Exhibit 10.3

 

LOAN AND SECURITY AGREEMENT

 

dated as of August 7, 2019

 

between

 

PACIFIC WESTERN BANK,

as Lender

 

and

 

OVERSEAS SUN COAST LLC,

as Borrower

 

 

 

 

TABLE OF CONTENTS

 

Section       ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1 SECTION 1.01. Certain
Defined Terms 1 SECTION 1.02. Computation of Time Periods 18 SECTION 1.03.
Accounting Terms 19 SECTION 1.04. Other Interpretive Provisions 19       ARTICLE
II THE LOAN 19 SECTION 2.01. The Loan 19 SECTION 2.02. Drawdown Procedures 19
SECTION 2.03. Advance of Loan Proceeds 20 SECTION 2.04. The Note 20 SECTION
2.05. Repayment of Principal and Interest 20       ARTICLE III INTEREST AND
PAYMENT PROVISIONS 20 SECTION 3.01. Interest Rate 20 SECTION 3.02. Payments and
Computations 20 SECTION 3.03. Prepayment 21       ARTICLE IV SECURITY 22 SECTION
4.01. Grant of Security Interest 22 SECTION 4.02. Release of Collateral. 22
SECTION 4.03. Exercise of Powers of Attorney 22       ARTICLE V CONDITIONS
PRECEDENT 22 SECTION 5.01. Conditions Precedent to the Initial Closing 22
SECTION 5.02. Conditions Precedent to the Funding of the Loan 24       ARTICLE
VI REPRESENTATIONS AND WARRANTIES 25 SECTION 6.01. Representations and
Warranties 25       ARTICLE VII COVENANTS OF BORROWER 29 SECTION 7.01.
Affirmative Covenants 29 SECTION 7.02. Negative Covenants 36       ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES 38 SECTION 8.01. Events of Default; Acceleration,
etc 38 SECTION 8.02. Additional Rights 41

 

i

 

 

ARTICLE IX MISCELLANEOUS 41 SECTION 9.01. Amendments, etc 41 SECTION 9.02.
Notices, etc 41 SECTION 9.03. GOVERNING LAW 42 SECTION 9.04. Service of Process
and Consent to Jurisdiction; Waiver of Venue 42 SECTION 9.05. No Remedy
Exclusive 43 SECTION 9.06. Payment of Costs 43 SECTION 9.07 . Further Assurances
43 SECTION 9.08. Counterparts 43 SECTION 9.09. Headings 43 SECTION 9.10.
Severability 43 SECTION 9.11. Survival 44 SECTION 9.12. WAIVER OF TRIAL BY JURY
44 SECTION 9.13. Assignment; Participations 44 SECTION 9.14. Patriot Act. 45
SECTION 9.15. Indemnity 45 SECTION 9.16. Confidentiality 45 SECTION 9.17.
Acknowledgment Regarding Any Supported QFCs. 46

 

Exhibit A - Form of General Assignment of Earnings Exhibit B - Form of
Assignment of Insurances Exhibit C - Form of Assignment of Time Charter and Time
Charterer’s Consent thereto Exhibit D - Form of First Preferred Mortgage Exhibit
E - Form of Guaranty Exhibit F- - Form of Promissory Note

 

Appendix A - Form of Drawdown Notice

 

ii

 

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of August 7, 2019,
is entered into by and between PACIFIC WESTERN BANK, a California banking
corporation, as lender (the “Lender”), and OVERSEAS SUN COAST LLC, a Delaware
limited liability company, as borrower (the “Borrower”).

 

RECITALS:

 

WHEREAS, the Borrower has requested that the Lender make available to it a term
loan in the original principal amount of $25,000,000, the proceeds of which
shall be used to finance in part the Borrower’s purchase of one (1) 50,000 DWT
class product/chemical tanker, Hull No. 2717, to be classed and registered with
the symbol of +Al(E), Oil and Chemical Carrier, ESP, IMO Ship type 2, +AMS,
+ACCU, CSR, AB-CM, TCM, UWILD, IHM, CPS, BWT, SPMA, VEC, RRDA, to be flagged
under the laws of the Republic of the Marshall Islands and built by Hyundai Mipo
Dockyard Co. Ltd. in Ulsan, Korea (the “Vessel”); and

 

WHEREAS, as security for its obligations to the Lender, the Borrower has agreed
to grant the Lender a first preferred mortgage over the whole of the Vessel and
a continuing, first priority security interest in all of said Vessel’s earnings,
insurances and requisition compensation; and

 

WHEREAS, as inducement to the Lender to make such term loan available to the
Borrower, Overseas Shipholding Group, Inc., the Borrower’s parent company, has
agreed to absolutely, unconditionally and irrevocably guarantee all obligations
of the Borrower to the Lender; and

 

WHEREAS, the Lender is willing to make such term loan available to the Borrower
subject to the terms and upon the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following
terms have the following meanings (such to be equally applicable to the singular
and plural forms of the terms defined):

 

“Acceptability” means a communication from an Oil Major (or other oil company,
or terminal operator, or other major user of tonnage similar to the Vessel)
which is reasonably understood to indicate that the Vessel is acceptable to the
entity issuing such communication.

 

“Acquisition” means, as to any Person, any transaction or series of related
transactions for the direct or indirect (a) acquisition of all or substantially
all of the property of any other Person, or of any business or division of any
other Person, (b) acquisition of all of the Equity Interests of any other
Person, and otherwise causing such other Person to become a Subsidiary of such
acquiring Person, or (c) merger or consolidation or any other combination with
any other Person.

 

1

 

 

“Affiliate” means, as to any Person, any other Person (i) that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. For purposes of this definition, the
term “control” (including the terms “controlling”, “controlled by” and “under
common control with”) of a Person means the possession, directly or indirectly,
of the power to vote 10% or more of the Equity Interests having ordinary voting
power for the election of directors/managers of such Person or the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Equity Interests, by contract, or otherwise.

 

“Agreement” has the meaning set forth in the preamble hereto and includes all
amendments, supplements and modifications thereto.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrower from time to time concerning or relating
to bribery or corruption, including, but not limited to, the United States
Foreign Corrupt Practices Act of 1977, as amended, and all regulations issued
pursuant thereto.

 

“Anti-Terrorism Laws” means all laws applicable to the Borrower relating to
terrorism or money laundering, including, but not limited to, the Patriot Act,
and all regulations issued pursuant thereto.

 

“Applicable Law” means all applicable Federal, state, local and foreign laws
(including common law, maritime law and civil law), treatises, code, ordinances,
judgments, decrees, injunctions, writs, rules, regulations, Orders, licenses and
permits of any Governmental Authority.

 

“Approved Classification Society” means the American Bureau of Shipping or other
classification society that is a member of the International Association of
Class Societies.

 

“Approved Manager” means OSG Ship Management, Inc. or any other company which
the Lender may, acting reasonably, approve from time to time as the commercial,
technical and/or crewing manager(s) of the Vessel.

 

“Asset Sales” means, in respect of any Person, (a) any disposition of any
property by such Person, or (b) any issuance or sale of any Equity Interests of
such Person.

 

“Assignment of Earnings” means the General Assignment of Earnings, dated as of
the Funding Date, substantially in the form attached hereto as Exhibit A,
pursuant to which the Borrower shall collaterally assign to the Lender, and
grant the Lender a continuing, first priority security interest in, and lien on,
all Earnings of the Vessel and all proceeds thereof.

 

“Assignment of Insurances” means the Assignment of Insurances, dated as of the
Funding Date, substantially in the form attached hereto as Exhibit B, pursuant
to which the Borrower shall collaterally assign to the Lender, and grant to the
Lender a continuing, first priority security interest in and lien on, all
Insurances of the Vessel and all proceeds thereof.

 

“Assignment of Time Charter” means the Assignment of Time Charter, substantially
in the form attached hereto as Exhibit C, pursuant to which the Lender shall
collaterally assign to the Lender, and grant the Lender a continuing, first
priority security interest in, and lien on, all of the Borrower’s rights, title
and interests in any time charter subsequently entered into by it having a
duration (including all renewals and extensions thereof) exceeding one (1) year
or more and all privileges incident thereto, including the right to receive and
collect all hire payable by the time charterer pursuant thereto.

 

2

 

 

“Attorneys’ Fees” means and includes any and all reasonable and documented
attorneys’ fees incurred by the Lender incident to, arising out of, or in any
way connected with (a) the preparation, negotiation, and execution of this
Agreement and the other Loan Documents (and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto), (b)
the administration of this Agreement during the term of the Loan, or (c) the
Lender’s enforcement of its rights and interests under this Agreement or any
other Loan Document, including reasonable attorneys’ fees incurred by the Lender
to collect sums due, during any work-out, with respect to settlement
negotiations, or in any bankruptcy proceeding (including reasonable attorneys’
fees incurred in connection with any motion for relief from the automatic stay).

 

“Attributable Indebtedness” means, when used with respect to any Sale and
Leaseback Transaction, as at the time of determination, the present value
(discounted at a rate equivalent to the Borrower’s then-current weighted average
cost of funds for borrowed money as at the time of determination, compounded on
a semi-annual basis) of the total obligations of the lessee for rental payments
(and substantially similar payments) during the remaining term of the lease
included in any such Sale and Leaseback Transaction.

 

“Bank Product” means transactions under Hedging Agreements extended to the
Borrower by a Bank Product Provider.

 

“Bank Product Agreements” means those agreements entered into from time to time
by the Borrower with a Bank Product Provider in connection with the obtaining of
any of the Bank Products.

 

“Bank Product Obligations” means (a) all Hedging Obligations pursuant to Hedging
Agreements entered into with one or more of the Bank Product Providers, and (b)
all amounts that the Lender is obligated to pay to a Bank Product Provider as a
result of the Lender purchasing participations from, or executing guarantees or
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to the
Borrower; provided that, in order for any item described in clause (a) or (b)
above, as applicable, to constitute “Bank Product Obligations,” the applicable
Bank Product must have been provided on or after the Funding Date and the Lender
shall have received a Bank Product Provider letter agreement from the applicable
Bank Product Provider (and acknowledged by the Borrower) within thirty (30) days
after the date of the provision of the applicable Bank Product to the Borrower.

 

“Bank Product Provider” means any lender or any of its Affiliates (or any Person
who at the time the respective Bank Product Agreement was entered into by the
Borrower was a lender or an Affiliate thereof); provided, however, that no such
Person shall constitute a Bank Product Provider with respect to a Bank Product
(x) unless and until the Lender shall have received a Bank Product Provider
letter agreement from such Person with respect to the applicable Bank Product
(and acknowledged by the Borrower) within thirty (30) days after the provision
of such Bank Product to the Borrower.

 

“Bankruptcy Code” means 11 U.S.C. §§ 101, et -, as now or hereafter in effect,
or any successor thereto.

 

“Borrower” means Overseas Sun Coast LLC, a Delaware limited liability company,
together with its successors and permitted assigns.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York City, New York are not authorized or required by
law or other governmental action to close.

 

3

 

 

“Capital Expenditures” means, as to any Person without duplication, (a) any
expenditure for any purchase or other acquisition of any asset, including
capitalized leasehold improvements, which would be classified as a fixed or
capital asset on a balance sheet of such Person prepared in accordance with
GAAP, and (b) Capital Lease Obligations and Synthetic Lease Obligations, but
excluding (i) expenditures made in connection with the replacement, substitution
or restoration of property to the extent made with the Net Cash Proceeds from
Asset Sales or Casualty Events, (ii) the purchase price of equipment that is
purchased substantially contemporaneously with the trade-in of existing
equipment to the extent of the gross amount of such purchase price that is
reduced by the credit granted by the seller of such equipment for the equipment
being traded in at such time, and (iii) Acquisitions.

 

“Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, any property by such Person as lessee
that has been or should be accounted for as a capital lease on a balance sheet
of such Person, prepared in accordance with GAAP.

 

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any Capital Lease, any lease entered into as
part of any Sale and Leaseback Transaction or any Synthetic Lease, or a
combination thereof, which obligations are (or would be, if such Synthetic Lease
or other lease were accounted for as a Capital Lease) required to be classified
and accounted for as a Capital Lease on a balance sheet of such Person in
accordance with GAAP, and the amount of such obligations shall be the
capitalized amount thereof (or the amount that would be capitalized if such
Synthetic Lease or other lease were accounted for as a Capital Lease) determined
in accordance with GAAP as in effect on the Funding Date.

 

“Cash Equivalents” means, as of any date of determination and as to any Person,
any of the following (a) marketable securities issued, or directly,
unconditionally and fully guaranteed or insured, by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one (1) year from the date of acquisition by such Person, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof having
maturities of not more than one (1) year from the date of acquisition by such
Person and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody’s, (c) time deposits and certificates of
deposit of any Lender or any commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any state thereof or the District of Columbia having, capital and
surplus aggregating in excess of $500,000,000 and a rating of “A” (or such other
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) with maturities of not more than one (1) year from the date of acquisition
by such Person, (d) repurchase obligations with a term of not more than thirty
(30) days for underlying securities of the types described in clause (a) above
entered into with any Person meeting the qualifications specified in clause (c)
above, which repurchase obligations are secured by a valid perfected security
interest in the underlying securities, (e) commercial paper issued by any Person
incorporated in the United States rated at least A-1 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Moody’s, and in each case
maturing not more than one (1) year after the date of acquisition by such
Person, (t) investments in money market funds at least 95% of whose assets are
comprised of securities of the types described in clauses (a) through (e) above,
and (g) investments in prime money market funds reasonably acceptable to the
Lender.

 

“Casualty Event” means, in respect of any Person, any loss or damage to, or
destruction of, or condemnation or other taking by any Governmental Authority
of, any property of such Person.

 

4

 

 

“Change in Control” means the occurrence of any of the following:

 

(a) the Guarantor at any time ceases to own directly or indirectly 100% of the
Equity Interests of the Borrower or ceases to have the power to vote, or direct
the voting of, any such Equity Interests;

 

(b) any “person” or “group” (as such terms are used in Sections I3(d) and 14(d)
of the Exchange Act, but excluding any employee benefit plan of such person or
group or its respective subsidiaries, and any person acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules I3d-3 and 13d-5 under the Exchange Act,
except that, for purposes of this clause, such person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of either (x) Voting Equity Interests of the Guarantor representing
50% or more of the voting power of the total outstanding Voting Equity Interests
of the Guarantor or (y) 50% or more of the total economic interests of the
Equity Interests of the Guarantor (in either case, taking into account in the
numerator all such securities that such person or group has the right to acquire
(whether pursuant to an option right or otherwise) and taking into account in
the denominator all securities that any person has the right to acquire (whether
pursuant to an option right or otherwise)); or

 

(c) during any period of twelve (12) consecutive months, a majority of the
members of the Board of Directors of the Guarantor cease to be composed of
individuals (i) who were members of that Board of Directors at the commencement
of such period, (ii) whose election or nomination to that Board of Directors was
approved by individuals referred to in preceding clause (i) constituting at the
time of such election or nomination at least a majority of that Board of
Directors or (iii) whose election or nomination to that Board of Directors was
approved by individuals referred to in preceding clauses (i) and (ii)
constituting at the time of such election or nomination at least a majority of
that Board of Directors; provided, however, that for purposes hereof, the
following directors shall be disregarded: (1) the replacement of any director
which is appointed by a shareholder other than pursuant to a proxy solicitation,
and such director seat is either left vacant or filled by a separate appointee
by such shareholder, and (2) any resignation of a director by his or her own
volition, and not upon request or requirement by vote of the shareholders or
otherwise, or as part of a preplacement of conditional resignation notice.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” has the meaning set forth in Section 4.01 of this Agreement.

 

“Competitor” means any owner (other than a bank, leasing company or other
financial institution) and/or operator of petroleum/chemical tankers (including
articulated tug and barge units) operating in the U.S. coastwise and/or foreign
trade.

 

“Consolidated Amortization Expense” means, for any period, the amortization
expense of the Guarantor and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Depreciation Expense” means, for any period, the depreciation
expense of the Guarantor and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

 

5

 

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income of the
Guarantor and its Subsidiaries for such period, adjusted by (i) adding thereto,
without duplication, in each case only to the extent (and in the same
proportion) deducted in determining such Consolidated Net Income:

 

(a) Consolidated Interest Expense for such period;

 

(b) Consolidated Amortization Expense for such period;

 

(c) Consolidated Depreciation Expense for such period;

 

(d) Consolidated Tax Expense for such period;

 

(e) non-recurring transaction costs and expenses (including legal, accounting,
tax and appraisal and collateral field exam costs and expenses) incurred, prior
to, or within one hundred thirty-five (135) days following, the Funding Date, in
connection with the transactions contemplated hereby or other credit
transactions of the Guarantor and its Subsidiaries, in each case during such
period;

 

(f) extraordinary (as determined by reference to GAAP immediately prior to
giving effect to FASB’s Accounting Standards Update No. 2015-01) losses or
charges for such period;

 

(g) the aggregate amount of all other non-cash charges reducing Consolidated Net
Income during such period (including (x) any write-down, write-off or impairment
of assets (other than current assets) and (y) non-cash stock based compensation
expense, but excluding the amortization of a prepaid cash item that was paid in
a prior period);

 

(h) non-recurring fees and expenses incurred during such period in connection
with any Acquisition or incurrence or issuance of Indebtedness (other than
intercompany Indebtedness);

 

(i) non-recurring cash charges incurred during any twelve (12) month period in
respect of restructurings, business process optimizations, headcount reductions
or other similar actions, including severance charges in respect of employee
terminations and related employee replacement costs;

 

U) to the extent actually reimbursed or reasonably expected to be reimbursed in
cash to the Guarantor and/or its Subsidiaries within six (6) months thereof,
expenses incurred during such period to the extent covered by indemnification
provisions in any agreement in connection with an Acquisition;

 

(k) to the extent covered by insurance and actually reimbursed or reasonably
expected to be reimbursed in cash to the Guarantor and/or its Subsidiaries
within six (6) months thereof, expenses incurred during such period with respect
to liability or Casualty Events or business interruption;

 

(1) other non-recurring charges incurred during such period reasonably
acceptable to the Lender in an aggregate amount not to exceed $5,000,000; and

 

6

 

 

(ii) subtracting therefrom, without duplication,

 

(a) the aggregate amount of all non-cash income increasing Consolidated Net
Income (other than the accrual of revenue or recording of receivables in the
ordinary course of business) for such period;

 

(b) any unusual, non-recurring or extraordinary income or gains for such period
to the extent such unusual, non-recurring or extraordinary gains during such
period exceed $5,000,000 in the aggregate;

 

(c) any gains on extinguishment of debt; and

 

(d) the aggregate amount of any cash payments or cash charges during such period
on account of any non-cash charges that were added back to Consolidated EBITDA
in a prior period pursuant to clause (i)(g) above.

 

“Consolidated Fixed Charges” means, for any period, an amount equal to the sum
of, without duplication (i) Consolidated Interest Expense of the Guarantor and
its Subsidiaries for such period and (ii) scheduled principal amortization on
all Indebtedness (including scheduled principal payments made on all loans),
determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Indebtedness” means, as of any date, an amount equal to the sum
of, without duplication, (i) the aggregate principal amount of all Indebtedness
of the Guarantor and its Subsidiaries on such date (to the extent such
Indebtedness would be included on a balance sheet prepared in accordance with
GAAP) consisting only of Indebtedness for borrowed money and obligations in
respect of Capital Lease Obligations, (ii) the aggregate principal amount of all
debt obligations of the Guarantor and its Subsidiaries evidenced by bonds,
debentures, notes, loan agreements or similar instruments (other than
performance, surety or similar bonds to the extent not otherwise included in
clause (i) above), (iii) the aggregate amount of unreimbursed drawings in
respect of letters of credit (or similar facilities) issued for the account of
the Guarantor and its Subsidiaries, and (iv) the aggregate amount of all
Contingent Obligations of the Guarantor and its Subsidiaries in respect of
Indebtedness of third persons of the type described in preceding clauses (i)
through (iii), in each case calculated on a consolidated basis for the Guarantor
and its Subsidiaries.

 

“Consolidated Interest Expense” means, for any period, the total consolidated
interest expense of the Guarantor and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP plus, without
duplication:

 

(a) imputed interest on Capital Lease Obligations and Attributable Indebtedness
of the Guarantor and its Subsidiaries for such period;

 

(b) commissions, discounts and other fees and charges owed by the Guarantor and
its Subsidiaries with respect to letters of credit securing financial
obligations, bankers’ acceptance financing, receivables financings and similar
credit transactions for such period;

 

(c) amortization of debt issuance costs, debt discount or premium and other
financing fees and expenses incurred by the Guarantor and its Subsidiaries for
such period;

 

(d) cash contributions to any employee stock ownership plan or similar trust
made by the Guarantor and its Subsidiaries to the extent such contributions are
used by such plan or trust to pay interest or fees to any Person in connection
with Indebtedness incurred by such plan or trust for such period;

 

7

 

 

(e) all interest paid or payable with respect to discontinued operations of the
Guarantor and its Subsidiaries for such period;

 

(f) the interest portion of any payment obligations of the Guarantor and its
Subsidiaries for such period deferred for payment at any future time, whether or
not such future payment is subject to the occurrence of any contingency, and
includes any and all payments representing the purchase price and any
assumptions of Indebtedness and/or Contingent Obligations, “earn-outs” and other
agreements to make any payment the amount of which is, or the terms of payment
of which are, in any respect subject to or contingent upon the revenues, income,
cash flow or profits (or the like) of any Person or business; and

 

(g) all interest on any Indebtedness of the Guarantor and its Subsidiaries of
the type described in clause (e) or (j) of the definition of “Indebtedness”
contained herein for such period;

 

provided that Consolidated Interest Expense shall be calculated after giving
effect to Hedging Agreements (including associated costs) intended to protect
against fluctuations in interest rates, but excluding unrealized gains and
losses with respect to any such Hedging Agreements.

 

“Consolidated Net Income” means, for any period, the consolidated net income (or
loss) of the Guarantor and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (after deduction for minority
interests).

 

“Consolidated Tax Expense” means, for any period, the sum of, without
duplication, (i) the tax expense (including Federal, state, local and foreign
income taxes) of the Guarantor and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, and (ii) the aggregate amount
of all Permitted Tax Distributions made during such period.

 

“Consolidated Total Assets” means, as of any date of determination, the net book
value of all assets of the Guarantor and its Subsidiaries determined on a
consolidated basis in accordance with GAAP on such date.

 

“Contingent Obligation” means, as to any Person, any obligation, agreement,
understanding or arrangement of such Person guaranteeing any Indebtedness,
leases or other obligations (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including any
obligation agreement, understanding or arrangement of such Person, whether or
not contingent: (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor; (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth, net equity, liquidity, level of income, cash flow or
solvency of the primary obligor; (c) to purchase or lease property, securities
or services primarily for the purpose of assuring the primary obligor of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; (d) with respect to bankers’ acceptances, letters of
credit and similar credit arrangements, until a reimbursement or equivalent
obligation arises (which reimbursement obligation shall constitute a primary
obligation); or (e) otherwise to assure or hold harmless the primary obligor of
any such primary obligation against the payment of such primary obligation;
provided, however, that the term “Contingent Obligation” shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business or any product warranties given in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation, or portion thereof, in
respect of which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable, whether
singly or jointly, pursuant to the terms of the instrument, agreements or other
documents or, if applicable, unwritten enforceable agreement, evidencing such
Contingent Obligation) or, if not stated or determinable, the amount that can
reasonably be expected to become an actual or matured liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.

 

8

 

 

“Default” means any event, which with the giving of notice or lapse of time, or
both, would constitute an Event of Default hereunder.

 

“Default Rate” has the meaning set forth in Section 3.01 of this Agreement.

 

“Designated Jurisdiction” means any country or territory to the extent that such
country or territory itself is the subject of any Sanction.

 

“Dollars” and the sign “i” mean lawful money of the United States of America.

 

“Drawdown Notice” has the meaning set forth in Section 2.02 of this Agreement.
“Earnings” means all moneys whatsoever due or to become due to or for the
account of the Borrower at any time during the term hereof arising out of any
charter, contract of affreightment or other contract in connection with the use,
employment or other operation of the Vessel, including, but not limited to, all
charter hire, freights or other earnings, compensation payable to the Borrower
in the event of requisition of the Vessel for hire, remuneration for salvage and
towage services, demurrage and detention moneys and damages for breach (or
payments for variation or termination) of any charter, contract of affreightment
or other contract of employment of the Vessel and all sums receivable under the
insurances in respect of loss of Earnings and includes, if and whenever the
Vessel is employed on terms whereby any or all such moneys as aforesaid are
pooled or shared with any other Person, the proportion of the net receipts of
the relevant pooling or sharing arrangement which is attributable to the Vessel,
including the pooling agreement.

 

“Environment” means air, land, soil, surface waters, ground waters, stream and
river sediments.

 

“Environmental Law” means any and all applicable current and future Legal
Requirements relating to the Environment, the Release or threatened Release of
Hazardous Material, exposure to Hazardous Material, natural resource damages, or
occupational safety or health, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601
et seq., the Hazardous Materials Transportation Act, 42 U.S.C. § 1901 et seq.,
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the
Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act,
42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et seq., the Hazardous Materials
Transportation Safety and Security Reauthorization Act of 2005, 49 U.S.C. §5101
et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.,
as such laws, regulations, and ordinances may be amended or supplemented from
time to time.

 

“Environmental Permit” means any permit, license, approval, consent,
registration, notification, exemption or other authorization required by or from
a Governmental Authority under any Environmental Law.

 

9

 

 

“Equity Interest” means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents (however designated, whether voting or non-voting), of equity of
such Person, including, if such Person is a partnership, partnership interests
(whether general or limited), or if such Person is a limited liability company,
membership interests, and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of property of, such partnership or limited liability company,
whether outstanding on the date hereof or issued on or after the Funding Date,
but excluding debt securities convertible or exchangeable into such equity.

 

“BRISA” has the meaning set forth in Section 6.01(1) of this Agreement.

 

“BRISA Affiliate” means any corporation which is a member of the same controlled
group of corporations as the Borrower within the meaning of section 414(b) of
the Code, or any trade or business which is under common control with the
Borrower within the meaning of section 414(c) of the Code.

 

“Event of Default” has the meaning set forth in Section 8.01 of this Agreement.
“Excluded Taxes” means (i) Taxes based on or measured by the net income, gross
income or net receipts of the Lender (including, but not limited to, any minimum
Taxes, any capital gain Taxes, or value added Taxes to the extent such Taxes
replace or are in lieu of a tax on net income) or Taxes on or measured by items
of tax preference of the Lender, other than Taxes in the nature of or in lieu of
sales, use, personal property or rental taxes; and (ii) whether or not described
in clause (i) above, (1) Taxes (other than Taxes in the nature of sales, use,
personal property or rental Taxes) imposed on the Lender that are, or are in the
nature of, Taxes on, based upon, measured by or imposed with respect to, gross
receipts, (2) any Taxes on or measured by capital, net worth or excess profits,
(3) any Taxes that are or are in the nature of franchise taxes, business or
commercial activity or doing business taxes, and (4) any additions to tax,
surcharges, interest, penalties, fines or other charges in respect of any of the
foregoing.

 

“First Preferred Mortgage” means the First Preferred Mortgage dated as of the
Funding Date, or if the Vessel is reflagged pursuant to Section 7.0l(v) hereof,
dated as of the date of such reflagging, substantially in the form attached
hereto as Exhibit D, pursuant to which the Borrower shall grant the Lender a
first preferred mortgage lien over the whole of the Vessel.

 

“Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio
of (i) Consolidated EBITDA of the Guarantor and its Subsidiaries for the Test
Period less cash Capital Expenditures and cash taxes paid during the Test Period
to (ii) Consolidated Fixed Charges of the Guarantor and its Subsidiaries for the
Test Period then most recently ended, determined on a consolidated basis in
accordance with GAAP.

 

“Funding Date” means the date when all conditions precedent set forth in Section
5.02 hereof have been satisfied or otherwise waived in writing by the Lender.

 

“GAAP” means generally accepted accounting principles in the United States, set
forth in the Financial Accounting Standards Board Codification or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

10

 

 

“Governmental Authority” means any federal, state, local or foreign (whether
civil, administrative, criminal, military or otherwise) court, central bank or
governmental agency, tribunal, authority, instrumentality, regulatory or
self-regulatory body or any subdivision thereof, including, but not limited to,
the National Association oflnsurance Commissioners, or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers of
or pertaining to any government or any court, in each case whether associated
with a state of the United States, the United States, or a foreign entity or
government (including any supra-national bodies such as the European Union or
the European Central Bank).

 

“Guarantor” means Overseas Shipholding Group, Inc., a Delaware corporation, its
successors and permitted assigns.

 

“Guaranty” means the Guaranty dated as of the Initial Closing Date,
substantially in the form attached hereto as Exhibit E, pursuant to which the
Guarantor shall absolutely, unconditionally and irrevocably guarantee all of the
Borrower’s obligations to the Lender under the Loan Documents.

 

“Hazardous Material” has the meaning set forth in Section 7.0l(m) of this
Agreement.

 

“Hedging Agreement” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, cap transactions, floor
transactions, collar transactions, spot contracts, futures contracts or other
liabilities for the purchase or sale of currency or other commodities at a
future date in the nature of a futures contract or any other similar
transactions or any combination of any of the foregoing (including any options
or warrants to enter into any of the foregoing), whether or not any such
transaction is governed by, or otherwise subject to, any master agreement or any
netting agreement, and (b) any and all transactions or arrangements of any kind,
and the related confirmations, which are subject to the terms and conditions of,
or governed by, any form of master agreement (or similar documentation)
published from time to time by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such agreement or documentation, together with any
related schedules, a “Master Agreement”), including any such obligations or
liabilities under any Master Agreement.

 

“Hedging Obligations” means obligations under or with respect to Hedging
Agreements.

 

“Hedging Termination Value” means, in respect of any one or more Hedging
Agreements, after taking into account the effect of any netting agreements
relating to such Hedging Agreements (to the extent, and only to the extent, such
netting agreements are legally enforceable in Insolvency Proceedings against the
applicable counterparty obligor thereunder), (i) for any date on or after the
date such Hedging Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (ii) for any
date prior to the date referenced in preceding clause (i), the amount(s)
determined as the mark-to-market value(s) for such Hedging Agreements, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Hedging Agreements (which
may include the Lender or any Affiliate of the Lender).

 

11

 

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money; (b) all obligations of such Person evidenced by
bonds, debentures, notes, loan agreements or similar instruments; (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property); (d) all
obligations of such Person issued or assumed as part of the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms
and not overdue by more than ninety (90) days); (e) all indebtedness secured by
any Lien on property owned or acquired by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not the obligations secured thereby have been assumed, but limited to the lower
of (i) the fair market value of such property and (ii) the amount of the
Indebtedness secured; (f) all Capital Lease Obligations, other Purchase Money
Obligations and Synthetic Lease Obligations of such Person; (g) all obligations
of such Person, contingent or otherwise, to purchase, redeem, retire or
otherwise acquire for value any Equity Interests of such Person, valued, in the
case of a redeemable preferred Equity Interest, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends; (h) all
Bank Product Obligations under Hedging Agreements valued at the Hedging
Termination Value thereof; (i) all obligations of such Person for the
reimbursement of any obligor in respect of letters of credit, letters of
guaranty, bankers’ acceptances and similar credit transactions; and (j) all
Contingent Obligations of such Person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (i) above; provided
that the term “Indebtedness” shall not include (i) preferred or prepaid
revenues, (ii) purchase price holdbacks in respect of a portion of the purchase
price of an asset to satisfy warranty or other unperformed obligations of the
seller of such asset, (iii) any obligations constituting the exercise of
appraisal rights and settlements of any claim of actions (whether actual,
contingent or potential) with respect thereto, and (iv) those intercompany
payment obligations as and to the extent described in Schedule 1.01. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent that
terms of such Indebtedness expressly provide that such Person is not liable
therefor.

 

“Indemnified Parties” means the Lender and its Related Parties.

 

“Initial Closing Date” means the date when all conditions precedent set forth in
Section 5.01 to this Agreement have been satisfied.

