borrowers, the Corporate Guarantors, the Manager or any other Security Party to comply with any of their respective obligations under the Security Documents or any of them; or

 

  (c) on the legality, validity or enforceability of any of the Security Documents or any of the rights or remedies of the Creditors or any of them thereunder; or

 

  (d) in any Relevant Jurisdiction (or any of the financial markets thereof);

“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage”:

 

  (a) in relation to the Zeus Ship, means the Zeus Mortgage; or

 

9

  (b) in relation to the Apollo Ship, means the Apollo Mortgage,

and “Mortgages” means either or both of them;

“Mortgaged Ship” means, at any relevant time, a Ship which is at such time subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Ship shall for the purposes of this Agreement be deemed to be a Mortgaged Ship as from whichever shall be the earlier of (a) the drawdown of the Advance relating to that Ship and (b) the date that the Mortgage of that Ship shall have been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required by the Agent to be paid pursuant to clause 4.3 following the sale or Total Loss of such Ship and (ii) the date on which all moneys owing under the Security Documents have been repaid in full;

“Operating Account”:

 

  (a) in relation to the Zeus Ship, means the Zeus Operating Account; or

 

  (b) in relation to the Apollo Ship, means the Apollo Operating Account,

and “Operating Accounts” means either or both of them;

“Operating Account Assignment”:

 

  (a) in relation to the Zeus Ship, means the Zeus Operating Account Assignment; or

 

  (b) in relation to the Apollo Ship, means the Apollo Operating Account Assignment,

and “Operating Account Assignments” means either or both of them;

“Operator” means any person who is from time to time during the Security Period concerned in the operation of a Ship and falls within the definition of “Company” set out in rule 1.1.2 of the Code;

“Permitted Encumbrance” means any Encumbrance in favour of the Security Agent or any other Creditor created pursuant to the Security Documents and Permitted Liens;

“Permitted Liens” means, in relation to a Ship:

 

  (a) any lien on such Ship for master’s, officer’s or crew’s wages outstanding in the ordinary course of trading;

 

  (b) any lien for salvage; and

 

  (c) any ship repairer’s or outfitter’s possessory lien for a sum not (except with the prior written consent of the Agent) exceeding the Casualty Amount for such Ship;

“Pollutant” means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Xxx 0000;

“Quotation Date” means, in respect of any period for which LIBOR falls to be determined under this Agreement, the day falling two (2) Banking Days before the first day of such period;

“Reference Bank” means, in relation to LIBOR and Mandatory Cost, the principal London office of Nordea Bank Finland plc or of any other bank appointed from time to time by the Agent pursuant to clause 16.21 and includes its successors in title;

 

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“Registry” means, in relation to a Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register such Ship, the relevant Borrower’s title to such Ship and the relevant Mortgage under the laws and flag of the relevant Flag State;

“Related Company” of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity;

“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected;

“Relevant Party” means each of the Borrowers, each of the Borrower’s Related Companies, any other Security Party and any Security Party’s Related Company (and includes, for the avoidance of doubt, each member of the Group);

“Relevant Ship” means the Ships and any other vessel from time to time (whether before or after the date of this Agreement) owned, managed or crewed by, or chartered to, any Relevant Party;

“Repayment Dates” means, in relation to each Advance and subject to clause 6.3, each of the dates falling at three (3) monthly intervals after the Drawdown Date for such Advance, up to and including the Final Maturity Date;

“Requisition Compensation” means, in relation to a Ship, all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of that Ship;

“Secured Creditors” means, together, the Agent, the Banks and the Swap Provider and “Secured Creditor” means any of them;

“Security Agent” means Nordea Bank Finland plc, a company incorporated in Finland with its registered office at Xxxxxxxxxxxxxxxx 00X, XX-00000 Xxxxxxxx, Xxxxxxx acting for the purposes of this Agreement through its branch at 0xx Xxxxx, Xxxx Xxxxx House, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other person as may be appointed as security agent and trustee by the Banks, the Swap Provider and the Agent pursuant to clause 16.14 and includes its successors in title;

“Security Documents” means this Agreement, the Fees Letter, the Master Swap Agreement, the Mortgages, the Deeds of Covenant, the Operating Account Assignments, the Corporate Guarantees, the Manager’s Undertakings, any Charter Assignments, the Swap Assignment and the Trust Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrowers and/or any other Security Party and/or any of them pursuant to this Agreement and/or any other Security Document (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means each of the Borrowers, the Manager, the Corporate Guarantors or any other person who may at any time be a party to any of the Security Documents (other than the Creditors);

“Security Period” means the period commencing on the date of this Agreement and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder;

“Security Requirement” means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers and the other Creditors) which is, at any relevant time:

 

  (a) during the period commencing on the day of this Agreement and ending on the day falling twenty four (24) months after the first Drawdown Date under this Agreement (the “Adjustment Date”), One hundred and thirty per cent (130%) of the Loan; and

 

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  (b) during the period commencing on the day falling immediately after the Adjustment Date and at all times thereafter, One hundred and thirty five per cent (135%) of the Loan;

“Security Value” means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers and the other Creditors) which is, at any relevant time, the aggregate of (a) the aggregate market value of the Mortgaged Ships as most recently determined in accordance with clause 8.2.2 and/or clause 8.1.6 and (b) the amount in Dollars for the time being actually pledged or charged in favour of the Security Agent in accordance with clause 8.2.1(b);

“Ship”:

 

  (a) in relation to the Zeus Borrower and/or the Zeus Advance, means the Zeus Ship; or

 

  (b) in relation to the Apollo Borrower and/or the Apollo Advance, means the Apollo Ship,

and “Ships” means either or both of them;

“Ship Security Documents”:

 

  (a) in respect of the Zeus Ship, means the Zeus Mortgage, the Zeus Deed of Covenant, the Zeus Manager’s Undertaking and any Charter Assignment in relation to the Zeus Ship; or

 

  (b) in respect of the Apollo Ship, means the Apollo Mortgage, the Apollo Deed of Covenant, the Apollo Manager’s Undertaking and any Charter Assignment in relation to the Apollo Ship;

“SMC” means a safety management certificate issued in respect of a Ship in accordance with rule 13 of the Code;

“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person, and for this purpose “control” means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise;

“Swap Assignment” means the assignment executed or (as the context may require) to be executed by the Borrowers in favour of the Security Agent in the form set out in schedule 12;

“Swap Exposure” means, as at any relevant time, the total sum certified by the Swap Provider to the Agent and the Borrowers to be the aggregate net amount in Dollars which would, in the absolute discretion of the Swap Provider, be an estimate of what would be payable by the Borrowers to the Swap Provider under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Swap Agreement if an Early Termination Date had occurred under the Master Swap Agreement at the relevant time in relation to all continuing Designated Transactions thereunder;

“Swap Provider” means Nordea Bank Finland plc, a company incorporated in Finland with its registered office at Xxxxxxxxxxxxxxxx 00X, XX-00000 Xxxxxxxx, Xxxxxxx, acting for the purposes of this Agreement and the other Security Documents through its office at 2747 Securities Services, XXX-00000 Xxxxxx, Xxxxxxxx, Xxxxxxx (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) and includes its successors in title;

 

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“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof and “Taxation” shall be construed accordingly;

“Termination Date” means 30 June 2011 or such other later date as the Borrowers may request and the Agent (acting on the instructions of all the Banks) may in its absolute discretion consent to;

“Total Commitment” means, at any relevant time, the total of the Commitments of all of the Banks at such time;

“Total Loss” in relation to a Ship means:

 

  (a) the actual, constructive, compromised or arranged total loss of such Ship; or

 

  (b) the Compulsory Acquisition of such Ship; or

 

  (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to the Compulsory Acquisition of such Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless such Ship be released and restored to the Borrower owning such Ship from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof;

“Transaction” has the meaning given to it in the Master Swap Agreement;

“Transfer Certificate” means a certificate substantially in the form set out in schedule 4;

“Transferee Bank” has the meaning ascribed thereto in clause 15.3;

“Transferor Bank” has the meaning ascribed thereto in clause 15.3;

“Trust Deed” means a trust deed in the form, or substantially in the form, set out in schedule 5;

“Trust Property” means (a) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Security Agent under or pursuant to the Security Documents (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to the Security Agent in the Security Documents), (b) all moneys, property and other assets paid or transferred to or vested in the Security Agent or any agent of the Security Agent or any receiver or received or recovered by the Security Agent or any agent of the Security Agent or any receiver pursuant to, or in connection with, any of the Security Documents whether from any Security Party or any other person and (c) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by the Security Agent or any agent of the Security Agent in respect of the same (or any part thereof);

“Underlying Documents” means, together, the Management Agreements, the Contracts and any Charter and “Underlying Document” means any of them;

“Zeus Advance” means an Advance of up to Thirty two million Dollars ($32,000,000) made or (as the context may require) to be made available to the Borrowers for the purpose of (a) financing part of the acquisition cost of the Zeus Ship by the Zeus Borrower pursuant to the Zeus Contract and (b) financing general corporate and working capital needs of the Zeus Borrower;

“Zeus Borrower” means Olympian Zeus Owners Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Xxxxxxxx Islands MH96960 and includes its successors in title;

 

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“Zeus Contract” means the shipbuilding contract dated 22 November 2010 as amended by an addendum No. 1 dated 3 December 2010 and an addendum No. 2 dated 10 December 2010, all made between the Builder and the Zeus Borrower, as may be further amended and supplemented from time to time, relating to the sale by the Builder and the purchase by the Zeus Borrower, of the Zeus Ship;

“Zeus Contract Price” means the purchase price payable or paid by the Zeus Borrower to the Builder for the Zeus Ship under the Zeus Contract being Fifty eight million seven hundred and fifty thousand Dollars ($58,750,000);

“Zeus Deed of Covenant” means the deed of covenant collateral to the Zeus Mortgage executed or (as the context may require) to be executed by the Zeus Borrower in favour of the Security Agent in the form set out in schedule 7;

“Zeus Management Agreement” means the agreement dated 1 January 2011, made between the Zeus Borrower and the Manager or any other agreement previously approved in writing by the Agent between the Zeus Borrower and the Manager, providing (inter alia) for the Manager to carry out the technical and commercial management at the Zeus Ship;

“Zeus Manager’s Undertaking” means the undertaking and assignment in respect of the Zeus Ship executed or (as the context may require) to be executed by the Manager in favour of the Security Agent in the form set out in schedule 10;

“Zeus Mortgage” means the first priority statutory Maltese mortgage of the Zeus Ship executed or (as the context may require) to be executed by the Zeus Borrower in favour of the Security Agent in the form set out in schedule 6;

“Zeus Operating Account” means an interest bearing Dollar account of the Zeus Borrower opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Zeus Operating Account for the purposes of this Agreement;

“Zeus Operating Account Assignment” means a first priority assignment executed or (as the context may require) to be executed by the Zeus Borrower in favour of the Security Agent in respect of the Zeus Operating Account in the form set out in schedule 13; and

“Zeus Ship” means the motor vessel Saga, a (approximately) 115,200 dwt, 2011 built crude oil tanker with IMO Number 9228031 owned on the date of this Agreement by the Zeus Borrower and registered in its ownership through the relevant Registry and under the laws and flag of the relevant Flag State.

 

1.3 Headings

Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.

 

1.4 Construction of certain terms

In this Agreement, unless the context otherwise requires:

 

1.4.1 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules;

 

1.4.2 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties;

 

1.4.3 references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority and, for the avoidance of doubt, shall include any Basel II Regulation;

 

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1.4.4 words importing the plural shall include the singular and vice versa;

 

1.4.5 references to a time of day are to London time;

 

1.4.6 references to a “person” shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity;

 

1.4.7 “control” means, in relation to a body corporate:

 

  (a) the power (whether by way of ownership of shares, proxy, contract, agency or otherwise, directly or indirectly) to:

 

  (i) cast, or control the casting of, more than fifty per cent (50%) of the maximum number of votes that might be cast at a general meeting of such body corporate; or

 

  (ii) appoint or remove all, or the majority, of the directors or other equivalent officers of such body corporate; or

 

  (iii) give directions with respect to the operating and financial policies of such body corporate with which the directors or other equivalent officers of such body corporate are obliged to comply; or

 

  (b) the holding beneficially of more than fifty per cent (50%) of the issued share capital of such body corporate (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital);

 

1.4.8 two or more persons are “acting in concert” if, pursuant to an agreement or understanding (whether formal or informal), they actively co-operate, through the acquisition (directly or indirectly) of shares in the Asclepius Guarantor by any of them, either directly or indirectly to obtain or consolidate control of the Asclepius Guarantor;

 

1.4.9 references to a “guarantee” include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly; and

 

1.4.10 references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended.

 

1.5 Majority Banks

Where this Agreement provides for any matter to be determined by reference to the opinion of the Majority Banks or to be subject to the consent or request of the Majority Banks or for any action to be taken on the instructions in writing of the Majority Banks, such opinion, consent, request or instructions shall (as between the Banks) only be regarded as having been validly given or issued by the Majority Banks if all the Banks shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Banks shall have given or issued such opinion, consent, request or instructions but so that (as between the Borrowers and the Creditors) the Borrowers shall be entitled (and bound) to assume that such notice shall have been duly received by each Bank and that the relevant majority shall have been obtained to constitute Majority Banks whether or not this is in fact the case.

 

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1.6 Banks’ Commitment

For the purposes of the definition of “Majority Banks” in clause 1.2 and the relevant provisions of the Security Documents, references to the Commitment of a Bank shall, if the Total Commitment has, at any relevant time, been reduced to zero, be deemed to be a reference to the Commitment of that Bank immediately prior to such reduction to zero.

 

2 The Total Commitment and the Advances

 

2.1 Agreement to lend

The Banks, relying upon each of the representations and warranties in clause 7, agree to lend to the Borrowers, jointly and severally, in two (2) Advances and upon and subject to the terms of this Agreement, the aggregate principal sum of up to Seventy million Dollars ($70,000,000). The obligation of each Bank under this Agreement shall be to contribute that proportion of each Advance which, as at the Drawdown Date of such Advance, such Bank’s Commitment bears to the Total Commitment.

 

2.2 Obligations several

The obligations of the Banks under this Agreement are several according to their respective Commitments and/or Contributions; the failure of any Bank to perform such obligations or the failure of the Swap Provider to perform its obligations under the Master Swap Agreement shall not relieve any other Creditor or the Borrowers or either of them of any of their respective obligations or liabilities under this Agreement or, as the case may be, the Master Swap Agreement nor shall any Creditor be responsible for the obligations of any other Creditor (except for its own obligations, if any, as a Bank or as Swap Provider) under this Agreement or the Master Swap Agreement, respectively.

 

2.3 Interests several

Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Banks) the interests of the Creditors are several and the amount due to any Creditor is a separate and independent debt. Each Creditor shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Creditor to be joined as an additional party in any proceedings for this purpose.

 

2.4 Drawdown

Subject to the terms and conditions of this Agreement, each Advance shall be made to the Borrowers or the proposed Drawdown Date for such Advance, following receipt by the Agent from the Borrowers of a Drawdown Notice not later than 10:00 a.m. on the second Banking Day before the proposed Drawdown Date, which shall be a Banking Day falling within the Drawdown Period. A Drawdown Notice (a) shall be effective on actual receipt by the Agent and (b), once given, shall, subject as provided in clause 3.6.1, be irrevocable.

 

2.5 Amounts, timing and limitation of Advances

 

2.5.1 The amount of the Loan shall not exceed the lower of (a) Seventy million Dollars ($70,000,000) and (b) the amount in Dollars which is fifty five per cent (55%) of the aggregate of the market values of both Ships determined in accordance with the valuations obtained for the Ships pursuant to schedule 3, Part 2.

 

2.5.2 The amount of the Zeus Advance shall not exceed the lower of (a) Thirty two million Dollars ($32,000,000) and (b) fifty five per cent (55%) of the market value of the Zeus Ship determined in accordance with the valuations obtained for that Ship pursuant to schedule 3, Part 2.

 

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2.5.3 The Zeus Advance:

 

  (a) shall be applied in or towards (i) payment to the Zeus Borrower following payment in full by the Zeus Borrower of the Zeus Contract Price and/or (ii) financing any of the Zeus Borrower’s general corporate or working capital needs;

 

  (b) shall be drawn down as and when specified in the Drawdown Notice for such Advance; and

 

  (c) shall be paid by the Banks to the Zeus Borrower.

 

2.5.4 The amount of the Apollo Advance shall not exceed the lower of (a) Thirty eight million Dollars ($38,000,000) and (b) fifty five per cent (55%) of the market value of the Apollo Ship determined in accordance with the valuations obtained for that Ship pursuant to schedule 3, Part 2.

 

2.5.5 The Apollo Advance:

 

  (a) shall be applied in or towards (i) payment to the Builder of a part of the Apollo Contract Price which is payable on the Delivery Date and/or (ii) financing any of the Apollo Borrower’s general corporate or working capital needs;

 

  (b) shall be drawn down only when the part of the Apollo Contract Price referred to in paragraph 2.5.5(a) above has become due and payable; and

 

  (c) shall be paid by the Banks to the Builder directly, as provided in the Apollo Contract (except for any part of the Apollo Advance referred to in paragraph (a)(ii) above which shall be paid to the Apollo Borrower).

 

2.6 Availability

Upon receipt of a Drawdown Notice complying with the terms of this Agreement the Agent shall promptly notify each Bank and, subject to the provisions of clause 9, on the Drawdown Date for the relevant Advance, each Bank shall make available to the Agent its portion of such Advance for payment by the Agent in accordance with clause 6.2. The Borrowers acknowledge that payment of either Advance to a Borrower or of the Apollo Advance or part thereof to the Builder, in accordance with clause 6.2, shall satisfy the obligations of the Banks to lend such Advance or part thereof to the Borrowers.

 

2.7 Termination of Total Commitment

Any part of the Total Commitment which remains undrawn and uncancelled by the end of the Termination Date, shall thereupon be automatically cancelled.

 

2.8 Application of proceeds

Without prejudice to the Borrowers’ obligations under clause 8.1.3, none of the Creditors shall have any responsibility for the application of the proceeds of the Loan or any part thereof by the Borrowers.