 

“Insolvency Laws” means the Bankruptcy Code, and all other insolvency,
bankruptcy, receivership, liquidation, conservatorship, assignment for the
benefit of creditors, moratorium, rearrangement, reorganization, or similar
Legal Requirements of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

“Insolvency Proceeding” means (i) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (ii) any general assignment for the benefit of creditors, formal or
informal moratorium, composition, marshaling of assets for creditors or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors, in each case, undertaken under United States federal
or state or non-United States Legal Requirements, including the Bankruptcy Code.

 

“Insurances” means (i) all policies and contracts of insurances (including,
without limitation, all insurances with respect to marine hull and machinery,
marine war risk, protection and indemnify, pollution, requisition of title or
otherwise) in respect of the Vessel and all entries of the Vessel in a
protection and indemnity or war risk association club, whether heretofore, now
or hereafter effected, and all renewals and replacements for the same, (ii) all
monies and claims for monies due and to become due to the Borrower under said
insurances with respect to an actual, constructive, agreed, arranged or
compromised total loss or any other loss or damage to the Vessel, (iii) all
returns of premiums, (iv) all other rights, benefits and privileges of the
Borrower under or in respect of said insurances, and (v) all proceeds of the
foregoing.

 

12

 

 

“Investment” means the lending of money or credit (by way of guarantee,
assumption of debt or otherwise) to any Person, or the purchase or acquisition
of Equity Interests, bonds, notes, debentures or other obligations or securities
of, or any other interest in, or the making of any capital contribution to, any
Person, or the purchase of a future contract or the purchase or sale of currency
or commodities at a future date in the nature of the futures contract.

 

“ISM Code” means, in relation to its application, if applicable, to the
Borrower, the Vessel and its operation, the International Safety Management Code
for the Safe Operation of Ships and for Pollution Prevention (including the
guidelines on its implementation), adopted by the International Maritime
Organization as Resolution A.741(18) and Resolution A.913(22), as the same may
be amended, supplemented or replaced from time to time as implemented and
administered in the United States by the U.S. Coast Guard pursuant to 46 U.S.C.
Chapter 32 and the regulations promulgated thereunder, and the terms “safe
management system”, “Safety Management Certificate” and “Document of Compliance”
having the meanings specified in the ISM Code.

 

“ISPS Code” means, in relation to its application, if applicable, to the
Borrower, the Vessel and its operation, the International Ship and Port Facility
Security Code adopted by the International Maritime Organization on December 13,
2002 and now set out in Chapter Xl-2 of the Safety of Life Sea Convention
(SOLAS) 1974 (as amended).

 

“Legal Requirements” means, as to any person, any treaty, law (including the
common law, maritime law and civil law), statute, ordinance, code, rule,
regulation, guidelines, license, permit requirement, judgment, decree, verdict,
order, consent order, consent decree, writ, declaration or injunction, policies
and procedures, Order or determination of an arbitrator or a court or other
Governmental Authority, and the interpretation or administration thereof, in
each case applicable to or binding upon such person or any of its property or to
which such person or any of its property is subject.

 

“Lender” means Pacific Western Bank, a California banking corporation, together
with its successors and assigns.

 

“Lien” means any lien, mortgage, charge, security interest, pledge, attachment,
levy or other encumbrance of any kind whatsoever.

 

“Loan” has the meaning set forth in Section 2.01 of this Agreement.

 

“Loan Documents” mean, collectively, this Agreement, the Note, the First
Preferred Mortgage, the General Assignment of Earnings, the Assignment of
Insurances, the Guaranty and all other documents now or hereafter executed and
delivered, to evidence, secure or guarantee the Loan, as each of said documents
may be amended, amended and restated, supplemented or otherwise modified from
time to time.

 

“Mandatory Equipment” has the meaning set forth m Section 7.0l(o)(vii) of this
Agreement.

 

“Margin Stock” has the meaning set forth in Section 6.0l(k) of this Agreement.

 

“Material Adverse Effect” means (a) a materially adverse effect on the business,
assets, operations, or financial condition of the Guarantor and its Subsidiaries
taken as a whole, or (b) a material impairment of the ability of the Borrower or
the Guarantor to perform any of its obligations under the Loan Documents to
which it is a party.

 

13

 

 

“Material Structural Modification” has the meaning set forth in Section
7.0l(o)(vii) of this Agreement.

 

“Memorandum of Particulars” means the Memorandum of Particulars in the form
required by the Office of the Maritime Administrator, the Republic of the
Marshall Islands, to be provided in connection with the filing of the First
Preferred Mortgage with said Office.

 

“Modifications” has the meaning set forth in Section 7.0l(o)(vii) of this
Agreement. “Multiemployer Plan” means any Plan which is a “multiemployer plan”
(as such term is defined in section 4001(a)(3) of ERISA).

 

“Net Cash Proceeds” means: (a) with respect to any Asset Sale (other than any
issuance or sale of Equity Interests), the proceeds thereof in the form of cash,
Cash Equivalents and marketable securities (including any such proceeds received
by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable, or by the sale, transfer or
other disposition of any non-cash consideration received in connection therewith
or otherwise, but only as and when received) received by the Guarantor or any of
its Subsidiaries (including cash proceeds subsequently received (as and when
received by the Guarantor or any of its Subsidiaries) in respect of non-cash
consideration initially received) net of (i) reasonable and customary selling
expenses (including reasonable brokers’ fees or commissions, legal, accounting
and other professional and transactional fees, survey costs, title insurance
premiums, related search and recording charges, mortgage recording taxes and
transfer and similar taxes and the Guarantor’s or such Subsidiary’s good faith
estimate of income taxes paid or payable in connection with such sale (after
taking into account any available tax credits or deductions and any tax sharing
arrangements)), (ii) amounts provided as a reserve, in accordance with GAAP,
against (x) any liabilities under any indemnification obligations associated
with such Asset Sale or (y) any other liabilities retained by the Guarantor or
any of its Subsidiaries associated with the properties sold in such Asset Sale
(provided that, to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds), and (iii) the
principal amount, premium or penalty, if any, interest and other amounts on any
Indebtedness for borrowed money that is secured by a Lien on the properties sold
in such Asset Sale (so long as such Lien was permitted to encumber such
properties under the Loan Documents at the time of such sale) and which is
repaid with such proceeds (other than (x) any such Indebtedness assumed by the
purchaser of such properties, (y) the obligations owed to the Guarantor and its
Subsidiaries’ secured lenders and (z) the obligations under the Loan Documents);
(b) with respect to any debt issuance, or issuance or sale of Equity Interests
by the Guarantor or any of its Subsidiaries, the cash proceeds thereof received
by the Guarantor or any of its Subsidiaries, net of reasonable and customary
fees, commissions, costs and other expenses incurred in connection therewith;
and (c) with respect to any Casualty Event, the cash insurance proceeds,
condemnation awards and other compensation received by the Guarantor or any of
its Subsidiaries in respect thereof, net of all reasonable costs and expenses
incurred in connection with the collection of such proceeds, awards or other
compensation in respect of such Casualty Event.

 

“Note” means the Promissory Note dated the Funding Date, substantially in the
form attached hereto as Exhibit F, evidencing the Loan made by the Lender to the
Borrower.

 

“NVDC” means the National Vessel Documentation Center of the United States Coast
Guard, Department of Homeland Security, and any successor board, agency or other
Governmental Authority.

 

14

 

 

“Obligation” means, with respect to any Obligor, any obligation of such Obligor
of any kind in respect to or arising under the Loan Documents or otherwise with
respect to the Loan, including, without limitation, any obligation to make any
payment for any reason, whether or not such obligation is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such obligation is
discharged, stayed or otherwise affected by any proceeding referred to in
Section 8.0l(k). For purposes hereof, the Borrower’s Obligations under the Loan
Documents include, without limitation, the timely payment of (i) all principal,
interest, the Prepayment Fees, late charges, certain other fees and expenses
(including, without limitation, reasonable Attorneys’ Fees and expenses),
disbursements, indemnities and any other amounts payable by the Borrower to the
Lender under or pursuant to the Loan Documents; and (ii) any amount which the
Lender, in its sole discretion, may elect to pay or advance on behalf of the
Borrower pursuant to and in accordance with the terms of the Loan Documents.

 

“Obligors” means, collectively, the Borrower and the Guarantor.

 

“OFAC” means the Office of Foreign Assets Control of the United States
Department of Treasury or any successor entity.

 

“Oil” has the meaning set forth in Section 7.0l(m) of this Agreement. “Oil
Major” means BP, Chevron, ExxonMobil, Shell, Statoil and Total.

 

“Order” means any judgment, decree, verdict, order, consent order, consent
decree, writ, declaration or injunction.

 

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001), as restored by the USA Freedom Act of 2015,
Pub. L. No. 114-23.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Permitted Maritime Liens” has the meaning set forth in the First Preferred
Mortgage.

 

“Permitted Modification” has the meaning set forth in Section 7.0l(o)(vii) of
this Agreement.

 

“Permitted Tax Distributions” means payments, dividends or distributions by the
Borrower to the Guarantor to enable the Guarantor to pay its consolidated or
combined Federal, state or local taxes then due and payable for the respective
period, which payments made by the Borrower to the Guarantor are not in excess
of the lesser of (x) the tax liabilities that would have been payable by the
Borrower on a stand-alone basis for the respective period (calculated, for the
avoidance of doubt, without regard to any investment credits, foreign tax
credits, net operating losses, capital losses or other tax attributes to the
extent the Guarantor previously reimbursed the Borrower for utilizing such tax
attribute in calculating the Guarantor’s consolidated or combined Federal, state
or local tax liability) and (y) the actual tax liabilities then due and payable
by the Guarantor for the respective period.

 

“Person” means any individual, corporation, business trust, association,
company, partnership, limited liability company, joint venture, Governmental
Authority, or other entity.

 

“Plan” means any “employee pension benefit plan” (as such term is defined in
section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Borrower or any ERISA Affiliate.

 

15

 

 

“Prepayment Fee” means, as to any prepayment made, a fee equal to (a) two
percent (2%) of the principal amount being prepaid assuming such prepayment
occurs after the Funding Date but on or prior to the first anniversary thereof,
(b) one and one-half percent (1.5%) of the principal amount being prepaid
assuming such prepayment occurs after the first anniversary of the Funding Date
but on or prior to the second anniversary thereof, and (c) one percent (1%) of
the principal amount being prepaid assuming such prepayment occurs after the
second anniversary of the Funding Date but on or prior to the third anniversary
thereof.

 

“Purchase Money Obligation” means, for any person, the obligations of such
person in respect of Indebtedness (including Capital Lease Obligations) incurred
for the purpose of financing all or any part of the purchase price of any fixed
or capital assets or the cost of installation, construction or improvement of
any fixed or capital assets; provided, however, that (i) such Indebtedness is
incurred within one hundred twenty (120) days after such acquisition,
installation, construction or improvement of such fixed or capital assets by
such person and (ii) the amount of such Indebtedness (x) does not exceed the
lesser of 100% of the fair market value of such fixed or capital asset or the
cost of the acquisition, installation, construction or improvement thereof, as
the case may be, and (y) equals at least 50% of the lesser of the two amounts
referred to in preceding clause (x).

 

“Regulation U” means (12 C.F.R. Part 221) of the Board of Governors of the
Federal Reserve System, as from time to time in effect and all official rulings
and interpretations thereunder or thereof.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates,
participants, members, managers, directors, officers, employees, agents,
administrators, advisors and representatives, together with their respective
successors and assigns.

 

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Materials in,
into, onto, from or through the Environment.

 

“Requisition Compensation” means all monies or other compensation payable by
reason of requisition of title or other compulsory acquisition of the Vessel
during the term of this Agreement other than by requisition for hire.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or controller of the Borrower, but in any event,
with respect to financial matters, the chief financial officer, treasurer,
assistant treasurer or controller of the Borrower.

 

“Restricted Payment” means, with respect to any Person, that such Person has
declared or paid a dividend or returned any equity capital to the holders of its
Equity Interests or authorized or made any other distribution, payment or
delivery of property or cash to the holders of its Equity Interests as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
consideration any of its Equity Interests outstanding (or any options or
warrants issued by such Person with respect to its Equity Interests), or set
aside or otherwise reserved, directly or indirectly, any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for consideration any of the outstanding Equity Interests
of such Person (or any options or warrants issued by such Person with respect to
its Equity Interests). Without limiting the foregoing, “Restricted Payment” with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans or setting aside of or
otherwise reserving any funds for the foregoing purposes.

 

16

 

 

“Sale and Leaseback Transaction” means any transaction, directly or indirectly,
whereby any Person shall sell or transfer any property used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which it intends to use for substantially the
same purpose or purposes as the property being sold or transferred.

 

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by the U.S. government, including
those administered by OFAC and the U.S. Department of State, or other relevant
sanctions authority applicable to the Borrower.

 

“Sanctions Authority” means the respective governmental institutions and
agencies of the United States, European Union, United Kingdom and the United
Nations, including the U.S. Treasury Department, the U.S. Commerce Department,
the U.S. State Department, the United Nations Security Council, or other
relevant sanctions authority of the United States, European Union, United
Kingdom or the United Nations.

 

“Sanctions Laws” means the economic or financial sanctions laws and/or
regulations, trade embargoes, prohibitions, restrictive measures, decisions,
executive orders or notices from regulators implemented, adapted, imposed,
administered, enacted and/or enforced by any Sanctions Authority.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Section 2 Citizen” means a “citizen of the United States” within the meaning of
46 U.S.C. §50501(a), (b) and (d) qualified to own and operate vessels for
operation in the coastwise trade of the United States.

 

“Solvent” means, with respect to any Person, that, as of the date of
determination, (a) the fair value of the properties of such Person will exceed
its debts and liabilities, subordinated, contingent or otherwise, (b) the
present fair saleable value of the property of such Person will be greater than
the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured, (c) such Person generally will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (d) such Person will not
have unreasonably small capital with which to conduct its business in which it
is engaged as such business is now conducted and is proposed, contemplated or
about to be conducted following the Funding Date, and (e) such Person is not
“insolvent” as such term is defined under any bankruptcy, insolvency or similar
laws of any jurisdiction in which any Person is organized. For the purposes of
this definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at such time represents the amount that can be reasonably expected to
become an actual or matured liability.

 

“Subsidiary” means, with respect to any Person, any company, whether operating
as a corporation, joint venture, partnership, limited liability company or other
entity, which is consolidated with such Person in accordance with GAAP.

 

“Synthetic Lease Obligations” means, as to any Person, an amount equal to the
capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such Person in accordance with GAAP if
such obligations were accounted for as Capital Lease Obligations.

 

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“Taxes” means all sales, use, rental and personal property taxes, ad valorem
taxes, registration and license fees and all other taxes and assessments as well
as all penalties and/or interest due in connection therewith, now or hereafter
levied on the Borrower, the Lender or the Vessel, or any part thereof, by any
Governmental Authority or upon the delivery, ownership, possession, use, lease,
charter, sub-charter, operation, control, maintenance, or repair of the Vessel.

 

“Test Period” means each period of four (4) consecutive fiscal quarters of the
Guarantor then last ended (in each case taken as one accounting period).

 

“Total Leverage Ratio” means, at any date of determination, the ratio of (i)
Consolidated Indebtedness of the Guarantor and its Subsidiaries on such date to
(ii) Consolidated EBITDA of the Guarantor and its Subsidiaries on such date, for
the Test Period then most recently ended.

 

“Total Loss” in respect of the Vessel, means the occurrence of: (i) the actual
or constructive total loss, or compromised, agreed or arranged total loss, of
the Vessel under the policies of hull and machinery insurance and related
coverages that the Borrower is required to procure and maintain pursuant to
Section 4 of the First Preferred Mortgage; or (ii) the loss, theft, hijacking,
disappearance or destruction of the Vessel or damage thereto to such extent as
shall make repair thereof uneconomical or shall render the Vessel permanently
unfit for normal use for any reason whatsoever; or (iii) the requisition of
title to or other compulsory acquisition of the Vessel (otherwise than by
requisition for hire which does not extend beyond the term of the Loan); or (iv)
the condemnation, capture, seizure, forfeiture, arrest, detention, confiscation
or other taking of title of the Vessel by any Person or Governmental Authority,
or by Persons acting or purporting to act on behalf of any government, unless
the Vessel shall be released from such capture, seizure, arrest or detention
within thirty (30) days after such occurrence, but in all events prior to the
expiration or earlier cancellation or termination of the term of the Loan. An
actual Total Loss shall be deemed to have occurred on the actual date on which
the Vessel was lost, or if the date of loss is unknown, the date that the Vessel
was last heard from. A constructive Total Loss shall be deemed to have occurred
on the earliest of (1) the date that a claim for Total Loss is allowed by the
underwriters, (2) if the underwriters do not allow a claim for Total Loss, on
the date that a Total Loss is subsequently finally adjudged by a court of
competent jurisdiction or an arbitration panel to have occurred, or (3) upon
receipt by the Lender of a report prepared by an independent, certified marine
surveyor selected by the Lender (and reasonably acceptable to the Borrower)
concluding that salvage, repair and associated costs to restore the Vessel to
the condition required in Section 7.0l(o) hereof would exceed the fair market
value of the Vessel in sound condition. An agreed or arranged Total Loss shall
be deemed to have occurred at the effective time of any agreement by the
underwriters or other appropriate Person with respect thereto, and any Total
Loss resulting from condemnation, seizure, forfeiture, arrest or similar actions
shall be deemed to have occurred upon entry of a final order with respect
thereto by the applicable Governmental Authority.

 

“Vessel” means the vessel referred to in the Recitals to this Agreement and
includes all her boilers, engines, machinery, masts, rigging, anchors, fuel,
spare gear, cables, chains, tackle, apparel, consumable and other stores, ropes,
equipment and all additions and appurtenances thereto and replacements thereof.

 

“Voting Equity Interests” means, with respect to any Person, any class or
classes of Equity Interests pursuant to which the holders thereof have the power
under ordinary circumstances to vote for persons to serve on the board of
directors/managers of such Person.

 

SECTION 1.02. Computation of Time Periods. For purposes of this Agreement and
each of the other Loan Documents, unless otherwise specified herein or therein,
in computing periods of time from a specified date to a later specified date,
the word “from” means “from and including” and each of the words “to” and
“until” means “to but excluding”.

 

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SECTION 1.03. Accounting Terms. All accounting terms not specifically defined
herein shall have the meanings generally attributed to such terms under GAAP, as
in effect from time to time, consistently applied. If at any time any change in
GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and the Borrower or the Lender shall so request, the
Lender and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP; provided that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and
(ii) the Borrower shall provide to the Lender financial statements and other
documents reasonably requested by the Lender hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP. Without limiting the foregoing,
leases shall continue to be classified and accounted for on a basis consistent
with that reflected in the audited consolidated financial statements of the
Guarantor and its Subsidiaries for the fiscal year ended December 31, 2018 for
all purposes of this Agreement, notwithstanding any change in GAAP relating
thereto, unless the parties hereto shall enter into a mutually acceptable
amendment addressing such changes, as provided for above.

 

SECTION 1.04. Other Interpretive Provisions. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document, (a) the definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined, (b) the words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation” and (c) unless the context requires otherwise, (i) any definition of
or reference to any agreement, instrument or other document (including any
articles of incorporation, bylaws or similar organizational documents) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“hereto,” ‘‘herein,” “hereof’ and “hereunder,” and words of similar import when
used in any Loan Document, shall be construed to refer to such Loan Document in
its entirety and not to any particular provision thereof, (iv) all references in
a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time.

 

ARTICLE II

 

THE LOAN

 

SECTION 2.01. The Loan. Subject to the terms of this Agreement and to the
satisfaction of all conditions precedent set forth in Article V hereof, the
Lender hereby agrees to make available to the Borrower a term loan in the
original principal amount of $25,000,000 (the “Loan”), for the purposes set
forth in the Recitals, and for no other purpose. Time is of the essence.

 

SECTION 2.02. Drawdown Procedures. The Borrower may request the Lender to
advance the proceeds of the Loan by delivering to the Lender a duly completed
Drawdown Notice, substantially in the form attached hereto as Appendix A (the
“Drawdown Notice”), which notice, once given, shall be irrevocable and shall be
received by the Lender not later than 11:00 a.m. Eastern time two (2) Business
Days prior to the proposed funding date. The Lender’s obligation to make the
Loan to the Borrower as set forth herein shall expire on October 31, 2019;
provided, however, that such commitment shall terminate automatically upon the
occurrence of an Event of Default.

 

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SECTION 2.03. Advance of Loan Proceeds. Subject to terms and upon the conditions
specified herein, the Lender shall advance the proceeds of the Loan to the
Borrower in accordance with the instructions set forth in the Drawdown Notice.

 

SECTION 2.04. The Note. The Loan shall be evidenced by the Note and shall be
paid in accordance with the terms thereof. The Lender shall record and, prior to
any transfer of the Note, shall endorse on any schedules forming a part thereof
appropriate notations setting forth the date and the amount of each payment and
of all prepayments (if any) made by the Borrower with respect thereto. The
Lender is hereby irrevocably authorized by the Borrower to endorse the Note
accordingly and to attach and to make a part of the Note such schedules as and
when required.

 

SECTION 2.05. Repayment of Principal and Interest. The Borrower shall make all
payments of principal and interest as and when due under the Note. If not sooner
paid, the Note shall mature and all sums remaining due and unpaid thereunder
shall be due and payable in full on or prior to October 31, 2024.

 

ARTICLE III

 

INTEREST AND PAYMENT PROVISIONS

 

SECTION 3.01. Interest Rate. Subject to the terms and conditions hereinafter set
forth, the Borrower shall pay interest on the unpaid principal balance of the
Loan for the period commencing on the date the Loan is made until the Loan is
repaid in full, at the rate set forth in the Note. Notwithstanding the
foregoing, in the event that any payment is not received by the Lender when due
(whether at maturity, by acceleration, on demand or otherwise), the Borrower
shall pay to the Lender interest on demand on such late payment from the date
such payment was due until such payment is actually received, at a rate per
annum equal to 5% over the otherwise applicable rate (the “Default Rate”).

 

SECTION 3.02. Payments and Computations

 

(a) Making of Payments. The Borrower shall make all payments of principal,
Prepayment Fees (if any) and interest due under the Note in Dollars, in
immediately available funds, not later than 11:00 a.m. New York time on the day
when due.

 

(b) Application of Payments. Each payment received by the Lender shall be
applied in the manner provided for in the Note or, in the absence of such
direction, as the Lender, in its sole discretion, shall determine.

 

(c) Computations. All computations of interest shall be made by the Lender on
the basis of a 360-day year for the actual number of days elapsed. Each
determination by the Lender of the interest due hereunder shall be conclusive
and binding for all purposes, absent manifest error.

 

(d) Payment Net of Taxes. (i) All payments made by the Borrower to the Lender
under this Agreement and the Note shall be made without any deduction, setoff or
counterclaim of any kind. All payments to be made to the Lender hereunder shall
be made free and clear of, and without withholding or deduction for or on
account of, any Taxes (except to the extent that such withholding or deduction
is compelled by law), excluding any Excluded Taxes. If the Borrower is compelled
by law to make any such deduction or withholding, it will:

 

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(A) pay to the relevant authorities the full amount required to be withheld or
deducted;

 

(B) except in the case of Excluded Taxes, pay such additional amounts to the
Lender as may be required for the Lender to receive, after such deduction or
withholding (including any required deduction or withholding on such additional
amounts), the amount it would have received had no such deduction or withholding
been made; and

 

(C) promptly forward to the Lender an official receipt or other documentation
reasonably satisfactory to the Lender evidencing such payment to such
authorities.

 

If any Taxes (other than Excluded Taxes) are directly assessed against the
Lender, the Lender shall promptly notify the Borrower of such assessment. Unless
the Borrower promptly provides evidence satisfactory to the Lender that such
Taxes have been paid, the Lender may pay such Taxes. Thereafter, the Borrower
shall pay such additional amount (including, without limitation, any penalties,
interest or expenses, but excluding any such items resulting from (A) the
failure of the Lender promptly to notify the Borrower of the assessment of such
Taxes against the Lender, or (B) the gross negligence or willful misconduct of
the Lender) as may be necessary for the Lender to receive, after the payment of
such Taxes (including any Taxes on such additional amount), the amount the
Lender would have received had no such Taxes been assessed. The Borrower’s
obligations arising from this Section 3.02 shall survive repayment of the Loan,
cancellation of the Note and the termination of this Agreement.

 

Notwithstanding any provision contained in this Agreement to the contrary, in
the event that the Lender should assign all or any portion of the Loan or all or
any portion of its rights under this Agreement to another Person, the Borrower’s
obligations under this Section 3.02 shall not be greater than what its
obligations would have been if the Lender had retained a 100% interest in the
Loan and in this Agreement.

 

SECTION 3.03. Prepayment

 

(a) Optional Prepayments. Subject to the terms and conditions hereinafter set
forth, upon not less than thirty (30) days prior written notice, the Borrower
may prepay the Note, in whole, or in part in minimum increments of $1,000,000,
on any installment payment date. All partial prepayments shall be applied to the
remaining principal installments due in their inverse order of maturity. On any
such date, the Borrower shall pay to the Lender, in addition to the principal
amount being prepaid, all accrued but unpaid interest then due thereon
(including any breakage fees), the Prepayment Fee (if any), and all other sums
then due hereunder.

 

(b) Mandatory Prepayments. If, at any time prior to repayment in full of the
Loan,

 

(i) the Vessel is sold, the Borrower shall pay to the Lender, upon the date
Vessel is sold, an amount equal to the outstanding principal balance of the
Loan, plus all accrued but unpaid interest then due thereon (including any
breakage fees), the Prepayment Fee (if any), and all other sums then due
hereunder; or

 

(ii) the Vessel sustains a Total Loss, the Borrower shall pay to the Lender,
upon the earlier of (x) ten (10) days following receipt of insurance proceeds or
(y) one hundred twenty (120) days after the date of such loss (in no event to
extend beyond the maturity date of the Loan), an amount equal to the outstanding
principal balance of the Loan, plus all accrued but unpaid interest then due
thereon (including any breakage fees), and all other sums then due hereunder. No
Prepayment Fee shall be due upon the payment of the Loan pursuant to this
Section 3.03(b)(ii).

 

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ARTICLE IV

 

SECURITY

 

SECTION 4.01. Grant of Security Interest. As security for the prompt payment and
performance of its Obligations hereunder, under the Note and the other Loan
Documents, the Borrower hereby assigns, and grants and conveys, to the Lender a
continuing, first priority security interest in and lien on the following
property (collectively, the “Collateral”):

 

(i) the Vessel, together with all of her boilers, engines, machinery, masts,
rigging, boats, anchors, chains, cables, tackle, apparel, spare gear, fuel,
consumable or other stores, ropes, equipment and all other appurtenances thereto
appertaining or belonging and appropriated to the exclusive use of the Vessel,
whether now owned or hereafter acquired, whether on board or not, and all
additions, improvements and replacements hereafter made in or to the Vessel, or
any part thereof, or in or to the stores, equipment and appurtenances aforesaid
(except such equipment which, when placed aboard the Vessel, does not become the
property of the Borrower or is leased equipment not belonging to the Borrower);

 

(ii) all Earnings, Insurances and Requisition Compensation of the Vessel;

 

(iii) all rights, interests and privileges of the Borrower under all time
charters and contracts of affreightment having a term (including all renewals
and extensions thereof) greater than one (1) year; and

 

(iv) all proceeds of the foregoing.

 

SECTION 4.02. Release of Collateral. Upon the indefeasible payment in full of
all sums due under the Note and satisfaction of all of the Borrower’s other
Obligations (other than contingent indemnification obligations for which no
claim has been made), the Lender shall, at the Borrower’s sole cost and expense,
discharge the First Preferred Mortgage of record and terminate its security
interests in all other Collateral.

 

SECTION 4.03. Exercise of Powers of Attorney. The Lender shall not exercise any
rights or powers pursuant to any power of attorney granted to the Lender
pursuant to the First Preferred Mortgage or the other Loan Documents until the
occurrence, and then only during the continuance, of an Event of Default.

 

ARTICLE V

 

CONDITIONS PRECEDENT

 

SECTION 5.01. Conditions Precedent to the Initial Closing. The Lender’s
obligation to proceed forward with this transaction and to enter into this
Agreement is subject to satisfaction of each of the following conditions
precedent:

 

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(a) no action, suit, investigation, litigation or proceeding to which the
Borrower or the Guarantor is a party shall be pending or threatened before any
court, Governmental Authority or arbi-trator which (i) could reasonably be
expected to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement, the Note, any of the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby;

 

(b) the Lender shall have received each of the following, in form and substance
reasonably satisfactory to the Lender and its legal counsel:

 

(i) true, correct and complete copies of the articles of
organization/incorporation and operating agreement/by-laws of the Borrower and
the Guarantor, together with all amendments thereto, certified by the secretary
or assistant secretary of the Borrower and the Guarantor, respectively, or other
authorized officer or a certificate from such party certifying that the copies
of the organizational documents of such party previously delivered to the Lender
have remained unchanged and are still in full force and effect;

 

(ii) resolutions of the board of managers/directors of the Borrower and the
Guarantor, respectively, authorizing the transactions contemplated this
Agreement and the other Loan Documents to which it is a party, certified by the
secretary or assistant secretary of the Borrower and the Guarantor or other
authorized officer;

 

(iii) a certificate of incumbency from an appropriate officer certifying the
names and specimen signatures of the persons authorized to sign this Agreement,
the Note, the Guaranty and any other Loan Documents to be executed and delivered
by the Borrower and the Guarantor (as applicable);

 

(iv) a certificate of good standing for the Borrower and the Guarantor from the
Secretary of State of Delaware dated not more than ten (10) days prior to the
Funding Date; and

 

(v) an opinion from counsel to the Borrower and the Guarantor, in form and
substance reasonably acceptable to the Lender, covering, among other things,
said party’s status as a limited liability company/corporation validly existing
in good standing under the laws of the state of Delaware, its due authorization,
execution and delivery of each of the Loan Documents to which it is a party, and
the enforceability of the Loan Documents to which it is a party;

 

(c) the Borrower shall have executed and delivered, or caused the Guarantor to
execute and deliver, to the Lender each of the following documents:

 

(i) this Agreement; and

 

(ii) the Guaranty.

 

(d) the Lender and its counsel shall have received payment in full of all fees
and expenses then due to each of them by the Borrower to the extent invoiced to
the Borrower at least two (2) days prior to the Initial Closing Date;

 

(e) no law, rule or regulation (including, without limitation, any trade
sanctions, laws or regulations applicable to the Lender) shall prevent the
Lender from entering into the transactions contemplated hereby or shall affect
the Borrower’s and/or the Guarantor’s ability to perform any of their respective
obligations under the various Loan Documents to which they are parties.