 

2.9 Derivative transactions

 

2.9.1 If, at any time during the Security Period, the Borrowers wish to enter into interest rate swap or other derivative transactions with the Swap Provider for the purpose of hedging all or any part of their exposure under this Agreement to interest rate fluctuations or for any other purpose (including hedging of currency risks), they shall advise in writing, and discuss with, the Agent their (or the Group’s) hedging strategy in respect of such transactions and, when such hedging strategy has been discussed and agreed between the Borrowers and the Agent, the Borrowers shall advise the Swap Provider in writing of such strategy.

 

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2.9.2 Any such swap or other derivative transaction shall be entered into pursuant to the hedging strategy discussed and agreed with the Agent pursuant to clause 2.9.1 and shall be concluded with the Swap Provider under the Master Swap Agreement.

 

2.9.3 No such swap or other derivative transaction shall be concluded or entered into with the Swap Provider unless the Swap Provider and the Agent first agree to it in writing. For the avoidance of doubt, other than the Agent’s and the Swap Provider’s agreement in writing referred to in the preceding sentence, no other prior approval is required by the Borrowers from any of the other Creditors before concluding any such swap or other derivative transaction with the Swap Provider.

 

2.9.4 If and when any such swap or other derivative transaction has been concluded or executed with the Swap Provider, it shall constitute a Designated Transaction, and the Borrowers shall sign a Confirmation with the Swap Provider and advise the Banks through the Agent promptly after concluding any Designated Transaction.

 

2.9.5 For the avoidance of doubt, nothing on this clause 2.9, the other provisions of this Agreement or the other Security Documents, shall oblige the Swap Provider or constitute a commitment by the Swap Provider to, enter into such a swap or other transaction under the Master Swap Agreement.

 

3 Interest and Interest Periods

 

3.1 Normal interest rate

The Borrowers shall pay interest on each Advance in respect of each Interest Period relating thereto on each Interest Payment Date (or, in the case of Interest Periods of more than three (3) months, by instalments, the first instalment being due three (3) months from the commencement of the Interest Period and the subsequent instalments at intervals of three (3) months thereof or, if shorter, the period from the date of the preceding instalment until the Interest Payment Date relative to such Interest Period) at the rate per annum determined by the Agent to be the aggregate of (a) the Margin, (b) LIBOR for such Interest Period and (c) Mandatory Cost (if any).

 

3.2 Selection of Interest Periods

The Borrowers may by notice received by the Agent not later than 10:00 a.m. on the third Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1) month, three (3) months, six (6) months or, subject to availability, such other period (shorter than twelve (12) months) as the Borrowers may select and the Agent (acting on the instructions of all the Banks) may agree.

 

3.3 Determination of Interest Periods

Every Interest Period shall be of the duration required by, or specified by the Borrowers pursuant to clause 3.2, but so that:

 

3.3.1 the first Interest Period in respect of each Advance shall commence on the Drawdown Date for such Advance and each subsequent Interest Period for such Advance shall commence on the last day of the previous Interest Period for such Advance;

 

3.3.2 if any Interest Period in respect of an Advance would otherwise overrun a Repayment Date for such Advance, then, in the case of the last Repayment Date for such Advance, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Repayment Dates for such Advance, the relevant Advance shall be divided into parts so that there is one part in the amount of the repayment instalment or instalments due on each Repayment Date for such Advance falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the relevant Advance having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3; and

 

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3.3.3 If the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3 such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.

 

3.4 Default interest

If the Borrowers or either of them fail to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents (except the Master Swap Agreement), the Borrowers shall pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Agent pursuant to this clause 3.4. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than three (3) months as selected by the Agent each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Agent) of (a) two per cent (2%) per annum, (b) the Margin, (c) LIBOR for such period and (d) the Mandatory Cost (if any). Such interest shall be due and payable on the last day of each such period as determined by the Agent and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is an amount of principal which became due and payable by reason of a declaration by the Agent under clause 10.2.2 or a prepayment pursuant to clauses 4.3., 8.2.1 or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Agent shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.6.1, the Agent is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, each Bank shall promptly notify the Agent of the cost of funds to such Bank and interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Agent to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to such Bank (including Mandatory Cost, if any).

 

3.5 Notification of Interest Periods and interest rate

The Agent shall notify the Borrowers and the Banks promptly of the duration of each Interest Period and of each rate of interest (or, as the case may be default interest) determined by it under this clause 3.

 

3.6 Market disruption; non-availability

 

3.6.1 If and whenever, at any time prior to the commencement of any Interest Period:

 

  (a) the Agent shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period; or

 

  (b) the Reference Bank does not supply the Agent with a quotation for the purposes of calculating LIBOR (where such a quotation is required having regard to paragraph (b) of the definition of “LIBOR” in clause 1.2); or

 

  (c)

the Agent shall have received notification from Banks whose aggregate Contributions are not less than one-third ( 1/3rd) of the Loan (or, prior to the first Drawdown Date, whose aggregate Commitments are not less than one-third ( 1/3rd) of the Total Commitment), that deposits in Dollars are not available to such Banks in the London Interbank Market in the ordinary course of business in sufficient amounts to fund their Commitments or their Contributions for such Interest Period, or that LIBOR does not accurately reflect the cost to such Banks of obtaining such deposits,

the Agent shall forthwith give notice (a “Determination Notice”) thereof to the Borrowers and to each of the Banks and the Swap Provider. A Determination Notice shall contain particulars

 

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of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice the undrawn amount of the Total Commitment shall not be borrowed until notice to the contrary is given to the Borrowers by the Agent.

 

3.6.2 During the period of ten (10) days after any Determination Notice has been given by the Agent under clause 3.6.1, each Bank shall certify an alternative basis (the “Alternative Basis”) for funding its Commitment and/or for maintaining its Contribution. The Alternative Basis may at the relevant Bank’s sole and unfettered discretion (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to such Bank (including Mandatory Cost, if any) equivalent to the Margin. The Agent shall calculate the arithmetic mean of the Alternative Bases provided by the relevant Banks (the “Substitute Basis”) and certify the same to the Borrowers, the Banks and the Swap Provider. The Substitute Basis so certified shall be binding upon the Borrowers and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Agent notifies the Borrowers that none of the circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.

 

4 Repayment and prepayment

 

4.1 Repayment

 

4.1.1 The Borrowers shall repay the Zeus Advance by twenty (20) instalments, one such instalment to be repaid on each of the Repayment Dates for such Advance, Subject to the provisions of this Agreement, the amount of each of the first to the nineteenth instalments (inclusive) in respect of such Advance shall be Five hundred and thirty three thousand three hundred and thirty three Dollars and thirty three cents ($533,333.33) and the amount of the twentieth and final instalment in respect of such Advance shall be Twenty one million eight hundred and sixty six thousand six hundred and sixty six Dollars and seventy three cents ($21,866,666.73) (comprising a repayment instalment of Five hundred and thirty three thousand three hundred and thirty three Dollars and thirty three cents ($533,333.33) and a balloon payment of Twenty one million three hundred and thirty three thousand three hundred and thirty three Dollars and forty cents ($21,333,333.40) (the “Zeus Balloon Instalment”)).

 

4.1.2 The Borrowers shall repay the Apollo Advance by as many instalments as there are Repayment Dates for that Advance, one such instalment to be repaid on each of the Repayment Dates for such Advance. Subject to the provisions of this Agreement, the amount of each of the instalments in respect of such Advance shall be Six hundred and thirty three thousand three hundred and thirty three Dollars and thirty three cents ($633,333.33). Any remaining balance of the Apollo Advance which remains unpaid on the Final Maturity Date (the “Apollo Balloon Instalment”) shall be repaid on the Final Maturity Date.

 

4.1.3 For the avoidance of doubt, on the Final Maturity Date the Borrowers shall repay all amounts outstanding in respect of both Advances in full.

 

4.1.4 If the Total Commitment in respect of an Advance is not drawn down in full, the amount of each repayment instalment in respect of such Advance (including the relevant Balloon Instalment) shall be reduced proportionately.

 

4.2 Voluntary prepayment

The Borrowers may prepay the Loan in whole or part (being One million Dollars ($1,000,000) or any larger sum which is an integral multiple of Five hundred thousand Dollars ($ 500,000)), on any Interest Payment Date relating to the part of the Loan to be prepaid without premium or penalty but subject to clause 11.1 and the other provisions of this clause 4.

 

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4.3 Prepayment on Total Loss or sale

 

4.3.1 Before drawdown of an Advance

On a Ship becoming a Total Loss (or suffering damage or being involved in an incident which in the opinion of the Agent may result in such Ship being subsequently determined to be a Total Loss) before the Advance relevant to such Ship is drawn down, the obligations of the Banks to make that Advance available shall immediately cease and the Total Commitment shall immediately be reduced by the amount of such Advance.

 

4.3.2 Thereafter

On the Disposal Reduction Date for a Mortgaged Ship, the Borrowers shall prepay to the Agent:

 

  (a) the Advance relating to such Mortgaged Ship (for the purposes of this clause 4.3.2, the “Relevant Advance”) in full; and

 

  (b) if the Applicable Fraction of the Loan as of such date is higher than the Relevant Advance, such additional part of the other Advance which is equal to the sum of (i) the Applicable Fraction of the Loan as of such date, minus (ii) the amount of the Relevant Advance.

 

4.3.3 Defined terms

For the purposes of this clause 4.3:

 

  (a) “Applicable Fraction” means, in relation to a Mortgaged Ship, a fraction having a numerator of an amount equal to the market value of such Mortgaged Ship (as most recently determined in accordance with clause 8.2.2) and a denominator of an amount equal to the market values of all Mortgaged Ships (as most recently determined in accordance with clause 8.2.2), in each case as at the Disposal Reduction Date of such Mortgaged Ship;

 

  (b) “Disposal Reduction Date” means:

 

  (i) in relation to a Mortgaged Ship which has become a Total Loss, its Total Loss Reduction Date; or

 

  (ii) in relation to a Mortgaged Ship which is sold (subject always to the other provisions of the relevant Ship Security Documents), the date of (and simultaneously with or immediately prior to) completion of such sale by the transfer of title to such Mortgaged Ship to the purchaser in exchange for payment of the relevant purchase price; and

 

  (c) “Total Loss Reduction Date” means, in relation to a Mortgaged Ship which has become a Total Loss, the date which is the earlier of:

 

  (i) the day falling one hundred and twenty (120) days after that on which such Mortgaged Ship became a Total Loss; and

 

  (ii) the day upon which the insurance proceeds in respect of such Total Loss are, or Requisition Compensation is, received by the Borrower owning such Mortgaged Ship (or the Security Agent or any other Creditors, pursuant to the relevant Ship Security Documents).

 

4.3.4 Interpretation

For the purposes of this Agreement and the other Security Documents, a Total Loss in respect of a Ship shall be deemed to have occurred:

 

  (a) in the case of an actual total loss of a Ship, on the actual date and at the time such Ship was lost or, if such date is not known, on the date on which such Ship was last reported;

 

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  (b) in the case of a constructive total loss of a Ship, upon the date and at the time notice of abandonment of such Ship is given to the insurers of such Ship for the time being;

 

  (c) in the case of a compromised or arranged total loss of a Ship, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of such Ship;

 

  (d) in the case of Compulsory Acquisition of a Ship, on the date upon which the relevant requisition of title or other compulsory acquisition of such Ship occurs; and

 

  (e) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Ship (other than where the same amounts to Compulsory Acquisition of such Ship) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the Borrower owning such Ship of the use of such Ship for more than thirty (30) days, upon the expiry of the period of thirty (30) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred,

 

4.4 Amounts payable on prepayment

Any prepayment of all or part of the Loan under this Agreement shall be made together with:

 

  (a) accrued interest on the amount to be prepaid to the date of such prepayment;

 

  (b) any additional amount payable under clauses 6.6 or 12.2; and

 

  (c) all other sums payable by the Borrowers to the Creditors under this Agreement or any of the other Security Documents including, without limitation, any accrued commitment commission and any amounts payable under clause 11.

 

4.5 Notice of prepayment; reduction of repayment Instalments; re-borrowing

 

4.5.1 No prepayment may be effected under clause 4.2 unless the Borrowers shall have given the Agent at least five (5) Banking Days’ prior written notice of their intention to make such prepayment. Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the Advance and the amount thereof to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.

 

4.5.2 Any amount prepaid pursuant to clause 4.3.2(b) in respect of an Advance shall be applied in reducing the repayment instalments of that Advance (including the relevant Balloon Instalment) under clause 4.1 proportionately.

 

4.5.3 Any amount prepaid pursuant to clause 4.2 or clause 8.2.1 shall be applied in prepayment of both Advances proportionately as between them, and in reduction of the repayment instalments under clause 4.1 (including the relevant Balloon Instalment) of each Advance proportionately.

 

4.5.4 The Borrowers may not prepay the Loan or any part thereof save as expressly provided in this Agreement.

 

4.5.5 No amount prepaid under this Agreement may be re-borrowed.

 

4.6 Unwinding of Designated Transactions

On or prior to any repayment or prepayment of all or part of the Loan (including, without limitation, pursuant to clauses 4.2, 4.3 or 8.2.1 or any other provision of this Agreement), the Borrowers, shall upon the request of the Agent (acting on the instructions of the Banks), wholly

 

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or partially reverse, offset, unwind, cancel, close out, net out or otherwise terminate one or more of the continuing Designated Transactions at that time so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to clause 4.1.

 

5 Fees, commitment commission and expenses

 

5.1 Fees

The Borrowers shall pay to the Agent:

 

5.1.1 for the account of the Arranger, the Banks and the Agent such fees of such amount and payable at such times as is specified in the Fees Letter; and

 

5.1.2 for the account of each Bank, on 31 March 2011 and on each of the dates falling at three (3) monthly intervals after such date until the last day of the Drawdown Period and on such day, commitment commission computed from the date of this Agreement (in the case of the first payment of commission) and from the due date of the preceding payment of commission (in the case of each subsequent payment), at the rate of one point one per cent (1.1%) per annum on the daily undrawn amount of such Bank’s Commitment.

The fees and the commitment commission referred to in this clause 5.1 shall be payable by the Borrowers to the Agent, whether or not any part of the Total Commitment is ever advanced and shall be, in each case, non refundable.

 

5.2 Expenses

The Borrowers shall pay to the Agent on a full indemnity basis on demand all expenses (including legal, printing and out-of-pocket expenses) incurred by the Creditors or any of them:

 

5.2.1 in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any amendment or extension of or the granting of any waiver or consent under, any of the Security Documents and the syndication of the Loan; and

 

5.2.2 in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, any of the Security Documents or otherwise in respect of the moneys owing under any of the Security Documents,

together with interest at the rate referred to in clause 3.4 from the date on which such expenses were incurred to the date of payment (as well after as before judgment).

 

5.3 Value added Tax

All fees and expenses payable pursuant to this clause 5 and/or pursuant to the Security Documents shall be paid together with value added tax or any similar tax (if any) properly chargeable thereon. Any value added tax chargeable in respect of any services supplied by the Creditors or any of them under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

 

5.4 Stamp and other duties

The Borrowers shall pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by, or assessed on, the Creditors or any of them) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loan and shall indemnify the Creditors or any of them against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.

 

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6 Payments and taxes; accounts and calculations

 

6.1 No set-off or counterclaim

The Borrowers acknowledge that in performing their respective obligations under this Agreement, the Banks will be incurring liabilities to third parties in relation to the funding of amounts to the Borrowers, such liabilities matching the liabilities of the Borrowers to the Banks and that it is reasonable for the Banks to be entitled to receive payments from the Borrowers gross on the due date in order that each of the Banks is put in a position to perform its matching obligations to the relevant third parties. All payments to be made by the Borrowers under any of the Security Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in Dollars on the due date to the account of the Agent at such bank and in such place as the Agent may from time to time specify for this purpose. Save for payments which are for the account of the Swap Provider and save as otherwise provided in this Agreement or any relevant Security Documents such payments shall be for the account of all the Banks and the Agent or, as the case may be, the Security Agent shall forthwith distribute such payments in like funds as are received by the Agent or, as the case may be, the Security Agent to the Banks rateably in accordance with their respective Commitment or (if after the first drawdown) Contribution, as the case may be.

 

6.2 Payment by the Banks

All sums to be advanced by the Banks to the Borrowers under this Agreement in respect of the Loan shall be remitted in Dollars on the Drawdown Date for the relevant Advance to the account of the Agent at such bank as the Agent may have notified to the Banks and shall be paid by the Agent on such date in like funds as are received by the Agent to such account as is specified in the Drawdown Notice for such Advance.

 

6.3 Non-Banking Days

When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.

 

6.4 Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

 

6.5 Certificates conclusive

Any certificate or determination of the Agent or the Security Agent or any Bank or the Swap Provider as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall, in the absence of manifest error, be conclusive and binding on the Borrowers and (in the case of a certificate or determination by the Agent or the Security Agent) on the other Creditors.

 

6.6 Grossing-up for Taxes

 

6.6.1 If at any time the Borrowers are required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of any Creditor (or if the Agent or, as the case may be, the Security Agent is required to make any such deduction or withholding from a payment to a Bank), the sum due from the Borrowers in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the relevant Creditor receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or

 

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withholding been required to be made and the Borrowers shall Indemnify each Creditor against any losses or costs incurred by it by reason of any failure of the Borrowers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers shall promptly deliver to the Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

 

6.6.2 For the avoidance of doubt, clause 6.6.1 does not apply in respect of sums due from the Borrowers to the Swap Provider under or in connection with the Master Swap Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Swap Agreement shall apply.

 

6.7 Loan account

Each Bank shall maintain, in accordance with its usual practice, an account or accounts evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Agent and the Security Agent shall maintain a control account or accounts showing the Loan, interest and other sums owing and/or payable by the Borrowers under the Security Documents. Each such control account (which shall be the “Account Current” referred to in each Mortgage) shall, in the absence of manifest error, be conclusive as to the amount from time to time owing by the Borrowers under the Security Documents.

 

6.8 Agent may assume receipt

Where any sum is to be paid under this Agreement to the Agent for the account of another person, the Agent may assume that the payment will be made when due and the Agent may (but shall not be obliged to) make such sum available to the person so entitled. If it proves to be the case that such payment was not made to the Agent, then the person to whom such sum was so made available shall on request refund such sum to the Agent together with interest thereon sufficient to compensate the Agent for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable shall indemnify the Agent for any and all loss or expense which the Agent may sustain or incur as a consequence of such sum not having been paid on its due date.