 

23

 

 

SECTION 5.02. Conditions Precedent to the Funding of the Loan. The Lender’s
obligation to proceed forward with the transactions contemplated by the Loan
Agreement and to fund the Loan is subject to the satisfaction of each of the
following conditions precedent:

 

(a) no action, suit, investigation, litigation or proceeding to which the
Borrower or the Guarantor is a party shall then be pending or threatened before
any court, Governmental Authority or arbitrator which (i) could reasonably be
expected to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement, the Note, any of the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby;

 

(b) in the Lender’s sole determination no material adverse change has occurred
in the business, current management or financial condition of the Borrower or
the Guarantor;

 

(c) no additional information concerning the Borrower or the Guarantor has come
to the Lender’s attention that reflects adversely on the Borrower’s or the
Guarantor’s past or present financial condition, management or operations;

 

(d) the Lender shall have completed to its satisfaction in its sole discretion
its due diligence investigation of the Borrower and the Guarantor including
complying with all Bank Secrecy Act requirements, including all OFAC and “Know
Your Customer” searches and background checks, said investigation to commence
not later than September 15, 2019;

 

(e) no Default or Event of Default shall have occurred;

 

(t) the Borrower shall have executed and delivered, or caused to be executed and
delivered, to the Lender each of the following documents:

 

(i) a bringdown certificate signed by a Responsible Officer of each of the
Borrower and the Guarantor confirming that the representations and warranties
made by them as set forth in the Loan Agreement and the Guaranty continue to be
true and accurate in all material respects as of the funding date;

 

(ii) a supplemental opinion from counsel to the Borrower, in form and substance
reasonably acceptable to the Lender, covering, among other things, the due
authorization, execution and delivery by the Borrower of each of the Loan
Documents set forth below, the enforceability of such Loan Documents and the
perfection of all liens and security interests granted by the Borrower to the
Lender under the Loan Documents to the extent perfection can be achieved by
either filing a UCC-1 financing statement with the Secretary of State of
Delaware or the First Preferred Mortgage with the Office of the Maritime
Administrator of the Republic of the Marshall Islands;

 

(iii) the Memorandum of Particulars;

 

(iv) the First Preferred Mortgage;

 

(v) the Guaranty;

 

(vi) the UCC-1 Financing Statement;

 

(vii) the Assignment of Earnings;

 

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(viii) the Assignment of Insurances;

 

(ix) the Assignment of Time Charter and Time Charterer’s consent thereto (if
applicable);

 

(x) a copy of the current Provisional Certificate of Registry for the Vessel
along with a copy of the Interim Classification Certificate for the Vessel
issued by the Approved Classification Society;

 

(xi) a Certificate of Ownership and Encumbrances, dated no more than five( 5)
days prior to the Funding Date, showing the Vessel to be owned by the Lender,
free and clear of all recorded Liens and other encumbrances;

 

(xii) copies of the Vessel’s Temporary Ship Radio Station License, Certificate
of Financial Security - Oil Pollution Certificate of Financial Security - Wreck
Removal, Minimum Safe Manning Certificate, and Port Authority Letter
Registration;

 

(xiii) copies of all insurance certificates, cover notes, letters of undertaking
from the Vessel’s Approved Managers named on said Insurances and certificates of
entry (as applicable) evidencing the Insurances now in place covering the
Vessel;

 

(xiv) written advice from the Borrower’s insurance brokers of the Insurances
currently in place with respect to the Vessel and of the amount of coverage
provided;

 

(xv) an agreement by the Borrower’s insurance brokers, in form and substance
satisfactory to the Lender, which states that the Insurances of the Vessel and
the claims thereunder will not be affected by non-payment of premiums on any
other insurances;

 

(g) the Lender and its counsel shall have received payment in full of all fees
and expenses then due to each of them by the Borrower to the extent invoiced to
the Borrower at least two (2) days prior to the Funding Date;

 

(h) all representations or warranties by the Borrower and the Guarantor
contained herein or in each of the other Loan Documents shall be true or correct
in all material respects as of the Funding Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date; and

 

(i) no law, regulation or ruling (including, without limitation, any trade
sanction laws and regulations applicable to the Lender) shall prevent the Lender
from entering into the transactions contemplated hereby or shall affect the
ability of the Borrower to perform any of its Obligations hereunder or under
each of the other Loan Documents to which it is a party.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF BORROWER

 

SECTION 6.01. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:

 

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(a) Organization and Powers. The Borrower is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware, and, except where failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect, is duly qualified and authorized to
transact business as a foreign limited liability company in good standing
wherever necessary to carry on its present business. The Borrower has the
requisite power and authority to enter into and to perform its obligations under
this Agreement and all other Loan Documents to which it is a party.

 

(b) Authorization; No Conflict. The Borrower has duly authorized by all
requisite limited liability company action the execution, delivery and
performance of each of the Loan Documents to which it is a party, and the
execution, delivery and performance by it of such Loan Documents will not
violate any provision of law, any Order of any court or other agency of
government, its organizational documents, or any indenture, agreement or other
instrument to which it is a party, or by which it or any of its property or
assets is bound, or be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time, or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
Lien or other encumbrance of any nature whatsoever upon any of its property or
assets, except as otherwise permitted, required or contemplated by the Loan
Documents. The Loan Documents constitute the Borrower’s legal, valid and binding
obligations, enforceable against it, in accordance with the terms thereof except
where such enforceability may be affected by bankruptcy, insolvency, moratorium
or other similar laws affecting creditor’s rights generally and by general
principles of equity.

 

(c) Litigation. There are no actions, suits or proceedings pending or, or to the
Borrower’s knowledge, threatened against the Borrower or any of its properties
or the rights of the Borrower by or before any court, arbitrator or Governmental
Authority, domestic or foreign, which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. The Borrower is
not in default with respect to any Order of any court, arbitrator or
Governmental Authority, domestic or foreign, which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(d) Financial Condition. Since the date of its formation, there has been no
event or circumstance, which either individually or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.

 

(e) No Sovereign Immunity. The Borrower is subject to private commercial law and
to suit in connection with matters relating to this Agreement, the Note and the
other Loan Documents, and neither it nor any of its property has any right to
immunity from suit or attachment on the grounds of sovereignty or on any other
grounds. The execution, delivery and performance by the Borrower of this
Agreement, the Note and the other Loan Documents constitute its commercial acts,
which are related to its commercial activities.

 

(f) Tax Returns. The Borrower has filed, or has caused to have been filed, all
Federal and state tax returns which are required to be filed, and has paid, or
caused to have been paid, all Taxes as shown on such returns or on any
assessment received by it, to the extent that such Taxes are not delinquent,
except for such Taxes and other governmental charges that are currently being
contested in good faith by appropriate legal proceedings being diligently
pursued and for which adequate reserves therefor have been established on the
Borrower’s books and records as required under GAAP.

 

26

 

 

(g) Compliance with Laws; Possession of Licenses and Permits, Etc. The Borrower
is not in violation of any laws, ordinances, governmental rules or regulations
applicable to it and its assets and properties, except where failure to comply
could not reasonably be expected to have a Material Adverse Effect. The Borrower
possesses all material franchises, certificates, licenses, development and other
permits (including all Environmental Permits) and other authorizations from
governmental political subdivisions or regulatory authorities and all material
patents, trademarks, service marks, trade names, copyrights, licenses,
easements, rights of way and other rights (collectively, “Material Rights”),
free from burdensome restrictions, that are necessary, in the Borrower’s
judgment, for the ownership, maintenance and operation of its business,
properties and assets, including the ownership and operation of the Vessel. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such Material Rights.

 

(h) Required Consents. Neither the execution and delivery by the Borrower of
this Agreement, the Note and any of the other Loan Documents, nor the
consummation by it of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the registration
with, or the taking of any other action in respect of, any Governmental
Authority or agency thereof, domestic or foreign, other than the filing and
recording of the First Preferred Mortgage with the Office of Maritime
Administrator, Republic of the Marshall Islands or the NVDC, as applicable, and
the filing of the UCC-1 financing statement with the Secretary of State of
Delaware.

 

(i) Ownership of Vessel: Perfection of Mortgage, Etc. As of the Funding Date,
the Borrower shall have good record title to the Vessel, free and clear of all
Liens, other than Permitted Maritime Liens. Upon the filing and recording of the
First Preferred Mortgage with the Office of the Maritime Administrator, Republic
of the Marshall Islands, the Lender will have a duly recorded, first preferred
mortgage lien over the whole of the Vessel.

 

G) Principal Place of Business: Tradenames. The Borrower’s principal place of
business and chief executive office is at 302 Knights Run Avenue, Suite 1200,
Tampa, Florida 33602. The Borrower does not conduct business under any trade,
assumed or fictitious names.

 

(k) Margin Stock: Investment Company Status. None of the proceeds from the Loan
will be used, directly or indirectly, by the Borrower for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness that was originally incurred to purchase or carry, any “margin
stock” within the meaning of Regulation U (the “Margin Stock”), or for any other
purpose that might make the transactions contemplated herein a “purpose credit”
within the meaning of said Regulation U, or cause this Agreement to violate any
other regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934, as amended, or any rules or regulations
promulgated under any of such statutes. The Borrower is not an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, or an “investment adviser” within the
meaning of the Investment Advisers Act of 1904.

 

(1) BRISA. No accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to any
Plan (other than a Multiemployer Plan). No liability to the PBGC has been or is
expected by the Borrower or any BRISA Affiliate to be incurred with respect to
any Plan (other than a Multiemployer Plan) by the Borrower, any Subsidiary or
any BRISA Affiliate which is or would be materially adverse to the business,
condition (financial or otherwise) or operations of the Borrower and its
Subsidiaries taken as a whole. Neither the Borrower or any BRISA Affiliate has
incurred or presently expects to incur any withdrawal liability under Title IV
of BRISA with respect to any Multiemployer Plan which is or would reasonably be
expected to have a Material Adverse Effect. The execution and delivery of this
Agreement and the other Loan Documents and the Loan hereunder will be exempt
from, or did not and will not involve any transaction which is subject to the
prohibitions of, section 406 of BRISA and did not and will not involve any
transaction in connection with which a penalty could be imposed under section
502(i) of BRISA or a tax could be imposed pursuant to section 4975 of the Code.
As of the Funding Date, the Borrower is not and will not be (1) an employee
benefit plan subject to Title I of ERISA, (2) a plan or account subject to
Section 4975 of the Code; (3) an entity deemed to hold “plan assets” of any such
plans or accounts for purposes of ERISA or the Code; or (4) a “governmental
plan” within the meaning of ERISA.

 

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(m) Solvency. The Borrower is Solvent and, after giving effect to the
transactions contemplated hereby and by the other Loan Documents, the Borrower
will not become insolvent as a result thereof. The Borrower believes that it is
now and will be able to pay its debts as they become due, and has and will have
sufficient capital to carry on its business.

 

(n) Existing Charters, Etc. As of the Funding Date, the Vessel shall not be
subject to any charter or other agreement regarding the use or employment
thereof, other than a charter permitted pursuant to Section 7.0l (o) hereof.

 

(o) Sanctions. Etc. Neither the Borrower nor, to the Borrower’s knowledge, any
Related Party is an individual or entity that is, or is owned or controlled by
an individual or entity that is, (i) an “enemy” or an “ally of an enemy” within
the meaning of Section 2 of the Trading with the Enemy Act or any enabling
legislation or executive order relating thereto, (ii) currently the subject or
target of, or a blocked Person under, any Sanctions or engages in any dealings
or transactions with any such blocked Person, (iii) included on OFAC’s List of
Specially Designated Nationals, or any similar list enforced by any other
relevant sanctions authority applicable to the Borrower, or (iv) located,
organized or resident in a Designated Jurisdiction, (b) the Borrower has not
been charged with, or convicted of bribery or any other anti-corruption related
activity under any Anti-Corruption Law or any other anti-corruption related
activity in a U.S. or any non-U.S. country or jurisdiction, and (c) to the
knowledge of senior management the Borrower is not in material violation of any
applicable Anti-Terrorism Laws or Sanctions, and the Borrower has established
and maintained procedures and controls which it reasonably believes are adequate
to ensure compliance by the Borrower in all material respects with all
applicable Anti-Corruption Laws, Anti-Terrorism Laws and Sanctions.

 

(p) Environmental Matters. The Borrower and all of its properties and facilities
presently comply and, to the Borrower’s knowledge, have complied at all times
and in all respects with all Environmental Laws except where failure to comply
could not reasonably be expected to result in a Material Adverse Effect.

 

(q) Employee Relations. The Borrower is not the subject of (a) any material
strike, work slowdown or stoppage, union organizing drive or other similar
activity or (b) any material action, suit, investigation or other proceeding
involving alleged employment discrimination, unfair termination, employee safety
or similar matters that in either case would reasonably be expected to have a
Material Adverse Effect nor, to the best knowledge of the Borrower, is any such
event imminent or likely to occur except those which, individually or in
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(r) Disclosure. Neither this Agreement nor any other document, certificate or
statement furnished to the Lender by or on behalf of the Borrower in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, taken as a whole as of the date thereof, not misleading; provided,
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time and information available to it at such
time, it being understood that the Borrower is under no obligation to update
such projections or underlying information.

 

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ARTICLE VII

 

COVENANTS OF BORROWER

 

SECTION 7.01. Affirmative Covenants. Until all the Borrower’s Obligations
hereunder and under each of the other Loan Documents have been paid or otherwise
satisfied in full, the Borrower hereby agrees that:

 

(a) Financial Information. The Borrower shall maintain a system of accounts
established and administered in accordance with GAAP. The Borrower shall furnish
the Lender such financial information concerning (i) the Borrower, including,
but not limited to: (x) as soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of the Borrower, the balance
sheet, statement of income and cash flows of the Borrower as of the end of such
fiscal year, setting forth in each case in comparative form the corresponding
figures from the preceding year, certified by the chief financial officer of the
Borrower, and (y) as soon as available and in any event within forty-five (45)
days after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, the balance sheet, statement of income and cash
flows of the Borrower for such quarterly period, all in reasonable detail and
certified by the chief financial officer of the Borrower, (ii) the Vessel and/or
(iii) the Borrower’s use and operation of the Vessel, in each case as the Lender
reasonably deems necessary. The Borrower warrants that all such information and
representations furnished by the Borrower to the Lender shall be accurate and
correct in all material respects.

 

(b) Existence. Except as otherwise permitted pursuant to Section 7.02(d) hereof,
the Borrower shall continue to maintain its existence in good standing and
qualifications to do business where required.

 

(c) Notices. The Borrower shall deliver to the Lender promptly after a
Responsible Officer obtains knowledge of any Event of Default or Default, a
certificate of a Responsible Officer describing such event in reasonable detail,
with a statement of the Borrower’s proposed action with respect thereto. In
addition, the Borrower shall, from time to time, provide the Lender with such
other information as the Lender may reasonably request with respect to the
Vessel, the condition or maintenance thereof, of all damage, if any, thereto and
of all repairs made in connection therewith. The Borrower shall give the Lender
immediate notice and copies of all tax notices (other than customary periodic
notices received in conjunction with the normal administration of the Borrower’s
tax reporting process), reports or inquiries, claims of Liens (other than
Permitted Maritime Liens), and of any damage, loss, seizure, attachment or
judicial process which may affect the use, maintenance, operation, possession or
ownership of the Vessel.

 

(d) [Intentionally Omitted].

 

(e) Use of Proceeds. The Borrower shall use the proceeds from the Loan solely
for the purposes specified in the Recitals, and for no other purposes.

 

(t) Payment of Taxes. The Borrower shall pay and discharge, or cause to be paid
and discharged, prior to becoming delinquent all Taxes as shown on any Federal
or state tax returns or on any assessment received by it, except such Taxes and
other governmental charges as are currently being contested in good faith and by
appropriate legal proceedings being diligently pursued and for which adequate
reserves therefor have been established on the Borrower’s books and records as
required under GAAP and for so long as none of its assets (including the Vessel)
have been attached or arrested.

 

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(g) Compliance with Laws Generally. The Borrower shall comply with the
requirements of all Applicable Laws of any Governmental Authority (including,
without limitation, the Office of the Maritime Administrator of the Republic of
the Marshall Islands and, to the extent applicable, the United States Coast
Guard) having jurisdiction over it or the Vessel (including, but not limited to,
the Anti-Corruption Laws, Anti-Terrorism Laws and, to the extent applicable, the
ISM Code and ISPS Code) and all rules and regulations promulgated pursuant
thereto), except where failure to comply could reasonably be expected to have a
Material Adverse Effect.

 

(h) Litigation. The Borrower shall promptly inform the Lender of any pending or
threatened litigation involving it, where the amount claimed exceeds $100,000 or
of any other event, condition or occurrence which could reasonably be expected
to have a Material Adverse Effect.

 

(i) Financial Responsibility. The Borrower shall comply with and satisfy all of
the provisions of any Applicable Law, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on it or the Vessel
with respect to pollution, including, without limitation, the International
Convention of Maritime Pollution of 1973, the International Convention for the
Safety of Life at Sea of 1974, the U.S. Water Pollution Act, as amended by the
Water Pollution Control Act Amendment of 1972, the U.S. Oil Pollution Act of
1990, as the same may be amended from time to time, and will maintain all
certificates or other evidence of financial responsibility as may be required by
any such law, regulation, proclamation or order with respect to the trade in
which the Vessel from time to time engages or the cargoes carried by it.

 

G) Insolvency. The Borrower shall provide the Lender with written notice of the
commencement of proceedings by or against it, under the applicable bankruptcy
laws or other insolvency laws (as now or hereafter in effect), involving it as a
debtor.

 

(k) Request for Information. The Borrower shall (i) keep and maintain accurate
books and records, (ii) make entries on its books and records in form reasonably
satisfactory to the Lender disclosing the Lender’s security interest in and lien
on the Vessel and her Insurances, (iii) furnish to the Lender promptly upon
reasonable request such information, reports, contracts, invoices (showing
names, addresses and amount owing) and other data relating to all charters or
other agreements entered into with respect to the employment of the Vessel and
to all payments by the charterers or operators thereunder, as applicable.

 

(1) Bonding and Compliance with BRISA. The Borrower shall maintain at all times
such bonding as is required by BRISA. As soon as practicable and in any event
within thirty (30) days after it knows or has reason to know that, with respect
to any Plan or Multiemployer Plan, a “reportable event” has occurred, it shall
deliver to the Lender a certificate signed by its chief financial officer
setting forth the details of such “reportable event”.

 

(m) Environmental. The Borrower covenants that it will keep and maintain the
Vessel in compliance in all material respects with all applicable Environmental
Laws, except where failure to do so could not reasonably be expected to have a
Material Adverse Effect. The Borrower hereby agrees to indemnify, defend and
hold harmless the Lender and its Related Parties from and against any and all
liabilities arising out of, relating to or resulting from the Borrower’s breach
of this covenant, and in the event of any disposal, discharge or release of any
Hazardous Materials from the Vessel that results in the imposition of Class Il
civil penalties or higher, or upon the initiation of any proceeding,
investigation or inquiry by any Governmental Authority alleging a violation of
any Environmental Laws as a result of such disposal, discharge or release from
the Vessel that could result in the imposition of such penalties, the Borrower
shall notify the Lender in writing within ten (10) days of having knowledge
thereof. As used herein, the term “Hazardous Materials” means Oil, other
hazardous materials, hazardous wastes, hazardous materials, or any other
pollutants, contaminants, chemicals, wastes, materials, compounds, constituents
or substances, defined under, subject to regulation under, or which can give
rise to liability or obligations under, any Environmental Laws, including
polychlorinated biphenyls (“PCBs”); and the term “Oil” has the meaning assigned
to it in the Oil Pollution Act of 1990, 33 U.S.C. §2701, et or any substance or
compound containing PCBs, asbestos or any asbestos-containing materials in any
form or condition, lead- based paint, urea formaldehyde, pesticides, radon or
any other, radioactive materials including any source, special nuclear or
by-product material, petroleum, petroleum products, petroleum-derived
substances, crude oil or any fraction thereof, or any mold, microbial or fungal
contamination that could pose a risk to human health or the Environment.

 

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(n) Insurances. At all times during the term hereof, the Borrower shall insure
and keep the Vessel insured in accordance with the requirements of the First
Preferred Mortgage.

 

(o) Additional Vessel Covenants. With respect to the Vessel, the Borrower hereby
covenants and agrees:

 

(i) to only use the Vessel in the territorial waters of nations which recognize
the rights of vessels registered under Marshall Islands and U.S. flag and only
in locations where the Vessel’s operating specifications allow it to operate
safely and within its technical capacities and certification and within the
limits of its insurance coverages;

 

(ii) to provide to the Lender forthwith copies of all material notices and
information received by it in relation to the Vessel and her Insurances and
operations, unless such notices or information state they have been provided
directly to the Lender;

 

(iii) to cause the Vessel at all times to comply with any of the Oil Majors crew
matrix requirements to the extent that the Vessel is subject to a time charter
with such Oil Major;

 

(iv) to promptly notify the Lender if at any time the Vessel is rejected by any
Oil Major and thereafter, within forty-five (45) days thereof, to restore the
Vessel’s Acceptability provided that the Vessel’s trading patterns and the
relevant Oil Major’s risks permit a re-inspection (if required);

 

(v) to ensure that at all times after January 31, 2022, the Vessel has
Acceptability from at least one (1) Oil Major;

 

(vi) to assign and provide that any Requisition Compensation is applied in
accordance with Section 6 of the First Preferred Mortgage as if received on the
basis of a sale of a Vessel;

 

(viii) unless and until the Vessel if reflagged under the laws of the United
States of America pursuant to Section 7.0l(v) hereof, to keep the Vessel duly
registered under the laws and flag of the Marshall Islands and to do or suffer
to be done nothing whereby such registration may be forfeited or canceled;

 

(ix) to keep and to cause the Vessel to be kept free and clear of all Liens
other than Liens granted in favor of the Lender and other Permitted Maritime
Liens, and not to pledge, charge, assign or otherwise encumber (in favor of any
Person other than the Lender) the Earnings or Insurances of the Vessel, or to
suffer the creation of any such pledge, charge, assignment or encumbrance as
aforesaid to or in favor of any Person other than the Lender;

 

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(x) without the prior written consent of the Lender, not to sell the Vessel
(unless the Lender shall have received or concurrently receives payment in full
of all sums then outstanding as provided for in Section 3.03(b) of this
Agreement, in which case no consent shall be required);

 

(xi) to comply with and satisfy all the requisites and formalities established
by the laws of the Republic of the Marshall Island (and if reflagged under the
laws of the United States, the United States) to establish and maintain the
First Preferred Mortgage as a legal, valid, binding and enforceable first
preferred mortgage lien upon the whole of the Vessel and to furnish to the
Lender from time to time such proofs as the Lender may reasonably request so
that it may be satisfied with respect to the compliance by the Borrower with the
provisions of this subsection;

 

(xii) neither the Borrower nor any permitted charterer will make any material
structural changes to the Vessel (each, a “Material Structural Modification”)
other than for any Mandatory Equipment (as defined below) or as otherwise
required by any Governmental Authority having jurisdiction over the Vessel or
the Approved Classification Society, without the prior written consent of the
Lender (which consent shall not be unreasonably withheld, conditioned or
delayed). Any structural change made to the Vessel shall be deemed a Material
Structural Modification if such change would: (1) convert the intended use of
the Vessel from a use authorized in this Section; (2) impair the seaworthiness
of the Vessel or invalidate any Certificate of Registry/Documentation, Load Line
Certificate, or class certification issued with respect to the Vessel; or (3)
diminish the fair market value, utility and remaining useful life of the Vessel
below the fair market value, utility or remaining useful life thereof
immediately prior to such change. The Borrower may make any other alterations
(including non-material structural changes), subtractions, upgrades and
improvements (“Permitted Modifications”); provided that any such Permitted
Modification does not diminish the value, utility or remaining useful life of
the Vessel and does not give rise to any Lien on the Vessel (other than
Permitted Maritime Liens). Permitted Modifications and Material Structural
Modifications are jointly referred to as “Modifications”. The Borrower shall
make all Modifications required by any Applicable Law or required by any
Governmental Authority or the Approved Classification Society. All Modifications
shall be made at the sole cost and expense of the Borrower. Each such
Modification shall be deemed to be a part of the Vessel. The Borrower, at its
sole cost and expense, shall procure and install any items of machinery or
equipment required by any Applicable Law, any Governmental Authority having
jurisdiction over the Vessel or the Approved Classification Society (“Mandatory
Equipment”);

 

(xiii) not to cause or permit the Vessel to be operated (x) in any manner
contrary to Applicable Law, treaty or convention, or any rule or regulation duly
issued thereunder as to which failure to comply could reasonably be expected to
have a Material Adverse Effect, or (y) in violation of the terms of any policies
of insurance procured by the Borrower pursuant to the First Preferred Mortgage,
not to abandon the Vessel in a foreign port, not to change the Approved Managers
of the Vessel without the Lender’s consent and delivery to the Lender of all
appropriate endorsements to the Borrower’s Insurances evidencing that all such
Insurances continue to remain in full force and effect notwithstanding such
change of manager(s), not to engage in any unlawful trade or carry any cargo
that will expose the Vessel to penalty, confiscation, forfeiture or capture, and
not to do, or suffer or permit to be done, anything which could disqualify its
registration under Marshall Islands (or if and when reflagged in the United
States, United States) law. The Borrower shall at all times operate the Vessel
as a responsible and prudent carrier in accordance with industry standards and
in the same manner that the Borrower operates other vessels of comparable type
that are owned or chartered in by it. The Borrower warrants that the Vessel will
be used solely in the conduct of the Borrower’s business, and will at all times
(other than when the Vessel is in drydock, is out of service undergoing repairs
or is bareboat chartered to a third party to the extent permitted pursuant to
Section 7.0(o)(ix) below) be and remain in the Borrower’s exclusive possession
and control. The Borrower warrants that it will exercise due diligence to
transport in the Vessel only lawful and suitable cargoes, subject to any and all
limitations, conditions and restrictions set forth herein, in the Vessel’s
Certificate of Registry and/or Load Line Certificate and contained in any
policy, contract or certificate of insurance procured pursuant to the First
Preferred Mortgage;

 

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(xiv) the Borrower shall not charter the Vessel on a bareboat basis, to any
Person, without the prior written consent of the Lender. Notwithstanding the
foregoing, the Borrower may from time to time enter into time charters of the
Vessel to both Affiliates of the Borrower and to non-Affiliates in the ordinary
course of its business; provided. however. that (i) any such charter shall
contain a provision placing the charterer thereof on notice of the First
Preferred Mortgage and subordinating any and all rights of such charterer to the
rights of the Lender hereunder and thereunder; (ii) the term of any such
charter, including options, shall not extend beyond maturity date of the Loan;
and (iii) for any time charter having a duration (including options) of greater
than one year, the Borrower shall execute and deliver to the Lender an
assignment thereof, substantially in the form attached hereto as Exhibit C,
collaterally assigning to the Lender all of its rights, title and interests
therein, along with a copy of the Consent and Agreement to be provided by the
time charterer in connection therewith;

 

(xv ) if a libel shall be filed against the Vessel, or if the Vessel shall be
seized, arrested, levied upon and taken into custody or detained in any
proceeding in any court or tribunal or by any government or under color of
authority, the Borrower shall forthwith give notice to the Lender of such arrest
and taking or detention and (except in connection with any taking or requisition
of the title or use of the Vessel by any Governmental Authority) cause the
Vessel to be released therefrom within thirty (30) days from the date of such
seizure, arrest or detainment, or within such lesser time as may be necessary to
avoid prejudice to the interests of the Lender with respect to the Vessel.
Without limiting the Borrower’s obligations under Section 9.15 of this
Agreement, the Borrower hereby agrees to indemnify, defend and hold harmless,
the Lender and the Vessel from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, judgments, costs and
expenses, including Attorneys’ Fees, of whatsoever kind and nature, imposed on,
incurred by or claimed against the Lender or the Vessel, in any way relating to
or arising out of the assertion of a Lien against the Vessel, including, without
limitation, a Permitted Maritime Lien;

 

(xvi) at all times and without cost or expense to the Lender, to maintain,
service and preserve the Vessel, its parts and equipment, so as to keep them in
every respect suitable for their intended uses and in good operating condition
and repair, consistent with prudent industry practice for vessels of the same
type and age, and used in the same trade, as the Vessel but in no event less
than the extent to which the Borrower maintains other similar vessels and
equipment in the prudent management of its assets and properties, and in all
events in as good a condition as existed on the Funding Date, normal wear and
tear from proper use alone excepted (except during such times when the Vessel or
any of her equipment is out of service undergoing repairs in order to maintain
the Vessel’s and such equipment’s compliance with the foregoing requirements).
The Borrower shall at all times keep the Vessel in such condition that she
complies with all Applicable Laws, treaties, conventions, rules, regulations and
class certifications to which she is currently subject (except at such time when
the Vessel is out of service undergoing repairs) and keep on board the Vessel,
when required thereby, valid certificates showing compliance therewith. Records
regarding the use, operation, maintenance and repair of the Vessel shall be
maintained by the Borrower throughout the term of the Loan consistent with
prudent industry practice, the requirements of policies of insurance covering
the Vessel, and Applicable Laws. To the extent applicable, the Borrower shall
comply or procure compliance with the ISM Code and the ISPS Code, and shall
furnish to the Lender on demand true and complete copies of the Vessel’s
Document of Compliance, Safety Management Certificate and such other ISM Code
documentation as the Lender may reasonably request in writing;

 

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(xvii) at all times and without cost or expense to the Lender to maintain the
classification status of the Vessel issued by the American Bureau of Shipping or
other Approved Classification Society to which the Vessel may from time to time
be subject. Upon the Lender’s request but not more than once during any six (6)
month period (unless an Event of Default exists), the Borrower shall furnish the
Lender hard copies of, or provide the Lender remote online access to copies of,
all documents issued by the Republic of the Marshall Islands (and if and when
reflagged under the laws of the United States, the United States Coast Guard),
all Load Line Certificates, if applicable, and all certificates issued by the
Approved Classification Society promptly upon issuance. All class certificates
and all maintenance histories of the Vessel shall be made available to the
Lender electronically within such reasonable period following the Lender’s
request therefor;

 

(xviii) the Borrower has advised the Lender that the Vessel shall participate in
the USCG Underwater Inspection In Lieu of Dry Docking (UWILD) program and, as
such, the Borrower, at its own cost and expense, shall drydock the Vessel every
five (5) years for a special survey in accordance with the UWILD program;

 

(xix) to furnish the Lender promptly upon the Lender’s written request, copies
of all time charters and contracts of affreightment with respect to the Vessel
having a duration (including all options) of twelve (12) months or more and the
full details as to the parties, times of delivery and the like pertaining
thereto; and

 

(xx) except as otherwise permitted pursuant to Section 7.0l(v) hereof, not to
transfer or change, or permit to be transferred or changed, the flag of the
Vessel without the prior written consent of the Lender, and any such written
consent to any one transfer or change of flag shall not be construed to be a
waiver of this provision with respect to any subsequent proposed transfer or
change of flag.

 

(p) Inspections; Logs and Records. At all times, upon not less than forty-eight
(48) hours prior notice but not more than once during any fiscal year of the
Borrower (unless an Event of Default exists), the Borrower shall afford the
Lender and its authorized representatives full and complete access to the Vessel
for the purpose of appraising and inspecting the same and inspecting her papers
and, at the request of the Lender, the Borrower shall deliver for inspection
copies of any and all contracts and documents relating to the operation and
employment of the Vessel, whether on board or not. Unless an Event of Default
has occurred and is continuing, the Lender shall use reasonable efforts to
ensure that the operation of the Vessel is not adversely affected and that the
Vessel’s schedule is not disrupted, as a result of such inspections. However,
if, upon such inspection, the Lender discovers that the Vessel is in a condition
of disrepair, and such condition is confirmed by an independent, certified
marine surveyor selected and agreed upon by the Lender and the Borrower, Lender
shall have the right to call for the repair and, if necessary, drydocking of the
Vessel within a commercially reasonable period not to exceed ninety (90) days
thereafter at the Borrower’s sole cost and expense and to the satisfaction of
the Lender.

 

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(q) Notice of Mortgage. The Borrower shall place a certified copy of the First
Preferred Mortgage, together with notice thereof, on board the Vessel and,
within thirty (30) days of the date hereof, shall furnish the Lender a copy of
the Master’s signed receipt therefor, in form and substance satisfactory to the
Lender.

 

(r) Other Additional Information. The Borrower shall provide the Lender such
information and documentation as may reasonably be requested by the Lender from
time to time for purposes of compliance by the Lender with Applicable Laws
(including. without limitation, the Patriot Act and other “know your customer”
and anti-money laund ring rules and regulations), and any policy or procedure
implemented by the Lender to comply therewith.

 

(s) Anti-Corruption Laws, Anti-Terrorism Laws, etc. The Borrower shall conduct
its business in compliance in all material respects with all applicable
Anti-Corruption Laws, Anti-Terrorism Laws and Sanctions, as amended, and the
regulations thereunder, and will maintain in effect and enforce procedures,
policies and controls which it reasonably believes are adequate to ensure
compliance by the Borrower with all applicable Anti-Corruption Laws,
Anti-Terrorism Laws and Sanctions.

 

(t) Financial Covenants.