 

6.9 Partial payments

If, on any date on which a payment is due to be made by the Borrowers under any of the Security Documents, the amount received by the Agent from the Borrowers falls short of the total amount of the payment due to be made by the Borrowers on such date then, without prejudice to any rights or remedies available to the Creditors or any of them under any of the Security Documents, the Agent shall apply the amount actually received from the Borrowers in or towards discharge of the obligations of the Borrowers under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrowers:

 

6.9.1 firstly, in or towards payment, on a pro rata basis, of any unpaid costs, expenses and fees owing to the Arranger, the Agent or the Security Agent under, or in relation to, the Security Documents;

 

6.9.2 secondly, in or towards payment, on a pro rata basis, of any unpaid costs, expenses and fees owing to the Banks or the Account Bank under, or in relation to, the Security Documents;

 

6.9.3 thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued interest which shall have become due under any of the Security Documents (other than the Master Swap Agreement) but remains unpaid;

 

6.9.4 fourthly, in or towards payment to the Banks, on a pro rata basis, for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement;

 

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6.9.5 fifthly, in or towards payment to the Banks, on a pro rata basis, of any principal in respect of the Loan which shall have become due but remains unpaid;

 

6.9.6 sixthly, in or towards payment to the Swap Provider of any sums owing to it under the Master Swap Agreement; and

 

6.9.7 seventhly, in or towards payment to the relevant person of any other sum which shall have become due under any of the Security Documents but remains unpaid (and, if more than one such sum so remains unpaid, on a pro rata basis).

The order of application set out in clauses 6.9.3 to 6.9.6 may be varied by the Agent if the Majority Banks so direct, without any reference to, or consent or approval from the Borrowers.

 

7 Representations and warranties

 

7.1 Continuing representations and warranties

The Borrowers jointly and severally represent and warrant to each Creditor that:

 

7.1.1 Due incorporation

the Borrowers and each of the other Security Parties are duly incorporated and validly existing in good standing under the laws of their respective countries of incorporation as limited liability companies or (as the case may be) corporations and have power to carry on their respective businesses as they are now being conducted and to own their respective property and other assets;

 

7.1.2 Corporate power

each of the Borrowers has power to execute, deliver and perform its obligations under the Underlying Documents and the Borrowers’ Security Documents to which it is or is to be a party and to borrow the Total Commitment and each of the other Security Parties has power to execute and deliver and perform its obligations under the Security Documents and the Underlying Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of either Borrower to borrow will be exceeded as a result of borrowing the Loan or entering into the Master Swap Agreement;

 

7.1.3 Binding obligations

the Underlying Documents and the Security Documents constitute or will, when executed, constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;

 

7.1.4 No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not:

 

  (a) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which either of the Borrowers or any other Security Party is subject;

 

  (b) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which either of the Borrowers or any other Security Party is a party or is subject or by which it or any of its property is bound;

 

  (c) contravene or conflict with any provision of the constitutional documents of either of the Borrowers or any other Security Party; or

 

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  (d) result in the creation or Imposition of or oblige either of the Borrowers or any of its Related Companies or any other Security Party to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of either of the Borrowers or any of its Related Companies or any other Security Party;

 

7.1.5 No litigation

no litigation, arbitration, investigation or proceeding (administrative or otherwise) is taking place, pending or, to the knowledge of the officers of either of the Borrowers, threatened against either of the Borrowers or any of its Related Companies or any other Security Party which could have a Material Adverse Effect;

 

7.1.6 No filings required

save for the registration of each Mortgage under the laws of the relevant Flag State through the relevant Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement. In the courts of each Relevant Jurisdiction;

 

7.1.7 Choice of law

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages) and the choice of the laws of the relevant Flag State to govern each Mortgage, and the submission therein by the Security Parties therein to the non-exclusive jurisdiction of the English courts, are valid and binding;

 

7.1.8 No immunity

neither of the Borrowers nor any other Security Party nor any of their respective assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement);

 

7.1.9 Consents obtained

every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Underlying Documents and each of the Security Documents to which it is a party or the performance by each Security Party of its obligations under the Underlying Documents and the Security Documents to which it is a party, respectively, has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same;

 

7.1.10 Compliance with laws and regulations

each of the Borrowers, the Corporate Guarantors and the Manager is in compliance with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying on of its business (including in relation to Taxation);

 

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7.1.11 No Material Adverse Effect

no events, conditions, facts or circumstances exist or have arisen or occurred since the date of this Agreement, which have had or could reasonably be expected to have a Material Adverse Effect;

 

7.1.12 Borrowers’ own account

in relation to the borrowing by the Borrowers of the Loan or any part thereof, the performance and discharge of its obligations and liabilities under the Security Documents and the transactions and other arrangements effected or contemplated by this Agreement, each of the Borrowers is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities (as amended)); and

 

7.1.13 Solvency

 

  (a) neither of the Borrowers nor any other Relevant Party is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts;

 

  (b) neither of the Borrowers nor any other Relevant Party (other than the DryShips Guarantor) by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

 

  (c) the value of the assets of each of the Borrowers and the other Relevant Parties is not less than their respective liabilities (taking into account contingent and prospective liabilities); and

 

  (d) no moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any Indebtedness of either of the Borrowers or any other Relevant Party.

 

7.2 Initial representations and warranties

The Borrowers jointly and severally further represent and warrant to each Creditor that:

 

7.2.1 Pari passu and subordinated Indebtedness

 

  (a) the obligations of each Borrower under this Agreement and the Master Swap Agreement are direct, general and unconditional obligations of such Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of such Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract; and

 

  (b) any Indebtedness of each Borrower owing to its respective shareholders or other Relevant Parties is subordinated in all respects to such Borrower’s obligations under this Agreement and the Master Swap Agreement;

 

7.2.2 No default under other Indebtedness

neither of the Borrowers nor any other Security Party nor any other Relevant Party is (nor would with the giving of notice or lapse of time or the satisfaction of any other condition or combination thereof be) in breach of or in default under any agreement relating to Indebtedness to which it is a party or by which it may be bound;

 

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7.2.3 Information - full disclosure

the information, exhibits and reports furnished by or on behalf of any Security Party to the Agent and/or the Arranger in connection with the negotiation and preparation of the Security Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading;

 

7.2.4 No withholding Taxes

no Taxes are imposed by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

 

7.2.5 No Default

no Default has occurred and is continuing;

 

7.2.6 The Ships

each Ship will, on the Drawdown Date of the Advance relevant to such Ship, be:

 

  (a) in the absolute ownership of the relevant Borrower who will, on and after such Drawdown Date, be the sole, legal and beneficial owner of such Ship;

 

  (b) registered in the name of the relevant Borrower under the laws and flag of the relevant Flag State;

 

  (c) operationally seaworthy and in every way fit for service; and

 

  (d) classed with the relevant Classification free of all requirements and recommendations of the relevant Classification Society;

 

7.2.7 Ships’ employment

save under the Initial Charters, neither of the Ships is nor will, on or before the Drawdown Date of the Advance relevant to such Ship, be subject to any charter or contract or to any agreement to enter into any charter or contract which, if entered into after the date of the relevant Ship Security Documents, would have required the consent of the Agent or, as the context may require, the Security Agent or the other Secured Creditors and, on or before the Drawdown Date of the Advance relevant to such Ship, there will not be any agreement or arrangement whereby the Earnings of such Ship may be shared with any other person;

 

7.2.8 Freedom from Encumbrances

neither of the Ships, nor her Earnings, Insurances or Requisition Compensation nor the Operating Account for such Ship nor any other properties or rights which are, or are to be, the subject of any of the Security Documents, nor any part thereof will be, on the Drawdown Date of the Advance relevant to such Ship, be subject to any Encumbrance other than the Permitted Encumbrances;

 

7.2.9 Compliance with Environmental Laws and Approvals

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent and/or the Arranger:

 

  (a) the Borrowers and the other Relevant Parties and, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;

 

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  (b) the Borrowers and the other Relevant Parties and, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and

 

  (c) neither the Borrowers nor any other Relevant Party nor, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have received notice of any Environmental Claim that the Borrowers or any other Relevant Party or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval;

 

7.2.10 No Environmental Claims

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent and/or the Arranger, there is no Environmental Claim pending or, to the best of the Borrowers’ knowledge and belief (having made due enquiry), threatened against either of the Borrowers or either of the Ships or any other Relevant Party or any other Relevant Ship or, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates;

 

7.2.11 No potential Environmental Claims

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent and/or the Arranger, there has been no emission, spill, release or discharge of a Pollutant from either of the Ships or any other Relevant Ship owned by, managed or crewed by or chartered to the Borrowers nor, to the best of the Borrowers’ knowledge and belief (having made due enquiry), from any Relevant Ship owned by, managed or crewed by or chartered to any other Relevant Party which could give rise to an Environmental Claim;

 

7.2.12 Copies true and complete

the copies of the Underlying Documents delivered or to be delivered to the Agent pursuant to clause 9.1 are or will, when delivered, be true and complete copies of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

 

7.2.13 Shareholdings

each Borrower is a wholly-owned indirect Subsidiary of the Asclepius Guarantor, the Asclepius Guarantor is a wholly-owned indirect Subsidiary of the DryShips Guarantor and all of the issued shares in the Manager are legally and ultimately beneficially owned by such person or persons as have been disclosed by or on behalf of the Borrowers or any other Security Party to the Agent, the Arranger and the Banks in the negotiation of this Agreement;

 

7.2.14 DOC and SMC

on the Drawdown Date of the Advance relevant to a Ship the Operator will have a DOC for itself and an SMC in respect of such Ship; and

 

7.2.15 ISPS Code

on the Drawdown Date of the Advance relevant to a Ship the relevant Borrower will have a valid and current ISSC in respect of such Ship and such Ship shall be in compliance with the ISPS Code.

 

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7.3 Repetition of representations and warranties

On and as of each Drawdown Date and (except in relation to the representations and warranties in clause 7.2) on each Interest Payment Date, the Borrowers shall:

 

7.3.1 be deemed to repeat the representations and warranties in clauses 7.1 and 7.2 as if made with reference to the facts and circumstances existing on such day; and

 

7.3.2 be deemed to further represent and warrant to each of the Creditors that the then latest audited financial statements delivered to the Agent and/or the Security Agent by the Borrowers (if any) under clause 8.1.5 of this Agreement and clause 5.1.4 of the Asclepius Guarantee have been prepared in accordance with the Applicable Accounting Principles which have been consistently applied and present fairly and accurately the consolidated financial position of the Group as at the end of the financial period to which the same relate, and the consolidated results of the operations of the Group for the financial period to which the same relate and, as at the end of such financial period, neither the Asclepius Guarantor nor any other member of the Group, nor the Group as a whole had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements.

 

8 Undertakings

 

8.1 General

The Borrowers jointly and severally undertake with each Creditor that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Total Commitment remains outstanding, they will:

 

8.1.1 Notice of Default and certain other events

promptly inform the Agent of any occurrence of which either of them becomes aware which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents or the Underlying Documents and, without limiting the generality of the foregoing and, without prejudice to clause 8.1.6, will inform the Agent of any material litigation involving the Group or any member thereof, any Environmental Claim, any discharge of a Pollutant from a Ship or any other Relevant Ship or any other incident which may give rise to an Environmental Claim and of any Default forthwith upon becoming aware thereof and will, from time to time, if so requested by the Agent, confirm to the Agent in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing;

 

8.1.2 Consents and licences; compliance with laws and regulations

 

  (a) without prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents and the Underlying Documents; and

 

  (b) comply with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying out of its business;

 

8.1.3 Use of proceeds

use the Loan or, as the case may be, the Advances for their benefit and under their full responsibility and exclusively for the purposes specified in clauses 1.1 and 2.5;

 

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8.1.4 Pari passu and subordination

without prejudice to the provisions of clause 8.3, ensure that:

 

  (a) their obligations under this Agreement and the Master Swap Agreement shall, at all times rank at least pari passu with all their other present and future unsecured and unsubordinated indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract; and

 

  (b) their Indebtedness (if any) to their shareholders or their Related Companies is on terms acceptable to the Agent in its absolute discretion and is, and shall remain, at all times fully subordinated towards their obligations to the Creditors under this Agreement, the Master Swap Agreement and the other Security Documents;

 

8.1.5 Financial statements

prepare or cause to be prepared:

 

  (a) audited consolidated financial statements of the Group in accordance with the Applicable Accounting Principles consistently applied in respect of each financial year (namely, each 12-month period ending on 31 December of each calendar year but commencing with the financial year ending on 31 December 2011) and cause the same to be reported on by the Group’s auditors;

 

  (b) unaudited consolidated financial statements of the Group on the same basis as the audited statements in respect of each financial year (namely, each 12-month period ending on 31 December of each calendar year but commencing with the financial year ending on 31 December 2011);

 

  (c) unaudited consolidated financial statements of the Group on the same basis as the audited statements consistently applied in respect of each quarter of each financial year (namely, each 3-month period ending on 31 March, 30 June and 30 September of each calendar year) and including on a year to date basis (but commencing with the financial quarter ending on 30 June 2011); and

 

  (d) upon the Agent’s request, financial projections of the Group on an annual consolidated basis in respect of each of the next three (3) consecutive financial years (inclusive) (namely, each of the three 12-month periods ending on 31 December of the next three (3) calendar years),

and, in each case, deliver as many copies of the same as the Agent may reasonably require as soon as practicable but not later than:

 

  (i) in the case of audited financial statements, one hundred and eighty (180) days after the end of the financial period to which they relate (namely, not later than 30 June of each calendar year);

 

  (ii) in the case of unaudited annual financial statements, ninety (90) days after the end of the financial period to which they relate (namely, not later than 2 April of each calendar year);

 

  (iii) in the case of unaudited quarterly financial statements, ninety (90) days after the end of the financial period to which they relate (namely, not later than 30 June, 30 September and 31 December, respectively, of each calendar year); and

 

  (iv) in the case of annual financial projections, one hundred and twenty (120) days after the beginning of the financial period to which they relate (namely, not later than 30 April of each calendar year);

 

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8.1.6 Valuations and Compliance Certificate

 

  (a) at the same time as the Borrowers and/or the Asclepius Guarantor provide the Agent and/or the Security Agent with unaudited half-yearly and annual consolidated financial statements of the Group pursuant to clause 8.1.5 of this Agreement or clause 5.1.4 of the Asclepius Guarantee (namely, not later than 2 April and 30 September of each calendar year but commencing with 30 September 2011) and, if a Default has occurred, at any other time as and when the Agent in its absolute discretion shall require, provide the Agent with valuations of the Ships made in accordance with clause 8.2.2; and

 

  (b) at the same time as the Borrowers and/or the Asclepius Guarantor provide the Agent and/or the Security Agent with consolidated financial statements of the Group pursuant to clause 8.1.5 of this Agreement or clause 5.1.4 of the Asclepius Guarantee (namely, on 2 April, 30 June, 30 September and 31 December of each calendar year) deliver to the Agent a Compliance Certificate (including any supporting schedules or other information and evidence as the Agent may require) duly signed by two duly authorised signatories of each of the Borrowers and two duly authorised signatories of the Asclepius Guarantor, and otherwise in accordance with clause 5.1.5 of the Asclepius Guarantee;

 

8.1.7 Delivery of reports

deliver to the Agent in sufficient copies for all the Banks of every report, circular, notice or like document issued by any of the Borrowers to its shareholders or creditors generally, at the same time it is issued or given;

 

8.1.8 Provision of further information

provide the Agent with such financial and other information concerning the Borrowers, the other Security Parties, any other Relevant Parties, the Group and its members and their respective affairs (including, without limitation, financial projections of the Group on an annual consolidated basis) as the Agent, any Bank or the Swap Provider (acting through the Agent) may from time to time reasonably require, and keep the Agent advised regularly of all major financial developments in relation to the Borrowers, the other Security Parties, any other Relevant Parties, the Group and its members including, without prejudice to the generality of the foregoing, any vessels’ sales or purchases and any new borrowings;

 

8.1.9 Obligations under Security Documents

and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by them under the Security Documents and the Underlying Documents;

 

8.1.10 Compliance with Code

and will procure that the Manager or any Operator will, comply with, and ensure that each Ship and the Manager or any Operator at all times complies with, the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period and will procure that each member of the Group and each Relevant Vessel complies with the requirements of the Code;

 

8.1.11 Issuance of DOC and SMC

and will procure that the Manager or any Operator will, promptly inform the Agent upon the issuance to either of the Borrowers, the Manager or any Operator of a DOC and to each Ship of an SMC or the receipt by either of the Borrowers, the Manager or any Operator of notification that its application for the same has been refused;

 

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8.1.12 Withdrawal of DOC and SMC

and will procure that the Manager or any Operator will, immediately inform the Agent if there is any threatened or actual withdrawal of its Operator’s DOC or the SMC in respect of either Ship;

 

8.1.13 ISPS Code compliance

and will procure that the Manager or any Operator will:

 

  (a) maintain at all times a valid and current ISSC in respect of each Ship;

 

  (b) immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of each Ship; and

 

  (c) procure that each Ship and any Relevant Ship will comply at all times with the ISPS Code;

 

8.1.14 Employment

without prejudice to the rights of the Creditors under the provisions of the other Security Documents, advise the Agent promptly of any Charter (other than the Initial Charters) in respect of a Ship, and:

 

  (a) deliver a certified copy of each such Charter to the Agent forthwith after its execution;

 

  (b) forthwith following a demand made by the Agent (acting on the instructions of the Majority Banks);

 

  (i) procure that the relevant Borrower executes a Charter Assignment of any such Charter in favour of the Security Agent and any notice of assignment required in connection therewith; and

 

  (ii) procure the service of any such notice of assignment on the relevant Charterer, and use its best endeavours to procure the execution of the acknowledgement of such notice by the relevant Charterer;

 

  (c) upon the Agent’s request, deliver to the Agent such documents and evidence of the type referred to in schedule 3, in relation to any such Charter Assignment or any other related matter referred to in this clause 8.1.14, as the Agent (acting on the instructions of the Majority Banks in their sole discretion) shall reasonably require; and

 

  (d) pay on the Agent’s demand all legal costs and other costs incurred by the Agent and/or the Banks and/or the Security Agent in connection with or in relation to any such Charter Assignment or any other related matter referred to in this clause 8.1.14;

 

8.1.15 Know your customer information

deliver to the Agent such documents and evidence as the Agent shall from time to time require relating to the verification of identity and knowledge of the Agent’s or any Bank’s, the Account Bank’s or any Swap Provider’s customers and the compliance by the Agent or any Bank or any Swap Provider or the Account Bank with all necessary “know your customer” or similar checks, always on the basis of applicable laws and regulations or the Agent’s or any Bank’s or the Swap Provider’s or the Account Bank’s own internal guidelines, in each case as such laws, regulations or internal guidelines apply from time to time; and

 

8.1.16 Money laundering

ensure that any borrowing by it and the performance of its obligations hereunder and under the other Security Documents to which it is a party will be for its own account and will not

 

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involve any breach by it of any law or regulatory measure relating to money laundering as defined in Article 1 of the directive (91/308/EEC) of the Council of the European Communities or any equivalent law or regulatory measure in any other jurisdiction.