 

(i) The Borrower shall cause the Guarantor and its Subsidiaries, on a
consolidated basis, to maintain at all times a Total Leverage Ratio for the four
(4) quarters most recently ended of not more than the following:

 

5.0 to 1.0 at any time during the fiscal year 2019;

4.25 to 1.0 at any time during the fiscal year 2020;

3.75 to 1.0 at any time during the fiscal year 2021; and

3.25 to 1.0 at any time during all fiscal years thereafter.

 

(ii) The Borrower shall cause the Guarantor and its Subsidiaries, on a
consolidated basis, to maintain at all times for the four (4) quarters most
recently ended a Fixed Charge Coverage Ratio of not less than 1.2 to 1.00.

 

(u) Optional Reflagging. The Borrower may elect to have the Vessel removed from
Marshall Islands flag and reflagged in the United States, upon giving the Lender
at least sixty (60) days prior written notice thereof. In such event, the Lender
will cooperate with the Borrower to release its mortgage on the Vessel so as to
allow the Vessel to be deleted from Marshall Islands registry and registered and
reflagged under U.S. law, provided that, contemporaneously therewith, the
Borrower executes and/or delivers to the Lender:

 

(i) a new first preferred ship mortgage over the whole of the Vessel,
substantially in the form attached hereto as Exhibit D and in appropriate form
for filing with NVDC;

 

(ii) copies of all limited liability company actions taken to authorize its
execution and delivery of such new mortgage and all other documents to be
executed and delivered in connection therewith;

 

(iii) an opinion of the Borrower’s counsel as to the Borrower’s due
authorization, execution and delivery of such documents and the perfection of
the Lender’s mortgage on the Vessel; and

 

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(iv) the Borrower shall have reimbursed the Lender for all fees, costs and
expenses incurred by the Lender in consenting to the Borrower’s request to have
the Vessel reflagged in the United States of America.

 

(v) Earnings. In the absence of an Event of Default, the Borrower shall cause
all Earnings of the Vessel to be payable to OSG Ship Management Inc., to be held
by it in trust on behalf of the Borrower, and used to pay all operating costs of
the Vessel, all sums as and when due and payable by the Borrower to the Lender
hereunder and under each of the other Loan Documents and for such other purposes
as the Borrower shall decide. Following the occurrence and during the
continuance of an Event of Default, all such Earnings shall be payable to the
Lender as provided for the Assignment of Earnings.

 

SECTION 7.02. Negative Covenants. Until all of Borrower’s Obligations hereunder
and under each of the other Loan Documents have been satisfied in full, the
Borrower agrees that without the prior written consent of the Lender:

 

(a) Indebtedness. It shall not create, incur or assume or suffer to exist any
Indebtedness other than (i) trade payables incurred in the ordinary course of
business, including, without limitation, payables in respect of bunkers and
drydocking and under service agreements relating to the Vessel, (ii)
Indebtedness incurred under the Loan Documents, (iii) Indebtedness incurred in
the ordinary course of its business not to exceed $250,000 in the aggregate at
any one time outstanding;

 

(b) Liens. It shall not create, incur, assume or suffer to exist any Lien or
other encumbrance upon the Vessel (other than Permitted Maritime Liens) or the
other Collateral.

 

(c) State of Formation; Place of Business. It shall not change its state of
formation or the location of its principal place of business from that set forth
in Section 9.02, without giving the Lender at least twenty (20) days’ prior
written notice thereof and setting forth in detail the new jurisdiction of
formation or complete address of such new place of business (as the case may
be). In furtherance thereof, it shall file, and hereby authorizes the Lender to
file on its behalf, Uniform Commercial Code financing statements, amendments or
continuation statements, in form and substance satisfactory to the Lender, in
such jurisdiction or jurisdictions as the Lender shall request upon demand by
the Lender.

 

(d) Assignments. It shall not assign to any Person (other than the Lender) any
of the Earnings, Insurances or Requisition Compensation of the Vessel.

 

(e) Maintain Single Purpose Entity Status.

 

(i) It shall not engage in any business other than as contemplated hereunder and
under the other Loan Documents or any activity other than as contemplated by, or
otherwise necessary to perform its obligations under, this Agreement and the
other Loan Documents;

 

(ii) It shall not acquire or own any material assets other than (A) the property
related to the Borrower’s ownership and operation of the Vessel, and (B) that
needed to maintain the Borrower’s existence or operations in order to comply
with, or as otherwise permitted by, the Loan Documents;

 

(iii) It shall not merge with or into, or consolidate with, any Person other
than the Guarantor, or dissolve, terminate or liquidate in whole or in part,
transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure;

 

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(iv) It shall not amend, modify, terminate or fail to comply with the provisions
of its organizational documents, as same may be further amended or supplemented,
if such amendment, modification, termination or failure to comply would
adversely affect its status as a single purpose entity or its ability to perform
its obligations hereunder, or under the Note and the other Loan Documents;

 

(v) It shall not own any Subsidiary nor make any Investment in any Person other
than Affiliates of the Borrower;

 

(vi) It shall not pledge, grant a security interest in or transfer any of its
assets to any other Person;

 

(vii) It shall not declare or make any Restricted Payments to any Person other
than to Affiliates of the Borrower;

 

(viii) It shall not fail to maintain its records, books of account separate and
apart from those of its Affiliates or any other Person;

 

(ix) It shall not enter into any contract or agreement with any of its
Affiliates or any other Person, except for those agreements which otherwise are
incurred in the ordinary course of business upon terms and conditions that would
be available on an arms-length basis;

 

(x) It shall not seek its dissolution or winding up in whole or in part;

 

(xi) It shall not maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any of its Affiliates;

 

(xii) It shall not hold itself out to be responsible for the debts of another
Person or pay another Person’s liabilities out of its own funds;

 

(xiii) It shall not make any loans or advances to any third party;

 

(xiv) It shall not fail to prepare and file its own tax returns, if such tax
returns are required to be filed under Applicable Law;

 

(xv) It shall not fail either to hold itself out to the public as a legal Person
separate and distinct from any other Person or to conduct its business solely in
its own name, in order not to mislead others as to the identity with which such
other party is transacting business, or to suggest that it is responsible for
the debts of any third party; or

 

(xvi) It shall not fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.

 

(f) Financing Statements. It shall not file any amendments, corrective
statements, or termination statements concerning the Collateral without the
prior written consent of the Lender.

 

(g) Sanctions. It shall not directly or knowingly indirectly use or permit the
proceeds of the Loan to be used (a) in connection with any investment in, or any
transaction or dealings with, any Person that, at the time of such funding, is
the subject of Sanctions in a manner that will result in a violation of
Sanctions, or (b) in any other manner in violation of Sanctions.

 

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(h) Anti-Corruption Laws; Anti-Terrorism Laws. It shall not directly, or
knowingly indirectly, use the proceeds of the Loan for any purpose which would
breach any Anti-Corruption Laws or any Anti-Terrorism Laws.

 

ARTICLE VIII

 

EVENTS OF DEFAULT; REMEDIES

 

SECTION 8.01. Events of Default; Acceleration, etc. Time is of the essence under
this Agreement and the Borrower shall be deemed to be in default of its
obligations hereunder upon the occurrence of any of the following events (each,
an “Event of Default”):

 

(a) the Borrower fails (i) to make any principal and interest payment as and
when due under the Note, or (ii) to pay when due any other sum otherwise payable
hereunder or under any other Loan Document, which failure continues unremedied
for a period of five (5) days thereafter; or

 

(b) the Borrower sells (other than in connection with the Borrower’s
satisfaction of its obligations under Section 3.03(b) hereof), or mortgages or
encumbers (other than for Permitted Maritime Liens) the Vessel, or if any Lien
(other than a Permitted Maritime Lien) is filed against or otherwise attaches to
the Vessel, which has not been released, bonded or otherwise secured as provided
in Section 7.0l(o)(x) hereof; or

 

(c) any representation or warranty made by the Borrower hereunder or by the
Borrower or the Guarantor in any of the other Loan Documents shall prove to have
been materially false or misleading when made; or

 

(d) (1) the Borrower fails to comply with any of the provisions of Section
7.0l(b), (e), the first sentence of (l), (n), (o)(ii) and (o)(xv) or Section
7.02, or (2) the Borrower fails to comply with any of the provisions of Section
7.0l(i) or (o)(iii) and such failure continues unremedied for a period of
fifteen (15) days following the earlier of the date that a Responsible Officer
of the Borrower or the Guarantor has knowledge thereof or the date that the
Lender provides notice of such failure to the Borrower; or

 

(e) the Borrower breaches any of the other agreements or covenants contained
herein (and not otherwise addressed in this Section 8.01) and such breach
continues unremedied for a period of thirty (30) days following the earlier of
the date that a Responsible Officer of the Borrower is obligated to report such
breach to the Lender under Section 7.0l(c) hereof or the date that the Lender
provides notice of such breach to the Borrower; or

 

(f) any notice shall have been issued by the Republic of the Marshall Islands
(or if applicable the United States Coast Guard Registry) to the effect that the
Vessel is subject to deletion from registration/documentation or the Certificate
of Registry/Documentation for the Vessel or the endorsement noted thereon is
subject to revocation or cancellation, for any reason whatsoever and such matter
is not remedied or such notice is not revoked within ten (10) Business Days of
the Borrower’s receipt thereof; or

 

(g) for any reason, the First Preferred Mortgage ceases to be a duly recorded,
first preferred mortgage over the whole of the Vessel other than in connection
with a reflagging of the Vessel pursuant to Section 7.0l(v) hereof and in which
case a new First Preferred Mortgage shall be executed by the Borrower and
delivered to the Lender in accordance with Section 7.0l(v)(i) hereof; or

 

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(h) should this Agreement, the Note, the Guaranty or any of the other Loan
Documents at any time after their execution and delivery, for any reason (other
than satisfaction in full of all Obligations) cease to be valid and binding on,
or enforceable against, the Borrower or the Guarantor (as the case may be), or
the Borrower or the Guarantor shall so state in writing or bring an action to
limit its obligations or liabilities thereunder; or this Agreement, the Note,
the Guaranty or any of the other Loan Documents shall, at any time after their
execution and delivery, for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported
to be covered thereby or such security interest shall for any reason (other than
pursuant to the terms hereof) cease to be a perfected first preferred mortgage
lien and/or first priority security interest, subject only to Permitted Maritime
Liens; or

 

(i) an event of default shall have occurred and be continuing under the First
Preferred Mortgage or any other Loan Document and such breach continues
unremedied for a period of thirty (30) days following the earlier of the date
that a Responsible Officer of the Borrower or the Guarantor has knowledge of
such breach or the date that the Lender provides notice of such breach to the
Borrower; or

 

G) should the Borrower cease to qualify as a “Foreign Maritime Entity” under the
laws of the Republic of the Marshall Islands (or if the Vessel has been
reflagged in the United States, a Section 2 Citizen) and such failure, if
curable, remains uncured for a period often (10) days thereafter; or

 

(k) should the Borrower or the Guarantor (i) make an assignment for the benefit
of its creditors, (ii) fail to generally pay its debts as they become due, (iii)
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law, (iv) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or other similar relief under any present or future statute, laws or regulation
relating to creditors’ rights, (v) have entered against it a decree or order for
relief in an involuntary case under any applicable bankruptcy, insolvency or
other similar law and such decree or order remains unstayed or is not vacated
within thirty (30) days thereafter, (vi) file an answer admitting or not
contesting the material allegations of a petition filed against it in any such
involuntary proceeding, (vii) seek or consent to or acquiesce in the entry of an
order for relief or the appointment of, or the taking possession by, any
trustee, receiver, assignee, custodian, sequestrator or liquidator of it or all
or any substantial part of its properties; or

 

(I) should the Vessel be seized or levied upon under any legal or governmental
process and the Borrower shall fail either to cause the release of the Vessel
from such seizure or levy within thirty (30) days or within such lesser time as
may be necessary to avoid prejudice to the Lender’s interest therein, or to pay
to the Lender an amount equal to the outstanding principal balance of the Loan,
plus all accrued but unpaid interest due thereon, and all other sums then due
hereunder; or

 

(m) should the Borrower or any Affiliate of the Borrower fail to make any
payment of principal of, premium, if any, and/or interest on, or rent or hire
due under, any charter, lease, credit or other debt instrument to which the
Borrower or any such Affiliate and the Lender or any of the Lender’s Affiliates
are parties beyond any grace period provided with respect thereto, where the
amount remaining unpaid in the case of the Borrower exceeds $25,000 and in the
case of an Affiliate of the Borrower exceeds $100,000; or

 

39

 

 

(n) should the Borrower or the Guarantor fail to make any payment of principal
of, premium, if any, and/or interest on, any third party Indebtedness or fail to
make any payment of rent or hire due under any charter or lease or otherwise
fail to perform or observe any other agreement or any term or condition
contained in any agreement relating to any third party Indebtedness, lease or
charter beyond any grace period provided with respect thereto (and for which the
Borrower or Guarantor has not set aside adequate reserves on its balance sheet
to make such payment) and the effect of such default or failure is (x) to permit
or cause, or to permit the holder or holders of such third party Indebtedness
(or a trustee on behalf of such holder or holders) to cause, such third party
Indebtedness to become due (or to be purchased by the Borrower or the Guarantor)
prior to any stated maturity date, or (y) in the case of a lease or charter, to
permit or cause the lessor or owner under such lease or charter to terminate
such lease or charter, in each case where the amount of such third party
Indebtedness or the payments remaining due under such lease or charter exceeds
in the case of the Borrower $25,000 and in the case of the Guarantor
$25,000,000; or

 

(o) should the Borrower or the Guarantor fail to pay for more than sixty (60)
days after it is due or during such period to vacate, obtain a stay pending
appeal or post bond against, any final, non-appealable judgment entered against
it by any court having jurisdiction over it or its property for the payment of
money aggregating, in the case of the Borrower in excess of $25,000 and in the
case of the Guarantor in excess of $25,000,000, over the amount covered by
insurance then in effect (so long as the insurer thereof has not denied
liability for the payment thereof); or

 

(p) should there occur a Change in Control;

 

then, and in each such event, the Lender may (A) by notice to the Borrower,
declare the Note, all interest accrued thereon and all other amounts (including,
but not limited to, any Prepayment Fee) payable thereunder and hereunder to be
forthwith due and payable in full, whereupon the Note, all such interest and all
such other amounts shall become immediately due and payable in full, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that in the event of
the entry of an order for relief with respect to the Borrower under the
Bankruptcy Code or under any similar Federal or state statute or regulation, the
Note, all accrued interest thereon and all other amounts due thereunder and
hereunder shall automatically become due and payable in full, without in each
instance having given the Borrower any notice whatsoever; (B) setoff against and
debit any account maintained by the Borrower with the Lender for any sums due
the Lender hereunder or under the Note; (C) immediately proceed against the
Vessel under the First Preferred Mortgage; or (D) exercise all other rights and
remedies available under any of the Loan Documents or any Applicable Law.

 

The rights and remedies of the Lender hereunder and under any documents or
instruments executed pursuant hereto are cumulative, and recourse to one or more
rights or remedies shall not constitute a waiver of the others or an election of
remedies. It is mutually agreed that commercial reasonableness and good faith
require the giving of no more than ten (10) Business Days’ prior written notice
of the time and place of any public sale of any Collateral or of the time after
which any private sale or any other intended disposition thereof is to be made,
and at any such public or private sale, subject to limitations of law, the
Lender, its agents and/or nominees, may purchase the Collateral. If the net
proceeds of any disposition of Collateral exceed the amount then due and owing,
whether by acceleration, at maturity or otherwise, or on demand, such excess
will be remitted to the Borrower or whomsoever shall be legally entitled
thereto. The Borrower shall remain liable for any deficiency remaining after
disposition of all Collateral.

 

40

 

 

If the Borrower fails to perform or comply with any of its obligations contained
herein, the Lender shall have the right, but shall not be obligated, to effect
such performance or compliance and the Borrower hereby promises to reimburse the
Lender upon demand for such sums so expended, together with interest thereon at
the Default Rate for the actual number of days elapsed from date of payment by
the Lender to the date on which the Lender receives payment thereof from the
Borrower. Failure of the Borrower to pay and promptly discharge the aforesaid
debts and obligations shall constitute a separate Event of Default under this
Agreement, but the payment of the same by the Lender shall not cure or
constitute a waiver of such Event of Default. Upon the occurrence of an Event of
Default, all payments received by the Lender from or on behalf of the Borrower
shall be applied by the Lender to any installment(s) due and payable under the
Note as the Lender, in its sole discretion, may determine, without notice to or
consent of Borrower, the Borrower hereby expressly waives (to the extent
permitted by law) all rights to make or manifest any binding instruction upon
the Lender as to application of such payments other than as herein provided.
Acceptance by the Lender of partial payment(s) or partial performance by the
Borrower or by any other third party shall not be construed as a waiver of any
Event of Default, nor shall the same affect or in any way impair the rights and
remedies of the Lender hereunder.

 

SECTION 8.02. Additional Rights. The Borrower hereby irrevocably appoints the
Lender as its attorney-in-fact (which power shall be deemed irrevocable and
coupled with an interest) to, following the occurrence and during the
continuance of an Event of Default, execute, endorse and deliver any deed,
conveyance, assignment or other instrument in writing as may be required to vest
in the Lender any right, title or power which, by the terms hereof, are
expressed to be conveyed to or conferred upon the Lender, including any
documents and checks or drafts relating to or received in payment for any loss
or damage under the policies of insurance required by the provisions of Section
7.01(n) hereof, but only to the extent that the same relates to the Collateral.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01. Amendments, etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be in writing and signed by the Lender
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

SECTION 9.02. Notices, etc. All demands, notices, and other communications under
this Agreement shall be in writing and shall personally be delivered or
deposited with a reputable commercial courier or express delivery service, or
with the United States Postal Service, first class postage prepaid or by
facsimile or email transmission, confirmed by letter, addressed as follows:

 

To the Borrower:

 

Overseas Sun Coast LLC

302 Knights Run Avenue

Suite 1200

Tampa, Florida 33602

Attention: Richard Trueblood

Facsimile: (813) 221-2769

Email: dtrueblood@osg.com

 

and

 

Attention: Susan Allan

Telephone: (813) 209-0620

Facsimile: (813) 221-2769

Email: sAllan@osg.com

 

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With copy to:

 

Gunster

600 Brickell Avenue

Suite 3500

Miami, Florida 33131

Attention: Joshua Jacobson, Esq.

Telephone: (305) 376-6032

Facsimile: (305) 376-6010

Email: jjacobson@gunster.com

 

To the Lender:

 

Pacific Western Bank

30 S. Wacker Drive

35th Floor

Chicago, Illinois 60606

Attention: Tanya Zasadzinski

Telephone: (312) 706-2114

Facsimile: (312) 577-7914

 

With a copy to:

 

Patrick K. Cameron, Esquire

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

100 Light Street

Baltimore, Maryland 21202

Facsimile: (410) 547-0699

 

or to such other address as shall be designated by such party in a written
notice to the other. All such notices and communications shall, when mailed, be
sent by overnight courier or by first class registered mail, postage prepaid,
return receipt requested and be effective three (3) Business Days after being
deposited in the U.S. mails addressed as aforesaid. All such notices and other
communications sent by facsimile or email transmission shall be effective when
sent if on a Business Day at the recipient’s office and not later than 3:00 p.m.
at the recipient’s office, provided that in the case of notices and other
communications sent by facsimile transmission when (i) an appropriate answerback
has been received by the sending party, and (ii) such facsimile is confirmed by
mailing to the receiving party, at its address given above, a copy of such
facsimile transmission postage prepaid by first class mail (air mail, if
international). All other forms of written notice or other communication shall
be effective only upon personal delivery.

 

SECTION 9.03. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS RULES FOR CONFLICTS
OF LAW (OTHER THAN SECTIONS 5-1401 AND 15-1402 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK).

 

SECTION 9.04. Service of Process and Consent to Jurisdiction: Waiver of Venue.
Each of the parties hereby irrevocably submits to the non-exclusive jurisdiction
of the federal and state courts located in the New York County, in any action
brought against it under this Agreement, the Note or any other Loan Document and
agrees that a summons and complaint commencing any action or proceeding in such
court shall be properly served if delivered personally or by registered mail to
the Borrower or the Lender at its address set forth in Section 9.02 above, or
otherwise served under the laws of the State of New York, and the Borrower and
the Lender hereby waive any objection to venue and jurisdiction which it may now
or hereafter have. Each party shall promptly notify the other of any change in
its address. Nothing herein shall affect the right of the Lender to serve
process in any other matter prescribed by law or the right of the Lender to
bring legal proceedings in any other competent jurisdiction.

 

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SECTION 9.05. No Remedy Exclusive. Each and every right, power and remedy given
to the Lender in this Agreement, the Note, the First Preferred Mortgage, and the
other Loan Documents shall be cumulative and in addition to every other right,
power and remedy herein or therein given now or hereafter existing at law, in
equity, in admiralty, by statute or otherwise. Each and every right, power and
remedy whether given therein or otherwise existing may be exercised from time to
time as often and in such order as may be determined by the Lender, and neither
the failure or delay in exercising any power or right nor the exercise or
partial exercise of any right, power or remedy shall be construed to be a waiver
of or acquiescence in any default therein; nor shall the acceptance of any
security or of any payment of or on account of any loan, promissory note,
advance, obligation, expense, interest or fees maturing after an Event of
Default or of any payment on account of any past default shall be construed to
be a waiver of any right to take advantage of any future default or of any past
default not completely cured thereby.

 

SECTION 9.06. Payment of Costs. Whether or not the transactions contemplated
herein shall be consummated, the Borrower hereby agrees to pay (a) all
reasonable and documented out-of-pocket costs and expenses incurred by the
Lender (including reasonable counsel fees and expenses) in connection with the
preparation, execution and delivery of this Agreement and the other Loan
Documents or any amendment to or modification of, or any waiver or consent
under, the Loan Documents, or in connection with any of the transactions
contemplated hereby or thereby, (b)subject to Section 7.0l(p), all reasonable
and documented costs and expenses incurred by the Lender for appraisals,
inspections and surveys of the Vessel (including any appraisals, inspections
and/or surveys conducted prior to the date of this Agreement), and (c) all
losses, reasonable costs and reasonable expenses (including, but not limited to,
reasonable Attorneys’ Fees and expenses) in connection with (i) the preservation
of any rights of the Lender under, or legal advice in respect of, the rights or
responsibilities of the Lender under this Agreement and the other Loan Documents
or (ii) the enforcement of any of the Loan Documents. The Borrower further
agrees to indemnify and hold the Lender harmless from and against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution, delivery, filing or recordation of this Agreement or
any of the other Loan Documents.

 

SECTION 9.07. Further Assurances. The Borrower further agrees to execute such
other and further assurances and documents as in the opinion of the Lender are
reasonably required to carry out the terms of this Agreement or of any of the
other Loan Documents.

 

SECTION 9.08. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall be deemed an original but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier or
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

 

SECTION 9.09. Headings. The titles of the Articles and the Section headings of
this Agreement are for convenience only and shall not affect the construction of
this Agreement.

 

SECTION 9.10. Severability. If any term or provision of this Agreement or of any
of the other Loan Documents shall be determined to be invalid or unenforceable
for any reason, such determination shall not adversely affect any other term or
provision of this Agreement or such other Loan Document which shall remain in
full force and effect and the effect of such determination shall be limited to
the territory or the jurisdiction in which made.

 

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SECTION 9.11. Survival. The Borrower’s agreements, representations, warranties
and conditions contained in this Agreement and made pursuant to the provisions
hereof shall survive the execution and delivery of this Agreement until the Note
and all interest accrued thereon shall have been indefeasibly paid in full in
accordance with the terms thereof, and any and all other moneys, payments,
obligations and liabilities which the Borrower shall have made, incurred or
become liable for pursuant to the terms of this Agreement or any of the other
Loan Documents shall have been indefeasibly paid in full or otherwise satisfied.
All statements made by the Borrower and contained in any certificate or other
instrument delivered pursuant to the provisions of this Agreement shall
constitute representations and warranties by the Borrower under this Agreement.

 

SECTION 9.12. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO WHICH THEY MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A)
THIS AGREEMENT OR (B) THE OTHER LOAN DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY EACH OF THE PARTIES HERETO, AND THE PARTIES HEREBY REPRESENT
THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. THE PARTIES FURTHER REPRESENT THAT THEY HAVE BEEN REPRESENTED IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIYER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THEY HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.

 

SECTION 9.13. Assignment; Participations. The Lender may assign any of its
rights and obligations hereunder or under any of the other Loan Documents (i) to
a regulated financial institution without the consent of, but upon notice to,
the Borrower, and (ii) to a non-regulated financial institution with, so long as
no Event of Default has occurred and is continuing, the consent of the Borrower
(such consent not to be unreasonably withheld, conditioned or delayed). In the
event the Borrower fails to respond to such request for consent within ten (10)
Business Days after its receipt thereof, the Borrower shall be deemed to have
consented thereto. In the event the Borrower refuses to give its consent to such
request, the Borrower shall have the option of either (i) prepaying the Loan in
full, without penalty, within sixty (60) days thereafter, or (ii) waiving its
right to object to such assignment. The Lender may also grant or sell
participation interests in this Agreement and the other Loan Documents and all
sums payable hereunder and thereunder (each, a “Participation”) so long as each
of the following conditions is satisfied with respect to such Participation: (i)
in the absence of an Event of Default, the proposed participant is not a
Competitor of the Borrower or any Affiliate thereof; (ii) no participant shall
have direct recourse against the Borrower or any Affiliate of the Borrower but
only through the Lender; (iii) the Borrower shall continue to deal solely and
exclusively with the Lender in connection with the Lender’s rights and
obligations under this Agreement; and (iv) any agreement or instrument pursuant
to which the Lender sells such a Participation shall provide that any action to
be taken to enforce the terms of this Agreement or to amend, modify or waive any
provisions thereof shall require the consent of not less than a majority of the
parties holding an interest this Agreement and all sums payable thereunder;
provided, however, that such agreement or instrument may provide that, without
the consent of each participant, the Lender may not agree to: (A) postpone any
date fixed by this Agreement or any other Loan Document for any payment
(excluding mandatory prepayments) of principal of, premium, if any, and/or
interest on the Note, or any other amounts due by the Borrower or the Guarantor
under this Agreement or any other Loan Document, (B) reduce the amount of any
scheduled principal and/or interest payment due hereunder or under the Note or
any fees or other amounts payable by the Borrower or the Guarantor to the Lender
under any of the Loan Documents; provided, however, that only the consent of a
majority of the participants shall be necessary to amend the definition of
“Default Rate”, (C) release the Guarantor of any of its payment or performance
obligations under its Guaranty, (D) release, subordinate or substitute any
collateral given to secure the Borrower’s obligations under this Agreement or
any other Loan Document, or (E) amend, waive or modify the provisions of this
Section 9.13.

 

44

 

 

SECTION 9.14. Patriot Act. The Lender hereby notifies the Borrower that pursuant
to the requirements of the Patriot Act, it is required to obtain, verify and
record information that identifies the Obligors, which information includes the
name, address and tax identification numbers of the Obligors and other
information that will allow the Lender to identify the Obligors in accordance
with the Patriot Act. The Borrower shall, promptly following a request by the
Lender, provide all documentation and other information that the Lender requests
in order to comply with its ongoing obligations under applicable “know your
customer” and anti-money laundering rules and regulations, including the Patriot
Act.

 

SECTION 9.15. Indemnity. The Borrower hereby agrees to indemnify and hold
harmless each of the Indemnified Parties, on an after tax basis, from and
against any and all liabilities, causes of action, claims, suits, penalties,
damages, losses, costs or expenses (including Attorneys’ Fees), obligations,
demands and judgments (collectively, a “Liability”) arising out of or in any way
related to: (a) a breach by the Borrower of any of its obligations under the
Loan Documents or in connection with the Lender’s enforcement of any of the
terms thereof, (b) the breach by the Borrower or the Guarantor of any
representation or warranty made by it in any of the Loan Documents, (c) the
Borrower’s use, employment, operation and/or chartering of the Vessel, or (d)
the Borrower’s failure to comply fully with any Applicable Law(s) or regulatory
requirements; provided, that the foregoing indemnity shall not apply to the
extent any Liability arises solely from the gross negligence or willful
misconduct of such Indemnified Party or any of its Related Parties or results
from a breach by such Indemnified Party or any of its Related Parties of its
obligations under any Loan Document. The indemnity contained in this Section
shall survive the termination of this Agreement, prepayment of any amounts due
hereunder or under the other Loan Documents and assignment of any rights
hereunder. The Borrower, at its own cost and expense, may participate in the
defense (if applicable) of any Liability.

 

SECTION 9.16. Confidentiality. The Lender agrees to keep confidential all
financial statements, reports and other non-public provided to it by the
Borrower pursuant to this Agreement or otherwise; provided that nothing herein
shall prevent the Lender from disclosing any such information (i) to any
Affiliates or Subsidiaries of the Lender with a need to know in connection with
the Loan Documents (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such information confidential), (ii) to any actual or
prospective assignee or participant which has been informed of the confidential
nature of such information and has signed and delivered to the Borrower a
confidentiality and non-disclosure agreement in form and substance satisfactory
to the Borrower agreeing in writing to treat such information as confidential in
accordance with the terms of the Loan Documents; provided that no such
information shall knowingly be provided by the Lender to any Competitor of the
Borrower or any Affiliate of any such Competitor, (iii) to the Lender’s
employees, directors, agents, attorneys, accountants, auditors and other
professional advisors or those of any of its Affiliates or Subsidiaries with a
need to know in connection with the Loan Documents (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such information and instructed to keep such information
confidential), (iv) upon the request or demand of any Governmental Authority
after providing notice to the Borrower of any such request provided that the
giving of such notice is not prohibited by such Governmental Authority or
Applicable Law, (v) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any requirement of law, in
each case after providing notice to the Borrower of such request, provided that
the giving of such notice is not prohibited by such court or other Governmental
Authority or Applicable Law, (vi) if requested or required to do so in
connection with any litigation or similar proceeding after providing notice to
the Borrower of any such request provided that the giving of such notice is not
prohibited by order of court or Applicable Law, (vii) that has been publicly
disclosed by the Borrower or the Guarantor, (viii) in connection with the
exercise of any remedy under this Agreement or the Loan Documents, (ix) upon
request, to bank examiners (or any other regulatory authority having
jurisdiction over the Lender), or (x) if the disclosure of such information has
been authorized by the Borrower in a separate writing.

 

45

 

 

SECTION 9.17. Acknowledgment Regarding Any Supported OFCs. To the extent that
the Loan Documents provide support, through a guarantee or otherwise, for any
swap contract or any other agreement or instrument that is a QFC (such support,
“OFC Credit Support”, and each such QFC, a “Supported OFC”), the parties
acknowledge and agree as follows with respect to the resolution power of the
Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act
and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(together with the regulations promulgated thereunder, the “U.S. Special
Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support
(with the provisions below applicable notwithstanding that the Loan Documents
and any Supported QFC may in fact be stated to be governed by the laws of the
State of Maryland and/or of the United States or any other state of the United
States):

 

(a) In the event a Covered Entity that is party to a Supported QFC (each, a
“Covered”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution
Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United
States or a state of the United States. In the event a Covered Party or a BHC
Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under the Financing Documents that
might otherwise apply to such Supported QFC or any QFC Credit Support that may
be exercised against such Covered Party are permitted to be exercised to no
greater extent than such Default Rights could be exercised under the U.S.
Special Resolution Regime if the Supported QFC and the Financing Documents were
governed by the laws of the United States or a state of the United States.
Without limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a defaulting Lender shall in no event
affect the rights of any Covered Party with respect to a Supported QFC or any
QFC Credit Support.

 

(b) As used in this Section 9.17, the following terms have the following
meanings:

 

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

“Covered Entity” means any of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a
“covered bank” as that term is defined in, and interpreted in accordance with,
12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.

 

“OFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).”

 

[Signature Page Follows]

 

46

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

WITNESS:   OVERSEAS SUN COAST LLC         /s/ Deborah Keblin   By: /s/ Richard
Trueblood Deborah Keblin   Name: Richard Trueblood     Title: Authorized Officer
        WITNESS:   PACIFIC WESTERN BANK           By:   Name:   Title:

 

[Loan and Security Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

WITNESS:   OVERSEAS SUN COAST LLC           By:       Name:       Title:        
  WITNESS:   PACIFIC WESTERN BANK         /s/ Maureen C Carr   By: /s/ Robert S.
Wille Maureen C Carr   Name: Robert S. Wille Managing Director   Title: Senior
Vice President

 

[Loan and Security Agreement]

 

 

 

 

Exhibit A

Form of Assignment of Earnings

 

 

 

 

GENERAL ASSIGNMENT OF EARNINGS

 

given by

 

OVERSEAS SUN COAST LLC,

Assignor

 

in favor of

 

PACIFIC WESTERN BANK,

                               Assignee

 

 

 

——, 2019

 

 

 

 

GENERAL ASSIGNMENT OF EARNINGS

 

THIS GENERAL ASSIGNMENT OF EARNINGS (this “Assignment”), dated as of __________,
2019, is given by OVERSEAS SUN COAST LLC, a Delaware limited liability company
with an office at 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602
(“Assignor”), in favor of PACIFIC WESTERN BANK, a California banking
corporation, with an office at 30 S. Wacker Drive, 35th Floor, Chicago, Illinois
60606 (together with its participants, successors and assigns, “Assignee”).

 

WITNESSETH THAT:

 

WHEREAS:

 

A. Assignor is the sole, absolute and unencumbered owner of the 50,000 DWT
Marshall Islands flagged product/chemical tanker named “OVERSEAS SUN COAST”,
Official No. 8599 (the “Vessel”).

 

B. Pursuant to that certain Loan and Security Agreement dated as of August ____,
2019 (as the same may be amended, amended and restated, supplemented, extended,
replaced or otherwise modified from time to time, the “Loan Agreement”), by and
between Assignor, as borrower, and Assignee, as lender, Assignee made available
to Assignor a term loan in the original principal amount of $25,000,000 (the
“Loan”), the proceeds of which were used to finance in part Assignor’s purchase
of the Vessel and to pay certain costs incident thereto. Assignor’s obligation
to repay the Loan, with interest, is evidenced by Assignor’ promissory note
dated 2019 in the original principal amount of $25,000,000 and made payable to
the order of Assignee (as the same may be amended, amended and restated,
supplemented, extended, replaced or otherwise modified from time to time, the
“Note”).

 

C. As security for Assignor’s obligations to Assignee, Assignor granted
Assignee, among other things, a first preferred mortgage (the “Mortgage”) over
the whole of the Vessel.

 

D. This Assignment is given to evidence the grant by Assignor to Assignee of a
first priority security interest in and lien on all Earnings (as hereinafter
defined) of the Vessel.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:

 

1. Defined Terms. Unless otherwise defined herein, terms defined in the Loan
Agreement shall have the same meanings when used herein.

 

2. Grant of Security. As inducement to Assignee to make the Loan available to
Assignor and as security for (i) repayment of the Obligations (as defined in the
Loan Agreement), and (ii) performance and observance by Assignor of the terms
and conditions contained in the Loan Agreement and the other Loan Documents,
Assignor does hereby grant, sell, convey, assign, transfer and set over unto
Assignee, its successors and assigns, and does hereby grant Assignee, its
successors and assigns, a continuing, first priority security interest in and to
(i) all earnings generated by it from its use and operation of the Vessel,
including, but not limited to, all moneys and claims for moneys due and to
become due thereto, whether as charter hire, freights, subfreights, passage
moneys, or otherwise, under, and all claims for damages arising out of any
breach of (or payment for variation or termination), any charter, contract of
affreightment or other contract for the use or employment of the Vessel and
operations of every kind whatsoever of the Vessel, (ii) all remuneration for
salvage and towage services, demurrage and detention moneys and any other
earnings whatsoever due or to become due to Assignor arising from the use or
employment of the Vessel, (iii) all moneys or other compensation payable by
reason of requisition for title or for hire or other compulsory acquisition of
the Vessel, (iv) all monies or other compensation payable as a result of any and
all claims for damages in respect of any actual or constructive total loss of
the Vessel, and (v) all proceeds of all of the foregoing (herein, called
“Earnings”).

 

 

 

 

3. Payments Due Under Charters. Assignor hereby covenants and agrees that, upon
the occurrence and during the continuance of an Event of Default, (a) it will
have all Earnings hereby assigned paid over directly to Assignee, (b) it will
procure that notice of this Assignment in substantially the form of Exhibit 1
attached hereto and a letter of instructions shall be duly given to each Person
who becomes party to any charter, contract of affreightment or other contract
entered into with Assignor in respect of the Vessel or to any Person who may
receive any Earnings hereby assigned, and (c) it will instruct such Person to
acknowledge directly to Assignee receipt of Assignor’s notification and
instructions.

 

4. Performance under Charters: No Duty of Inquiry. Assignor hereby undertakes
that, notwithstanding the assignment contained herein, it shall punctually
perform all its obligations under all such charters, contracts of affreightment
and other contracts pertaining to the use and/or employment of the Vessel to
which it is a party. It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, Assignor shall remain liable under all
such charters, contracts of affreightment and other contracts pertaining to the
Vessel to perform the obligations assumed by it thereunder, and Assignee shall
have no obligation or liability under any such charter, contract of
affreightment or contract by reason of or arising out of the assignment
contained herein, nor shall Assignee be required to assume or be obligated in
any manner to perform or fulfill any obligation of Assignor under or pursuant to
any such charter, contract of affreightment or contract or to make any payment
or make any inquiry as to the nature or sufficiency of any payment received by
Assignee, or, unless and until indemnified to its satisfaction, to present or
file any claim or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be entitled
hereunder or pursuant hereto at any time or times.

 

5. Requisition. Assignor shall promptly notify Assignee in writing of the
commencement and termination of any period during which the Vessel may be
requisitioned.

 

6. Employment of Vessel. Assignor hereby further covenants and agrees to
promptly furnish Assignee upon Assignee’s reasonable request such information
regarding the employment, position and engagements of the Vessel.

 

7. Negative Pledge. Assignor does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge so
long as this Assignment shall remain in effect, any of its right, title or
interest in the whole or any part of the Earnings hereby assigned to anyone
other than Assignee, and it will not take or omit to take any action, the taking
or omission of which might result in an alteration or impairment of the rights
hereby assigned or any of the rights created in this Assignment; and Assignor
does hereby irrevocably appoint and constitute Assignee as Assignor’s true and
lawful attorney-in-fact with full power (in the name of Assignor or otherwise)
should an Event of Default have occurred and be continuing to ask, require,
demand, receive, compound and give acquittance for any and all Earnings assigned
hereby, to endorse any checks or other instruments or orders in connection
therewith, to file any claims or take any action or institute any proceedings
which Assignee may deem to be necessary or advisable in the premises and to file
any and all Uniform Commercial Code financing statements or renewals thereof in
connection with this Assignment without the signature of Assignor which Assignee
may deem to be necessary or advisable in order to perfect or maintain the
security interest granted hereby.

 

2

 

 

8. Application of Proceeds. All moneys collected or received by Assignee from
time to time following the occurrence and during the continuance of an Event of
Default shall be dealt with as provided for in the Loan Agreement. After the
indefeasible payment in full of all Obligations (as defined in the Loan
Agreement), all moneys received by Assignee from Assignor in excess thereof
shall be paid promptly to Assignor or whomsoever else shall be legally entitled
thereto.

 

9. Further Assurances. Assignor agrees, that at any time and from time to time,
upon the written request of Assignee, Assignor will promptly and duly execute
and deliver any and all such further instruments and documents as Assignee may
reasonably deem desirable in obtaining the full benefits of this Assignment and
of the rights and powers herein granted.

 

10. Remedies Cumulative and Not Exclusive; No Waiver. Each and every right,
power and remedy herein given to Assignee shall be cumulative and shall be in
addition to every other right, power and remedy of Assignee now or hereafter
existing at law, in admiralty, in equity or by statute, and each and every
right, power and remedy, whether herein given or otherwise existing, may be
exercised from time to time, in whole or in part, and as often and in such order
as may be deemed expedient by Assignee, and the exercise or the beginning of the
exercise of any right, power or remedy shall not be construed to be a waiver of
the right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by Assignee in the exercise of any right or power
or in the pursuance of any remedy accruing upon any breach or default by
Assignor or any guarantor shall impair any such right, power or remedy or to be
construed to be a waiver of any such right, power or remedy or to be an
acquiescence therein; nor shall the acceptance by Assignee of any security or of
any payment of or on account of any of the amounts due from Assignor or any
other Obligor to Assignee and maturing after any breach or default or of any
payment on account of any past breach or default be construed to be a waiver of
any right to take advantage of any future breach or default or of any past
breach or default not completely cured thereby.

 

11. Invalidity. If any provision of this Assignment shall at any time for any
reason be declared invalid, void or otherwise inoperative by a court of
competent jurisdiction, such declaration or decision shall not affect the
validity of any other provision or provisions of this Assignment, or the
validity of this Assignment as a whole. In the event that it should transpire
that by reason of any law, rule or regulation, or by reason of a ruling of any
court, or by any other reason whatsoever, the assignment herein contained is
either wholly or partly defective, Assignor hereby undertakes to furnish
Assignee with an alternative assignment of the Earnings and/or to do all such
other acts relative to the Earnings as, in the sole opinion of Assignee, shall
be required in order to ensure and give effect to the full intent of this
Assignment. The powers and authorities granted to Assignee, its successors or
assigns, herein have been given for valuable consideration and are hereby
declared to be irrevocable and complied with an interest.

 

12. Continuing Security. It is declared and agreed that the security created by
this Assignment shall be held by Assignee as a continuing security for the
prompt payment of all Obligations (as defined in the Loan Agreement) and that
the security so created shall not be satisfied by an intermediate payment or
satisfaction of any part of the amount hereby secured and that the security so
created shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by Assignee
for all or any part of the moneys hereby secured.

 

13. Waiver; Amendment. None of the terms and conditions of this Assignment may
be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by Assignee and Assignor.

 

3

 

 

14. Termination. This Assignment shall terminate (other than provisions hereof
providing for indemnities, reimbursement obligations and similar contingent
obligations) and all of the right, title and interest herein assigned shall
revert to Assignor upon the payment in full in cash of all Obligations (as
defined in the Loan Agreement) (other than contingent indemnification
obligations for which no claim has been made) and the termination of the Loan
Agreement and all commitments to extend credit thereunder.

 

15. WAIVER OF JURY TRIAL. ASSIGNOR, AND BY ITS ACCEPTANCE HEREOF, ASSIGNEE,
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS ASSIGNMENT, THE LOAN AGREEMENT, OR ANY
OTHER DOCUMENTS THEREIN DESCRIBED, ANY AMENDMENTS THERETO, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

16. Notices. All notices and other communications provided for hereunder shall
be in writing and mailed, facsimile transmitted or delivered as follows:

 

  To Assignor:

Overseas Sun Coast LLC

302 Knights Run Avenue

Suite 1200

Tampa, Florida 33602

Attention: Richard Trueblood

Telephone: (813)___________

Facsimile: (813) 221-2769

        To Assignee:

Pacific Western Bank

30 S. Wacker Drive

35th Floor

Chicago, Illinois 60606,

Attention: Tanya Zasadzinski

Telephone: (312) 706-2114

Facsimile: (312) 577-7914

        with copy to:

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

100 Light Street

Baltimore, Maryland 21202

Attention: Patrick K. Cameron, Esq. Telephone: (410) 862-1140

Facsimile: (410) 547-0699

 

or to such other address as shall be designated by such party in a written
notice to the other party. All such notices and communications shall, when
mailed, be sent by first class registered mail, postage prepaid, return receipt
requested and be effective three (3) Business Days after being deposited in the
U.S. mails addressed as aforesaid. All notices sent by facsimile transmission
shall be effective when sent if on a Business Day at the recipient’s office and
not later than 11:00 a.m. at the recipient’s office, provided that (i) an
appropriate answerback has been received by the sending party and (ii) such
facsimile is confirmed by mailing to the receiving party, at its address given
above, a copy of such facsimile transmission postage prepaid by first class mail
(air mail, if international). All other forms of written notice or other
communication shall be effective only upon receipt.

 

17. Governing Law. This Assignment and all matters relating hereto shall, in
accordance with Section 5-1401 of the General Obligations Law of the State of
New York, be governed by and construed in accordance with the laws of the State
of New Yark.

 

18. Headings. In this Assignment, Section headings are inserted for convenience
of reference only and shall be ignored in the interpretation hereof.

 

[Signature Page Follows]

 

4

 

 

IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed as
of the day and year first above written.

 

 OVERSEAS SUN COAST LLC     By:  Name:   Title:          

 

[General Assignment of Earnings]

 

 

 

 

EXHIBIT 1

 

EARNINGS ASSIGNMENT NOTICE

 

TO:

 

TAKE NOTICE:

 

(a)that by a General Assignment of Earnings dated as of 2019 given by us
(“Assignor”) in favor of PACIFIC WESTERN BANK (“Assignee”) party to that certain
Loan and Security Agreement dated as of August_, 2019 (the “Loan Agreement”),
we, the owner of the 50,000 DWT Marshall Islands flagged product/chemical tanker
named “OVERSEAS SUN COAST”, Official No. 8599 (the “Vessel”), have assigned to
Assignee as from the date hereof all our rights, title and interests in and to:

 

(i)any earnings or other moneys whatsoever payable to us under any charter,
contract of affreightment or other contract for the use or employment of the
Vessel, and all other rights and benefits whatsoever accruing to us thereunder,
including (but without prejudice to the generality of the foregoing) all claims
for damages in respect of any breach by any charterer or other party thereto of
any such charter, contract of affreightment or other contract for the use or
employment of the Vessel; and

 

(ii)all freights, passage moneys, hire moneys or other compensation payable to
us in the event of the requisition of the Vessel for title or hire, remuneration
for salvage and towage services, demurrage and detention moneys and any other
earnings whatsoever due or to become due to us arising from the use or
employment of the Vessel;

 

as security for the Obligations (as defined in the Loan Agreement).

 

(b)that you are hereby irrevocably authorized and instructed to pay from the
date hereof all of such aforesaid moneys to Assignee at the following address of
Assignee (or at such other place as Assignee may direct): Pacific Western Bank,
30 S. Wacker Drive, 35th Floor, Chicago, Illinois 60606.

 

 OVERSEAS SUN COAST LLC     By:  Name:   Title:          

 

DATED this ____ day of ___________, 20__.

 

 

 

 

Exhibit B

Form of Assignment of Insurances

 

 

 

 

ASSIGNMENT OF INSURANCES

 

given by

 

OVERSEAS SUN COAST LLC,

Assignor

 

in favor of

 

PACIFIC WESTERN BANK,

Assignee

 

 

          , 2019

 

 

 

 

 

ASSIGNMENT OF INSURANCES

 

THIS ASSIGNMENT OF INSURANCES (this “Assignment”) dated as of       2019, is
executed by OVERSEAS SUN COAST LLC, a Delaware limited liability company, with
an office at 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602 (the
“Assignor”), in favor of PACIFIC WESTERN BANK, a California banking corporation,
with an office at 30 S. Wacker Drive, 35th Floor, Chicago, Illinois 60606
(together with its participants, successors and assigns, the “Assignee”).

 

WITNESSETH THAT:

 

WHEREAS:

 

A. Assignor is the sole, absolute and unencumbered owner of the 50,000 DWT
Marshall Islands flagged product/chemical tanker named “OVERSEAS SUN COAST”,
Official No. 8599 (the “Vessel”).

 

B. Pursuant to that certain Loan and Security Agreement dated as of August_,
2019 (as the same may be amended, amended and restated, supplemented, extended,
replaced or otherwise modified from time to time, the “Loan Agreement”), by and
between Assignor, as borrower, and Assignee, as lender, Assignee made available
to Assignor a term loan in the original principal amount of $25,000,000 (the
“Loan”), the proceeds of which were used to finance in part Assignor’s purchase
of the Vessel and to pay certain costs incident thereto. Assignor’s obligation
to repay the Loan, with interest, is evidenced by Assignor’s promissory note
dated                 , 2019 in the original principal amount of $25,000,000,
and made payable to the order of Assignee (as the same may be amended, amended
and restated, supplemented, extended, replaced or otherwise modified from time
to time, the “Note”).

 

C. As security for Assignor’s obligations to Assignee, Assignor has granted
Assignee, among other things, a first preferred ship mortgage (the “Mortgage”)
over the whole of the Vessel.

 

D. This Assignment is given as additional security for the prompt payment and
performance of Assignor’s obligations to Assignee under the Loan Agreement and
the other Loan Documents (as hereinafter defined).

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
intending to be legally bound hereby, Assignor hereby agrees as follows:

 

1. Defined Terms. Unless otherwise defined herein, terms defined in the Loan
Agreement shall have the same meanings when used herein.

 

2. Grant of Security. As security for the prompt payment and performance of all
of Assignor’s obligations to Assignee under the Loan Agreement, the Note and
other documents executed pursuant thereto (collectively, the “Loan Documents”),
Assignor does hereby sell, assign, transfer and set over unto Assignee, its
successors and assigns, and to and for its and its successors’ and assigns’ own
proper use and benefit, and does hereby grant to Assignee a continuing, first
priority security interest in, all of its rights, title and interests in and to:
(i) all insurances (including, without limitation, all insurances with respect
to hull and machinery, increased value, war risk, protection and indemnity,
pollution, requisition of title or otherwise) in respect of the Vessel, whether
heretofore, now or hereafter effected, and all renewals of or replacements for
the same, (ii) all monies and claims for moneys due and to become due to
Assignor under said insurances with respect to the actual, constructive, agreed,
arranged or compromised total loss or any other loss or damage to the Vessel;
(iii) all returns of premium, (iv) all other rights and benefits of Assignor
under or in respect of said insurances, and (v) all proceeds of the foregoing
(herein collectively called “Insurances”).

 

 

 

 

3. Payment of Premiums; Performance of Obligations. Notwithstanding the
foregoing, Assignor alone shall continue to remain liable under said Insurances
to perform all obligations assumed by it thereunder and Assignee shall have no
obligation or liability (including, without limitation, any obligation or
liability with respect to the payment of premiums, calls or assessments) under
said Insurances by reason of or arising out of this Assignment nor shall
Assignee be required or obligated in any manner to perform or fulfill any
obligations of Assignor under or pursuant to said Insurances or to make any
payment or to make any inquiry as to the nature or sufficiency of any payment
received by it or to present or file any claim, or to take any other action to
collect or enforce the payment of any amounts which may have been assigned to it
or to which it may be entitled hereunder at any time or times.

 

4. Authority to Act. Assignor does hereby constitute Assignee, its successors
and assigns, as Assignor’s true and lawful attorneys, irrevocably, with full
power of substitution (in the name of Assignor, Assignee or otherwise) to take
the following actions following the occurrence and during the continuance of an
Event of Default (as defined therein) under the Loan Agreement: (i) to ask,
require, demand, receive, compound and give acquittance for any and all moneys
and claims for moneys due and to become due under or arising out of said
Insurances (other than moneys payable to third parties), (ii) to endorse any
checks or other instruments or orders in connection therewith, and (iii) to file
any claims or to take any action or to institute any proceedings which Assignee
may deem to be necessary or advisable in the premises.

 

5. Notice of Assignment. Assignor hereby covenants and agrees to procure that
notice of this Assignment shall be duly given to all underwriters and that where
the consent of any underwriter is required pursuant to any of the Insurances
assigned hereby that it shall be obtained and evidence thereof shall be given to
Assignee, or, in the alternative, that, in the case of protection and indemnity
or general liability coverage, Assignor shall obtain, with Assignee’s approval,
a letter of undertaking by the underwriters or insurers, and that there shall be
duly endorsed upon all slips, cover notes, policies, certificates of entry or
other instruments issued, or to be issued, in connection with the Insurances
assigned hereby such clauses as to named assured or loss payees as Assignee may
reasonably require or approve. In all cases, unless otherwise agreed in writing
by Assignee, such slips, cover notes, notices, certificates of entry or other
instruments shall show Assignee as an additional named assured, shall provide
that there will be no recourse against Assignee for payment of premiums, calls
or assessments and shall otherwise be in form and substance satisfactory to
Assignee.

 

6. Grant Irrevocable. The powers and authority granted to Assignee herein have
been given for a valuable consideration and are hereby declared to be
irrevocable and coupled with an interest.

 

7. Further Assurances. Assignor further agrees that at any time and from time to
time, upon the written request of Assignee, Assignor, at its own cost and
expense, shall promptly and duly execute and deliver any and all such further
instruments and documents as Assignee may reasonably deem desirable in obtaining
the full benefits of this Assignment and of the rights and powers herein
granted.

 

8. Negative Pledge. Assignor does hereby represent and warrant to Assignee that,
it has not assigned, pledged or otherwise encumbered, and hereby covenants that,
so long as this Assignment shall remain in effect, it will not assign, pledge or
encumber, all or any part of its rights, title and interests hereby assigned to
anyone other than Assignee, its successors and assigns, and it will not take or
omit to take any action, the taking or omission of which might result in any
alteration or impairment of said Insurances, of this Assignment or of any of the
rights created by said Insurances or this Assignment.

 

2

 

 

9. Notices. All notices or other communications which are required to be made to
Assignee hereunder shall be made in writing or by facsimile transmission, and
shall be delivered or mailed (first class airmail postage prepaid) to:

 

Pacific Western Bank
30 S. Wacker Drive
35th Floor
Chicago, Illinois 60606,
Attention: Tanya Zasadzinski

 

or at such other address as Assignee may have furnished to Assignor in writing.

 

10. Application of Proceeds. All moneys collected or received from time to time
by Assignee pursuant to this Assignment shall be applied with as provided for in
the Loan Agreement. After the indefeasible payment in full of all sums due
Assignee, all moneys collected or received by Assignee in excess thereof shall
be paid promptly to Assignor or to whomsoever else shall be legally entitled
thereto.

 

11. Governing Law; Amendment. This Assignment shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to its rules for conflicts of law (other than Sections 5-1401 and 5-1402
of the General Obligations Law of the State of New York) and may not be amended
or changed except by an instrument in writing signed by Assignee.

 

12. Financing Statement. Assignor hereby authorizes Assignee to file such
financing statements (including Form UCC-1) and amendments thereto as provided
in Article 9 of the Uniform Commercial Code.

 

[Signature Page Follows]

 

3

 

 

IN WI1NESS WHEREOF, Assignor has caused this Assignment to be duly executed as
of the day and year first above written.

 

  OVERSEAS SUN COAST LLC                      By:     Name:     Title:  

 

[Assignment of Insurances]

 

 

 

 

NOTICE OF ASSIGNMENT

 

OVERSEAS SUN COAST LLC (the “Assignor”), the owner of the 50,000 DWT Marshall
Islands flagged product/chemical tanker named “OVERSEAS SUN COAST”, Official No.
8599 (the “Vessel”), HEREBY GIVES NOTICE that pursuant to an Assignment of
Insurances dated as of — 2019, given by Assignor in favor of PACIFIC WESTERN
BANK (together with its participants, successors and assigns, the “Assignee”),
Assignor has assigned to Assignee all of its rights, title and interests in and
to all insurances and the benefit of all insurances now or hereafter taken out
in respect of the Vessel. This Notice and the attached Loss Payable Clauses and
Cancellation Clause are to be endorsed on all policies and certificates of entry
evidencing such insurance.

 

  OVERSEAS SUN COAST LLC                   By:     Name:     Title:  

 

 

 

LOSS PAYABLE CLAUSES

 

Hull and Machinery and War Risk

 

Loss, if any, payable to PACIFIC WESTERN BANK (together with its participants,
successors and assigns, the “Assignee”), for distribution by it to itself,
OVERSEAS SUN COAST LLC (the “Assignor”) or to whomever else may be lawfully
entitled thereto, as their respective interests may appear, or order, except
that, unless underwriters have been otherwise instructed by notice in writing
from Assignee, in the case of any loss involving any damage to, or liability of,
the 50,000 DWT Marshall Islands flagged product/chemical tanker named “OVERSEAS
SUN COAST”, Official No. 8599 (the “Vessel”), the underwriters may pay directly
for the repair, salvage, liability or other charges involved or, if Assignor
shall have first fully repaired the damage and paid the cost thereof, or
discharged the liability or paid all of the salvage or other charges, then the
underwriters may pay Assignor as reimbursement therefor;provided, however, that
if such damage involves a loss in excess of$1,000,000, the underwriters shall
not make such payment without first obtaining the prior written consent thereto
of Assignee (which consent shall not be unreasonably withheld, conditioned or
delayed); provided, further, that any such loss may not be adjusted or
compromised without the prior written consent of Assignee.

 

In the event of an actual or constructive total loss or an agreed, arranged or
compromised total loss or requisition of title to the Vessel, all insurance
payments payable as a result thereof shall be paid to Assignee alone for
distribution by it in accordance with the provisions of that certain First
Preferred Mortgage dated              , 2019 given by Assignor in favor of
Assignee, as it may be amended, amended and restated, supplemented, extended,
replaced or otherwise modified from time to time.

 

 

 

 

General Liability/Protection and Indemnity

 

Payment or reimbursement of monies to which OVERSEAS SUN COAST LLC (the
“Assignor”) is entitled to receive out of the funds of its protection and
indemnity association or from its insurer in respect of any liability, costs or
expenses incurred by Assignor shall be made to Assignor or to its order unless
and until the association receives notice from PACIFIC WESTERN BANK (together
with its participants, successors or assigns, the “Assignee”) that there has
occurred an Event of Default under that certain Loan and Security Agreement
dated as of August , 2019 (as the same may be amended, amended and restated,
supplemented, extended, replaced or otherwise modified from time to time, the
“Loan Agreement”) between Assignee and Assignor, or under the promissory note or
any other document referenced therein, in which event all reimbursements payable
to Assignor shall thereafter be paid directly to Assignee or its order.

 

 

 

 

Cancellation Clause

 

This Policy may not be cancelled by the underwriters for any reason whatsoever
except upon at least thirty (30) days’ (fourteen (14) in the case of
cancellation for non-payment of premiums) prior written notice to Pacific
Western Bank (the “Assignee”) at 30 S. Wacker Drive, 35th Floor, Chicago,
Illinois 60606, Attention: Tanya Zasadzinski.

 

 

 

 

Exhibit C
Form of Assignment of Time Charter/
Contract of Affreightment

 

 

 

 

ASSIGNMENT OF [TIME CHARTER]
[CONTRACT OF AFFREIGHTMENT]

 

given by

 

OVERSEAS SUN COAST LLC,

Assignor

 

in favor of

 

PACIFIC WESTERN BANK,

Assignee

 

 

 

 

ASSIGNMENT OF [TIME CHARTER) [CONTRACT OF AFFREIGHTMENT)

 

THIS ASSIGNMENT OF [TIME CHARTER] [CONTRACT OF AFFREIGHTMENT] (this
“Assignment”), dated as of               , 2019, is given by OVERSEAS SUN COAST
LLC, a Delaware limited liability company (the “Assignor”), in favor of PACIFIC
WESTERN BANK, a California banking corporation (together with its successors and
assigns, the “Assignee”).

 

RECITALS

 

Assignor is the sole, absolute and unencumbered owner of the 50,000 DWT Marshall
Islands flagged product/chemical tanker named “OVERSEAS SUN COAST”, Official No.
8599 (the “Vessel”).

 

Pursuant to that certain Loan and Security Agreement, dated as of August     ,
2019 (as the same may be amended, amended and restated, supplemented, extended,
replaced or otherwise modified from time to time, the “Loan Agreement”), by and
between Assignor, as borrower, and Assignee, as lender, Assignee made available
to Assignor a term loan in the original principal amount of $25,000,000 (the
“Loan”), the proceeds of which were used to finance in part Assignor’s purchase
of the Vessel and to pay certain costs incident thereto. Assignor’s obligation
to repay the Loan, with interest, is evidenced by Assignor’s promissory note
dated              2019 in the original principal amount of $25,000,000 and made
payable to the order of Assignee (as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time, the “Note”).

 

As security for Assignor’s obligations to Assignee, Assignor has agreed to
collaterally assign to Assignee, and grant Assignee a continuing, first priority
security interest in and to, all of its rights, title and interests in and to
(but none of its obligations under), among other things, that certain [Charter]
[Contract of Affreightment] dated         , 201_ (the “Charter”) between it and
          a          (the “Charterer”).

 

NOW, THEREFORE, in consideration of the premises and to induce Assignee to enter
into the Loan Agreement and to make the Loan to it, Assignor hereby agrees with
Assignee as follows:

 

1. Definitions. Capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Loan Agreement.

 

2. Assignment. Assignor hereby grants, conveys, assigns, transfers, mortgages
and pledges to Assignee, as security for its obligations under the Loan
Agreement and other Loan Documents, all its rights, title, interests, claims and
demands in and to:

 

(a) the Charter, including, without limitation, (i) the right to receive and
compel performance by the Charterer of its obligations thereunder, (ii) the
exclusive right to cancel or terminate the Charter, (iii) the right to grant all
waivers and consents and to enter into all amendments and agreements with
respect thereto; provided, however, that so long as no Event of Default shall
have occurred and be continuing under the Loan Agreement, Assignee shall not
agree to any such waivers or grant any such consents or to enter into any such
amendments or to make any such agreements with the Charterer without the prior
consent of Assignor, and (iv) the right to exercise (to the exclusion of
Assignor) all rights and remedies and to take all other actions upon the
occurrence and during the continuance of an Event of Default, including the
right to commence and conduct legal, administrative or other proceedings, as
shall be permitted by the Charter, at law, in equity or in admiralty, and the
right to do any and all other things whatsoever which Assignor is or may
lawfully be entitled to do under the Charter;

 

 

 

 

(b) all claims for damages arising out of the Charterer’s breach thereof;

 

(c) the right of Assignor to take possession of the Vessel (to the exclusion of
the Charterer) following termination of the Charter, including, without
limitation, the right to exercise all rights, remedies, powers and privileges of
Assignor, whether arising under the Charter or by statute or at law or in equity
or in admiralty or otherwise, upon the failure of the Charterer to pay any
monies or to satisfy any claims as required by the Charter; and

 

(d) all proceeds of the foregoing.

 

Nothing in this Assignment shall be construed to constitute a waiver of any
other rights that Assignor may have against the Charterer under the Charter.

 

3. Rights Assigned. The rights hereby assigned to Assignee include, without
limitation, the right, in the case of an Event of Default under the Loan
Agreement, to receive and compel performance of the Charterer under the Charter.
The obligations of the Charterer under the Charter may, in the case of an Event
of Default under the Loan Agreement, be received or compelled by Assignee or its
nominee or any other assignee. Any and all property described or referred to in
Section 2 above which is hereafter acquired by Assignor shall ipso facto, and
without any further conveyance, assignment or act on the part of Assignor or
Assignee, become and be subject to the liens and security interests herein
granted as fully and completely as those specifically described herein.

 

4. Cumulative Remedies and Waiver. Each and every right, power and remedy given
to Assignee hereunder shall be cumulative and shall be in addition to every
other right, power and remedy of Assignee as assignee of Assignor, both now
existing or hereafter arising, under the Charter or at law, in admiralty, in
equity or by statute, and each and every right, power and remedy, whether herein
given or otherwise existing, may be exercised from time to time, in whole or in
part, and as often and in such order as Assignee may be deemed expedient, and
the exercise or the beginning of the exercise of any right, power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other right, power or remedy. No delay or omission by Assignee
in the exercise of any right, power or remedy accruing upon any breach or
default by Assignor shall impair any such right, power or remedy or be construed
to be a waiver of any such right, power or remedy or to be an acquiescence
therein; nor shall the acceptance by Assignee of any security or of any payment
of or on account of any of the amounts due to Assignee and maturing after any
breach or default or of any payment on account of any past breach or default be
construed to be a waiver of any right to take advantage of any future breach or
default or of any past breach or default not completely cured thereby.