 

8.2 Security value maintenance

 

8.2.1 Security shortfall

If at any time the Security Value shall be less than the Security Requirement, the Agent may, and if so directed by the Majority Banks shall, give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers shall, within a period of fifteen (15) days of the date of receipt by the Borrowers of the Agent’s said notice, either:

 

  (a) prepay such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to the Security Value; or

 

  (b) constitute to the satisfaction of the Agent further security for the Loan and amounts owing under the Master Swap Agreement in the form of cash deposits in Dollars, pledged and/or assigned and/or charged in favour of the Security Agent (in a form substantial to that of the Operating Account Assignment), and in an amount which, as at the date upon which such further security shall be constituted and when added to the Security Value, shall not be less than the Security Requirement as at such date.

The provisions of clause 4.4 and any relevant provisions of clause 4.5 shall apply to any prepayments made under clause 8.2.1.

 

8.2.2 Valuation of Mortgaged Ships

 

  (a) Each of the Mortgaged Ships shall, for the purposes of this Agreement, be valued in Dollars as and when the Agent shall require (but at least twice every calendar year) (whether for the purpose of testing compliance with clause 8.2.1 or at any other time acting on the instructions of the Majority Banks) by two (2) of the Approved Shipbrokers, one selected by the Agent and the other selected by the Borrowers or, failing such selection by the Borrowers, selected by the Agent (acting on the instructions of the Majority Banks in their sole discretion). Each such valuation shall not be older than 30 days, shall be addressed to the Agent and made without, unless required by the Agent, physical inspection and without taking into account the benefit of any charterparty or other engagement concerning such Mortgaged Ship and it shall be made on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing buyer and a willing seller. The arithmetic mean of such two (2) valuations shall constitute the value of such Mortgaged Ship for the purposes of this clause 8.2 and the other provisions of this Agreement and the other Security Documents.

 

  (b) The value of each Mortgaged Ship determined in accordance with the provisions of this clause 8.2 and/or clause 8.1.6 shall be binding upon the parties hereto until such time as any further such valuations shall be obtained in respect of such Mortgaged Ship.

 

8.2.3 Information

The Borrowers jointly and severally undertake with each Creditor to supply to the Agent and to any such Approved Shipbrokers such information concerning each Mortgaged Ship and its condition as such Approved Shipbrokers may require for the purpose of making any such valuation.

 

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8.2.4 Costs

All costs in connection with the Agent obtaining any valuations of the Mortgaged Ships referred to in clause 8.2.2 and any valuation of the Mortgaged Ships referred to in clause 8.1.6 or schedule 2, shall be borne by the Borrowers.

 

8.2.5 Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Agent shall be entitled to receive such evidence and documents of the kind referred to in schedule 3 as may in the Agent’s opinion, be appropriate and such favourable legal opinions as the Agent shall in its absolute discretion require.

 

8.3 Negative undertakings

The Borrowers jointly and severally undertake with each Creditor that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Total Commitment remains outstanding, the Borrowers will not, without the prior written consent of the Agent (acting on the instructions of the Majority Banks):

 

8.3.1 Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of their present or future undertaking, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Security Party or any other person;

 

8.3.2 No merger

merge or consolidate with any other person or enter into any amalgamation, demerger, corporate reconstruction or redomiciliation of any type;

 

8.3.3 Disposals

sell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control over any part (being, either alone or when aggregated with all other disposals falling to be taken into account pursuant to this clause 8.3.3, material in the opinion of the Agent in relation to their respective undertaking, assets, rights and revenues taken as a whole) of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading but in any event excluding the assets which are subject to security created by the Security Documents) whether by one or a series of transactions related or not;

 

8.3.4 Other business

undertake any business other than the ownership and operation of the Ships and the chartering of the Ships to third parties;

 

8.3.5 Acquisitions

acquire any further assets other than the Ships and rights arising under contracts entered into by or on behalf of the Borrowers in the ordinary course of their business of owning, operating and chartering the Ships;

 

8.3.6 Other obligations

incur any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of their business of owning, operating and chartering the Ships;

 

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8.3.7 No borrowing

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents;

 

8.3.8 Repayment of borrowings

repay the principal of, or pay interest on or any other sum in connection with, any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents;

 

8.3.9 Guarantees

issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation, except pursuant to the Security Documents and except for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which a Ship is entered, guarantees required to procure the release of a Ship from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Ship;

 

8.3.10 Loans

make any loans or grant any credit to any person or agree to do so save for normal trade credit in the ordinary course of business;

 

8.3.11 Sureties

permit any Indebtedness of either Borrower to any person (other than the Creditors pursuant to the Security Documents) to be guaranteed by any person (save for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which a Ship is entered, guarantees required to procure the release of a Ship from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Ship);

 

8.3.12 Share capital and distribution

purchase or otherwise acquire for value any shares of their capital or declare or pay any dividends or distribute any of their present or future assets, undertaking, rights or revenues to any of their shareholders provided however that each Borrower shall be entitled to declare or pay cash dividends to its shareholder if no Event of Default has occurred and is continuing at the time of declaration or payment of such dividends nor would result from the declaration or payment of such dividends;

 

8.3.13 Subsidiaries

form or acquire any Subsidiaries or make an equity investment in any person;

 

8.3.14 Constitutional documents

change, amend or vary, or agree to permit any change, amendment or variation of, its constitutional documents or any change of its corporate name;

 

8.3.15 Intra-Group transactions

enter into any transactions or agreements with any other member of the Group other than on an arm’s length basis and for full consideration;

 

8.3.16 Designated Transactions

enter into any derivative transactions other than Designated Transactions;

 

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8.3.17 Financial Year

change, permit or agree to any change in, the way of computation of their financial year; and

 

8.3.18 Shareholdings

change, cause or permit any change in, the legal and/or ultimate beneficial ownership (direct or indirect) of any of the shares in the Manager from that existing on the date of this Agreement as specified in clause 7.2.13.

 

9 Conditions

 

9.1 Documents and evidence

The obligation of each Bank to make its Commitment available shall be subject to the condition that the Agent, or its duly authorised representative, shall have received:

 

9.1.1 on or prior to the day on which the first Drawdown Notice is given under this Agreement, the documents and evidence specified in Part 1 of schedule 3 in form and substance satisfactory to the Agent; and

 

9.1.2 on or prior to the drawdown of each Advance, the documents and evidence specified in Part 2 of schedule 3 in respect of such Advance and the Ship relevant to it, in form and substance satisfactory to the Agent.

 

9.2 General conditions precedent

The obligation of each Bank to contribute to an Advance shall be subject to the further conditions that, at the time of the giving of the Drawdown Notice for such Advance, and at the time of the making of such Advance:

 

9.2.1 the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) and (ii) clause 4 of each of the Corporate Guarantees, are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time;

 

9.2.2 no Default shall have occurred and be continuing or would result from the making of such Advance; and

 

9.2.3 no events, facts, conditions or circumstances shall exist or have arisen or occurred (and neither the Agent nor any Bank shall have become aware of other events, facts, conditions or circumstances not previously known to it), which the Agent (acting on the instructions of the Majority Banks) shall determine, has had or could reasonably be expected to have, a Material Adverse Effect.

 

9.3 Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Banks and may be waived by the Agent (acting on the instructions of the Majority Banks) in whole or in part and with or without conditions.

 

9.4 Further conditions precedent

Not later than five (5) Banking Days prior to each Drawdown Date and not later than five (5) Banking Days prior to each Interest Payment Date, the Agent (acting on the instructions of the Majority Banks) may request and the Borrowers shall, not later than two (2) Banking Days prior to such date, deliver to the Agent on such request further favourable certificates and/or favourable opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

 

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10 Events of Default

 

10.1 Events

There shall be an Event of Default if:

 

10.1.1 Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or

 

10.1.2 Master Swap Agreement: (a) an Event of Default or Potential Event of Default (in each case as defined in the Master Swap Agreement) has occurred and is continuing with the Borrowers or either of them as the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement or (b) an Early Termination Event (as defined in the Master Swap Agreement) has occurred with the Borrowers as the sole Affected Party (as defined in the Master Swap Agreement) or has been or will become capable of being effectively designated under the Master Swap Agreement by the Swap Provider; or

 

10.1.3 Breach of Insurances and certain other obligations: either of the Borrowers or the Manager or any other person fails to obtain and/or maintain the Insurances (in accordance with the requirements of, the relevant Ship Security Documents) for either of the Mortgaged Ships or if any insurer in respect of such Insurances cancels such Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for such Insurances or for any other failure or default on the part of either of the Borrowers or any other person, or the Borrowers or either of them commit any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by them under clauses 8.1.5, 8.1.6, 8.2 or 8.3, or the Asclepius Guarantor commits any breach of, or fails to observe, any of the obligations or undertakings expressed to be assumed by it under clauses 5.1.4, 5.1.5, 5.2 or 5.3 of the Asclepius Guarantee or the DryShips Guarantor commits any breach of, or fails to observe, any of the obligations or undertakings expressed to be assumed by it under clause 5.2 of the DryShips Guarantee; or

 

10.1.4 Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) and, in respect of any such breach or omission which in the opinion of the Agent (following consultation with the Banks) is capable of remedy, such action as the Agent (acting on the instructions of the Majority Banks) may require shall not have been taken within thirty (30) days of the Agent notifying the relevant Security Party of such default and of such required action; or

 

10.1.5 Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents or any of the Underlying Documents is or proves to have been incorrect or misleading in any material respect; or

 

10.1.6

Cross-default: any Indebtedness of any Security Party or any other Relevant Party is not paid when due or any Indebtedness of any Security Party or any other Relevant Party becomes (whether by declaration or (except in the case of the DryShips Guarantor) automatically, in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party or any other Relevant Party of a voluntary right of prepayment), or any creditor of any Security Party or any other Relevant Party declares or (except in the case of the DryShips Guarantor) becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to any Security Party or any other Relevant Party relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party or any other Relevant Party shall have satisfied the Agent that

 

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such withdrawal, suspension or cancellation will not affect or prejudice in any way the ability of the relevant Security Party or other Relevant Party to pay its debts as they fall due and fund its commitments, or any guarantee given by any Security Party or any other Relevant Party in respect of Indebtedness is not honoured when due and called upon Provided that the amount of any Indebtedness of the DryShips Guarantor, at any one time, in relation to which any of the foregoing events shall have occurred and be continuing, is equal or greater than One million Dollars ($1,000,000) or its equivalent in the currency in which the same is denominated or payable; or

 

10.1.7 Legal process: any judgment or order made against any Security Party or other Relevant Party is not stayed or complied with within ten (10) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party or other Relevant Party and is not discharged within ten (10) days; or

 

10.1.8 Insolvency: any Security Party or any other member of the Group is unable or admits inability to pay its debts as they fall due; or suspends making payments on any of its debts or announces an intention to do so; or becomes insolvent; or has assets the value of which is less than the value of its liabilities (taking into account contingent and prospective liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness or any corporate action, legal proceedings or other procedure or step is taken in relation to any of the above; or

 

10.1.9 Reduction or loss of capital: a meeting is convened by any Security Party or other Relevant Party for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or

 

10.1.10 Winding up: any corporate action, legal proceedings or other procedure or step is taken for the purpose of winding-up any Security Party or any other member of the Group or an order is made or resolution passed for the winding up of any Security Party or any other member of the Group or a notice is issued convening a meeting for the purpose of passing any such resolution; or

 

10.1.11 Administration: any petition is presented, notice given or other step is taken for the purpose of the appointment of an administrator of any Security Party or any other member of the Group or the Agent believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party or any other member of the Group; or

 

10.1.12 Appointment of receivers and managers: any administrative or other receiver, liquidator, compulsory manager or other similar officer is appointed of any Security Party or any other member of the Group or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Security Party or any other member of the Group; or

 

10.1.13 Compositions: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Security Party or any other member of the Group or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness (provided however that, for the avoidance of any doubt, the mere granting by any creditor to a Security Party or other member of the Group of any deferral option in relation to the payment of individual repayment instalments of any loan or any increase of margin or any prepayment of any loan shall not in itself constitute an Event of Default under this clause 10.1.13) or to proposing any kind of composition, compromise or arrangement involving such person and any of its creditors; or

 

10.1.14 Analogous proceedings: there occurs, in relation to any Security Party or other Relevant Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Agent, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive) or any Security Party or other Relevant Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

 

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10.1.15 Cessation of business: any Security Party or any other member of the Group suspends or ceases or threatens to suspend or cease to carry on its business; or

 

10.1.16 Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party or any other Relevant Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or

 

10.1.17 Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or

 

10.1.18 Unlawfulness: it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for a Creditor to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

 

10.1.19 Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

 

10.1.20 Encumbrances enforceable: any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or

 

10.1.21 Material Adverse Effect: any event, condition, fact or circumstance occurs, arises or exists which, in the opinion of the Agent (acting on the instructions of the Majority Banks), has had or is reasonably expected to have a Material Adverse Effect; or

 

10.1.22 Arrest: either Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Borrower and such Borrower shall fail to procure the release of such Ship within a period of ten (10) days thereafter; or

 

10.1.23 Registration: the registration of a Ship under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Agent (acting on the instructions of the Majority Banks) or if such registration of a Ship is not renewed at least forty five (45) days prior to the expiry of such registration; or

 

10.1.24 Unrest: the Flag State of a Ship becomes involved in hostilities or civil war or there is a seizure of power in the Flag State of a Ship by unconstitutional means; or

 

10.1.25 Environment: either Borrower and/or any other Relevant Party and/or any Security Party fails to comply with any Environmental Law or any Environmental Approval or either of the Ships or any other Relevant Ship is involved in any incident which gives rise or may give rise to an Environmental Claim; or

 

10.1.26 P&I: either Borrower or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which such Borrower’s Ship is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where such Ship operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or

 

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10.1.27 Shareholdings:

 

  (a) either of the Borrowers ceases at any time to be a wholly-owned indirect Subsidiary of the Asclepius Guarantor; or

 

  (b) there is any change in the legal and/or ultimate beneficial ownership (direct or indirect) of any of the shares in the Manager, from that existing on the date of this Agreement, as set out in clause 7.2.13; or

 

  (c) without prejudice to the generality of paragraphs (a) to (b) above, a Change of Control occurs; or

 

10.1.28 Accounts: moneys are withdrawn from either of the Operating Accounts other than in accordance with clause 14 or the provisions of the Operating Account Assignments; or

 

10.1.29 Manager: either Ship ceases to be managed by the Manager without the prior written consent of the Agent (acting on the instructions of the Majority Banks) provided however that such consent shall not to be unreasonably withheld if (a) the Borrowers propose to the Agent a replacement manager for that Ship and (b) the persons who are the legal and ultimate beneficial owners of the shares of the proposed replacement manager are the persons disclosed by the Borrowers to the Agent in the negotiation of this Agreement to be the legal and ultimate beneficial owners of the shares of the Manager as at the date of this Agreement; or

 

10.1.30 Termination of the Initial Charters: either Initial Charter is cancelled or terminated or becomes frustrated for any reason whatsoever other than expiry by effluxion of time or the relevant Ship becoming a Total Loss unless, forthwith upon such event occurring, such Initial Charter has been replaced by another Charter in respect of the relevant Ship with such Charterer, for such duration, with such charterhire and otherwise on such other terms and conditions as are in all respects acceptable to the Agent (acting on the instructions of the Majority Banks); or

 

10.1.31 De-listing: at any time the shares of the DryShips Guarantor are de-listed or cease to trade on the New York Stock Exchange, unless at that time the Creditors have released the DryShips Guarantor from its obligations under the DryShips Guarantee; or

 

10.1.32 Licenses, etc: any license, authorisation, consent or approval at any time necessary to enable any Security Party to comply with its obligations under the Security Documents or the Underlying Documents is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the Underlying Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents or the Underlying Documents; or

 

10.1.33 Material events: any other event occurs or circumstance arises which, in the opinion of the Agent (acting on the instructions of the Majority Banks), is likely materially and adversely to affect either (a) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents or the Underlying Documents or (b) the security created by any of the Security Documents.

 

10.2 Acceleration

The Agent may, and if so requested by the Majority Banks shall, without prejudice to any other rights of the Creditors, at any time after the happening of an Event of Default by notice to the Borrowers declare that:

 

10.2.1 the obligation of each Bank to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or

 

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10.2.2 the Loan and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

 

10.3 Demand basis

If, pursuant to clause 10.2.2, the Agent declares the Loan to be due and payable on demand, the Agent may (and, if so instructed by the Majority Banks, shall) by written notice to the Borrowers (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest and commitment commission accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

 

10.4 Position of Swap Provider

Neither the Agent nor the Security Agent shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this clause 10, to have any regard to the requirements of the Swap Provider except to the extent that the Swap Provider is also a Bank.

 

11 Indemnities

 

11.1 Miscellaneous indemnities

The Borrowers shall on demand indemnify each Creditor, without prejudice to any of such Creditor’s other rights under any of the Security Documents, against any loss (including loss of Margin) or expense which such Creditor shall certify as sustained or incurred by it as a consequence of:

 

11.1.1 any default in payment by any Security Party of any sum under any of the Security Documents when due;

 

11.1.2 the occurrence of any other Event of Default;

 

11.1.3 any prepayment of the Loan (or any part thereof) being made under clauses 4.2, 4.3, 8.2.1 or 12.1, or any other repayment or prepayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or

 

11.1.4 any Advance not being made for any reason (excluding any default by any Creditor) after the Drawdown Notice for such Advance has been given,

including, in any such case, but not limited to, any loss or expense sustained or incurred by a Bank in maintaining or funding its Contribution or, as the case may be, Commitment or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain its Contribution or, as the case may be, Commitment or any part thereof or any other amount owing to such Bank, or in terminating, reversing or otherwise in connection with, any open position of a Bank in relation to this Agreement.

 

11.2 Currency indemnity

If any sum due from the Borrowers or either of them under any of the Security Documents or any order or judgment given or made in relation thereto has to be converted from the currency (the “first currency”) in which the same is payable under the relevant Security Document or under such order or judgment into another currency (the “second currency”) for the purpose of (a) making or filing a claim or proof against the Borrowers or either of them, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to any of the Security Documents, the Borrowers shall indemnify and hold harmless each Creditor from and against any loss suffered as a result of any difference between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency

 

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into the second currency and (ii) the rate or rates of exchange at which the relevant Creditor may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

Any amount due from the Borrowers under this clause 11.2 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

 

11.3 Environmental indemnity

The Borrowers shall indemnify each Creditor on demand and hold it harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against such Creditor at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against such Creditor if such Environmental Claim would not have been, or been capable of being, made or asserted against such Creditor if it had not entered into any of the Security Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Security Documents.

 

11.4 Central Bank or European Central Bank reserve requirements indemnity

The Borrowers shall on demand promptly indemnify each Bank against any cost incurred or loss suffered by such Bank as a result of its complying with the minimum reserve requirements of the European Central Bank and/or with respect to maintaining required reserves with the relevant national Central Bank to the extent that such compliance relates to such Bank’s Commitment and/or Contribution or deposits obtained by it to fund the whole or part of that Contribution and to the extent such cost or loss is not recoverable by such Bank under clause 12.2.

 

11.5 Waiver

In no event shall a Creditor or any of its Related Companies or any of their respective officers or directors be liable on any theory of liability for any special, indirect, consequential or punitive damages and each of the Borrowers hereby waives, releases and agrees not to xxx upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favour.

 

11.6 General indemnity

Each of the Borrowers hereby indemnifies and agrees to hold harmless the Creditors and each of their respective Related Companies and each of their respective officers, directors, employees, agents, advisors and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities, costs, legal and other expenses (altogether the “Losses”), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any claim, investigation, litigation or proceeding (or the preparation of any defence with respect thereto) commenced or threatened in relation to the Security Documents or any of them (or the transactions contemplated hereby or thereby) or any use made or proposed to be made with the proceeds of the Loan. This indemnity shall apply whether or not such claims, investigation, litigation or proceeding is brought by the Borrowers, any other Security Party, any Relevant Party, any of their respective shareholders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto, except to the extent that such Losses are found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or wilful misconduct.

 

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12 Unlawfulness and increased costs

 

12.1 Unlawfulness

If it is or becomes contrary to any law or regulation for any Bank to contribute to an Advance or to maintain its Commitment or fund its Contribution, such Bank shall promptly, through the Agent, give notice to the Borrowers whereupon (a) the Total Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement and/or the Master Swap Agreement.

 

12.2 Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any Capital Adequacy Law or the compliance by a Bank with any Capital Adequacy Law, is to:

 

12.2.1 subject any Bank to Taxes or change the basis of Taxation of any Bank with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

 

12.2.2 increase the cost to, or impose an additional cost on, any Bank or its holding company in making or keeping such Bank’s Commitment available or maintaining or funding all or part of such Bank’s Contribution; and/or

 

12.2.3 reduce the amount payable or the effective return to any Bank under any of the Security Documents; and/or

 

12.2.4 reduce any Bank’s or its holding company’s rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Bank’s obligations under any of the Security Documents; and/or

 

12.2.5 require any Bank or its holding company to make a payment or forego a return on or calculated by reference to any amount received or receivable by such Bank under any of the Security Documents; and/or

 

12.2.6 require any Bank or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of its Commitment or its Contribution from its capital for regulatory purposes.

then and in each such case (subject to clause 12.3):

 

  (a) such Bank shall (through the Agent) notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and

 

  (b) the Borrowers shall on demand made at any time, whether or not such Bank’s Contribution has been repaid, pay to the Agent for the account of such Bank the amount which such Bank specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Bank or its holding company regards as confidential) is required to compensate such Bank and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, foregone return or loss.

For the purposes of this clause 12.2 “holding company” means, in relation to a Bank, the company or entity (if any) within the consolidated supervision of which such Bank is included.

 

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12.3 Exception

Nothing in clause 12 shall entitle any Bank to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same (a) is taken into account in calculating the Mandatory Cost or (b) is the subject of an additional payment under clause 6.6.

 

13 Security, set-off and pro-rata payments

 

13.1 Application of moneys

All moneys received by a Creditor under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 shall, if received by a Creditor other than the Agent and the Security Agent, be paid to the Agent for application, and if received by the Agent or the Security Agent, shall be applied by the Agent and/or the Security Agent (as the case may be) in the following manner:

 

13.1.1 first, in or towards payment of all unpaid costs, expenses and fees which may be owing to the Arranger, the Agent or the Security Agent under any of the Security Documents;

 

13.1.2 secondly, in or towards payment of any unpaid costs, expenses and fees payable to the Banks or the Account Bank or any of them;

 

13.1.3 thirdly, in or towards payment of any arrears of interest owing in respect of the Loan or any part thereof;

 

13.1.4 fourthly, in or towards payment to any Bank for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid or prepaid and which amounts are so payable under this Agreement;

 

13.1.5 fifthly, in or towards repayment of the Loan (whether the same is due and payable or not);

 

13.1.6 sixthly, in or towards payment to the Swap Provider of any sums owing to it under the Master Swap Agreement;

 

13.1.7 seventhly, in or towards payment to any Creditor (other than the Swap Provider) of any other sums owing to it under any of the Security Documents (and if any such sums are owing to more than one Creditor, as between such Creditors on a pro rata basis); and

 

13.1.8 eighthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be entitled to receive such surplus.

 

13.2 Pro rata payments

 

13.2.1 If at any time any Bank (the “Recovering Bank”) receives or recovers any amount owing to it by the Borrowers under this Agreement by direct payment, set-off or in any manner other than by payment through the Agent pursuant to clauses 6.1 or 6.9 (not being a payment received from a Transferee Bank or a sub-participant in such Bank’s Contribution or any other payment of an amount due to the Recovering Bank for its sole account pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 12.1 or 12.2) the Recovering Bank shall, within two (2) Banking Days of such receipt or recovery (a “Relevant Receipt”) notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Bank would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to clauses 6.1 or 6.9 (as the case may be) then:

 

  (a) within two (2) Banking Days of demand by the Agent, the Recovering Bank shall pay to the Agent an amount equal (or equivalent) to the excess;

 

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  (b) the Agent shall treat the excess amount so paid by the Recovering Bank as if it were a payment made by the Borrowers and shall distribute the same to the Banks (other than the Recovering Bank) in accordance with clause 6.9; and

 

  (c) as between the Borrowers and the Recovering Bank the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrowers to the other Banks shall, to the extent of the amount so re-distributed to them, be treated as discharged.

 

13.2.2 If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Bank (whether to a liquidator or otherwise) each Bank to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Bank repay to the Recovering Bank such Bank’s pro-rata share of the amount which has to be refunded by the Recovering Bank.

 

13.2.3 Each Bank shall on request supply to the Agent such information as the Agent may from time to time request for the purpose of this clause 13.2.

 

13.2.4 Notwithstanding the foregoing provisions of this clause 13.2, no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Agent).

 

13.3 Set-off

 

13.3.1 Each Borrower authorises the Agent and each Bank (without prejudice to any of the Agent’s and such Bank’s rights at law, in equity or otherwise), at any time and without notice to the Borrowers, to apply any credit balance to which such Borrower is then entitled standing upon any account of such Borrower with any branch of such Creditor in or towards satisfaction of any sum due and payable from the Borrowers or either of them to the Agent or such Bank, as the case may be, under any of the Security Documents. For this purpose, the Agent and each Bank is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

 

13.3.2 No Creditor shall be obliged to exercise any right given to it by this clause 13.2. Each Bank shall notify the Agent and the Agent shall notify the Borrowers forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto and the Agent shall inform the other Banks.

 

13.3.3 Nothing in this clause 13.3 shall be effective to create a charge or other Encumbrance.

 

13.4 No release

For the avoidance of doubt it is hereby declared that failure by any Recovering Bank to comply with the provisions of clause 13.2 shall not release any other Recovering Bank from any of its obligations or liabilities under clause 13.2.

 

13.5 No charge

The provisions of this clause 13 shall not, and shall not be construed so as to, constitute a charge or other security interest by a Creditor over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 13.2.

 

13.6 Further assurance

The Borrowers jointly and severally undertake that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the

 

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Security Documents be valid and binding obligations of the respective parties thereto and rights of each Creditor enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Majority Banks may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents.

 

13.7 Conflicts

In the event of any conflict between this Agreement and any of the other Borrowers’ Security Documents (other than the Master Swap Agreement), the provisions of this Agreement shall prevail.

 

14 Operating Accounts

 

14.1 General

The Borrowers jointly and severally undertake with each Creditor that they will:

 

14.1.1 on or before the first Drawdown Date under this Agreement, open each of the Operating Accounts (and provide the Agent and the Account Bank with any information or documents requested by them under clause 8.1.15 to enable the Account Bank to do so); and

 

14.1.2 procure that all moneys payable to a Borrower in respect of the Earnings of such Borrower’s Ship and 50% of any moneys payable to the Borrowers under the Master Swap Agreement shall, unless and until the Agent (acting on the instructions of the Majority Banks) directs to the contrary pursuant to clause 2.1 of the Deed of Covenant relevant to such Ship, be paid to such Borrower’s Operating Account Provided however that if any of the moneys paid to either of the Operating Accounts are payable in a currency other than Dollars, the Account Bank shall (and the Borrowers hereby irrevocably and unconditionally instruct the Account Bank to) convert such moneys into Dollars at the Account Bank’s spot rate of exchange at the relevant time for the purchase of Dollars with such currency and the term “spot rate of exchange” shall include any premium and costs of exchange payable in connection with the purchase of Dollars with such currency.

 

14.2 Operating Accounts: withdrawals

Unless and until a Default shall occur and be continuing and the Agent (acting on the instructions of the Majority Banks) shall direct to the contrary, each Borrower shall be entitled to withdraw moneys from its Operating Account only for the following purposes:

 

14.2.1 to pay any amount to the Agent in or towards payments of any instalments of interest or any repayments, reductions or other payments of principal, or any other amounts then payable pursuant to the Security Documents;

 

14.2.2 to pay the proper and reasonable expenses of its Ship (including management fees under the Management Agreement);

 

14.2.3 to pay the proper and reasonable expenses of administering its affairs; and

 

14.2.4 to the extent not prohibited by the other provisions of this Agreement to pay cash dividends and distributions to its shareholder.

 

14.3 Account terms

Amounts standing to the credit of the Operating Accounts shall (unless otherwise agreed between the Account Bank and the Borrowers) bear interest at the rates from time to time offered by the Account Bank to its customers for Dollar deposits in comparable amounts for comparable periods. Interest shall accrue on the Operating Accounts from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year and shall be credited to the Operating Accounts at such times as the Account Bank and the Borrowers shall agree.

 

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14.4 Application of moneys of the Operating Accounts

At any time after the occurrence of an Event of Default, the Agent may (and on the instructions of the Majority Banks shall), without notice to the Borrowers, instruct the Account Bank to apply all moneys then standing to the credit of the Operating Accounts or either of them (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to the Creditors or any of them under the Security Documents in the manner specified in clause 13.1.

 

14.5 Charging of Operating Accounts

The Operating Accounts and all amounts from time to time standing to the credit thereof shall be subject to the security constituted and the rights conferred by the Operating Account Assignments.

 

14.6 Electronic Banking

The Borrowers hereby jointly and severally undertake with the Creditors that they will on or before the Termination Date enter into any service level agreement with the Account Bank in respect of cash management services and electronic banking system for the Operating Accounts as requested by the Agent.

 

15 Assignment, transfer and lending office

 

15.1 Benefit and burden

This Agreement shall be binding upon, and enure for the benefit of, the Creditors and the Borrowers and their respective successors in title.

 

15.2 No assignment by Borrowers

Neither Borrower may assign or transfer any of its rights or obligations under this Agreement.

 

15.3 Transfers by Banks

Subject to the prior written consent of (a) the Borrowers (such consent not to be unreasonably withheld or delayed) and (b) the Agent, any Bank (the “Transferor Bank”) may at any time cause all or any part of its rights, benefits and/or obligations under this Agreement and the Security Documents to be transferred to any other bank or financial institution (a “Transferee Bank”) by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Bank and the Transferee Bank Provided however that (a) the Transferor Bank shall pay to the Agent a transfer fee of Three thousand Dollars ($3,000) in respect of any such transfer and (b) the rights, benefits and/or obligations to be transferred under any such transfer shall be in respect of a minimum amount of Ten million Dollars ($10,000,000) of the Transferor Bank’s Commitment and/or (as the case may be) Contribution. The consent of the Borrower referred to above shall not be required in relation to any transfer if (1) a Default has occurred and is continuing or (2) the relevant Transferee Bank is (A) another Bank or (B) a Related Company of the relevant Transferor Bank or of another Bank. No such transfer is binding on, or effective in relation to, the Borrowers, the Agent or the other Creditors unless (i) it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Bank, the Transferee Bank and the Agent (on behalf of itself, the Borrowers and the other Creditors) and (ii) such transfer of rights under the other Security Documents as the Agent or the Transferee Bank may deem necessary has been effected and registered to the satisfaction of the Agent. Upon signature of any such Transfer Certificate by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below

 

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The following further provisions shall have effect in relation to any Transfer Certificate:

 

15.3.1 a Transfer Certificate may be in respect of a Bank’s rights in respect of all, or part of, its Commitment and shall be in respect of the same proportion of its Contribution;

 

15.3.2 a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Bank in its capacity as a Bank and shall not transfer its rights and obligations as Agent, Security Agent or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement;

 

15.3.3 a Transfer Certificate shall take effect in accordance with English law as follows:

 

  (a) to the extent specified in the Transfer Certificate, the Transferor Bank’s payment rights and all its other rights (other than those referred to in clause 15.3.2 above) under this Agreement are assigned to the Transferee Bank absolutely, free of any defects in the Transferor Bank’s title and of any rights or equities which the Borrowers or either of them had against the Transferor Bank;

 

  (b) the Transferor Bank’s Commitment is discharged to the extent specified in the Transfer Certificate;

 

  (c) the Transferee Bank becomes a Bank with a Contribution and a Commitment of the amounts specified in the Transfer Certificate;

 

  (d) the Transferee Bank becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Banks generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Security Agent, the Swap Provider and the Arranger in accordance with the provisions of clause 16 and to the extent that the Transferee Bank becomes bound by those provisions, the Transferor Bank ceases to be bound by them;

 

  (e) an Advance or part of an Advance which the Transferee Bank makes after the Transfer Certificate comes into effect ranks in point of priority and security in the same way as it would have ranked had it been made by the Transferor Bank, assuming that any defects in the Transferor Bank’s title and any rights or equities of any Security Party against the Transferor Bank had not existed; and

 

  (f) the Transferee Bank becomes entitled to all the rights under this Agreement which are applicable to the Banks generally, including but not limited to those relating to the Majority Banks and those under clauses 3.6, 5 and 12 and to the extent that the Transferee Bank becomes entitled to such rights, the Transferor Bank ceases to be entitled to them;

 

15.3.4 the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim; and

 

15.3.5 the Borrowers, the Account Bank, the Security Agent, the Swap Provider and the other Creditors hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on their behalf and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrowers, the Security Agent, the Swap Provider, the Account Bank, the Arranger, the Transferor Bank, the Transferee Bank and the other Banks.

 

15.4 Reliance on Transfer Certificate

 

15.4.1 The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance.

 

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15.4.2 The Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, Contributions and administrative details (including the lending office) from time to time of the Banks holding a Transfer Certificate and the date at which the transfer referred to in such Transfer Certificate held by each Bank was transferred to such Bank, and the Agent shall make the said register available for inspection by any Bank, the Security Agent or either Borrower during normal banking hours upon receipt by the Agent of reasonable prior notice requesting the Agent to do so.

 

15.4.3 The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Banks from time to time and the principal amounts of such Transfer Certificates and may be relied upon by the Agent, the other Creditors and the Security Parties for all purposes in connection with this Agreement and the Security Documents.

 

15.5 Transfer fees and expenses

If any Bank causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents, it shall (or it shall ensure that the relevant Transferee Bank shall) pay to the Agent and/or the Security Agent on demand a transfer fee of $3,500 per transfer for the account of the Agent and all costs, fees and expenses (including, but not limited to, legal fees and expenses), and all value added tax thereon, verified by the Agent or, as the case may be, the Security Agent as having been incurred by it in connection with such transfer.

 

15.6 Documenting transfers

If any Bank assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, the Borrowers jointly and severally undertake with each Creditor, immediately on being requested to do so by the Agent and at the cost of the Transferor Bank, to enter into, and procure that the other Security Parties shall (at the cost of the Transferor Bank) enter into, such documents as may be necessary or desirable to transfer to the Transferee Bank all or the relevant part of such Bank’s interest in the Security Documents and all relevant references in this Agreement to such Bank shall thereafter be construed as a reference to the Transferor Bank and/or its Transferee Bank (as the case may be) to the extent of their respective interests.

 

15.7 Sub-participation

A Bank may sub-participate to all or any part of its rights and/or obligations under the Security Documents without the consent of, or notice to, the Borrowers but with the prior written consent of the Agent (such consent not to be unreasonably withheld) Provided however that the terms of any relevant sub-participation agreement shall provide that the sub-participant shall not exercise (or be entitled to exercise) any direct or indirect control over the voting rights of such Bank under this Agreement and the other Security Documents (such that such Bank shall be entitled to exercise its rights and discharge its obligations under this Agreement and the other Security Documents, without any prior approval or consent of, or any other reference to, the relevant sub-participant).

 

15.8 Lending offices

Each Bank shall lend through its office at the address specified in schedule 1 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Bank selected from time to time by such Bank through which such Bank wishes to lend for the purposes of this Agreement. If the office through which a Bank is lending is changed pursuant to this clause 15.8, such Bank shall notify the Agent promptly of such change and the Agent shall notify the Borrowers, the Security Agent, the Swap Provider, the Account Bank and the other Banks.

 

15.9 Disclosure of information

A Bank may, with the prior written consent of the Agent (such consent not to be unreasonably withheld), disclose to a prospective Transferee Bank (provided that the Borrowers have in the

 

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meantime given their consent in relation to that transfer, if and where the same is required under clause 15.3) or to any other person who may propose entering into contractual relations with such Bank in relation to this Agreement such information about the Borrowers and the other Security Parties, the Group and any members thereof or any of them as such Bank shall consider appropriate provided that such Bank shall ensure that such information shall be disclosed on a confidential basis to any such person.