 

5. Retention of Obligations. Notwithstanding, anything contained herein to the
contrary, nothing herein shall release Assignor from any of its obligations to
the Charterer, and Assignor shall continue to remain liable for performance of
its obligations under the Charter, and neither Assignee nor any of its
successors and assigns shall have any obligation or liability under the Charter
by reason of or arising out of this Assignment, nor shall Assignee or its
successors and assigns be required or obligated in any manner to perform or
fulfill any obligations of Assignor under or pursuant to the Charter, or to make
any inquiry as to the nature or sufficiency of any payment received by it or to
present or file any claim, or to take any other action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled hereunder at any time or times.

 

6. Attorney-in-Fact. Assignor hereby constitutes Assignee as its true and lawful
attorney, irrevocably, with full power of substitution, at any time following
the occurrence and during the continuance of any Event of Default under the Loan
Agreement, in the name of Assignor, Assignee or otherwise, to receive or compel
performance by the Charterer of its obligations under the Charter, to ask,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies due and to become due under or arising out of a breach by
the Charterer of its obligations under the Charter, to endorse any checks or
other instruments or orders in connection therewith and to file any document or
to take any action or institute any proceedings which Assignor, its successors
and assigns, may deem to be necessary or advisable in the premise.

 

2

 

 

7. Effective Date. The assignment of the Charter to Assignee as provided herein
shall take effect immediately upon the execution hereof and the powers and
authorities granted to Assignee herein, having been given for valuable
consideration, are hereby declared to be irrevocable and coupled with an
interest.

 

8. Further Assurances. Assignor hereby agrees that, at any time and from time to
time, upon the written request of Assignee, it will promptly and duly execute
and deliver any and all such further instruments and documents as Assignee may
reasonably require in order to obtain the full benefits of this Assignment and
of the rights and powers herein granted.

 

9. Representations and Warranties. Assignor hereby represents and warrants as of
the date hereof that the Charter is in full force and effect and that neither
Assignor nor, to its knowledge, the Charterer is in default under any of the
terms thereof. Assignor hereby further represents and warrants that it has not
assigned, pledged or in any way created any security interest in, the Charter,
except for the assignment to Assignee made pursuant to this Assignment. Assignor
hereby covenants that, so long as this Assignment shall remain in effect, it
will not amend or modify any of the terms or provisions of the Charter, or
assign or pledge, in whole or in part, any of its rights, title and interests
hereby assigned to anyone other than Assignee and it will not take or omit to
take any action, the taking or omission of which might result in the impairment
of any of the rights hereby assigned to Assignee in the Charter as provided in
this Assignment.

 

10. Financing Statements. Assignor hereby agrees that Assignee may execute
and/or authenticate on Assignor’s behalf and file any financing statements under
the Uniform Commercial Code, or papers of similar purpose or effect in respect
of this Assignment, once filed, and Assignee shall provide a copy of any such
filing to Assignor; provided, however, that any failure to provide any such copy
shall not impair the right of Assignee to execute and make any such filing.

 

11. Notices. All payments or notices or other communications may be made or
delivered in person, by certified mail, postage prepaid, or by telex or
telephone facsimile copy (confirmed by overnight courier) (provided, that
appropriate telephone numbers for such facsimile transmission shall have been
provided to each party hereto) addressed to the particular parties as provided
below, or to such other address as such parties may hereafter specify in a
written notice to the other parties hereto, and all notices or other
communications shall be in writing so addressed and shall be effective upon
receipt by the addressee thereof:

 

If to Assignor:

 

Overseas Sun Coast LLC
302 Knights Run Avenue
Suite 1200
Tampa, Florida 33602
Attention: Richard Trueblood
Facsimile: (813) 221-2769

 

3

 

 

If to Assignee:

 

Pacific Western Bank
30 S Wacker Drive
35th Floor
Chicago, Illinois 60606
Attention: Tanya Zasadzinski
Facsimile: (312) 577-7914

 

12. Amendment. This Assignment may not be amended or changed except by an
instrument in writing signed by both parties.

 

13. GOVERNING LAW; WAIVER OF TRIAL BY JURY.

 

(a) THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.

 

(b) BY ITS SIGNATURE BELOW WRITTEN ASSIGNOR HEREBY IRREVOCABLY WAIVES UNDER
APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS ASSIGNMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

14. Jurisdiction; Service of Process.

 

(a) Assignor hereby irrevocably submits itself to the non-exclusive jurisdiction
of the federal and state courts located in the State of New York, in any suit,
action or proceeding brought against it under or relating to this Assignment and
agrees that a summons and complaint commencing any action or proceeding in such
court shall be properly served if delivered personally or by registered mail to
Assignor at its address set forth in Section 11 above, or otherwise served under
the laws of the State of New York, and Assignor hereby waives any objection to
venue and jurisdiction which it may now or hereafter have. Assignor shall
promptly notify Assignee of any change in its address. Nothing herein shall
affect the right of Assignee to serve process in any other matter pre-scribed by
law or the right of Assignee to bring legal proceedings in any other competent
jurisdiction.

 

(b) To the extent that Assignor has or hereafter may acquire any immunity from
jurisdiction of any of the above-named courts or from any legal process therein,
Assignor hereby irrevocably waives, to the extent permitted by applicable law,
such immunity, and hereby irrevocably waives, to the extent permitted by
applicable law, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any legal action or proceeding brought hereunder in any of the
above-named courts (A) the defense of sovereign immunity, (B) that it or any of
its property is immune from the above described legal process, (C) that such
action or proceeding is brought in any inconvenient forum, (D) that venue for
the action or proceeding is improper, or (E) that this Assignment or any other
document, instrument or agreement executed in connection herewith or therewith
may not be enforced in or by such courts.

 

15. Counterparts. This Assignment may be executed in any number of counterparts.
Each of said counterparts shall be deemed to be an original, but all of such
counterparts shall when taken together constitute but one and the same
instrument.

 

4

 

 

16. Termination. This Assignment is given as collateral security and shall
terminate, and be of no further force and effect, only upon the indefeasible
payment in full of all of Assignor’s Obligations to Assignee under the Loan
Agreement and other Loan Documents and the absence of any further actual or
contingent liability (other than contingent liabilities for which no claim has
been made or threatened) in respect of any thereof. In the event of such
termination, Assignee shall, upon demand by and at the sole cost and expense of
Assignor, deliver to Assignor an instrument reassigning the same and such other
documents as Assignor may reasonably request to evidence such termination.

 

17. Application of Proceeds. All moneys collected or received from time to time
by Assignee pursuant to this Assignment shall be applied towards satisfaction of
Assignor’s Obligations under the Loan Documents and once such amounts have been
indefeasibly paid in full, the remainder (if any) shall be paid to Assignor or
to whomever shall be lawfully entitled thereto.

 

[Signature Page Follows]

 

5

 

 

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of
the day and year first above written.

 

WITNESS: OVERSEAS SUN COAST LLC                    By:     Name:     Title:    
    WITNESS: PACIFIC WESTERN BANK         By:     Name:     Title:  

 

 

 

 

CONSENT AND AGREEMENT

 

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned,       , a            (the “Charterer”),
hereby accepts notice of and consents and agrees to the assignment by Overseas
Sun Coast LLC (the “Owner”) to Pacific Western Bank (together with its
participants, successors and assigns, the “Assignee”) of all of its rights,
title and interests (but none of its obligations) in and to that certain——-
dated      , 20_ (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Charter”) between the Charterer and Assignor,
including the right to receive and compel performance of the Charterer’s
obligations under the Charter, all as more fully described in the Assignment of
[Time Charter] [Contract of Affreightment] (the “Assignment”).

 

The Charterer further agrees that:

 

1. Upon its receipt of written notice from Assignee that there has occurred and
is continuing an Event of Default under the Loan Agreement, the Charterer shall
henceforth take all directions from, and perform all its obligations under the
Charter to and for the benefit of, Assignee or its designee. Prior to that time,
it will perform its obligations under the Charter as directed by Assignor.

 

2. Notwithstanding anything contained in the Charter to the contrary, it shall
have no right to set-off its obligations under the Charter against any claims it
may have now or in the future against Assignor, Assignee or any other Person.

 

3. Except as otherwise expressly provided in the Charter, Assignor shall have no
right to terminate the Charter or to release, relieve or discharge the Charterer
from any of its obligation or liabilities thereunder, for any reason whatsoever.

 

4. All notices or other communications required or permitted to be made or given
hereunder, may be made or given in person, by certified mail, postage prepaid,
or by telex or telephone facsimile copy (confirmed by overnight courier)
(provided, that appropriate telephone numbers for such facsimile transmission
shall have been provided to each party hereto) addressed to the particular
parties as provided below, or to such other address as such parties may
hereafter specify in a written notice to the other parties hereto, and all
notices or other communications shall be in writing so addressed and shall be
effective upon receipt by the addressee thereof:

 

If to Assignee:

 

Pacific Western Bank
30 S Wacker Drive
35th Floor
Chicago, Illinois 60606
Attention: Tanya Zasadzinski
Facsimile: (312) 577-7914

 

 

 

 

If to Assignor:

 

Overseas Sun Coast LLC
302 Knights Run Avenue
Suite 1200
Tampa, Florida 33602
Attention: Richard Trueblood
Facsimile: (813) 221-2769

 

5. IMAGE OMITTED To the extent that the Charterer seeks to exercise any right or
remedy arising out of Assignor’s breach of or failure to perform any of its
obligations under the Charter, the Charterer agrees to give Assignee prompt
written notice thereof and to allow Assignee up to thirty (30) days in which to
cure said default (provided, however, that if said default is capable of being
cured but cannot be cured within said 30-day period, Assignee shall, so long as
it is diligently pursuing said cure, have up to sixty

(60) days to effectuate such cure.)

 

6. The Charterer hereby further represents and warrants to and for the benefit
of Assignee that:

 

a. have occurred thereunder. The Charter is in full force and effect and no
defaults or events of default

 

b. Without the prior written consent of Assignee, the Charterer will not agree
to any amendments or modifications to the Charter.

 

IN WI1NESS WHEREOF, Charterer has caused this Consent and Agreement to be duly
executed as of the      day of    201

 

WI1NESS:             By:     Name:     Title:  

 

 

 

 

Exhibit D
Form of First Preferred Mortgage

 

 

 

 

FIRST PREFERRED MORTGAGE

 

given by

 

OVERSEAS SUN COAST LLC,

as Owner

 

in favor of

 

PACIFIC WESTERN BANK,

as Mortgagee

 

on the

 

MN “OVERSEAS SUN COAST”

 

OFFICIAL NO. 8599

 

 

 

 

SYNOPSIS OF MORTGAGE

 

Name of Vessel and Official No.:       Official Number     “OVERSEAS SUN COAST”
  8599           Type of Instrument:   First Preferred Mortgage              
Effective Date of Instrument:         ,·2019               Name of Owner:  
Overseas Sun Coast LLC               Percentage of Vessel owned:   100%        
      Address of Owner:   302 Knights Run Avenue         Suite 1200        
Tampa, Florida 33602               Name of Mortgagee:   Pacific Western Bank    
          Address of Mortgagee:   30 S. Wacker Drive         35th Floor        
Chicago, Illinois 60606         Attention: Tanya Zasadzinski               Total
Amount of Mortgage:   Twenty-Five Million United States Dollars ($25,000,000),
plus interest, fees, costs and performance of mortgage covenants.

 

 

 

 

TABLE OF CONTENTS

 

1. DEFINITIONS 1       2. MORTGAGE 3       3. REPRESENTATIONS AND WARRANTIES 4  
    4. COVENANTS 4       5. EVENTS OF DEFAULT 9       6. APPLICATION OF MONEYS
11       7. DELAY AND CURE 11       8. DELEGATION OF MORTGAGEE’S POWERS 12      
9. [INTENTIONALLY OMITTED] 12       10. POWER OF ATTORNEY 12       11. ARREST BY
A THIRD PARTY 12       12. JURISDICTION 12       13. INVALID PROVISIONS 13      
14. FURTHER ASSURANCE 13       15. CUMULATIVE REMEDIES 13       16. AMOUNT OF
MORTGAGE 13       17. PREFERRED STATUS 13       18. NOTICES 13       19. PARTIES
BOUND 14       20. WAIVER OF DEMAND 14       21. EXPENSES 14       22. GOVERNING
LAW 14

 

Exhibit 1: Loan Agreement (without Exhibits or Appendices other than Exhibit F)

 

 

 

 

FIRST PREFERRED MORTGAGE

 

THIS FIRST PREFERRED MORTGAGE is made as a deed on this        day of      2019
(this “Mortgage”), by OVERSEAS SUN COAST LLC, a foreign maritime entity
qualified in the Republic of the Marshall Islands, whose registered office in
the Marshall Islands is at Trust Company Complex, Ajeltake Island, P.O. Box
1405, Majuro, Republic of the Marshall Islands MH 96960 (the “Owner”), in favor
of PACIFIC WESTERN BANK, a California banking corporation, with an office at 30
S. Wacker Drive, 35th Floor, Chicago, Illinois 60606 (the “Mortgagee”).

 

RECITALS

 

WHEREAS:

 

A. The Owner is the sole, absolute and unencumbered owner of the whole of the
2019-built 50,000 DWT product/chemical carrier named “OVERSEAS SUN COAST”,
Official No. 8599 (the “Vessel”), registered in the name of the Owner under the
laws and flag of the Republic of the Marshall Islands and more particularly
described as follows:

 

Tons gross:

Tons Net:

 

B. Pursuant to that certain Loan and Security Agreement dated as of August_,
2019 (as the same may be amended, amended and restated, supplemented, extended,
replaced or otherwise modified from time to time, the “Loan Agreement”), between
the Owner and the Mortgagee (a copy of which, without Exhibits or Appendices
other than Exhibit F, is attached hereto as Exhibit 1 and made a part hereof),
the Mortgagee lent the Owner Twenty-Five Million United States Dollars
($25,000,000), subject to the terms and upon the conditions described therein.
Said loan is evidenced by the Owner’s promissory note dated      2019 and made
payable to the order of the Mortgagee, in the original principal amount of
Twenty-Five Million United States Dollars ($25,000,000) (as the same may be
amended, amended and restated, supplemented, extended, replaced or otherwise
modified from time to time, the “Note”).

 

C. As of the date hereof, the Mortgagee has lent the Owner Twenty-Five Million
United States Dollars ($25,000,000), and the Owner acknowledges that it is
justly indebted to the Mortgagee for said amount.

 

D. To secure the (i) full and punctual repayment of the Secured Indebtedness (as
defined below), and (ii) performance of the terms and conditions contained in
this Mortgage and the other Loan Documents, expressed or implied to be
performed, observed and complied with by and on the part of the Owner, the Owner
has agreed to execute and deliver this Mortgage.

 

NOW, THEREFORE, THIS MORTGAGE WITNESSETH:

 

1. Definitions. In this Mortgage, unless the context otherwise requires:

 

(a) “Insurances” means all policies and contracts of insurance (whether issued
in the commercial market or by the United States of America) and all entries of
the Vessel in a protection and indemnity or war risks association or club that
are from time to time taken out or entered into in respect of the Vessel;

 

 

 

 

(b) “ISM Code” means, in relation to its application to the Owner, the Vessel
and its operation, the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention (including the guidelines on its
implementation) adopted by the International Maritime Organization as Resolution
A.741(18) and Resolution A.913(22), as the same may be amended, supplemented or
replaced from time to time as implemented and administered in the United States
by the U.S. Coast Guard pursuant to 46 U.S.C. Chapter 32 and the regulations
promulgated thereunder and the terms “safe management system”, “Safety
Management Certificate” and “Document of Compliance” have the meanings specified
in the ISM Code;

 

(c) “ISPS Code” means, in relation to its application to the Owner, the Vessel
and its operation, the International Ship and Port Facility Security Code
adopted by the International Maritime Organization on December 13, 2002 and now
set out in Chapter Xl-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as
amended);

 

(d) “Lien” means any lien, mortgage, charge, security interest, pledge,
attachment, levy or other encumbrance of any kind whatsoever;

 

(e) “Loan” means the total principal amount of Twenty-Five Million United States
Dollars ($25,000,000) advanced by the Mortgagee to the Owner pursuant to the
Loan Agreement or (as the context may require) the balance of such principal
outstanding at any relevant time;

 

(f) “Loan Documents” mean, collectively, the Loan Agreement, the Note, this
Mortgage, and all other documents now or hereafter executed and delivered, to
evidence, secure, or guarantee the Loan;

 

(g) “Protection and Indemnity Risks” means the usual risks covered by a
protection and indemnity association or club, including the portion not
recoverable in case of collision under the ordinary runnig-down clause;

 

(h) “Requisition Compensation” means all moneys or other compensation payable by
reason of requisition for title or other compulsory acquisition of the Vessel
other than by requisition for hire;

 

(i) “Secured Indebtedness” means, on any relevant date, the unpaid principal
balance of the Loan, together with all accrued but unpaid interest and all other
sums payable to the Mortgagee by the Owner under the Loan Agreement, the Note or
any of the other Loan Documents; and

 

G) “Total Loss” in respect of the Vessel, means the occurrence of: (i) the
actual or constructive total loss, or compromised, agreed or arranged total
loss, of the Vessel under the policies of hull and machinery insurance and
related coverages that the Owner is required to procure and maintain pursuant to
Section 4 of this Mortgage; or (ii) the loss, theft, hijacking, disappearance or
destruction of the Vessel or damage thereto to such extent as shall make repair
thereof uneconomical or shall render the Vessel permanently unfit for normal use
for any reason whatsoever; or (iii) the requisition of title to or other
compulsory acquisition of the Vessel (otherwise than by requisition for hire
which does not extend beyond the term of the Loan); or (iv) the condemnation,
capture, seizure, forfeiture, arrest, detention, confiscation or other taking of
title of the Vessel by any Person or Governmental Authority, or by Persons
acting or purporting to act on behalf of any government, unless the Vessel shall
be released from such capture, seizure, arrest or detention within thirty (30)
days after such occurrence, but in all events prior to the expiration or earlier
cancellation or termination of the term of the Loan. An actual Total Loss shall
be deemed to have occurred on the actual date on which the Vessel was lost, or
if the date of loss is unknown, the date that the Vessel was last heard from. A
constructive Total Loss shall be deemed to have occurred on the earliest of (1)
the date that a claim for Total Loss is allowed by the underwriters, (2) if the
underwriters do not allow a claim for Total Loss, on the date that a Total Loss
is subsequently finally adjudged by a court of competent jurisdiction or an
arbitration panel to have occurred, or (3) upon receipt by the Mortgagee of a
report prepared by an independent, certified marine surveyor selected by the
Owner (and reasonably acceptable to the Mortgagee) concluding that salvage,
repair and associated costs to restore the Vessel to the condition required in
Section 7.0l(o) of the Loan Agreement would exceed the fair market value of the
Vessel in sound condition. An agreed or arranged Total Loss shall be deemed to
have occurred at the effective time of any agreement by the underwriters or
other appropriate Person with respect thereto, and any Total Loss resulting from
condemnation, seizure, forfeiture, arrest or similar actions shall be deemed to
have occurred upon entry of a final order with respect thereto by the applicable
Governmental Authority.

 

2

 

 

(k) “War Risks” means the risk of mines and all risks excluded by the free of
capture and seizure clause from the standard form of United States, Norwegian or
English marine policy, including coverage for confiscation, nationalization,
terrorism, sabotage, piracy and civil unrest.

 

Words, expressions and other provisions specified in the Loan Agreement, which
are not otherwise defined in this Section 1, shall have the same meaning when
used in this Mortgage. The rules of usage and interpretation set forth in the
Loan Agreement shall apply to terms defined herein.

 

2. Mortgage. In consideration of the premises and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
to secure the prompt payment when due of the Secured Indebtedness and the timely
performance and observance of and compliance with the covenants, terms and
conditions contained in this Mortgage, the Loan Agreement, the Note and the
other Loan Documents, the Owner has granted, conveyed and mortgaged, and does,
by these presents, grant, convey and mortgage, to and in favor of the Mortgagee,
its successors and assigns, to and for the benefit of the Mortgagee and its
successors and assigns, the whole of the Vessel, together with (i) all of her
boilers, engines, machinery, masts, rigging, boats, anchors, chains, cables,
tackle, apparel, spare gear, fuel (to the extent owned by the Owner), consumable
or other stores, equipment and all other appurtenances thereto appertaining or
belonging and appropriated to the exclusive use of the Vessel, whether now owned
or hereafter acquired, whether on board or not, (ii) all additions, improvements
and replacements hereafter made in or to the Vessel, or any part thereof, or in
or to the stores, equipment and appurtenances aforesaid except such equipment
that, when placed aboard the Vessel, does not become the property of the Owner
or leased equipment not belonging to the Owner, and (iii) all logs, books and
records pertaining to the use, operation and employment of the Vessel
(excluding, however, all readily removable equipment installed, placed or
brought aboard the Vessel by any charterer thereof and otherwise consented to by
the Mortgagee prior to its installation or placement aboard the Vessel).

 

TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and assigns,
forever, upon the terms set forth in this Mortgage for the enforcement of the
payment of the Secured Indebtedness and to secure the performance and observance
of and compliance with the covenants, terms and conditions contained in this
Mortgage, the Note, the Loan Agreement and the other Loan Documents.

 

PROVIDED only and the conditions of these presents are such that, if the Owner,
or its successors or permitted assigns, shall pay or cause to be paid to the
Mortgagee or its successors and assigns, the Secured Indebtedness as and when
the same shall become due and payable in accordance with the terms of this
Mortgage, the Loan Agreement, the Note and the other Loan Documents (or any
other agreement entered into pursuant to the terms thereof or hereof) and shall
perform, observe and comply with each and every covenant, term and condition
contained in this Mortgage, the Loan Agreement, the Note and the other Loan
Documents, expressed or implied, to be performed, observed or complied with by
and on the part of the Owner, its successors or assigns, all without delay,
then, these presents and the rights of the Mortgagee under this Mortgage shall
cease and terminate and, in such event, the Mortgagee agrees, at the sole cost
and expense of the Owner, to execute and deliver all such documents as the Owner
may reasonably require to release and discharge this Mortgage under the laws of
the Republic of the Marshall Islands; otherwise to be and remain in full force
and effect.

 

3

 

 

It is declared and hereby agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the prompt payment
of the Secured Indebtedness.

 

3. Representations and Warranties. The Owner hereby represents and warrants to
the Mortgagee that:

 

(a) the Vessel is duly documented in the name of the Owner under the laws and
flag of the Republic of the Marshall Islands;

 

(b) the Vessel is owned by Owner free of any Lien other than this Mortgage and
Permitted Maritime Liens, and Owner will warrant and defend the title and
possession of the Vessel and of every part thereof for the benefit of the
Mortgagee against the claims and demands of all Persons whomsoever;

 

(c) the Vessel is in class and free of any recommendations or conditions
affecting her class;

 

(d) it has full power and authority to (i) execute and deliver this Mortgage,
and (ii) perform all its obligations thereunder;

 

(e) it has duly executed and delivered this Mortgage;

 

(f) this Mortgage constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except to the extent such
enforcement may be limited by any applicable bankruptcy, insolvency, moratorium
or similar laws affecting the rights of creditors generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity, at law or in admiralty);

 

(g) all consents, licenses, approvals and authorizations (including any
approvals of the Office of the Maritime Administrator, Republic of the Marshall
Islands) required for the entry into, performance, validity and enforceability
of, this Mortgage have been duly obtained and are in full force and effect; and

 

(h) except for the recordation of this Mortgage with the Office of the Maritime
Administrator, Republic of the Marshall Islands, and as otherwise contemplated
by the Loan Agreement, it is not necessary for the legality, validity,
enforceability or admissibility into evidence of this Mortgage or any of the
other Loan Documents that any of them or any document relating thereto, be
registered, filed, recorded or enrolled with any court or authority in any
relevant jurisdiction,

 

4. Covenants. The Owner hereby covenants and agrees to (i) pay the Secured
Indebtedness to the Mortgagee or its successors and assigns when due, and (ii)
observe, perform and comply with the terms and conditions herein and in the
other Loan Documents on its part to be observed, performed or complied with; and
further covenants and undertakes at all times throughout the term hereof (unless
otherwise specified):

 

4

 

 

(a) at all times during the term hereof, the Owner shall, at its own cost and
expense and at no cost to the Mortgagee, procure and maintain in full force and
effect insurance on the Vessel with underwriters, companies or clubs as are
acceptable to the Mortgagee having an A.M. Best or comparable agency rating of
at least “A-” or better, in the following amounts and covering the following
risks, with such deductibles as the Mortgagee may require from time to time:

 

1) full form Hull and Machinery Insurance as per American Institute Hull Clauses
(June 2, 1977) or the equivalent, including American Institute Increased Value
and Excess Liability Clauses (if applicable) and War Risk insurance as per the
American Institute Hull War Risks and Strike Clauses or their equivalent, with a
stipulated agreed value in an amount equal to the greater of (A) the full
commercial value of the Vessel, and (B) 105% of the outstanding principal
balance of the Loan from time to time - such insurance shall include navigation
limits adequate for the Vessel’s trade;

 

2) full protection and indemnity coverage (including, without limitation, 414th
collision coverage, contractual liability, wreck removal, and pollution
liability and clean-up insurance) on terms and conditions as per the rules of a
protection and indemnity club (“P&I Club”) that is a member of the International
Group of Protection and Indemnity Associations, or equivalent cover acceptable
to the Mortgagee, with limits equal to $1,000,000,000 per occurrence or
accident;

 

4) third party general liability coverage in the amount of $5,000,000 per
occurrence or accident; and

 

5) workers’ compensation insurance in such statutory amounts as required by
Applicable Law.

 

In addition, the Owner shall provide, or cause to be provided, at its own cost
and expense, breach of warranty coverage or mortgagee’s interest insurance and
mortgagee’s additional perils pollution insurance covering the Vessel in an
amount not less than 105% of the outstanding principal balance of the Loan from
time to time, issued under policy forms acceptable to the Mortgagee and
reflecting customary commercial practice, such that no act or omission of the
Owner or any permitted sub-charterer, or breach of any warranty of
seaworthiness, whether express or implied, shall operate to forfeit the
Mortgagee’s coverages under the above policies or result in a cancellation of
insurance as to the Mortgagee.

 

The Owner hereby agrees to indemnify, defend and hold harmless the Mortgagee,
its officers, directors, agents and employees from and against any and all
losses, damages, liabilities and expenses whatsoever (including attorneys’ fees
and litigation expenses), arising, either directly or indirectly, out of or
relating to any claim made against the Mortgagee by the underwriters of the
Owner pursuant to rights of subrogation under policies of insurance insuring the
Owner, the Mortgagee and the Vessel against loss or damage or liabilities
incurred in connection with the Owner’s use, possession or operation of the
Vessel.

 

(b) The Owner shall operate the Vessel only in the territorial waters of nations
which recognize the rights of vessels registered in the Marshall Islands and
only in locations when the Vessel’s operating specifications allow it to operate
safely and within its technical capacities and certification and will not
navigate the Vessel outside the navigational limits of any such policies of
insurance covering the Vessel, unless, prior to any such navigation, the Owner
procures an endorsement to the policies obtained hereunder authorizing such
navigation, in form and substance satisfactory to the Mortgagee (and reflecting
customary commercial practice). Prior to, and as a condition to any such consent
by the Mortgagee, any navigation of the Vessel beyond the navigation limits
stated in this Section, the Owner shall procure increased value, war risk and
other related insurance with limits as may be required by the Mortgagee.

 

5

 

 

All insurance (excluding workers’ compensation) shall name the Mortgagee as
lender loss payee and/or loss payee, as its interest may appear, and shall be
payable as provided below. All policies shall further provide that (i) there
shall be no recourse against the Mortgagee for the payment of any premiums,
calls, commissions, or deductibles; (ii) all rights of subrogation by the
underwriters against the Mortgagee are waived; (iii) such policies are primary
to and without any right of contribution from any other insurance covering the
Vessel that may be procured and maintained by the Mortgagee; (iv) all rights of
the underwriters to set-off, counterclaim, or charge against, or otherwise
deduct from, whether by attachment or otherwise, in respect of any liability of
the Owner, the proceeds payable under such policy are waived by the
underwriters, and (v) the Mortgagee will receive at least fourteen (14) days
written notice from the insurance company or broker prior to cancellation or any
material alteration in the insurance policy or any reduction in coverage which
could materially affect the interests of the Mortgagee (ten (10) days’ notice if
the cancellation is due to non-payment of premiums). No policy shall have a
deductible exceeding $500,000 per occurrence without the prior written consent
of the Mortgagee.

 

The Owner shall not do any act, nor voluntarily suffer or permit any act to be
done, whereby any insurances required by this Section shall or may be suspended,
impaired or defeated, or suffer or permit the Vessel to engage in any voyage not
permitted under the policies of insurance then in effect without first procuring
insurance satisfactory to the Mortgagee in all respects for such voyage.

 

All hull and machinery, increased value, war risk and other physical loss or
damage coverages required under this Section shall name the Mortgagee as lender
loss payee, and shall provide that all insurance proceeds shall be disbursed
directly to the Owner; provided, however, that such policies may provide that,
unless notice of an Event of Default has been received by the Owner’s insurance
broker or underwriter, proceeds payable on account of damage to the Vessel
(other than in the case of a Total Loss), up to an aggregate of $1,000,000, may
be disbursed directly by the underwriters to Persons who have performed sue and
labor, salvage, repairs and other services in connection with the repair of the
Vessel; and provided, further, that if an Event of Default has occurred, and the
Owner’s insurance broker or the underwriter has received notice of such Event of
Default, all policy proceeds shall be made payable to the sole order of the
Mortgagee. All proceeds of hull and machinery, increase value, war risk and
other physical loss or damage coverages required under this Section and received
by the Mortgagee shall be disbursed (after payment of commissions and other
costs of collection of such proceeds) as follows:

 

(i) in the event of damage to the Vessel not constituting a Total Loss (A)
provided that no Event of Default has occurred and is continuing, all insurance
proceeds payable as a result thereof shall be applied to pay for repairs,
salvage, sue and labor and other charges with respect to the Vessel, or (B) if
an Event of Default has occurred and is then continuing, such proceeds, at the
Mortgagee’s sole option and in the Mortgagee’s sole discretion, shall be applied
either against the Owner’s outstanding Obligations as provided in Section 6
hereof or to pay for such repairs, salvage, sue and labor and other charges.

 

(ii) in the event of the Total Loss of the Vessel, all insurance proceeds
payable in connection therewith shall be applied as provided in Section 6
hereof.