 

15.10 Replacement of a Bank

 

15.10.1 If at any time:

 

  (a) any Bank becomes an Increased Cost Bank; or

 

  (b) any Bank becomes a Non-Consenting Bank,

then the Borrowers may: (i) on ten (10) Business Days’ prior notice to the Agent and that Bank; and (ii) following consultation with the Agent, replace that Bank by causing it to (and that Bank shall) transfer pursuant to this clause 15 all of its rights and obligations under this Agreement and the other Security Documents to another Bank or other person selected by the Borrowers and acceptable to the Agent (acting reasonably) for a purchase price equal to the outstanding principal amount of that Bank’s Contribution and all accrued interest and fees and other amounts payable under this Agreement. If the effective date for that transfer is not an Interest Payment Date, then the Borrowers shall, on the transfer date, indemnify the Increased Cost Bank or the Non-Consenting Bank against any loss which it incurs as a result.

 

15.10.2 The Borrowers shall have no right to replace the Arranger, the Agent, the Account Bank or the Security Agent and none of the foregoing shall create on any Creditor, nor any Creditor shall have, any obligation towards the Borrowers to find a replacement Bank or such other entity. No member of the Group may make any payment or assume any obligation (whether by way of fees, expenses or otherwise) to or on behalf of the replacement Bank as an inducement for the replacement Bank to become a Bank.

 

15.10.3 The Borrowers may only replace a Non-Consenting Bank or an Increased Cost Bank if that replacement takes place no later than 60 days after:

 

  (a) the date on which the Non-Consenting Bank becomes a Non-Consenting Bank; or

 

  (b) the date on which the Increased Cost Bank demands payment of the relevant additional amounts.

 

15.10.4 No Bank replaced under this clause 15.10 may be required to pay or surrender to that replacement Bank or other entity any of the fees received by it.

 

15.10.5 In the case of a replacement of an Increased Cost Bank, the Borrowers shall pay the relevant additional amounts to that Increased Cost Bank prior to it being replaced and the payment of those additional amounts shall be a condition to replacement.

 

15.10.6 For the purposes of this clause 15.10:

 

  (a) an “Increased Cost Bank” is a Bank to whom the Borrowers become obliged to pay any additional amount under clause 6.6 or clause 12.2 in circumstances where (i) the Borrowers are also obliged to pay such additional amount to other Banks under the same clause and (ii) the additional amounts which such Bank is seeking to recover from the Borrowers under such clause are materially higher than the equivalent amounts sought by the other such Banks under the same clause; and

 

  (b) a “Non-Consenting Bank” is a Bank who does not agree to a waiver, consent or amendment where:

 

  (i) the Borrowers or the Agent has requested the Banks to consent to a departure from, or waiver of, any provision of the Security Documents or to agree to any amendment thereto;

 

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  (ii) the waiver, consent or amendment in question requires the agreement of the Majority Banks or all the Banks;

 

  (iii) a period of not less than 30 days has elapsed from the date the waiver, consent or amendment was requested;

 

  (iv) the Majority Banks have agreed to such waiver, consent or amendment; and

 

  (v) the Borrowers have notified such Bank that they will treat it as a Non-Consenting Bank.

 

16 Arranger, Agent and Security Agent

 

16.1 Appointment of the Agent

Each Bank and the Swap Provider irrevocably appoints the Agent as its agent for the purposes of this Agreement and such of the Security Documents to which it may be appropriate for the Agent to be party. By virtue of such appointment, each of the Banks and the Swap Provider hereby authorises the Agent:

 

16.1.1 to execute such documents as may be approved by the Majority Banks for execution by the Agent; and

 

16.1.2 (whether or not by or through employees or agents) to take such action on such Bank’s or, as the case may be, the Swap Provider’s behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Agent by this Agreement and/or any other Security Document, together with such powers and discretions as are reasonably incidental thereto.

 

16.2 Agent’s actions

Any action taken by the Agent under or in relation to this Agreement or any of the other Security Documents whether with requisite authority, or on the basis of appropriate instructions, received from the Banks (or as otherwise duly authorised) shall be binding on all the Banks, the Swap Provider and the other Creditors.

 

16.3 Agent’s duties

The Agent shall:

 

16.3.1 promptly notify each Bank and the Swap Provider of the contents of each notice, certificate or other document received by it from the Borrowers under or pursuant to clauses 8.1.1, 8.1.5, 8.1.6, 8.1.7 and 8.1.8; and

 

16.3.2 (subject to the other provisions of this clause 16) take (or instruct the Security Agent to take) such action or, as the case may be, refrain from taking (or authorise the Security Agent to refrain from taking) such action with respect to the exercise of any of its rights, remedies, powers and discretions as agent, as the Majority Banks may direct.

 

16.4 Agent’s rights

The Agent may:

 

16.4.1 in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement or any of the other Security Documents, act or, as the case may be, refrain from acting (or authorise the Security Agent to act or refrain from acting) in accordance with the instructions of the Banks, and shall be fully protected in so doing;

 

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16.4.2 unless and until it shall have received directions from the Majority Banks, take such action or, as the case may be, refrain from taking such action (or authorise the Security Agent to take or refrain from taking such action) in respect of a Default of which the Agent has actual knowledge as it shall deem advisable in the best interests of the Banks and the Swap Provider (but shall not be obliged to do so);

 

16.4.3 refrain from acting (or authorise the Security Agent to refrain from acting) in accordance with any instructions of the Banks to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents until it and/or the Security Agent has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result;

 

16.4.4 deem and treat (i) each Bank as the person entitled to the benefit of the Contribution of such Bank for all purposes of this Agreement unless and until a Transfer Certificate shall have been filed with the Agent pursuant to clause 15.3 and shall have become effective, and (ii) the office set opposite the name of each of the Banks in schedule 1 or, as the case may be, in any relevant Transfer Certificate as such Bank’s lending office unless and until a written notice of change of lending office shall have been received by the Agent and the Agent may act upon any such notice unless and until the same is superseded by a further such notice;

 

16.4.5 rely as to matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by any director or member of the board of directors or officer of the relevant Security Party on behalf of the relevant Security Party; and

 

16.4.6 do anything which is in its opinion necessary or desirable to comply with any law or regulation in any jurisdiction.

 

16.5 No liability of Arranger or Agent

Neither the Arranger nor the Agent nor any of their respective employees and agents shall:

 

16.5.1 be obliged to make any enquiry as to the use of any of the proceeds of any Advance unless (in the case of the Agent) so required in writing by a Bank, in which case the Agent shall promptly make the appropriate request to the Borrowers; or

 

16.5.2 be obliged to make any enquiry as to any breach or default by either of the Borrowers or any other Security Party in the performance or observance of any of the provisions of this Agreement or any of the other Security Documents or as to the existence of a Default unless (in the case of the Agent) the Agent has actual knowledge thereof or has been notified in writing thereof by a Bank or the Swap Provider, in which case the Agent shall promptly notify the Banks of the relevant event or circumstance; or

 

16.5.3 be obliged to enquire whether or not any representation or warranty made by either of the Borrowers or any other Security Party pursuant to this Agreement or any of the other Security Documents is true; or

 

16.5.4 be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a breach of any duty of confidentiality or otherwise be actionable or render it liable to any person; or

 

16.5.5 be obliged to account to any Bank or the Swap Provider for any sum or the profit element of any sum received by it for its own account; or

 

16.5.6 be obliged to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents other than on the instructions of the Majority Banks; or

 

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16.5.7 be liable to any Bank or the Swap Provider for any action taken or omitted under or in connection with this Agreement or any of the other Security Documents unless caused by its gross negligence or wilful misconduct.

For the purposes of this clause 16, neither the Arranger nor the Agent shall be treated as having actual knowledge of any matter of which the corporate finance or any other division outside the agency or loan administration department of the Arranger or the person for the time being acting as the Agent may become aware in the context of corporate finance, advisory or lending activities from time to time undertaken by the Arranger or, as the case may be, the Agent for any Security Party or any other person which may be a trade competitor of any Security Party or may otherwise have commercial interests similar to those of any Security Party.

 

16.6 Non-reliance on Arranger or Agent

Each Bank and the Swap Provider acknowledges that it has not relied on any statement, opinion, forecast or other representation made by the Arranger or the Agent to induce it to enter into this Agreement or any of the other Security Documents and that it has made and will continue to make, without reliance on the Arranger or the Agent and based on such documents as it considers appropriate, its own appraisal of the creditworthiness of the Security Parties and its own independent investigation of the financial condition, prospects and affairs of the Security Parties in connection with the making and continuation of such Bank’s Commitment or Contribution under this Agreement. Neither the Arranger nor the Agent shall have any duty or responsibility, either initially or on a continuing basis, to provide any other Creditor with any credit or other information with respect to any Security Party whether coming into its possession before the making of any Advance or at any time or times thereafter other than as provided in clause 16.3.1.

 

16.7 No responsibility on Arranger or Agent for Borrowers’ performance

Neither the Arranger nor the Agent shall have any responsibility or liability to any Bank or the Swap Provider:

 

16.7.1 on account of the failure of any Security Party to perform its obligations under any of the Security Documents; or

 

16.7.2 for the financial condition of any Security Party; or

 

16.7.3 for the completeness or accuracy of any statements, representations or warranties in any of the Security Documents or any document delivered under any of the Security Documents; or

 

16.7.4 for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of any of the Security Documents or of any certificate, report or other document executed or delivered under any of the Security Documents; or

 

16.7.5 to investigate or make any enquiry into the title of either of the Borrowers or any other Security Party to the Ships or any other security or any part thereof; or

 

16.7.6 for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere; or

 

16.7.7 for taking or omitting to take any other action under or in relation to any of the Security Documents or any aspect of any of the Security Documents; or

 

16.7.8 on account of the failure of the Security Agent to perform or discharge any of its duties or obligations under the Security Documents; or

 

16.7.9 otherwise in connection with this Agreement or its negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Banks or the Swap Provider.

 

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16.8 Reliance on documents and professional advice

The Arranger and the Agent shall be entitled to rely on any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person and shall be entitled to rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it (including those in the Arranger’s or, as the case may be, the Agent’s employment).

 

16.9 Other dealings

The Arranger and the Agent may, without any liability to account to the Banks or the Swap Provider, accept deposits from, lend money to, and generally engage in any kind of banking or other business with, and provide advisory or other services to, any Security Party or any of its Related Companies or any of the Banks or the Swap Provider as if it were not the Arranger or, as the case may be, the Agent.

 

16.10 Rights of Agent as Bank; no partnership

With respect to its own Commitment and Contribution (if any) the Agent shall have the same rights and powers under the Security Documents as any other Bank and may exercise the same as though it were not performing the duties and functions delegated to it under this Agreement and the term “Banks” shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Bank. This Agreement shall not and shall not be construed so as to constitute a partnership between the parties or any of them.

 

16.11 Amendments and waivers

 

16.11.1 Subject to clause 16.11.2, the Agent may, with the written consent of the Majority Banks (or if and to the extent expressly authorised by the other provisions of any of the Security Documents) and, if so instructed by the Majority Banks, the Agent shall:

 

  (a) agree (or authorise the Security Agent to agree) amendments or modifications to any of the Security Documents with any Security Party; and/or

 

  (b) vary or waive breaches of, or defaults under, or otherwise excuse performance of, any provision of any of the other Security Documents by any Security Party (or authorise the Security Agent to do so).

Any such action so authorised and effected by the Agent shall be documented in such manner as the Agent shall (with the approval of the Majority Banks) determine, shall be promptly notified to the Banks by the Agent and (without prejudice to the generality of clause 16.2) shall be binding on all the Creditors.

 

16.11.2 Except with the prior written consent of all the Banks, the Agent shall have no authority on behalf of the Banks or the Swap Provider to agree (or authorise the Security Agent to agree) with any Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Agent to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Agent to vary or excuse) performance of or under any of the Security Documents by any Security Party, if the effect of such amendment, modification, waiver or excuse would be to:

 

  (a) reduce the Margin;

 

  (b) postpone the due date of, or reduce the amount of any payment of principal, interest or other amount payable by any Security Party under any of the Security Documents;

 

  (c) change the currency in which any amount is payable by any Security Party under any of the Security Documents;

 

  (d) increase any Bank’s Commitment;

 

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  (e) extend the Termination Date;

 

  (f) change any provision of any of the Security Documents which expressly or implied requires the approval or consent of all the Banks such that the relevant approval or consent may be given otherwise than with the sanction of all the Banks;

 

  (g) change the order of distribution under clause 6.9 or clause 13.1 or change clause 13.2;

 

  (h) change this clause 16.11;

 

  (i) change the definition of “Majority Banks” in clause 1.2; or

 

  (j) release any Security Party from the security constituted by any Security Document (except as required by the terms thereof or by law) or change the terms and conditions upon which such security or guarantee may be, or is required to be, released.

 

16.12 Reimbursement and indemnity by Banks

Each Bank shall reimburse the Agent (rateably in accordance with such Bank’s Commitment or, following the first drawdown, Contribution), to the extent that the Agent is not reimbursed by the Borrowers, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrowers under clause 5.2 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Agent (rateably in accordance with such Bank’s Commitment or, following the first drawdown, Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Agent’s own gross negligence or wilful misconduct.

 

16.13 Retirement of Agent

 

16.13.1 The Agent may, (having given to the Borrowers, the Swap Provider and each of the Banks not less than thirty (30) days’ notice of its intention to do so), retire from its appointment as Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Banks and the Swap Provider as a successor agent:

 

  (a) a Related Company of the Agent nominated by the Agent which the Banks and the Swap Provider hereby irrevocably and unconditionally agree to appoint or, failing such nomination,

 

  (b) a Bank nominated by the Majority Banks or, failing such a nomination,

 

  (c) any reputable and experienced bank or financial institution nominated by the retiring Agent and such successor agent shall have accepted such appointment.

Any corporation into which the retiring Agent may be merged or converted or any corporation with which the Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Agent shall be a party shall, to the extent permitted by applicable law, be the successor Agent under this Agreement and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Banks and the Swap Provider. Prior to any such successor being appointed, the Agent agrees to consult with the Borrowers as to the identity of the proposed successor and to take account of any reasonable objections which the Borrowers may raise to such successor being appointed.

 

16.13.2 Upon any such successor as aforesaid being appointed, the retiring Agent shall be discharged from any further obligation under the Security Documents (but shall continue to

 

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have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Agent. The retiring Agent shall (at the expense of the Borrowers) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.

 

16.14 Appointment and retirement of Security Agent

 

16.14.1 Appointment

Each of the Agent, the Swap Provider and the Banks irrevocably appoints the Security Agent as its security agent and trustee for the purposes of this Agreement and the other Security Documents to which the Security Agent is or is to be a party, in each case on the terms set out in this Agreement. By virtue of such appointment, the Agent, the Swap Provider and each of the Banks hereby authorises the Security Agent (whether or not by or through employees or agents) to take such action on its behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Security Agent by this Agreement and/or any of the other Security Documents together with such powers and discretions as are reasonably incidental thereto.

 

16.14.2 Retirement

 

  (a) Without prejudice to clause 16.13, the Security Agent may, having given to the Borrowers and each of the Banks and the Swap Provider not less than fifteen (15) days’ notice of its intention to do so, retire from its appointment as Security Agent under this Agreement and any Trust Deed, provided that no such retirement shall take effect unless there has been appointed by the Banks, the Agent and the Swap Provider as a successor security agent and trustee:

 

  (i) a Related Company of the Security Agent nominated by the Security Agent which the Banks hereby irrevocably and unconditionally agree to appoint or, failing such nomination.

 

  (ii) a bank or trust corporation nominated by the Majority Banks or, failing such a nomination,

 

  (iii) any bank or trust corporation nominated by the retiring Security Agent,

and, in any case (A) such successor security agent and trustee shall have duly accepted such appointment by delivering to the Agent (1) written confirmation (in a form acceptable to the Agent) of such acceptance agreeing to be bound by this Agreement in the capacity of Security Agent as if it had been an original party to this Agreement and (2) a duly executed Trust Deed and (B) such successor security agent and trustee shall have duly entered into, whether with the retiring Security Agent and/or with the Borrowers and the other Security Parties and/or with the Creditors or with any of them, such documents in connection with the Security Documents as the Agent shall require in its absolute discretion.

 

  (b) Any corporation into which the retiring Security Agent may be merged or converted or any corporation with which the Security Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Security Agent shall be a party shall, to the extent permitted by applicable law, be the successor Security Agent under this Agreement, any Trust Deed and the other Security Documents referred to in clause 16.14.1 without the execution or filing of any document or any further act on the part of any of the parties to this Agreement, any Trust Deed and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Banks, the Agent and the Swap Provider.

 

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  (c) Upon any such successor as aforesaid being appointed, the retiring Security Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Security Agent. The retiring Security Agent shall (at the expense of the Borrowers) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.

 

16.15 Powers and duties of the Security Agent

 

16.15.1 The Security Agent shall have no duties, obligations or liabilities to the Agent, the Swap Provider or any of the Banks beyond those expressly stated in any of the Security Documents. The Agent, the Swap Provider and each of the Banks hereby authorises the Security Agent to enter into and execute:

 

  (a) each of the Security Documents to which the Security Agent is or is intended to be a party; and

 

  (b) any and all such other Security Documents as may be approved by the Agent in writing (acting on the instructions of the Majority Banks) for entry into by the Security Agent,

and, in each and every case, to hold any and all security thereby created upon trust for the Banks, the Swap Provider and the Agent in the manner contemplated by this Agreement.

 

16.15.2 Subject to clause 16.15.3 the Security Agent may, with the prior consent of the Majority Banks communicated in writing by the Agent, concur with any of the Security Parties to:

 

  (a) amend, modify or otherwise vary any provision of the Security Documents to which the Security Agent is or is intended to be a party; or

 

  (b) waive breaches of, or defaults under, or otherwise excuse performance of, any provision of the Security Documents to which the Security Agent is or is intended to be a party.

Any such action so authorised and effected by the Security Agent shall be promptly notified to the Banks, the Swap Provider and the Agent by the Security Agent and shall be binding on the other Creditors.

 

16.15.3 The Security Agent shall not concur with any Security Party with respect to any of the matters described in clause 16.11.2 without the consent of all the Banks communicated in writing by the Agent.

 

16.15.4 The Security Agent shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as security agent and trustee, as the Agent may direct. Subject as provided in the foregoing provisions of this clause, unless and until the Security Agent shall have received such instructions from the Agent, the Security Agent may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.15.1 as the Security Agent shall deem advisable in the best interests of the Creditors provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Agent to take, or refrain from taking, any action of the nature referred to in clause 16.15.2- and for which the prior consent of the Banks is expressly required under clause 16.15.3 - clauses 16.15.2 and16.15.3 shall apply to the exclusion of this clause.

 

16.15.5 None of the Banks nor the Swap Provider nor the Agent shall have any independent power to enforce any of the Security Documents referred to in clause 16.15.1 or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or any of them or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents or any of them except through the Security Agent.

 

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16.15.6 For the purpose of this clause 16, the Security Agent may, rely and act in reliance upon any information from time to time furnished to the Security Agent by the Agent (whether pursuant to clause 16.15.7 or otherwise) unless and until the same is superseded by further such information, so that the Security Agent shall have no liability or responsibility to any party as a consequence of placing reliance on and acting in reliance upon any such information unless the Security Agent has actual knowledge that such information is inaccurate or incorrect.

 

16.15.7 Without prejudice to the foregoing, each of the Agent, the Swap Provider and the Banks (whether directly or through the Agent) shall provide the Security Agent with such written information as it may reasonably require for the purpose of carrying out its duties and obligations under the Security Documents referred to in clause 16.15.1.

 

16.15.8 Each Bank shall reimburse the Security Agent (rateably in accordance with such Bank’s Commitment or, following the first drawdown, Contribution), to the extent that the Security Agent is not reimbursed by the Borrowers, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrowers under clause 5.2 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Security Agent (rateably in accordance with such Bank’s Commitment or, following the first drawdown, Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Security Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Security Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Security Agent’s own gross negligence or wilful misconduct.

 

16.16 Trust provisions

 

16.16.1 In its capacity as trustee in relation to the Security Documents specified in clause 16.15.1 the Security Agent shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Agent by any of those Security Documents.

 

16.16.2 It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.15.1, the Security Agent shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Agent, may not be paid out promptly following receipt in the name or under the control of the Security Agent in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Agent as the Security Agent may think fit without being under any duty to diversify its investments and the Security Agent may at any time vary or transpose any such property or investments for or into any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part of all of the security may, at the discretion of the Security Agent, be made or retained in the names of nominees.

 

16.17 Independent action by Creditors

None of the Creditors shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Security Documents without the prior written consent of the Majority Banks but, Provided such consent has been obtained, it shall not be necessary for any other Creditor to be joined as an additional party in any proceedings for this purpose.

 

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16.18 Common Agent and Security Agent

The Agent and the Security Agent have entered into the Security Documents in their separate capacities (a) as agent for the Banks and the Swap Provider under and pursuant to this Agreement (in the case of the Agent) and (b) as security agent and trustee for the Banks, the Agent and the Swap Provider, under and pursuant to this Agreement, to hold the guarantees and/or security created by the other Security Documents specified in clause 16.15.1 on the terms set out in such Security Documents (in the case of the Security Agent). However, from time to time the Agent and the Security Agent may be the same entity. When the Agent and the Security Agent are the same entity and any Security Document provides for the Agent to communicate with or provide instructions to the Security Agent (and vice versa), it will not be necessary for there to be any such formal communications or instructions on those occasions.

 

16.19 Co-operation to achieve agreed priorities of application

The Banks, the Swap Provider, the Agent and the Account Bank shall co-operate with each other and with the Security Agent and any receiver under the Security Documents in realising the property and assets subject to the Security Documents and in ensuring that the net proceeds realised under the Security Documents after deduction of the expenses of realisation are applied in accordance with clause 13.1.

 

16.20 Prompt distribution of proceeds

Moneys received by any of the Creditors (whether from a receiver or otherwise) pursuant to the exercise of (or otherwise by virtue of the existence of) any rights and powers under or pursuant to any of the Security Documents shall (after providing for all costs, charges, expenses and liabilities and other payments ranking in priority) be paid to the Agent for distribution in accordance with clause 13.1 if such moneys are so received by any of the Creditors other than the Agent or the Security Agent), and if so received by the Agent or the Security Agent, they shall be distributed by the Agent or, as the case may be, the Security Agent in accordance with clause 13.1. The Agent or, as the case may be, the Security Agent shall make each such application and/or distribution as soon as is practicable after the relevant moneys are received by, or otherwise become available to, the Agent or, as the case may be, the Security Agent save that (without prejudice to any other provision contained in any of the Security Documents) the Agent or, as the case may be, the Security Agent (acting on the instructions of the Majority Banks) or any receiver may credit any moneys received by it to a suspense account for so long and in such manner as the Agent or such receiver may from time to time determine with a view to preserving the rights of the Agent and/or the Security Agent and/or the Account Bank and/or the Swap Provider and/or the Arranger and/or the Banks or any of them to provide for the whole of their respective claims against the Borrowers or any other person liable.

 

16.21 Change of Reference Bank

If the Reference Bank ceases to provide quotations to the Agent for the purposes of determining LIBOR or the Mandatory Cost, the Agent may terminate the appointment of such Reference Bank and appoint another bank or financial institution to replace it as the Reference Bank.

 

17 Notices and other matters

 

17.1 Notices

Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) under any of the other Security Documents shall:

 

17.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form;

 

17.1.2

be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of

 

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telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and

 

17.1.3 be sent:

 

  (a) if to the Borrowers or either of them at:

c/o TMS Tankers Ltd.

Athens Shipmanagement Office

00 Xxxxxxxxx Xxxxxx

XX 000 00 Xxxxxxxx

Xxxxxx

Fax no:         x00 000 000 0000

Attention:     Xx X. Xxxxxxxx

 

  (b) if to the Arranger, the Agent, the Security Agent or the Account Bank at:

Nordea Bank Finland plc, London Branch

0xx Xxxxx, Xxxx Xxxxx House

00 Xxxxxxxxxx Xxxxxx

Xxxxxx XX0X 0XX

Xxxxxxx

Fax no:         x00 000 000 0000

Att:               Loan Administration

with a copy to:

Fax no:         x00 000 000 0000

Att:               Shipping Department

 

  (c) if to a Bank, to its address or fax number specified in schedule 1 or , in the case of a Transferee Bank, in any relevant Transfer Certificate; or

 

  (d) if to the Swap Provider, to its address or fax number specified in paragraph (a) of Part 4 of the Schedule to the Master Swap Agreement,

or, in each case, to such other address and/or numbers as is notified by one party to the other parties under this Agreement.

 

17.2 Notices through the Agent

Every notice, request, demand or other communication under this Agreement to be given by the Borrowers to any other party (other than the Swap Provider) shall be given to the Agent for onward transmission as appropriate and if such notice, request, demand or other communication is to be given to the Borrowers, it shall (except if otherwise provided in the Security Documents) be given through the Agent.

 

17.3 No implied waivers, remedies cumulative

No failure or delay on the part of any Creditor to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law.

 

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17.4 English language

All certificates, instruments and other documents to be delivered under or supplied in connection with any of the Security Documents shall be in the English language or shall be accompanied by a certified English translation upon which the Creditors or any of them shall be entitled to rely.

 

17.5 Borrowers’ obligations

 

17.5.1 Joint and several

Notwithstanding anything to the contrary contained in any of the Security Documents, the agreements, obligations and liabilities of the Borrowers herein contained are joint and several and shall be construed accordingly. Each of the Borrowers agrees and consents to be bound by the Security Documents to which it is, or is to be, a party notwithstanding that the other Borrower which is intended to sign or to be bound may not do so or be effectually bound and notwithstanding that any of the Security Documents may be invalid or unenforceable against the other Borrower, whether or not the deficiency is known to any of the Creditors.

 

17.5.2 Borrowers as principal debtors

Each Borrower acknowledges and confirms that it is a principal and original debtor in respect of all amounts which may become payable by the Borrowers in accordance with the terms of this Agreement or any of the other Security Documents and agrees that the Creditors may also continue to treat it as such, whether or not any Creditor is or becomes aware that such Borrower is or has become a surety for the other Borrower.

 

17.5.3 Indemnity

The Borrowers hereby agree jointly and severally to keep the Creditors fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of a Borrower to perform or discharge any purported obligation or liability of a Borrower which would have been the subject of this Agreement or any other Security Document had it been valid and enforceable and which is not or ceases to be valid and enforceable against a Borrower on any ground whatsoever, whether or not known to a Creditor (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of a Borrower (or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding up, administration, receivership, amalgamation, reconstruction or any other incapacity of any person whatsoever (including, In the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Security Party)).

 

17.5.4 Liability unconditional

None of the obligations or liabilities of the Borrowers under this Agreement or any other Security Document shall be discharged or reduced by reason of:

 

  (a) the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of a Borrower or any other person liable;

 

  (b) the Agent (acting on the instructions of the Majority Banks) or the Security Agent granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, a Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting, varying any compromise, arrangement or settlement or omitting to claim or enforce payment from a Borrower or any other person liable; or

 

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  (c) anything done or omitted which but for this provision might operate to exonerate the Borrowers or either of them.

 

17.5.5 Recourse to other security

The Creditors shall not be obliged to make any claim or demand or to resort to any Security Document or other means of payment now or hereafter held by or available to it for enforcing this Agreement or any of the Security Documents against a Borrower or any other person liable and no action taken or omitted by any Creditor in connection with any such Security Document or other means of payment will discharge, reduce, prejudice or affect the liability of the Borrowers under this Agreement and the Security Documents to which either of them is, or is to be, a party.

 

17.5.6 Waiver of Borrowers’ rights

Each Borrower agrees with each Creditor that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Total Commitment remains outstanding, it will not, without the prior written consent of the Agent (acting on the instructions of the Majority Banks):

 

  (a) exercise any right of subrogation, reimbursement and indemnity against the other Borrower or any other person liable under the Security Documents;

 

  (b) demand or accept repayment in whole or in part of any Indebtedness now or hereafter due to such Borrower from the other Borrower or from any other person liable or demand or accept any guarantee, indemnity or other assurance against financial loss or any document or instrument created or evidencing an Encumbrance in respect of the same or dispose of the same;

 

  (c) take any steps to enforce any right against the other Borrower or any other person liable in respect of any such moneys; or

 

  (d) claim any set-off or counterclaim against the other Borrower or any other person liable or claiming or proving in competition with any Creditor in the liquidation of the other Borrower or any other person liable or have the benefit of, or share in, any payment from or composition with, the other Borrower or any other person liable or any other Security Document now or hereafter held by any Creditor for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Agent, it will prove for the whole or any part of its claim in the liquidation of the other Borrower or other person liable on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Banks and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Agent (acting on the Instructions of the Majority Banks) shall deem appropriate.

 

18 Governing law and jurisdiction

 

18.1 Law

This Agreement and any non-contractual obligations connected with it are governed by, and shall be construed in accordance with, English law.

 

18.2 Submission to jurisdiction

The Borrowers jointly and severally agree, for the benefit of each Creditor, that any legal action or proceedings arising out of or in connection with this Agreement (including any non-contractual obligations connected with this Agreement) against the Borrowers or either of them or any of

 

64

their assets may be brought in the English courts. Each of the Borrowers irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Ince Process Agents Ltd, at present of 0xx Xxxxx, Xxxxxxxxxxxxx Xxxxx, 0 Xx. Xxxxxxxxx’s Way, Xxxxxx X0X 0XX, Xxxxxxx to receive for it and on its behalf, service of process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of any Creditor to take proceedings against either of the Borrowers in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

The parties further agree that only the Courts of England and not those of any other State shall have jurisdiction to determine any claim which either of the Borrowers may have against any Creditor arising out of or in connection with this Agreement (including any non-contractual obligations connected with this Agreement).

 

18.3 Contracts (Rights of Third Parties) Xxx 0000

No term of this Agreement is enforceable under the provisions of the Contracts (Rights of Third Parties) Xxx 0000 by a person who is not a party to this Agreement.

IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written.

 

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Schedule 1

The Banks and their Commitments

 

Name

   

Lending office and contact
details

    Commitment $  

Nordea Bank Finland plc,

London Branch

    Lending office      70,000,000   
   0xx Xxxxx, Xxxx Xxxxx House 00 Xxxxxxxxxx Xxxxxx Xxxxxx XX0X 0XX Xxxxxxx   
  

Contact details for notices

 

0xx Xxxxx, Xxxx Xxxxx House 00 Xxxxxxxxxx Xxxxxx Xxxxxx XX0X 0XX Xxxxxxx

   
  

Fax: x00 000 000 0000

Attn: Loan Administration

 

With a copy to:

 

Fax: x00 000 000 0000 Attn: Shipping Department

   

TOTAL COMMITMENT

         70,000,000   

 

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Schedule 2

Form of Drawdown Notice

(referred to in clause 2.4)

 

To: Nordea Bank Finland plc, London Branch

0xx Xxxxx, Xxxx Xxxxx House

00 Xxxxxxxxxx Xxxxxx

Xxxxxx XX0X 0XX

Xxxxxxx

(as Agent)

[—] 2011

U.S.$70,000,000 Loan

Loan Agreement dated [—] 2011 (the “Loan Agreement”)

We refer to the above Loan Agreement and hereby give you notice that we wish to draw down the [Zeus] [Apollo] Advance, namely $[—] on [                        ] 20[—] and select the first Interest Period in respect thereof to expire on [—]. The funds should be credited to [name and number of account] with [details of bank in New York City].

We confirm that:

 

(a) no event or circumstance has occurred and is continuing which constitutes a Default;

 

(b) the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) of the Loan Agreement and (ii) clause 4 of each of the Corporate Guarantees, are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;

 

(c) the borrowing to be effected by the drawdown of the [Zeus] [Apollo] Advance is in accordance with clauses 1.1 and 2.5 of the Loan Agreement and will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded;

 

(d) no events, conditions, facts or circumstances exist, have arisen or occurred since the date of the Loan Agreement which have had or could be reasonably expected to have a Material Adverse Effect; and

 

(e) we will use the proceeds of the [Zeus] [Apollo] Advance for our benefit and under our full responsibility and exclusively for the purpose specified in the Loan Agreement.

Words and expressions defined in the Loan Agreement shall have the same meanings where used.

 

 

For and on behalf of
OLYMPIAN ZEUS OWNERS INC.

 

 

For and on behalf of
OLYMPIAN APOLLO OWNERS INC.

 

67

Schedule 3

Documents and evidence required as conditions precedent to the Loan being

made

(referred to in clause 9.1)

Part 1

Documents and conditions required as conditions precedent to the Total Commitment being

made available

 

1 Constitutional documents

Copies, certified by the legal adviser of each Security Party as true, complete and up to date copies of all documents which contain or establish or relate to the constitution of that Security Party;

 

2 Corporate authorisations

copies of resolutions of the directors of each Security Party and, if required, the shareholders (as the case may be) of each Security Party (except for the DryShips Guarantor) approving such of the Underlying Documents and the Security Documents to which such Security Party or such other party is, or is to be, party and authorising the signature, delivery and performance of such Security Party’s or such other party’s obligations thereunder, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party or such other party, as:

 

  (a) being true and correct;

 

  (b) being duly passed at meetings of the board of directors of such Security Party or such other party and, if required, of the shareholders of such Security Party (except for the Dry Ships Guarantor) each duly convened and held;

 

  (c) not having been amended, modified or revoked; and

 

  (d) being in full force and effect,

together with originals or certified copies of any powers of attorney issued by any such Security Party or such other party pursuant to such resolutions;

 

3 Specimen signatures

copies of the signatures of the persons who have been authorised on behalf of each Security Party to sign such of the Underlying Documents and the Security Documents to which such Security Party is, or is to be, party and to give notices and communications, including notices of drawing, under or in connection with the Security Documents, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party as being the true signatures of such persons;

 

4 Certificates of incumbency

a list of directors and officers of each Security Party specifying the names and positions of such persons, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party to be true, complete and up to date;

 

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5 Borrowers’ consents and approvals

a certificate (dated no earlier than five (5) Banking Days prior to the date of this Agreement) from an officer of each of the Borrowers that no consents, authorisations, licences or approvals are necessary for that Borrower to authorise or are required by that Borrower in connection with the borrowing by that Borrower of the Loan pursuant to this Agreement or the execution, delivery and performance of the Security Documents by that Borrower;

 

6 Other consents and approvals

a certificate (dated no earlier than five (5) Banking Days prior to the date of this Agreement) from an officer of each Security Party (other than the Borrowers) that no consents, authorisations, licences or approvals are necessary for such Security Party to guarantee and/or grant security for the borrowing by the Borrowers of the Total Commitment pursuant to this Agreement and execute, deliver and perform the Security Documents insofar as such Security Party is a party thereto;

 

7 Certified copies of the Underlying Documents

a copy, certified (in a certificate dated no earlier than (5) five Banking Days prior to the date of this Agreement) as a true and complete copy by the legal adviser of each of the Borrowers of each of the Management Agreements, the Contracts and the Initial Charters;

 

8 Xxxxxxxx Islands opinion

an opinion of Messrs Cozen X’Xxxxxx, special legal advisers on matters of Xxxxxxxx Islands law to the Agent;

 

9 Maltese opinion

an opinion of Messrs Ganado and Associates, special legal advisers on matters of Maltese law to the Agent;

 

10 Further opinions

any such further opinion as may be required by the Agent;

 

11 Security Documents

the Fees Letter, the Master Swap Agreement, the Corporate Guarantees, the Operating Account Assignments and the Swap Assignment (together with any other documents to be executed and delivered to the Agent pursuant thereto), each duly executed;

 

12 Fees and commitment commission

evidence that any fees and commission due under clause 5.1 or any other provision of the Security Documents have been paid in full;

 

13 Borrowers’ process agent

a letter from each Borrower’s agent for receipt of service of proceedings referred to in clause 18.2 accepting its appointment under the said clause and under each of the other Security Documents in which it is or is to be appointed as such Borrower’s agent;

 

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14 Corporate Guarantors’ process agent

a letter from the agent of each of the Corporate Guarantor’s agent for receipt of service of proceedings referred to in clause 9.2 of each of the Corporate Guarantees accepting its appointment under each such clause;

 

15 Registration forms

such statutory forms duly signed by the Borrowers and the other Security Parties as may be required by the Agent to perfect the security contemplated by the Security Documents;

 

16 Operating Accounts

evidence that each Operating Account has been opened together with mandate forms in respect thereof duly executed and that an amount of at least $10 is standing to the credit thereof; and

 

17 “KYC”

such documentation and other evidence as is requested by the Agent in order for the Agent or any Bank or the Account Bank to carry out and be satisfied with the results of all necessary “know your client” or other checks which each such Bank or the Account Bank is required to carry out under any applicable law or legislation or by any regulatory or financial services authority (including in the European Union or the U.S.A.), in relation to the transactions contemplated by this Agreement and to the identity of any parties to this Agreement (other than the Creditors) and their directors, members of the board of directors, officers, shareholders and ultimate beneficial owners.