 

The proceeds of any protection and indemnity, pollution and other liability or
indemnity coverages required hereunder may be paid (i) directly to the Person to
whom any liability covered by such policies has been incurred, or (ii) to the
Owner to reimburse it for any loss, damage or expense incurred and paid by it
with respect to third party liabilities and covered by such insurance;
[provided, however, that following the occurrence of an Event of Default
hereunder (and receipt of such notice by the Owner’s insurance broker or
underwriters), any proceeds issued in reimbursement of sums paid by the Owner
shall in such instance be payable solely to the Mortgagee to the extent
necessary to offset sums owed by the Owner to the Mortgagee.] The Owner further
covenants to make all insurance premium payments when due, and, if applicable,
make all quarterly protection and indemnity club U.S. Voyage Quarterly
Declarations for each such quarter no later than six (6) weeks after the end of
each quarter and ensure that copies of the same be sent to the Mortgagee. The
Owner shall be responsible for pursuing all claims under the insurances
indicated above, and take such actions as may be necessary to reasonably satisfy
all insurers’ inquiries. Unless notified by the Mortgagee to the contrary, the
Owner shall arrange for collision and/or salvage guarantee(s) and/or security to
be provided to third parties as may be required to prevent the arrest, or secure
the release of, the Vessel;

 

6

 

 

(c) to provide to the Mortgagee forthwith copies of all material notices and
information received by the Owner in relation to the Vessel and her Insurances
unless such notices or information state they have been provided directly to the
Mortgagee, and to provide notice to the Mortgagee of any casualty to the Vessel
in respect whereof the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or deductible, exceeds
Five Hundred Thousand United States Dollars ($500,000) or the equivalent in any
other currency;

 

(d) to assign and provide that any Requisition Compensation 1s applied
inaccordance with Section 6 hereof as if received on the basis of a sale of a
Vessel;

 

(e) to keep and to cause the Vessel to be kept free and clear of all Liens,
other than (1) Liens in favor of the Mortgagee, (2) Liens for damage arising out
of maritime torts, (3) Liens for wages of the crew and for wages of stevedores
when employed directly by the Owner or the master of the Vessel which wages are
not yet due and payable or which are being contested by the Owner in good faith
by appropriate legal proceedings being diligently pursued, (4) Liens for general
average and for salvage (including contract salvage), (5) Liens fully covered
(less permitted deductibles) by valid policies of insurance held by or otherwise
in favor of the Owner and the Mortgagee and meeting or exceeding the maximum
limits specified in Section 4(a) hereof so long as in each case there is no risk
of the Mortgagee incurring any civil or criminal liability, and (6) maritime
liens which attach to the Vessel by operation of law without further action by
the claimant but only to the extent that such Liens are incurred and paid in the
ordinary course of business without delay or default (such items (1) through (6)
hereof being hereinafter referred to as “Permitted Maritime Liens”); provided,
however, that no Liens described in clauses (2) through (6) of this subparagraph
(e) of this Section 4(a) shall be a Permitted Maritime Lien which is no longer
inchoate, is otherwise due and payable or is not fully secured by an appropriate
bond or cash deposit;

 

(f) to not sell or otherwise transfer any interest in the Vessel (unless
permitted pursuant to the provisions of Section 3.03(b) of the Loan Agreement);

 

(g) to cause this Mortgage to be duly recorded as prescribed by Section 302 of
the Marshall Islands Maritime Act of 1990, as amended (the “Marshall Islands
Maritime Act”), and will otherwise comply with and satisfy all of the
requirements and formalities established by the Marshall Islands Maritime Act
and any pertinent legislation of the Republic of the Marshall Islands in order
to perfect and to maintain the perfection and priority of this Mortgage as a
valid and enforceable first preferred mortgage lien upon the Vessel and to
furnish to the Mortgagee from time to time such proofs as the Mortgagee may
reasonably request of its satisfaction of the Owner’s compliance with the
provisions hereof;

 

(h) except as otherwise provided in the Loan Agreement, to keep the Vessel
registered as a Marshall Islands vessel and will not do or cause to be done
anything whereby such registration may be forfeited, cancelled or imperiled;

 

7

 

 

(i) (i) to not cause or permit the Vessel to be operated in any manner contrary
to Applicable Law, rule or regulation, (ii) to not abandon the Vessel in a
foreign port, (iii) to not engage in any unlawful trade or violate any law or
carry any cargo that will expose the Vessel to penalty, expropriation,
nationalization, confiscation, forfeiture or capture, (iv) not to change the
managers of the Vessel without the Lender’s prior written consent (such consent
not to be unreasonably withheld or delayed) and then only after delivering to
the Lender copies of all endorsements to the Owner’s insurance policies
evidencing that all such insurances continue to remain in effect notwithstanding
a change of managers, and (v) to not do, or suffer or permit to be done,
anything which could disqualify its registration under Marshall Islands law;

 

(i) if a libel shall be filed against the Vessel or the Vessel shall be seized,
arrested, levied upon and taken into custody or detained in any proceeding in
any court or tribunal or by any government or under color of authority, the
Owner shall promptly notify the Mortgagee of such seizure, arrest, taking or
detention by telecopy, confirmed by letter, and (except in connection with any
taking or requisition of the title or use of the Vessel by any Governmental
Authority), within thirty (30) days from the date of such seizure, arrest,
taking or detainment or within such lesser time as may be necessary to avoid
prejudice to the interests of the Mortgagee with respect to the Vessel, to cause
the Vessel to be released and all Liens thereon other than this Mortgage and
Permitted Maritime Liens to be discharged and to promptly notify the Mortgagee
thereof in the manner aforesaid; and to notify the Mortgagee within five (5)
Business Days of any average or salvage incurred by the Vessel;

 

(k) at all times and without cost or expense to the Mortgagee, (i) to maintain,
service and preserve, or cause to be maintained, serviced and preserved, the
Vessel and her parts and equipment, so as to keep them in every respect suitable
for their intended uses and in good operating condition and repair, consistent
with prudent industry practice for vessels of the same type, and used in the
same trade, as the Vessel but in no event less than the extent to which the
Owner maintains other similar vessels and equipment in the prudent management of
its assets and properties, and in all events in as good a condition as existed
on the Closing Date, normal wear and tear from proper use alone excepted (except
during such times when the Vessel or any of her equipment is out of service
undergoing repairs in order to maintain the Vessel’s and such equipment’s
compliance with the foregoing requirements); (ii) to comply with all Applicable
Laws, treaties and conventions, and rules and regulations to which the Republic
of the Marshall Islands is a party and of any jurisdiction where the Vessel
operates and to have on board as and when required thereby valid certificates
showing compliance therewith; and (iii) to the extent applicable, to comply or
procure compliance with the ISM Code and the ISPS Code, and to furnish to the
Mortgagee on demand true and complete copies of the Vessel’s Document of
Compliance, Safety Management Certificate and such other ISM Code documentation
as the Mortgagee may reasonably request in writing;

 

(l) except as otherwise provided in the Loan Agreement, to not transfer or
change, or permit to be transferred or changed, the flag of the Vessel, without
the prior written consent of the Mortgagee; and

 

(m) to place, and at all times and places to retain, a properly certified copy
of this Mortgage on board the Vessel and to cause such certified copy and the
Vessel’s marine documents to be exhibited to any Person having business
therewith that might give rise to any Lien thereon and to any representatives of
the Mortgagee; and to place aboard the Vessel a printed notice reading as
follows:

 

8

 

 

NOTICE OF MORTGAGE

 

THIS VESSEL IS COVERED BY A FIRST PREFERRED MORTGAGE IN FAVOR OF PACIFIC WESTERN
BANK, UNITED STATES OF AMERICA (THE “MORTGAGEE”), UNDER THE PROVISIONS OF
CHAPTER 3 OF THE MARSHALL ISLANDS MARITIME ACT OF 1990, AS AMENDED. UNDER THE
TERMS OF SAID MORTGAGE, NEITHER THE OWNER, ANY CHARTERER, THE MASTER OF THIS
VESSEL NOR ANY OTHER PERSON HAS ANY RIGHT, POWER OR AUTHORITY TO CREATE, INCUR
OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL ANY LIEN WHATSOEVER OTHER
THAN THE LIEN OF THE AFORESAID MORTGAGE AND LIENS FOR CURRENT CREW WAGES,
GENERAL AVERAGE AND SALVAGE, LIENS COVERED BY VALID POLICIES OF INSURANCE AND
LIENS INCURRED IN THE ORDINARY COURSE OF OPERATION OF THE VESSEL THAT ARE NOT
YET DUE AND PAYABLE AND ARE IN EXISTENCE LESS THAN THIRTY (30) DAYS.

 

5. Events of Default. If (i) the Owner fails to make any payment when due (after
giving effect to applicable cure periods, if any) in respect of the Secured
Indebtedness, (ii) any representation or warranty made by the Owner hereunder
shall prove to have been materially false or materially misleading when made,
(iii) the Owner fails to insure the Vessel as required hereunder, (iv) the Owner
fails to honor any of its other obligations hereunder and such failure continues
unremedied for a period of thirty (30) days, or (v) there occurs any Event of
Default under the Loan Agreement, the Mortgagee may do any or all of the
following:

 

(a) demand payment of the Secured Indebtedness, by written notice to the Owner,
whereupon such payment by the Owner to the Mortgagee shall be immediately due
and payable without prejudice to any other rights and remedies of the Mortgagee
(provided no demand or notice shall be required if an Event of Default shall
have occurred with respect to the Owner under Section 8.0l(k) of the Loan
Agreement);

 

(b) at any time and as often as may be necessary, take any action to protect the
security created by this Mortgage and each and every expense or liability
(including reasonable fees and expenses of counsel) so incurred by the Mortgagee
in the protection of such security shall be repayable to the Mortgagee by the
Owner on demand, together with interest thereon at the Default Rate from the
date on which such expense or liability was incurred by the Mortgagee until full
payment is received. The Owner promptly shall execute and deliver, or cause to
be executed and delivered, to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the reasonable opinion of the
Mortgagee or its counsel are necessary or advisable to facilitate or expedite
the protection, maintenance and enforcement of the security created by this
Mortgage;

 

(c) exercise all the rights and remedies in foreclosure and otherwise provided
to mortgagees pursuant to Chapter 3 of the Marshall Islands Maritime Act or by
any other jurisdiction where the Vessel may be found;

 

(d) take possession of the Vessel, whether actually or constructively and/or
otherwise to take control of the Vessel, wherever it may be, without prior
demand and without legal process (when permissible under applicable law) and
cause the Owner of the Vessel forthwith upon demand of the Mortgagee to
surrender possession thereof to the Mortgagee at safe berth at a port designated
by the Mortgagee;

 

(e) collect, recover, compromise and give a good discharge for all claims then
outstanding or thereafter arising under the Insurances or any of them and to
takeover or institute (if necessary using the name of the Owner) all such
proceedings in connection therewith as the Mortgagee reasonably thinks fit and
to permit the brokers through whom collection or recovery is effected to charge
the usual brokerage therefor;

 

9

 

 

(t) discharge, compound, release or compromise claims against the Owner
concerning the Vessel that have given or may give rise to any Lien on the Vessel
or that are or may be enforceable by proceedings against the Vessel;

 

(g) take appropriate judicial, extra-judicial or administrative proceedings for
the foreclosure of this Mortgage and/or for the enforcement of the rights of the
Mortgagee hereunder or otherwise, recover judgment for any amount due on the
Secured Indebtedness and collect the same out of any property of the Owner
subject only to the rights of third parties holding duly perfected Liens on such
property;

 

(h) as permitted by Applicable Law, sell the Vessel at public auction, free from
any claim of or by the Owner of any nature whatsoever by first giving notice of
the time and place of sale with a general description of the Vessel in the
following manner:

 

(x) by publishing such notice for ten (10) consecutive days in a daily newspaper
of general circulation published in New York, New York; and

 

(y) if the place of sale should not be New York, New York, then also by
publication of a similar notice in a daily newspaper, if any, published at the
place of sale; and

 

(z) by sending a similar notice by facsimile transmission confirmed by mail to
the Owner at least ten (10) days before the date of sale as permitted by the
laws of the United States of America and other applicable law.

 

Such sale of the Vessel may be held at such place and at such time as the
Mortgagee in such notices may have specified, or such sale may be adjourned by
the Mortgagee from time to time by announcement at the time and place appointed
for such sale or for such adjourned sale and without further notice or
publication the Mortgagee may make such sale at the time and place to which the
same shall be so adjourned. Such sale may be conducted without bringing the
Vessel to the place designated for such sale and in such manner as the Mortgagee
may deem advisable, and the Mortgagee or any holder of the Note may become the
purchaser at such sale and shall have the right to credit on the purchase price
any and all amounts due in respect of the Note and/or any Secured Indebtedness,
as appropriate. Any sale made in accordance with the provisions of this
subsection (h) shall be deemed made in a commercially reasonable manner insofar
as the Owner is concerned.

 

(i) pending the sale of the Vessel (either directly or indirectly), as permitted
by the laws of the Republic of the Marshall Islands and other applicable law,
manage, charter, lease, insure, maintain or repair the Vessel and employ or lay
up the Vessel upon such terms, in such manner and for such period as the
Mortgagee may reasonably deem expedient and for the purpose aforesaid the
Mortgagee shall be entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements respecting the Vessel,
her Insurances, management, maintenance, repair, and employment in all respects
as if the Mortgagee were the owner of the Vessel but without any obligations to
take any action with respect to the Vessel and without any responsibility for
any loss thereby incurred;

 

(j) recover from the Owner on demand any losses as may be incurred by the
Mortgagee in the exercise of the power vested in the Mortgagee under subsection
(i) hereof with interest thereon at the Default Rate from the date when such
losses were incurred by the Mortgagee until full payment is received; and

 

(k) recover from the Owner on demand all reasonable expenses, payments and
disbursements (including fees and expenses of counsel) incurred by the Mortgagee
in the exercise by it of any of the powers vested in it hereunder, together with
interest thereon at the Default Rate from the date when such expenses, payments
or disbursements were incurred by it until full payment is received;

 

10

 

 

PROVIDED, ALWAYS, that any sale by the Mortgagee of the Vessel pursuant to this
Section 5 shall operate to divest all rights, title and interests of any nature
whatsoever of the Owner, its successors and assigns, and all Persons claiming
by, through or under the Owner in or to the Vessel or such shares so sold and
upon such sale the purchaser shall not be bound to see or inquire whether the
power of sale of the Mortgagee has arisen in the manner herein provided and the
sale shall be deemed to be within the power of the Mortgagee and the receipt by
the Mortgagee of the purchase money shall effectively discharge the purchaser,
who shall not be concerned with the manner of application of the proceeds of the
sale or be in any way answerable therefor. The Owner hereby irrevocably appoints
the Mortgagee the true and lawful attorney of the Owner, in its name and stead,
to make all necessary transfers of the whole or any part of the Vessel in
connection with a sale, use or other disposition pursuant to this Section 5, and
for that purpose to execute all necessary instruments of assignment and
transfer. Nevertheless, the Owner shall, if so requested by the Mortgagee,
ratify and confirm any sale, assignment, transfer or delivery by executing and
delivering such proper bill of sale, assignment, conveyance, instrument of
transfer or other instrument as may be designated in such request.

 

6. Application of Moneys. The proceeds of any sale made either under the power
of sale hereby granted to the Mortgagee or under a judgment or decree in any
judicial proceeding for the foreclosure of this Mortgage, or proceeds arising
from the enforcement of any remedy granted to the Mortgagee hereunder, or any
net earnings arising from the management, charter or other use of the Vessel by
the Mortgagee under any of the powers herein granted or the proceeds of any and
all Insurances and any claims for damages on account of the Vessel or the Owner
of any nature whatsoever and any net earnings of the Vessel from the operation
of the Vessel by the Mortgagee under any of the powers herein granted or by law
provided or any Requisition Compensation shall be applied as follows:

 

First: to the payment or reimbursement of all the costs of the Mortgagee
incurred or made in the exercise, protection or pursuance of its rights or
remedies under this Mortgage and the other Loan Documents including, but not
limited to, the expenses of any sale or of any taking, attorneys’ fees and court
costs together with interest thereon at the Default Rate and to provide adequate
indemnity to the Mortgagee against Liens or rights claiming priority over or
equal to the lien created under this Mortgage and the other Loan Documents;

 

Second: to the payment of any amounts due to the Mortgagee under any Loan
Documents other than amounts set forth in clauses “First”, “Third”, and “Fourth”
together with interest thereon at the Default Rate from the date of incurrence
to the date of payment in full;

 

Third: to the payment of accrued interest on the Loan and all other sums payable
by the Owner to the Mortgagee, whether under this Mortgage or the other Loan
Documents;

 

Fourth: to the payment of principal of the Loan whether due or not; and Fifth:
to the Owner or to whomsoever else may be lawfully entitled thereto. If the
proceeds are insufficient to pay the amounts specified in paragraphs “First”,
“Second”, “Third” and “Fourth” above, the Mortgagee shall be entitled to collect
the balance from the Owner or any other Person liable therefor.

 

7. Delay and Cure. No delay or omission of the Mortgagee to exercise any right
or power vested in it under this Mortgage shall impair such right or power or be
construed as a waiver thereof or as an acquiescence in any default by the Owner
hereunder or under the Loan Agreement, the Note or any other Loan Document, nor
shall the acceptance by the Mortgagee of any payments concerning this Mortgage
from any source be deemed a waiver hereunder. However, if at any time after the
occurrence of an Event of Default and before the actual sale of the Vessel by
the Mortgagee or before any foreclosure proceedings, the Owner cures completely
and promptly all Events of Default and pays promptly all expenses, advances and
damages to the Mortgagee arising from such Events of Default, with interest at
the Default Rate from the date when such expenses, advances and damages were
incurred until full payment is received, then the Mortgagee may, in its sole
discretion, accept such cure and payment and restore the Owner to its former
position, but such action shall not affect any subsequent Event of Default or
impair any rights consequent thereon.

 

11

 

 

8. Delegation of Mortgagee’s Powers. The Mortgagee shall be entitled at any time
and as often as may be expedient to delegate all or any of the powers and
discretions vested in it by this Mortgage (including the power vested in it by
virtue of Section 10 hereof) in such manner and upon such terms and to such
Persons as the Mortgagee in its absolute discretion may think fit.

 

9. [Intentionally Omitted].

 

10. Power of Attorney.

 

(a) Owner hereby irrevocably appoints the Mortgagee as its attorney-in-fact
(which appointment is coupled with an interest) for the duration of the term
hereof to do in the name of the Owner or in the Mortgagee’s own name following
the occurrence and during the continuance of an Event of Default, all acts that
the Owner, or its successors or assigns, could do in relation to the Vessel,
including, without limitation, to demand, collect, receive, compromise, settle
and sue for (insofar as the Mortgagee lawfully may), all amounts due from
underwriters under the Insurances of the Vessel as payment for losses or as
return of premiums or otherwise, salvage awards and recoveries, in general
average or otherwise, and all other sums due or to become due to Owner relative
to the Vessel or arising from the Vessel, and to make, give and execute in the
name of Owner acquittance, receipts, releases, or other discharges for the same,
whether under seal or otherwise, to take possession of, sell or otherwise
dispose of or manage or employ the Vessel, to execute and deliver charters and a
bill of sale for the Vessel, and to endorse and accept in the name of the Owner
all checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing.

 

(b) The exercise by or on behalf of the Mortgagee of the power granted in this
Section 10 shall not require any Person dealing with the Mortgagee to conduct
any inquiry as to whether any Event of Default has occurred, nor shall such
Person be in any way affected by notice that any Event of Default does not
exist, and the exercise by the Mortgagee of such power shall, with regard to
such Person, be conclusive evidence of the Mortgagee’s right to exercise the
same.

 

11. Arrest by a Third Party. If the Vessel shall be arrested or detained by a
marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty (30) days from the date
of arrest or detention, the Owner hereby authorizes the Mortgagee, in the name
of the Owner, to apply for and receive possession of and to take possession of
the Vessel with all of the rights and powers that the Owner might have, possess
and exercise in any such event. This authorization is irrevocable and coupled
with an interest.

 

12. Jurisdiction. The Mortgagee shall have the right to commence proceedings in
the courts of any country having jurisdiction over the Vessel. In particular,
the Mortgagee shall have the right to arrest and take action against the Vessel
at whatever place the Vessel shall be found lying and for the purpose of any
such action, before the local court or other judicial authority with
jurisdiction over the Vessel. The Owner agrees that for the purpose of
proceedings against the Vessel, any writ, notice, judgment or other legal
process or documents may be served upon the Owner by mail at its address set
forth in Section 18 hereof, and that such service shall be deemed good service
on the Owner for all purposes.

 

12

 

 

13. Invalid Provisions. If any provision or provisions of this Mortgage shall be
declared invalid, void or otherwise inoperative by any present or future court
of competent jurisdiction in any country, the Owner will, without prejudice to
any other right and remedy of the Mortgagee under this Mortgage, execute and
deliver such other and further instruments and do such things as in the opinion
of the Mortgagee or its counsel will be necessary or advisable to carry out the
intent and spirit of this Mortgage. In any event, any such declaration of
partial invalidity shall not affect the validity of any other provision or
provisions of this Mortgage, which shall remain in full force and effect, or the
validity of this Mortgage as a whole.

 

14. Further Assurance. The Owner hereby further undertakes, at its own cost and
expense, to execute, sign, perfect, do and (if required), register every such
further assurance, document, act or thing reasonably necessary or advisable for
the purpose of maintaining or perfecting or exercising the security constituted
by this Mortgage.

 

15. Cumulative Remedies. Each and every power and remedy in this Mortgage
specifically given to the Mortgagee shall be in addition to every other power
and remedy herein specifically given or now or hereafter existing at law, in
equity, in admiralty, or by statute, and each and every power and remedy,
whether specifically in this Mortgage given or otherwise existing, may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Mortgagee, and the exercise or the commencement of the exercise
of any such power or remedy shall not be construed to be a waiver of the right
to exercise at the same time or thereafter any other power or remedy under this
Mortgage.

 

16. Amount of Mortgage. For purposes of recording this Mortgage as required by
Section 302 of the Marshall Islands Maritime Act, the total amount of
obligations secured by this Mortgage is Twenty-Five Million United States
Dollars ($25,000,000) plus interest, fees, costs, expenses and performance of
mortgage covenants. The maturity date of this Mortgage is        , 2024.

 

17. Preferred Status. Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Mortgage
and that, if any provision or portion of this Mortgage shall be construed to
waive its preferred status, then such provision or portion to such extent shall
be void and of no effect.

 

18. Notices. All notices and other communications provided for hereunder shall
be in writing and shall be either personally delivered, or deposited with a
reputable commercial carrier or express delivery service, or with the United
States Postal Service, first class postage prepaid, or by facsimile or email
transmission, confirmed by letter, addressed as follows:

 

  If to the Owner: Overseas Sun Coast LLC     302 Knights Run Avenue     Suite
1200     Tampa, Florida 33602     Attention: Richard Trueblood     Facsimile:
(813) 221-2769

 

13

 

 

  If to the Mortgagee: Pacific Western Bank     30 S. Wacker Drive     35th
Floor     Chicago, Illinois 60606,     Attention: Tanya Zasadzinski    
Facsimile: (312) 577-7914         with a copy to: Baker, Donelson, Bearman,
Caldwell & Berkowitz, PC     100 Light Street     Baltimore, Maryland 21202    
Attention: Patrick K. Cameron, Esq.     Facsimile: (410) 547-0699

 

or to such other address as shall be designated by such party in a written
notice to the other. All such notices and communications shall, when mailed, be
sent by overnight courier or by first class registered mail, postage prepaid,
return receipt requested and be effective three (3) Business Days after being
deposited in the U.S. mails addressed as aforesaid. All such notices and other
communications sent by facsimile or email transmission shall be effective when
sent if on a Business Day at the recipient’s office and not later than 3:00 p.m.
at the recipient’s office, provided that in the case of notices and other
communications sent by facsimile transmission when (i) an appropriate answerback
has been received by the sending party, and (ii) such facsimile is confirmed by
mailing to the receiving party, at its address given above, a copy of such
facsimile transmission postage prepaid by first class mail (air mail, if
international). All other forms of written notice or other communication shall
be effective only upon personal delivery.

 

19. Parties Bound. All the covenants, promises, stipulations and agreements of
the Owner and all the rights and remedies of the Mortgagee contained in this
Mortgage shall bind the Owner, its successors and assigns, and shall inure to
the benefit of the Mortgagee, its successors and assigns, whether or not so
expressed.

 

20. Waiver of Demand, The Owner hereby expressly waives demand and presentment
for payment, notice of nonpayment, protest, notice of protest, notice of
dishonor, bringing of suit, and diligence in taking any action to collect
amounts called for under this Mortgage or the Note and in the handling of
collateral for the Note at any time in connection herewith and therewith.

 

21. Expenses. The Owner shall reimburse the Mortgagee for all reasonable and
documented costs and expenses, which the Mortgagee may from time to time incur,
lay out or expend, together with interest thereon at the Default Rate in
insuring the Vessel, discharging Liens, paying taxes, dues, assessments,
governmental charges, fines and penalties that may be lawfully imposed, making
repairs or in performing any other duty that the Owner is obligated to perform
hereunder, but otherwise fails to perform. The obligation to reimburse the
Mortgagee for such costs and expenses shall be a Secured Indebtedness due from
the Owner, secured by this Mortgage, and shall be payable by the Owner on
demand. The Mortgagee, though privileged so to do, shall be under no obligation
to make any such expenditures, nor shall the making thereof relieve the Owner of
any default in that respect.

 

22. Governing Law. This Mortgage and the rights and obligations of the parties
hereto shall be governed by, and construed in accordance with, the laws of the
Republic of the Marshall Islands.

 

[Signature Page Follows]

 

14

 

 

IN WITNESS WHEREOF, the Owner has executed this Mortgage by its duly authorized
officer effective as of the date first above written.

 

  OVERSEAS SUN COAST LLC                    By:     Name:     Title:  

 

 

 

 

ACKNOWLEDGMENT

 

STATE OF NEW YORK )     )   COUNTY OF NEW YORK )  

 

On this       day of      , 2019, personally came and appeared before me, a
Notary Public in and for the State and County set forth above,     , to me
known, who being by me duly sworn deposes and says that he/she resides at
     that he/she is the      of Overseas Sun Coast LLC, the limited liability
company described in and which executed the foregoing instrument and that he/she
signed his/her name thereto pursuant to the authority given to him/her by the
Board of Managers of said limited liability company.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and year
first above written.

 

      Notary Public     My commission expires:___________________________  

 

 

 

 

Exhibit 1

 

Loan Agreement

 

 

 

 

Exhibit E
Form of Guaranty

 

 

 

 

GUARANTY

 

Dated as of August 7, 2019

 

given by

 

OVERSEAS SHIPHOLDING GROUP, INC.

as Guarantor

 

infavorof

 

PACIFIC WESTERN BANK,

as Lender

 

 

 

 

 

GUARANTY

 

THIS GUARANTY (the “Guaranty”), dated as of August 7, 2019, is executed by
OVERSEAS SHIPHOLDING GROUP, INC., a Delaware corporation (the “Guarantor”), in
favor of PACIFIC WESTERN BANK, a California banking corporation (together with
its participants, successors and assigns, the “Lender”).

 

WHEREAS, Overseas Sun Coast LLC, a Delaware limited liability company (the
“Borrower”), is a wholly-owned indirect subsidiary of the Guarantor; and

 

WHEREAS, concurrently herewith, the Lender and the Borrower have entered into a
Loan and Security Agreement dated as of the date hereof (as the same may be
amended, amended and restated, supplemented, extended, replaced or otherwise
modified from time to time, the “Loan Agreement”), pursuant to which the Lender
has agreed to loan the Borrower up to $25,000,000, the proceeds of which shall
be used to finance in part the Borrower’s purchase of one (1) 50,000 DWT class
product/chemical tanker, Hull No. 2717, being built by Hyundai Mipo Dockyard
Co., Ltd. in Ulsan, Korea (the “Vessel”); and

 

WHEREAS, as inducement to the Lender to enter into the Loan Agreement and to
make such loan available to the Borrower, the Guarantor has agreed to
absolutely, irrevocably and unconditionally guarantee all obligations of the
Borrower to the Lender under the Loan Agreement and other Loan Documents.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and intending to be legally bound hereby, the Guarantor hereby
agrees with the Lender as follows:

 

ARTICLE I.

DEFINED TERMS

 

SECTION 1.01. Definitions. Capitalized terms used herein but not defined shall
have such meanings given such terms in the Loan Agreement.

 

ARTICLE II.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GUARANTOR

 

SECTION 2.01. Representations and Warranties.

 

(a) Organization: Conflicting Agreements: Actions Pending. The Guarantor is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware. The execution, delivery and performance by the
Guarantor of this Guaranty are within its corporate powers and the Guarantor has
taken all corporate and other actions necessary to authorize the execution and
delivery of, and its entry into, this Guaranty. Once executed, this Guaranty
shall constitute the legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles affecting the rights
of creditors generally. The execution, delivery and performance of this Guaranty
do not and will not conflict with, or result in any violation of, or default
under, any provision of the Certificate of incorporation or Bylaws of the
Guarantor or any judgment or order applicable to the Guarantor or, after due
investigation and to the Guarantor’s best knowledge, any statute, law, rule or
regulation applicable to the Guarantor, or result in the creation or imposition
of any lien, encumbrance or security interest on any of its properties or
assets. As of the date hereof, there are no actions, suits, investigations or
proceedings pending or, to the knowledge of the Guarantor, threatened against
the Guarantor by or before any court, arbitrator or administrative or
Governmental Authority that could reasonably be expected to have a Material
Adverse Effect. The financing provided by the Lender to the Borrower shall
result in direct and substantial benefits to the Guarantor.

 

 

 

 

(b) Financial Statements. The December 31, 2018 audited consolidated financial
statements of the Guarantor and its Subsidiaries, copies of which have been
delivered to the Lender (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, (ii) fairly present, in all material respects, the consolidated
financial condition of the Guarantor and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Guarantor and its Subsidiaries
as of the date thereof, including liabilities for taxes, material commitments
and Indebtedness. Since December 31, 2018, there has been no event or
circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect.

 

(c) Taxes. The Guarantor has filed all Federal and state income tax and all
other material tax and informational returns which are required to be filed by
it. The Guarantor has paid all taxes shown on such returns and on all
assessments received, except to the extent that such taxes are (y) not yet
delinquent or (z) being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been established on the
Guarantor’s books in accordance with GAAP.

 

(d) ERISA. No accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to any
Plan (other than a Multiemployer Plan). No liability to the PBGC has been or is
expected by the Guarantor or any ERISA Affiliate to be incurred with respect to
any Plan (other than a Multiemployer Plan) by the Guarantor, any Subsidiary or
any ERISA Affiliate which is or would be materially adverse to the business,
condition (financial or otherwise) or operations of the Guarantor and its
Subsidiaries taken as a whole. Neither the Guarantor, nor any ERISA Affiliate
has incurred or presently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan which is or would reasonably
be expected to have a Material Adverse Effect. The execution and delivery of
this Guaranty will be exempt from, or did not and will not involve any
transaction which is subject to the prohibitions of, section 406 of ERISA and
did not and will not involve any transaction in connection with which a penalty
could be imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. As of the date hereof, the Guarantor is
not and will not be (1) an employee benefit plan subject to Title I of ERISA,
(2) a plan or account subject to Section 4975 of the Code; (3) an entity deemed
to hold “plan assets” of any such plans or accounts for purposes of ERISA or the
Code; or (4) a “governmental plan” within the meaning of ERISA.

 

(e) Consents. Neither the nature of the Guarantor nor any of its businesses or
properties, nor any relationship between the Guarantor and any other Person, nor
any circumstance in connection with the execution and delivery of this Guaranty
and any of the other Loan Documents is such as to require any authorization,
consent, approval, exemption or other action by, notice to or filing with, any
court, administrative or Governmental Authority (other than routine filings
after the date hereof with the Securities and Exchange Commission (“SEC”) and/or
state blue sky authorities) or any other Person in connection with the execution
and delivery of the Guaranty and the other Loan Documents, that has not been
obtained.

 

 

 

 

(f) Possession of Franchises, Licenses, Etc. The Guarantor possesses all
material franchises, certificates, licenses, development and other permits
(including Environmental Permits) and other authorizations from all applicable
Governmental Authorities and regulatory bodies and all material patents,
trademarks, service marks, trade names, copyrights, licenses, easements, rights
of way and other rights (collectively, “Material Rights”), free from burdensome
restriction, that are necessary in the judgment of the Guarantor for the
ownership, maintenance and operation of its business, properties and assets, and
the Guarantor is not in violation of any Material Rights. No event has occurred
which permits, or after notice or lapse of time or both would permit, the
revocation or termination of any such Material Rights.

 

(g) Environmental Matters. The Guarantor and all of its respective properties
and facilities presently comply and, to the knowledge of the Guarantor, have
complied at all times and in all respects with all Environmental Laws, except
where failure to comply could not reasonably be expected to have a Material
Adverse Effect.

 

(h) Employee Relations. The Guarantor is not the subject of (a) any strike, work
slowdown or stoppage, union organizing drive or other similar activity or (b)
any action, suit, investigation or other proceeding involving alleged employment
discrimination, unfair termination, employee safety or similar matters that in
either case could reasonably be expected to have a Material Adverse Effect.

 

(i) Sanctions and Anti-Corruption Laws.

 

(1) Neither the Guarantor nor, to the knowledge of senior management of the
Guarantor, any officer or director of the Guarantor is an individual or entity
that is, or is owned or controlled by any individual or entity that is (i)
currently the subject or target of any Sanctions, (ii) included on OFAC’s List
of Specially Designated Nationals, or any similar list enforced by any other
relevant sanctions authority applicable to the Guarantor and the Borrower or
(iii) located, organized or resident in a Designated Jurisdiction.