 

70

Part 2

Documents and conditions required as conditions precedent to the Loan being made

 

1 Past conditions precedent

Evidence that the conditions precedent referred to in Part 1 of this schedule 3, remain fully satisfied;

 

2 Ship conditions

evidence that the Ship (for the purposes of this Part 2, the “Relevant Ship”) to which the Advance to be drawn down relates (for the purposes of this Part 2, the “Relevant Advance”):

 

2.1 Registration and Encumbrances

is permanently or provisionally registered in the name of the relevant Borrower under the laws and flag of the relevant Flag State through the relevant Registry and that the Relevant Ship and its Earnings, Insurances and Requisition Compensation are free of Encumbrances;

 

2.2 Classification

maintains the relevant Classification free of all requirements and recommendations from the relevant Classification Society; and

 

2.3 Insurances

is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, confirmation from the protection and indemnity association or other insurer with which the Relevant Ship is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to the Relevant Ship);

 

3 Ship Security Documents

the Ship Security Documents for the Relevant Ship, together with the other documents to be delivered to the Security Agent pursuant thereto, duly executed and delivered;

 

4 Title and no Encumbrances

evidence that the transfer of title to the Relevant Ship from the Builder to the relevant Borrower has been duly registered in the relevant Registry free of any Encumbrance (other than Permitted Encumbrances);

 

5 Mortgage registration

evidence that the relevant Mortgage has been permanently registered against the Relevant Ship under the laws and flag of the relevant Flag State through the relevant Registry;

 

6 Initial Charter

the Charter Assignment in respect of the Initial Charter for the Relevant Ship, duly executed by the relevant Borrower;

 

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7 Registration forms

such statutory forms duly signed by the Borrowers and the other Security Parties as may be required by the Agent to perfect the security contemplated by the Security Documents;

 

8 Notices of assignment and acknowledgements

copies of duly executed notices of assignment and acknowledgements thereof in the forms prescribed by the relevant Ship Security Documents in respect of the Relevant Ship;

 

9 Xxxxxxxx Islands opinion

an opinion of Messrs. Cozen X’Xxxxxx, special legal advisers on matters of Xxxxxxxx Islands law to the Agent;

 

10 Maltese opinion

an opinion of Messrs Ganado & Associates, special legal advisers on matters of Maltese law to the Agent;

 

11 Further opinions

any such further opinion as may be required by the Agent;

 

12 Delivery documents

a copy, certified as a true and complete copy by an officer or a legal advisor of the Borrowers, of (a) a duly executed and notarised/legalised xxxx of sale in respect of the Relevant Ship evidencing the full Contract Price for the Relevant Ship, (b) the protocol of delivery and acceptance in respect of the Relevant Ship and (c) any other delivery documents, each duly executed and exchanged pursuant to the relevant Contract (including any evidence of payment in full of the relevant Contract Price, the commercial invoice constituting adequate such evidence);

 

13 Insurance opinion

an opinion from insurance consultants to the Agent, at the cost of the Borrowers, on the Insurances effected or to be effected in respect of the Relevant Ship upon and following the Drawdown Date of the Relevant Advance in form and substance satisfactory to the Agent;

 

14 Readiness

(in relation to the Apollo Advance only) evidence that the Relevant Ship is in all respects ready for delivery pursuant to the relevant Contract;

 

15 ISPS Code compliance

 

15.1 evidence satisfactory to the Agent that the Relevant Ship is subject to a ship security plan which complies with the ISPS Code; and

 

15.2 a copy certified as a true and complete copy by an officer or a legal advisor of the Borrowers of the ISSC for the Relevant Ship and the continuous synopsis record required by the ISPS Code in respect of the Relevant Ship;

 

16 SMC/DOC

a copy, certified as a true and complete copy by an officer or legal advisor of the Borrowers of the DOC issued to the Operator of the Relevant Ship and the SMC for the Relevant Ship;

 

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17 Valuation

a valuation of the Relevant Ship (each being not older than 30 days (In respect of the Zeus Ship) and 15 days (in respect of the Apollo Ship) from the Drawdown Date of the Relevant Advance) made (at the cost of the Borrowers) by two (2) Approved Shipbrokers selected by the Agent and made on the basis of, and in accordance with, the provisions of clause 8.2.2, expressed in Dollars;

 

18 Certificates of financial responsibility

if the Relevant Ship will trade in the United States of America, a copy of a certificate of financial responsibility in relation to the Relevant Ship complying with the requirements of the United States Pollution Xxx 0000 or the United States Comprehensive Environmental Response Compensation Liability Xxx 0000;

 

19 Security Parties’ process agent

a letter from each Security Party’s agent for receipt of service of proceedings accepting its appointment under each Ship Security Document in which it is or is to be appointed as agent for service of process;

 

20 Fees and commitment commission

payment of any fees and commitment commission due from the Borrowers to the Agent pursuant to the terms of clause 5.1 or any other provisions of the Security Documents;

 

21 Updated corporate authorisations/certificates of incumbency

(in relation to the Apollo Advance only) a list of directors, officers and authorised attorneys-in-fact of each Security Party specifying the names and positions of such persons and copies of the signatures of the persons who have been authorised on behalf of each such Security Party to sign such of the Security Documents to which such Security Party is, or is to be, party and to give notices and communications, including notices of drawing, under or in connection with the Security Documents, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the Apollo Advance) by a legal adviser of such Security Party to be, in the case of the list of directors, officers and authorised attorneys-in-fact, true, complete and up to date and, in the case of the specimen signatures, true signatures of such persons, or a certificate by an officer of such Security Party that the list provided in respect of such Security Party pursuant to paragraph 4 of Part 1 of this schedule, and that the specimen signatures provided in respect of such Security Party pursuant to paragraph 3 of Part 1 of this schedule, remain true, complete and up to date; and

 

22 Further matters/conditions precedent

such other conditions, documents and evidence as the Agent may be required.

 

73

Schedule 4

Form of Transfer Certificate

(referred to in clause 15.3)

TRANSFER CERTIFICATE

Banks are advised not to employ Transfer Certificates or otherwise to assign or transfer interests in the Loan Agreement without further ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services and Markets Xxx 0000 and regulations made thereunder and similar statutes which may be in force in other jurisdictions

 

To: NORDEA BANK FINLAND PLC, LONDON BRANCH as agent on its own behalf and on behalf of the Borrowers, the Account Bank, the Security Agent, the Arranger, the Swap Provider and the Banks defined in the Loan Agreement referred to below.

[Date]

Attention:    [—]

This certificate (“Transfer Certificate”) relates to a loan agreement dated [—] (the “Loan Agreement”) and made between (1) Olympian Zeus Owners Inc. and Olympian Apollo Owners Inc. as joint and several borrowers (the “Borrowers”), (2) the banks and financial institutions defined therein as banks (the “Banks”) and (3) Nordea Bank Finland plc, London Branch as Agent, Arranger, Security Agent, Swap Provider and Account Bank, in relation to a term loan of up to Seventy million Dollars ($70,000,000). Terms defined in the Loan Agreement shall, unless otherwise defined herein, have the same meanings herein as therein.

In this Certificate:

the “Transferor Bank” means [full name] of [lending office]; and

the “Transferee Bank” means [full name] of [lending office].

 

1 The Transferor Bank with full title guarantee assigns to the Transferee Bank absolutely all rights and interests (present, future or contingent) which the Transferor Bank has as a Bank under or by virtue of the Loan Agreement and all the Security Documents in relation to that part of the [Contribution] [Commitment] of the Transferor Bank (or its predecessors in title) details of which are set out below:

 

Date of Advance

    Amount of Advance      Transferor Bank’s
[Contribution]
[Commitment]
to Advance		      Maturity Date  
        

 

2 By virtue of this Transfer Certificate and clause 15 of the Loan Agreement, the Transferor Bank is discharged [entirely from its [Contribution] [Commitment] which amounts to $[        ]] [from [    ] per cent ([    ]%) of its [Contribution] [Commitment] in respect of both Advances], which percentage represents $[        ]].

 

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3 The Transferee Bank hereby requests the Borrowers, the Agent (on behalf of itself, the Borrowers, the Account Bank, the Arranger, the Security Agent, the Swap Provider and the Banks) to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of clause 15.3 of the Loan Agreement so as to lake effect in accordance with the terms thereof on [date of transfer].

 

4 The Transferee Bank:

 

4.1 confirms that it has received a copy of the Loan Agreement and the other Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby;

 

4.2 confirms that it has not relied and will not hereafter rely on the Transferor Bank, the Agent, the Arranger, the Security Agent, the Swap Provider, the Account Bank or the other Banks to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Loan Agreement, any of the Security Documents or any such documents or information;

 

4.3 agrees that it has not relied and will not rely on the Transferor Bank, the Agent, the Arranger, the Security Agent, the Account Bank, the Swap Provider or the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrowers or either of them or any other Security Party (save as otherwise expressly provided therein);

 

4.4 warrants that it has power and authority to become a party to the Loan Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Loan Agreement and the Security Documents; and

 

4.5 if not already a Bank, appoints (i) the Agent to act as its agent and (ii) the Security Agent to act as its security agent and trustee, in each case as provided in the Loan Agreement and the Security Documents and agrees to be bound by the terms of the Loan Agreement and the other Security Documents.

 

5 The Transferor Bank:

 

5.1 warrants to the Transferee Bank that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so;

 

5.2 warrants to the Transferee Bank that this Transfer Certificate is binding on the Transferor Bank under the laws of England, the country in which the Transferor Bank is incorporated and the country in which its lending office is located; and

 

5.3 agrees that it will, at its own expense, execute any documents which the Transferee Bank reasonably requests for perfecting in any relevant jurisdiction the Transferee Bank’s title under this Transfer Certificate or for a similar purpose.

 

6 The Transferee Bank hereby undertakes with the Transferor Bank and each of the other parties to the Loan Agreement and the other Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Loan Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

 

7

By execution of this Transfer Certificate on their behalf by the Agent and in reliance upon the representations and warranties of the Transferee Bank, the Borrowers, the Account Bank, the Arranger, the Security Agent, the Agent, the Swap Provider and the Banks accept the Transferee Bank as a party to the Loan Agreement and the Security Documents with respect to all those rights and/or obligations which by the terms of the Loan Agreement and the Security Documents will be assumed by the Transferee Bank (including those about pro-rata sharing and the exclusion

 

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of liability on the part of, and the indemnification of, the Agent, the Arranger, the Account Bank, the Swap Provider and the Security Agent as provided by the Loan Agreement) after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

 

8 None of the Transferor Bank, the Agent, the Arranger, the Security Agent, the Account Bank, the Swap Provider or the Banks.

 

8.1 makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Loan Agreement or any of the Security Documents or any document relating thereto; or

 

8.2 assumes any responsibility for the financial condition of the Borrowers or either of them or any other Security Party or any party to any such other document or for the performance and observance by the Borrowers or either of them or any other Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid).

 

9 The Transferor Bank and the Transferee Bank each undertake that they will on demand fully indemnify the Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Agent’s gross negligence or wilful misconduct, as the case may be.

 

10 The agreements and undertakings of the Transferee Bank in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to the Loan Agreement and the Security Documents.

 

11 This Transfer Certificate and any non-contractual obligations connected with this Transfer Certificate shall be governed by, and shall be construed in accordance with, English law.

 

Transferor Bank     Transferee Bank
By:  

 

     By:  

 

Dated:  

 

     Dated:  

 

Agent

Agreed for and on behalf of itself as Agent, the Arranger, the Borrowers, the Security Agent, the Account Bank, the Swap Provider and the Banks.

 

NORDEA BANK FINLAND PLC, LONDON BRANCH
By:  

 

Dated:  

 

Note: The execution of this Transfer Certificate alone may not transfer a proportionate share of the Transferor Bank’s interest in the security constituted by the Security Documents in the Transferor Bank’s or Transferee Bank’s jurisdiction. It is the responsibility of the Transferee Bank to ascertain whether any other documents are required to perfect a transfer of such a share in the Transferor Bank’s interest in such security in any such jurisdiction and, if so, to seek appropriate advice and arrange for execution of the same.

 

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The Schedule

Outstanding Contribution: $—

Commitment: $—

Portion Transferred: —%

Administrative Details of Transferee Bank

Name of Transferee Bank:

Lending Office:

Contact Person

(Loan Administration Department):

Telephone:

Telefax No:

Contact Person:

(Credit Administration Department):

Telephone:

Telefax No:

Account for payments:

 

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Schedule 5

Form of Trust Deed

THIS DECLARATION OF TRUST by NORDEA BANK FINLAND PLC, LONDON BRANCH (the “Security Agent”) is made on [—] 2011 and is supplemental to (and made pursuant to the terms of) a Loan Agreement dated [—] 2011 (the “Agreement”) and made between (1) Olympian Zeus Owners Inc. and Olympian Apollo Owners Inc. as joint and several Borrowers, (2) the banks and financial institutions mentioned in schedule 1 to the Agreement as the Banks and (3) Nordea Bank Finland plc, London Branch as Arranger, Agent, Security Agent, Swap Provider and Account Bank. Words and expressions defined in the Agreement shall have the same meaning when used in this Deed.

NOW THIS DEED WITNESSETH as follows:

 

1 The Security Agent hereby acknowledges and declares that, from the date of this Deed, it holds and shall hold the Trust Property on trust for certain of the other Creditors on the terms and basis set out in the Agreement.

 

2 The declaration and acknowledgement contained in paragraph 1 above shall be irrevocable.

IN WITNESS whereof the Security Agent has executed this Deed the day and year first above written.

 

SIGNED, SEALED and DELIVERED    )  
As a DEED    )  
by    )  

 

for and on behalf of    )   Attorney-In-fact
NORDEA BANK FINLAND PLC, LONDON BRANCH    )  
(as Security Agent)    )  
in the presence of:     

 

78

Schedule 6

Form of Mortgage

 

79

Schedule 7

Form of Deed of Covenant

 

80

Schedule 8

Form of Asclepius Guarantee

 

81

Schedule 9

Form of DryShips Guarantee

 

82

Schedule 10

Form of Manager’s Undertaking

 

83

Schedule 11

Form of Master Swap Agreement

 

84

Schedule 12

Form of Swap Assignment

 

85

Schedule 13

Form of Operating Account Assignment

 

86

Schedule 14

Mandatory Cost formula

 

1 The Mandatory Cost is an addition to the interest rate to compensate Banks for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

 

2 On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Bank, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Banks’ Additional Cost Rates (weighted in proportion to the percentage participation of each Bank in the Loan or any relevant unpaid sum) and will be expressed as a percentage rate per annum.

 

3 The Additional Cost Rate for any Bank lending from a lending office in a Participating Member State will be the percentage notified by that Bank to the Agent. This percentage will be certified by that Bank in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Bank’s participation in the Loan or the relevant unpaid sum made from that lending office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that lending office.

 

4 The Additional Cost Rate for any Bank lending from a lending office in the United Kingdom will be calculated by the Agent as follows:

 

E x 0.01   per cent per annum.
300  

Where E is designed to compensate Banks for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

 

5 For the purposes of this Schedule:

 

  (a) “Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

 

  (b) “Fee Tariffs” means the fee tariffs specified in the Fees Rules under Column 1 of the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate);

 

  (c) “Participating Member State” means any member of the European Union that adopts or has adopted the euro as its lawful currency in accordance with the legislation of the European Community relating to the Economic and Monetary Union;

 

  (d) “Special Deposits” has the meaning given to it from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; and

 

  (e) “Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

 

6

If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that

 

87

 

Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by the Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

 

7 Each Bank shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Bank shall supply the following information on or prior to the date on which it becomes a Bank:

 

  (a) the jurisdiction of its lending office; and

 

  (b) any other information that the Agent may reasonably require for such purpose.

Each Bank shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph.

 

8 The rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the Information supplied to it pursuant to paragraphs 6 and 7 above and on the assumption that, unless a Bank notifies the Agent to the contrary, each Bank’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a lending office in the same jurisdiction as its lending office.

 

9 The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Bank and shall be entitled to assume that the information provided by any Bank or Reference Bank pursuant to paragraphs 3. 6 and 7 above is true and correct in all respects.

 

10 The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Banks on the basis of the Additional Cost Rate for each Bank based on the information provided by each Bank and each Reference Bank pursuant to paragraphs 3.6 and 7 above.

 

11 Any determination by the Agent pursuant to this schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Bank shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.

The Agent may from time to time, after consultation with the Borrowers and the Banks, determine and notify to all parties to this Agreement any amendments which are required to be made to this schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.

 

88

SIGNED by Xxxxxxxxx Xxxxxx    )    
for and on behalf of    )  

/s/ Xxxxxxxxx Xxxxxx

OLYMPIAN ZEUS OWNERS INC.    )   Attorney-in-fact
as Borrower    )  

 

SIGNED by Xxxxxxxxx Xxxxxx    )    
for and on behalf of    )  

/s/ Xxxxxxxxx Xxxxxx

OLYMPIAN APOLLO OWNERS INC.    )   Attorney-in-fact
as Borrower    )  

 

SIGNED by Kyviallos Spoullos    )    
for and on behalf of    )  

/s/ Kyviallos Spoullos

NORDEA BANK FINLAND PLC, LONDON BRANCH    )   Attorney-in-fact
as Arranger, Agent, Security Agent    )  
and Account Bank    )  

 

SIGNED by Kyviallos Spoullos    )    
for and on behalf of    )  

/s/ Kyviallos Spoullos

NORDEA BANK FINLAND PLC, LONDON BRANCH    )   Attorney-in-fact
as Bank    )  

 

SIGNED by Kyviallos Spoullos    )    
for and on behalf of    )  

/s/ Kyviallos Spoullos

NORDEA BANK FINLAND PLC    )   Attorney-in-fact
as Swap Provider     

 

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Filed: April 15th, 2011
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