 

(2) The Guarantor has not been charged with, or convicted of, bribery or any
other anti-corruption related activity under any law or regulation applicable to
bribery or any other anti-corruption related activity in a U.S. or any non-U.S.
country or jurisdiction, including, but not limited to, the United States
Foreign Corrupt Practices Act of 1977 (“Anti-Corruption Laws”), and the
Guarantor has established and maintained procedures and controls which it
reasonably believes are adequate to promote and achieve compliance by the
Guarantor with all applicable Anti-Corruption Laws.

 

G) Disclosure. Neither this Guaranty nor any other document, certificate or
statement furnished to the Lender by or on behalf of the Guarantor in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, taken as a whole as of the date thereof, not misleading; provided that,
with respect to projected financial information, the Guarantor represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time and information available to it at such time, it
being understood that the actual results may differ materially from such
projections and the Guarantor is under no obligation to update such projections
or underlying information.

 

 

 

 

(k) Title to Properties. The Guarantor has good and marketable title to all its
real properties (other than properties it leases) and has good title to all of
its other properties and assets, including the properties and assets reflected
in the most recent audited balance sheet of the Guarantor furnished to the
Lender (other than properties and assets disposed of in the ordinary course of
business). There is no default, nor any event that, with notice or lapse of time
or both, would constitute such a default under any lease to which the Guarantor
is a lessee, lessor, sublessee or sublessor.

 

(I) Conflicting Agreements and Other Matters. Neither the execution nor delivery
of this Guaranty nor fulfillment nor compliance with the terms and provisions
hereof will conflict with, or result in a breach of, the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or assets of the
Guarantor pursuant to, its certificate of incorporation, bylaws or similar
organization documents, any award of any arbitrator or any agreement,
instrument, order, judgment, decree, and after due diligence investigation and
to the Guarantor’s knowledge, any statute, law, rule or regulation to which the
Guarantor is subject. The Guarantor is not a party to, or otherwise subject to
any provision contained in, any instrument evidencing any of its Indebtedness,
any agreement relating thereto or any other contract or agreement which
restricts or otherwise limits the incurring of the various obligations pursuant
hereto.

 

SECTION 2.02. Covenants. The Guarantor hereby covenants and agrees with the
Lender that so long as any of the Borrower’s Obligations remain outstanding:

 

(a) Financial Statements, Etc. It shall deliver, or cause to be delivered, to
the Lender:

 

(i) as soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Guarantor, the consolidated balance sheet of the
Guarantor and its subsidiaries and the consolidated statement of income and cash
flows of the Guarantor and its subsidiaries as of the end of such fiscal year,
setting forth in each case in comparative form corresponding figures from the
preceding annual audit, audited by independent public accountants of recognized
national standing whose opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit;

 

(ii) as soon as available and in any event within forty-five (45) days after the
end of each quarterly period (other than the last quarterly period) in each
fiscal year, the consolidated balance sheet of the Guarantor and its
subsidiaries and the consolidated statements of income and cash flows of the
Guarantor and its subsidiaries for the period from the beginning of the current
fiscal year to the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in the preceding fiscal
year, all in reasonable detail and certified by the chief financial officer of
the Guarantor, subject only to changes resulting from year-end adjustments;

 

(iii) with the financial statements to be delivered to the Lender pursuant to
subsections (i) and (ii) hereof, a compliance certificate, duly executed by the
chief financial officer of the Guarantor, confirming the Guarantor’s compliance
with the financial covenants set forth in Section 2.02(j); and

 

(iv) such other financial information regarding the Guarantor or any of its
subsidiaries as the Lender may reasonably request.

 

 

 

 

All information required to be delivered pursuant to Sections 2.02(a)(i) and
2.02(a)(ii) shall be deemed to be delivered to the Lender on the date such
information has been posted (and is publicly available) on the Guarantor’s
website on the Internet (which website is located as of the date hereof at
http://www.osg.com) or on the SEC website accessible through
http://www.sec.gov/edgar (or any successor webpage of the SEC thereto).

 

(b) Existence. It shall not dissolve, liquidate or cease or suspend the conduct
of its business or cease to maintain its existence in good standing.

 

(c) Merger, Consolidation and Sale of All or Substantially All Assets. Without
the prior written consent of the Lender (such consent to be at the Lender’s sole
and absolute discretion), it shall not (i) merge into or be merged or
consolidated with any other entity unless the Guarantor is the survivor of such
merger or consolidation, or (ii) sell all or substantially all of its assets.

 

(d) Maintenance of Properties: Insurances. It shall (i) maintain, or cause to be
maintained, in good repair, working order and condition all material properties
used or useful at that time in its business and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof, and
(ii) maintain insurance with reputable and financially sound insurers in such
amounts and against such liabilities and hazards as is customarily maintained by
other companies operating similar businesses. It shall cause the Borrower to
maintain its properties and insurance, in each case in accordance with the terms
of the Loan Documents.

 

(e) Changes. It will not change its form of organization.

 

(f) [Intentionally Omitted].

 

(g) Environmental Laws. It shall keep and maintain its properties and conduct
its operations in compliance with all applicable Environmental Laws except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect. It shall cause the Borrower to maintain its properties and conduct its
operations in compliance with applicable Environmental Laws to the extent
required under the Loan Documents.

 

(h) Inspection of Property. It shall, and shall cause the Borrower to, permit
any employees or designated representatives of the Lender, at the Lender’s
expense (unless there exists a default hereunder or any Event of Default under
the Loan Agreement, and in such case, at the expense of the Guarantor and the
Borrower), upon reasonable prior notice, during normal business hours, and at
such reasonable times and intervals as the Lender may reasonably request, but
not more than once during any fiscal year of the Guarantor or the Borrower
(unless an Event of Default exists), to visit the chief executive office of the
Guarantor or the Borrower or any other properties of the Guarantor or the
Borrower at which its books and financial records are kept, in order to inspect
and examine such books and financial records and to make copies thereof or
extracts therefrom and to discuss their affairs, finances and accounts with
Responsible Officers of the Guarantor, the Borrower and the Guarantor’s
independent certified accountants, all at such reasonable times and as often as
such Person may reasonably request; provided that a principal financial officer
of the Guarantor shall have reasonable prior notice of, and may elect to be
present during, discussions with the Guarantor’s independent public accountants.
The Lender hereby acknowledges that all information obtained by it in connection
with any such inspection or inquiry is subject to the provisions of Section
10.01.

 

(i) Anti-Corruption Policies and Procedures: Sanctions. It shall, and shall
cause the Borrower to, conduct its business in compliance with all applicable
Anti-Corruption Laws and maintain procedures and controls which it reasonably
believes are adequate to promote and achieve compliance by the Guarantor and the
Borrower with all applicable Anti-Corruption Laws.

 

 

 

 

G) Financial Covenants.

 

(i) The Guarantor and its Subsidiaries, on a consolidated basis, shall maintain
at all times a Total Leverage Ratio for the four (4) quarters most recently
ended of not more than the following:

 

5.0 to 1.0 at any time during the fiscal year 2019;

4.25 to 1.0 at any time during the fiscal year 2020;

3.75 to 1.0 at any time during the fiscal year 2021; and

3.25 to 1.0 at any time during all fiscal years thereafter.

 

(ii) The Guarantor and its Subsidiaries, on a consolidated basis, shall maintain
at all times for the four (4) quarters most recently ended a Fixed Charge
Coverage Ratio of not less than 1.2 to 1.00.

 

(k) Most Favored Nations Provision. In the event that the Guarantor shall enter
into any new (or shall modify any existing) agreement, instrument or document
creating, securing or evidencing Indebtedness in excess of $5,000,000 containing
one or more additional financial covenants (including, without limitation,
financial reporting covenant) or additional defaults related thereto not
contained in this Guaranty, or more favorable financial covenants (including,
without limitation, financial reporting covenants) or events of default related
thereto, the terms of this Guaranty shall, without any further action on the
part of the Guarantor or the Lender, be deemed to be amended automatically to
include each such additional financial covenants and additional defaults related
thereto or more favorable financial covenants or events of default related
thereto contained in such agreement, instrument or document; provided, however,
that if subsequent thereto, the parties to any such agreements, instruments or
documents agree to remove, loosen or make less restrictive any such financial
covenants or events of default, then the terms of this Guaranty shall, without
any further action on the part of the Guarantor and the Lender and so long as
such new terms are no less favorable to the Lender than those which exist on the
date hereof, shall be deemed to be similarly amended. In the event that the
lenders under any such agreements, instruments or documents receive any
compensation for such removal, loosening or making less restrictive such
additional financial covenants or events of default, the Lender shall be
entitled to receive compensation (including, without limitation, the payment of
any fees) in equivalent proportion thereto. The Guarantor further covenants to
promptly execute and deliver, at its own cost and expense (including the fees
and expenses of the Lender’s counsel), an amendment to this Guaranty, in form
and substance satisfactory to the Lender, evidencing the amendment of this
Guaranty to include such additional financial covenants and additional events of
default related thereto, or more favorable financial covenants or events of
default related thereto, provided that the execution and delivery of such
amendment shall not be a precondition to the effectiveness of such amendment as
provided for in Section 2.02(j), but shall merely be for the convenience of the
parties hereto.

 

ARTICLE III.

GUARANTY

 

SECTION 3.01. Guaranty of the Borrower’s Obligations. The Guarantor hereby
unconditionally and irrevocably guarantees to the Lender, as primary obligor and
not merely as surety, (A) the due and punctual performance of all obligations
owed by the Borrower to the Lender arising under or pursuant to the Loan
Agreement and other Loan Documents, and (B) the due and punctual payment when
due of all installment payments and other sums due, both now or hereafter
pursuant to the provisions of the Loan Agreement and other Loan Documents,
including, without limitation, any amount for which the Borrower is or may at
any time become liable by reason of any breach of or failure to perform or
observe, or any other non-compliance with, any covenant, condition or agreement
or other obligation to be performed by the Borrower under the Loan Agreement or
other Loan Documents or any falsity of any representation or warranty of the
Borrower in the Loan Agreement or in any other Loan Document (the performance
and payment obligations described in this sentence being the “Obligations”).
Without limiting the generality of the foregoing, the Guarantor’s liability
shall extend to all obligations and payments which constitute part of the
Obligations and would be owed by the Borrower to the Lender under the Loan
Agreement or other Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.

 

 

 

 

SECTION 3.02. Guaranty Absolute. The Guarantor guarantees that the Obligations
will be paid and performed strictly in accordance with the terms of the Loan
Agreement and other Loan Documents, regardless of any law, rule, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Lender, the Guarantor or the Borrower with respect thereto.
The obligations of the Guarantor under this Guaranty are independent of the
Obligations of the Borrower, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or whether the Borrower is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:

 

i. any lack of validity or enforceability of the Loan Agreement or any term
thereof or of any other agreement or instrument relating thereto;

 

ii. any change in the time, manner or place of payment or performance of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from the Loan Agreement or other Loan
Documents;

 

iii. any taking, exchange, release or non-perfection of any collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;

 

iv. any manner of application of collateral (if any), or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Obligations or any other assets of the
Borrower;

 

v. any change, restructuring or termination of the corporate structure or
existence of the Borrower or the Guarantor or any insolvency, bankruptcy,
reorganization or other similar proceedings affecting the Borrower or its assets
or any resulting release or discharge of any of the Obligations;

 

vi. any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor thereof (other than the
defense of payment);

 

vii. any extension, indulgence or renewal with respect to the Obligations or any
other obligation of the Borrower to the Lender under the Loan Agreement or other
Loan Documents;

 

viii. any modification of, or amendment or supplement to, the Loan Agreement or
any other Loan Document;

 

ix. any furnishing or acceptance of any security or any release of any security;
or

 

 

 

 

x. any waiver, compromise, consent or other action or inaction, or any exercise
or non-exercise of any right, remedy or power with respect to the Borrower.

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Lender for any reason, including upon the
insolvency, bankruptcy or reorganization of the Borrower, all as though such
payment had not been made at such time.

 

SECTION 3.03. Waiver: Reinstatement. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty and any requirement that the Lender protect,
secure, perfect or insure any security interest or lien (if any) or any property
subject thereto or exhaust any right or take any action against the Borrower or
any other person or entity or any collateral. This is a guaranty of payment and
performance, not merely of collection. The obligations of the Guarantor
hereunder are absolute, present and continuing obligations which are not
conditional upon the institution of suit against or the exercise of any remedies
against the Borrower, or any attempt to foreclose or realize upon any security
for obligations of the Borrower or the taking of any other action with respect
to the Borrower.

 

This Guaranty and the Guarantor’s obligations hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any of
the Obligations are rescinded or must otherwise be restored or returned by the
Lender, all as though such payment had not been made. The Lender’s good faith
determination as to whether a payment must be restored or returned shall be
binding on the Guarantor.

 

SECTION 3.04. No Waiver: Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. Each remedy herein provided is cumulative and is not exclusive of any
other remedy provided herein or by law.

 

ARTICLE IV.

SUBROGATION

 

SECTION 4.01. Subrogation. If (i) the Guarantor shall make payment to the Lender
of all or any part of the Obligations and (ii) all the Obligations and all other
amounts payable under this Guaranty shall be satisfied or paid in full, the
Lender will, at the Guarantor’s request and at the Guarantor’s sole cost and
expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty of any kind, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor. The Guarantor will not
exercise any rights which it may acquire by way of subrogation under this
Guaranty, by any performance or payment made hereunder or otherwise, until all
the Obligations and all other amounts payable by the Guarantor to the Lender
under this Guaranty shall have been paid in full. If any amount shall be paid to
the Guarantor on account of such subrogation rights at any time prior to the
payment in full of the Obligations and all other amounts payable under this
Guaranty, such amount shall be held in trust for the benefit of the Lender and
shall forthwith be paid to the Lender to be credited and applied towards payment
of the Obligations, whether matured or unmatured, in accordance with the terms
of the Loan Agreement or to be held by the Lender as collateral security for any
Obligations thereafter existing.

 

 

 

 

ARTICLE V.

PAYMENTS

 

SECTION 5.01. Payments. The Guarantor hereby guarantees that all payments
hereunder shall be made in United States Dollars and shall be paid without
regard to any setoff, counterclaim, withholding, deduction or defense that the
Guarantor may have or assert.

 

ARTICLE VI.

DEFAULTS; REMEDIES

 

SECTION 6.01. Events of Default. The following events shall constitute an “Event
of Default” hereunder:

 

(a) Failure to Pay. The Guarantor shall fail to make any payment as and when due
hereunder; or

 

(b) Failure to Perform Certain Obligations. The Guarantor shall fail to comply
with any of the provisions of Sections 2.02(b), 2.02(c), 2.02(e), 3.01, 3.02,
4.01 and 5.01 hereof;

 

(c) Failure to Perform Generally. The Guarantor shall fail to honor any of its
other obligations hereunder (other than as specified in subparagraphs (a) and
(b) above) and such failure shall continue unremedied for thirty (30) days after
written notice from the Lender to the Guarantor; or

 

(d) Default Under Loan Agreement. An “Event of Default” (as defined therein)
shall occur under the Loan Agreement; or

 

(e) Repudiation. There is an anticipatory repudiation of the Guarantor’s
obligations pursuant to this Guaranty; or

 

(f) Misrepresentation. Any certificate, statement, representation, warranty or
audit contained herein or heretofore or hereafter furnished in writing with
respect to this Guaranty by or on behalf of the Guarantor shall prove to be
false in any material respect at the time as of which the facts therein set
forth were stated or certified, or shall omit any substantial contingent or
unliquidated liability or claim against the Guarantor to the extent required to
be reported in accordance with GAAP.

 

SECTION 6.02. Remedies.

 

(a) Remedies Generally. Upon the occurrence of an Event of Default hereunder,
the Lender may, at its option, declare the Guaranty to be in default and do any
one or more of the following, all of which are agreed to by Guarantor:

 

A. demand immediate payment of all amounts outstanding under the Loan Agreement
and the Note; and/or

 

B. sue for and recover all damages and/or other sums otherwise recoverable from
the Guarantor under this Guaranty including, without limitation, all attorneys’
fees and expenses and other costs of collection; and/or

 

C. seek to enforce Guarantor’s obligations hereunder.

 

 

 

 

(b) Rights Cumulative. No right or remedy referred to herein is intended to be
exclusive, but each shall be cumulative, and shall be in addition to any other
remedy referred to above or otherwise available at law or in equity, and may be
exercised concurrently or separately, from time to time.

 

(c) Right Independent of Claims against the Borrower. The Guarantor’s
obligations hereunder are independent of the obligations of the Borrower. A
separate action or actions may be brought and prosecuted against the Guarantor
whether an action is brought against the Borrower or whether the Borrower be
joined in any such action or actions.

 

(d) Attorneys’ Fees. In addition, the Guarantor shall be liable for all
attorneys’ fees and out of pocket costs and expenses incurred by the Lender by
reason of such Event of Default or by the Lender in connection with its exercise
of any of its rights or remedies hereunder.

 

ARTICLE VII.

NOTICES

 

SECTION 7.01. Addresses for Notices. All notices or demands required or
permitted by the terms hereof shall be in writing. Any written notice or demand
shall either be mailed, certified or registered mail (airmail, if
international), return receipt requested with proper first class (airmail, if
international) postage prepaid, or sent in the form of a facsimile, email, or by
overnight delivery service or delivered by hand. Any such notice or demand shall
be deemed to be effective as of the date of hand delivery, or if sent by email
transmission, when confirmed by electronic means or other means during business
hours on a Business Day (as defined in the Loan Agreement), or if confirmed
after business hours on a non-Business Day, on the next Business Day, or if sent
by overnight delivery, express mail or federal express on the next day after
dispatch, or if sent by first class mail with postage prepaid three (3) days
thereafter. Any written notice to the Lender shall be directed to the Lender at
its address set forth in Section 9.02 of the Loan Agreement or to such other
address or telecopy number as it may designate by notice given to the Guarantor.
Any written notice or demand to the Guarantor shall be directed to the Guarantor
at its address set forth below the signature of the Guarantor or to such other
address or telecopy number as it may designate by written notice given to the
Lender.

 

ARTICLE VIII.

MISCELLANEOUS

 

SECTION 8.01. Miscellaneous.

 

(a) Severability. Any provision of this Guaranty which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.

 

(b) Binding effect. This Guaranty shall inure to the benefit of and shall be
binding upon the Lender and the Guarantor and their respective successors and
assigns.

 

(c) Waivers. No waiver by the Lender or the Guarantor of any right or remedy or
any other provision of this Guaranty shall be effective or enforceable unless in
writing signed by the party against whom the waiver is asserted nor, in any
event, shall the same operate as a waiver of any other or future right or remedy
that may accrue to the Lender.

 

 

 

 

(d) Amendment. The terms of this Guaranty shall not be altered, modified,
amended, supplemented or terminated in any manner whatsoever except by written
instrument signed by the party against which such alteration, modification,
amendment, supplement or termination is sought.

 

(e) Assignability. This Guaranty may be assigned, in whole or in part, by the
Lender, its successors or assigns, at any time or from time to time, provided
that this Guaranty may only be assigned (i) to an entity to which the Lender has
also assigned the Loan, and (ii) in accordance with Section 9.13 of the Loan
Agreement. The Guarantor may not assign any of its obligations hereunder.

 

(f) Final Agreement. This Guaranty contains the final and entire agreement
between the Lender and the Guarantor with respect to the guaranty by the
Guarantor of the Borrower’s Obligations to the Lender. There are no separate
oral or written understandings between the Lender and the Guarantor with respect
thereto.

 

(h) Tense: Gender: Captions. As used herein, the plural shall refer to and
include the singular, and the singular, the plural, and the use of any gender
shall include and refer to any other gender. All captions are for the purpose of
convenience only.

 

(i) Counterparts. This Guaranty may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall when taken together constitute but one and the same
instrument.

 

ARTICLE IX.

GOVERNING LAW AND .JURISDICTION

 

SECTION 9.01. Governing Law, Etc.; Waiver of Jury Trial. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES      THEREOF
     (OTHER     THAN     SECTION     5-1401     OF     THE     GENERAL
OBLIGATIONS LAW). THE GUARANTOR (I) IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE.
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK IN
ANY ACTION ARISING OUT OF TIDS GUARANTY, (II) AGREES THAT ALL CLAIMS IN SUCH
ACTION MAY BE DECIDED IN SUCH COURT, (III) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM AND (IV) CONSENT TO THE
SERVICE OF PROCESS BY MAIL. A FINAL JUDGMENT IN ANY SUCH ACTION SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR AFFECT ITS RIGHT TO BRING ANY ACTION IN ANY OTHER COURT. THE GUARANTOR
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE AGREEMENTS, ANY OTHER
DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

 

SECTION 9.02. No Strict Construction. The parties hereto have participated
jointly in the negotiation of this Guaranty. In the event an ambiguity or
question of intent or interpretation arises, this Guaranty shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Guaranty.

 

 

 

 

ARTICLE X.

CONFIDENTIALITY

 

SECTION 10.01. Treatment of Certain Information: Confidentiality. The Lender
agrees to keep confidential all financial statements, reports and other
non-public information provided to it pursuant to this Guaranty or otherwise;
provided that nothing herein shall prevent the Lender from disclosing any such
information (i) to any Affiliates or Subsidiaries of the Lender with a need to
know in connection with the Loan Documents (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such information and instructed to keep such information confidential), (ii) to
any actual or prospective assignee or participant which has been informed of the
confidential nature of such information and has signed and delivered to the
Guarantor a confidentiality and non-disclosure agreement in form and substance
satisfactory to the Guarantor agreeing in writing to treat such information as
confidential in accordance with the terms of the Loan Documents; provided that
no such information shall knowingly be provided by the Lender to any competitor
of the Guarantor or any Affiliate of such competitor, (iii) to the Lender’s
employees, directors, agents, attorneys, accountants, auditors and other
professional advisors or those of any of its Affiliates or Subsidiaries with a
need to know in connection with the Loan Documents (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such information and instructed to keep such information
confidential), (iv) upon the request or demand of any Governmental Authority
after providing notice to the Guarantor of any such request provided that the
giving of such notice is not prohibited by such Governmental Authority or
Applicable Law, (v) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any requirement of law, in
each case after providing notice to the Guarantor of such request, provided that
the giving of such notice is not prohibited by such court or other Governmental
Authority or Applicable Law, (vi) if requested or required to do so in
connection with any litigation or similar proceeding after providing notice to
the Guarantor of any such request provided that the giving of such notice is not
prohibited by order of court or Applicable Law, (vii) that has been publicly
disclosed by the Borrower or the Guarantor, (viii) in connection with the
exercise of any remedy under this Guaranty, (ix) upon request, to bank examiners
(or any other regulatory authority having jurisdiction over the Lender), or (x)
if the disclosure of such information has been authorized by the Guarantor in a
separate writing. The parties agree that none of the information required to be
kept confidential pursuant to this subsection relates to the tax treatment or
tax structure of this transaction as those terms are defined for purposes of
Treasury Regulation Section l.6011-4(c).

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

  OVERSEAS SHIPHOLDING GROUP, INC.         By:       Richard Trueblood     Chief
Financial Officer           302 Knights Run Avenue     Suite 1200     Tampa,
Florida 33602     Email: snorton@osg. com     Facsimile: (813) 221-2769    
Attention: Richard Trueblood     Email: dtrueblood@osg.com           and        
  Attention: Susan Allan     Email: sallan@osg.com

 

 

 

 

Exhibit F
Form of Promissory Note

 

 

 

 

PROMISSORY NOTE

 

$25,000,000 2019

 

FOR VALUE RECEIVED, OVERSEAS SUN COAST LLC, a Delaware limited liability company
(the “Borrower”), HEREBY PROMISES TO PAY to the order of PACIFIC WESTERN BANK, a
California banking corporation (the “Lender”) or its registered assigns, in
lawful money of the United States of America and in immediately available funds,
the principal sum of TWENTY-FIVE MILLION UNITED STATES DOLLARS ($25,000,000)
(hereinafter, the “Principal Sum”), or so much thereof as shall have been
advanced by the Lender to the Borrower pursuant to that certain Loan and
Security Agreement dated as of August 7, 2019 between them (as the same may be
amended, amended and restated, supplemented, extended, replaced or otherwise
modified from time to time, the “Loan Agreement”) and shall not have been
previously repaid, together with interest on the Principal Sum outstanding from
time to time at the rate or rates hereinafter described, all upon the terms and
conditions hereinafter set forth.

 

1. Defined Terms. Capitalized terms used herein and not defined shall have the
meanings given to such terms in the Loan Agreement.

 

2. Repayment. Principal and interest on this Note shall be payable as follows:

 

(i) commencing on      2019, and continuing on the same day of each month
thereafter, the Borrower shall make consecutive monthly payments of principal
and interest, each in the amount set forth in Schedule 1 hereto; and

 

(ii) unless sooner paid, the entire unpaid balance of the Principal Sum,
together with all accrued but unpaid interest then due thereon and all other
sums due in connection herewith, shall be due and payable in full on      20_
(the “Maturity Date”).

 

3. Interest Rate. Except for any period during which an Event of Default shall
have occurred and be continuing, the Borrower shall pay interest on the unpaid
balance of the Principal Sum until maturity (whether by acceleration, extension
or otherwise) at a rate at all times equal to           percent (         %) per
annum.

 

Upon the occurrence and during the continuance of an Event of Default, the
unpaid balance of the Principal Sum shall bear interest at the Default Rate.

 

Interest shall be computed on the basis of a 360-day year and the actual number
of days elapsed.

 

4. Prepayments. This Note may be prepaid only in accordance with the terms of
the Loan Agreement.

 

5. Manner of Making Payments. Unless otherwise instructed by the Lender, all
payments of principal and interest due hereunder shall be made in accordance
with the provisions of the Loan Agreement and such payments shall be effective
only upon receipt. All payments shall be made in U.S. Dollars, in immediately
available funds, which shall be the exclusive currency for payment of the
obligations hereunder, free of any restrictions or deductions whatsoever for
present or future taxes, charges, assessments, withholdings or costs, the
payment of which shall be the sole responsibility of the Borrower.

 

 

 

 

6. Loan Agreement and Other Loan Documents. This Note is the “Note” referred to
in the Loan Agreement. The Lender is entitled to all of the benefits of the Loan
Agreement and the other Loan Documents.

 

7. Defaults. In the event (i) the Borrower fails to pay any installment of
principal and interest when due hereunder or fails to pay, within five (5) days
after the due date thereof, any other amounts payable hereunder or under the
Loan Agreement, including all indemnities, costs, fees and other expenses, or
(ii) there occurs any other Event of Default (as defined in the Loan Agreement),
then the Lender may, by notice to the Borrower, declare the outstanding
Principal Sum, all accrued but unpaid interest then due thereon, the Prepayment
Fee, if any, and all other amounts payable hereunder to be forthwith due and
payable, whereupon all such sums shall become immediately due and payable in
full without further demand, notice, presentment or protest, all of which are
hereby waived by the Borrower; provided, however, that in the event of the entry
of an order for relief with respect to the Borrower under the Bankruptcy Code or
under any similar Federal or state statute or regulation, this Note, all accrued
interest hereon, the Prepayment Fee, if any, and all other amounts due hereunder
and under the Loan Agreement shall automatically become due and payable in full,
in each instance without having given the Borrower any notice whatsoever. Until
paid in full, all such sums shall bear interest at the Default Rate. In
addition, the Borrower shall be liable to the Lender for all costs of collection
including, without limitation, all court costs and reasonable and documented
attorney’s fees and expenses.

 

8. Waiver of Presentment, Etc. The Borrower hereby waives presentment for
payment, demand, notice of demand, notice of non-payment or dishonor, protest
and notice of protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of this
Note.

 

9. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER
AND THE LENDER MAY BE PARTIES ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS
NOTE AND SUCH WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST
ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO
ARE NOT PARTIES TO THIS NOTE. THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY THE BORROWER AND THE BORROWER HEREBY ACKNOWLEDGES THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE
BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF
THIS NOTE AND IN THE MAKING OF THIS WAIVER BY LEGAL COUNSEL, SELECTED OF ITS OWN
FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH ITS
COUNSEL.

 

10. Remedies. The remedies of the Lender as provided herein and in the Loan
Agreement shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of the Lender, and may be
exercised as often as occasion therefor shall occur; and the failure to exercise
any such right or remedy shall in no event be construed as a waiver or release
thereof.

 

11. GOVERNING LAW. THE PARTIES HEREBY AGREE THAT THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS RULES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

2

 

 

12. Submission to Jurisdiction. The Borrower hereby irrevocably submits itself
to the non- exclusive jurisdiction of the appropriate Federal and state courts
located in the State of New York for the purposes of any suit, action or other
proceeding arising out of this Note or with respect to the subject matter
hereof, and, to the extent permitted by applicable law, hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding any claim that it is not personally subject to the
jurisdiction of the above-named courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Note or the subject matter hereof may not
be enforced in or by such court.

 

13. Partial Invalidity. In the event any one or more of the provisions of this
Note shall for any reason be held to be invalid, illegal or unenforceable, in
whole or in part or in any respect, or in the event that any one or more of the
provisions of this Note operates or would prospectively operate to invalidate
this Note, then and in any of those events, such provision or provisions only
shall be deemed null and void and shall not affect any other provision of this
Note and the remaining provisions of this Note shall remain operative and in
full force and effect and shall in no way be effected, prejudiced or disturbed
thereby.

 

14. Notices. Unless otherwise specifically provided herein, all notices
(excluding billings and other communications in the ordinary course of business)
required or permitted by the terms hereof shall be given in the manner and with
the effect provided for in the Loan Agreement.

 

15. Conflicts. In the event of any conflict between the provisions of this Note
and those of the Loan Agreement, the terms of the Loan Agreement shall control.

 

[Signature Page Follows]

 

3

 

 

IN WI1NESS WHEREOF, the Borrower has caused this Note to be duly executed by a
duly au theorized officer as of the date first written above.

 

WI1NESS: OVERSEAS SUN COAST LLC                 By:     Name:     Title:  

 

 

 

 

Appendix A
Form of Drawdown Notice

 

 

 

 

        , 2019

 

Pacific Western Bank
30 S. Wacker Drive
35th Floor
Chicago, Illinois 60606
Attn: Tanya Zasadzinski

 

Gentlemen:

 

DRAWDOWN NOTICE

 

We refer to that certain Loan and Security Agreement dated as of August_, 2019
(the “Loan Agreement”) entered into between yourselves and ourselves, pursuant
to which you have agreed to lend to us up to $25,000,000. Capitalized terms used
herein and defined in the Loan Agreement shall have the meanings given to such
terms in the Loan Agreement.

 

We hereby request that you lend to us $25,000,000 on       , 2019 and disburse
the proceeds thereof as follows:

 

  a. $           to you in payment of the commitment fee due to you;         b.
$           to your counsel Baker Donelson, by wire transfer as follows, in
payment of their fees and expenses:           Bank: First Tennessee Bank    
BANo.: 084000026     Beneficiary: Baker, Donelson, Bearman, Caldwell & Berkowitz
    Account No.: 00-9760288     Swift Code: FTBMUS 44     Reference: Overseas
Sun Coast           C. $           to          by wire transfer as follows:    
        Bank Name: _______________________     ABANo.: _______________________  
  Account Name: _______________________     Account No.: _______________________
    Swift Code: _______________________

 

We hereby confirm that:

 

  a. the representations and warranties made by us in Article VI of the Loan
Agreement are true and accurate on the date hereof as if made on such date;    
    b. the covenants contained in Article VII of the Loan Agreement have at all
times been complied with; and         c. no Event of Default (or event which,
with the giving of notice and/or lapse of time or any other applicable
condition, might constitute an Event of Default) has occurred and is continuing
or would result from the proposed borrowing.

 

[Signature Page Follows}

 

 

 

 

The undersigned has executed this Drawdown Notice as of the    day of
      ,2019.

 

  OVERSEAS SUN COAST LLC                  By:     Name:     Title: