Document:

Exhibit 10.7.3

 

Originally dated 18 August 2008

(as amended and supplemented by (i) a first supplemental agreement dated 23 February 2009, (ii) a second supplemental agreement dated 3 April 2009, (iii) a side letter dated 2 July 2009, (iv) a third supplemental agreement dated 25 November 2009, (v) a fourth supplemental agreement dated 14 October 2011, (vi) a fifth supplemental agreement dated 28 February 2013 and (vii) a sixth supplemental agreement dated 16 October 2013, as assigned pursuant to a loan assignment dated 31 March 2014, as amended and restated pursuant to an amending a restating agreement dated 31 March 2014,  as further assigned pursuant to the Loan Assignment dated [·] and as further amended and restated by the Amending and Restating Agreement dated  [·] 2014)

 

 

LICHTENSTEIN SHIPPING COMPANY LIMITED

as Borrower

 

 

and

 

 

CREDIT SUISSE AG

as Lender

 

 

LOAN AGREEMENT

 

relating to
 a term loan facility of up to US$11,300,000

 

 

 

Index

 

	
Clause
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1
    	
Interpretation
    	
 
    	
1
    
	
2
    	
Facility
    	
 
    	
16
    
	
3
    	
Drawdown
    	
 
    	
17
    
	
4
    	
Interest
    	
 
    	
17
    
	
5
    	
Interest   Periods
    	
 
    	
19
    
	
6
    	
Default   Interest
    	
 
    	
20
    
	
7
    	
Repayment   and Prepayment
    	
 
    	
21
    
	
8
    	
[Conditions   Precedent]
    	
 
    	
23
    
	
9
    	
Representations   and Warranties
    	
 
    	
23
    
	
10
    	
General   Undertakings
    	
 
    	
25
    
	
11
    	
Corporate   Undertakings
    	
 
    	
29
    
	
12
    	
Insurance
    	
 
    	
31
    
	
13
    	
Ship   Covenants
    	
 
    	
35
    
	
14
    	
Security   Cover
    	
 
    	
39
    
	
15
    	
Payments   and Calculations
    	
 
    	
41
    
	
16
    	
Application   of Receipts
    	
 
    	
42
    
	
17
    	
Application   of Earnings; swap payments
    	
 
    	
43
    
	
18
    	
Events   of Default
    	
 
    	
43
    
	
19
    	
Fees   and Expenses
    	
 
    	
48
    
	
20
    	
Indemnities
    	
 
    	
49
    
	
21
    	
No   Set-Off or Tax Deduction
    	
 
    	
51
    
	
22
    	
Illegality,   etc.
    	
 
    	
53
    
	
23
    	
Increased   Costs
    	
 
    	
54
    
	
24
    	
Set-Off
    	
 
    	
55
    
	
25
    	
Transfers   and Changes in Lending Offices
    	
 
    	
56
    
	
26
    	
Variations   and Waivers
    	
 
    	
58
    
	
27
    	
Notices
    	
 
    	
58
    
	
28
    	
Supplemental
    	
 
    	
60
    
	
29
    	
Confidentiality
    	
 
    	
61
    
	
30
    	
Law   and Jurisdiction
    	
 
    	
64
    
	
Execution Page
    	
 
    	
66
    

 

 

LOAN AGREEMENT originally dated 18 August 2008 as amended and supplemented by (i) a first supplemental agreement dated 23 February 2009, (ii) a second supplemental agreement dated 3 April 2009, (iii) a side letter dated 2 July 2009, (iv) a third supplemental agreement dated 25 November 2009, (v) a fourth supplemental agreement dated 14 October 2011, (vi) a fifth supplemental agreement dated 28 February 2013 and (vii) a sixth supplemental agreement dated 16 October 2013, as assigned pursuant to a loan assignment dated 31 March 2014 and as amended and restated pursuant to an amending a restating agreement dated 31 March 2014, as further assigned pursuant to the Loan Assignment dated [·] and as further amended and restated by the Amending and Restating Agreement dated  [·] 2014

 

BETWEEN

 

(1)                                 LICHTENSTEIN SHIPPING COMPANY LIMITED, a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia, as Borrower; and

 

(2)                                 CREDIT SUISSE AG, having its registered office at Paradeplatz 8, 8001 Zurich, Switzerland and acting through its office at St. Alban-Graben 1-3, 4002 Basel, Switzerland, as  Lender.

 

BACKGROUND

 

(A)                               The Lender has made available to the Borrower a term loan facility of up to $11,300,000 in two Advances in the amounts referred to below for the purpose of part-financing the acquisition cost of the Ship:

 

(a)                                 Advance A in an amount equal to the lesser of (i) an amount not exceeding 35 per cent. of the Initial Market Value of the Ship and (ii) $10,000,000; and

 

(b)                                 Advance B in an amount equal to the lesser of (i) an amount not exceeding 5 per cent. of the Initial Market Value of the Ship, (ii) an amount, which when aggregated with the amount drawn down under Advance A, does not exceed 40 per cent. of the Initial Market Value of the Ship and (iii) $1,300,000.

 

(B)                               The Lender may, in its absolute discretion, agree to enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower’s exposure under this Agreement to interest rate fluctuations.

 

IT IS AGREED as follows:

 

INTERPRETATION

 

Definitions

 

Subject to Clause 1.5, in this Agreement:

 

“Account Pledge”  means a deed creating security in respect of the Earnings Account in the Agreed Form;

 

“Advance”  means the principal amount of each borrowing by the Borrower under this Agreement;

 

“Advance A” means an amount equal to the lesser of (i) an amount not exceeding 35 per cent. of the Initial Market Value of the Ship and (ii) $10,000,000, made available to the Borrower pursuant to the terms of this Agreement;

 

“Advance B” means an amount equal to the lesser of (i) an amount not exceeding 5 per cent. of the Initial Market Value of the Ship and (ii) $1,300,000, made available to the Borrower pursuant to the terms of this Agreement;

 

 

“Agreed Form”  means, in relation to any document, that document in the form approved in writing by the Lender or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document;

 

“Amending and Restating Loan Agreement” means the amending and restating agreement dated on the same date hereof, made between (inter alios) the Borrower and the Lender;

 

“Approved Broker” means, as at the date of this Agreement, any of Arrow Valuations Ltd United Kingdom, Braemar Seascope Ltd., Galbraiths Ltd., Lorentzen & Stemoco A.S., Clarkson Plc, Fearnleys AS, Simpson, Spence & Young and RS Platou or such other first-class independent sale and purchase shipbroker as may be acceptable to the Lender from time to time and, in the plural, means any or all of them;

 

“Approved Flag” means the flag of the Marshall Islands, Liberia, Panama or Malta or such other flag as the Lender may approve as the flag under which the Ship may  be registered from time to time;

 

“Approved Flag State” means the Republic of Panama any other country under which the Lender may approve that the Ship may be registered from time to time;

 

“Approved Manager”  means the Existing Charterer, Empire Navigation Inc., a corporation incorporated in the Republic of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 and its representative office at  88 Voulagmenis Avenue, Elliniko 167 77, Greece or any other company which the Lender reasonably approves from time to time as the technical and/or commercial manager of the Ship (such approval not to be unreasonably withheld or delayed);

 

“Approved Manager’s Undertaking” means the confirmation dated 16 October 2013 and made between Alpha Bank A.E. and the Approved Manager as assigned to the Original Lender and amended and restated on 31 March 2014, as further amended and restated in the form attached to the Amending and Restating Agreement as schedule [·] and as from time to time further amended or supplemented, or any other  letter of undertaking executed or to be executed by the Approved Manager in favour of the Lender in the Agreed Form agreeing certain matters in relation to the Approved Manager serving as the manager of the Ship and subordinating the rights of the Approved Manager against the Ship and the Borrower to the rights of the Lender under the Finance Documents;

 

“Bareboat Charter Assignment” means the tripartite agreement dated [3 August 2009] and made between the Borrower, the Existing Charterer and the Lender as from time to time further amended or supplemented;

 

“Borrower” means Lichtenstein Shipping Company Limited, a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Britto Shipping” means Britto Shipping Company Limited, a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Business Day”  means a day on which banks are open in London, Zurich, Basel and Athens, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

 

“Charter Assignment” means the specific assignment of any charterparty executed or to be executed hereunder by the Borrower in favour of the lender in the Agreed Form;

 

“Code” means the US Internal Revenue Code of 1986;

 

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“Collateral Loan Agreements” means, together:

 

(a)                                 the loan agreement dated [·] made between (i) the companies listed in schedule 1 thereof as joint and several borrowers, (ii) the banks and financial institutions listed in schedule 2 thereof as lenders, (iii) the banks and financial institutions listed in schedule 3 as swap banks, (iv) Credit Suisse as agent and security trustee in respect of a loan facility of up to $166,100,000, as from time to time further amended or supplemented;

 

(b)                                 the loan agreement originally dated 1 October 2008, as amended by the side letters dated 19 January 2009, 9 February 2009 and 26 March 2009, an addendum no. 1 thereto dated 11 May 2009 and the side letters dated 16 July 2010, 25 May 2011 and 26 July 2012, as amended and restated on 16 October 2013,made between (i) Warhol Shipping, Indiana R Shipping Company Limited and Britto  Shipping as joint and several borrowers , (ii) the banks and financial institutions listed in schedule 1 thereof as lenders and (iii) HSH Nordbank AG as mandated lead arranger, underwriter, administrative agent and security trustee [as assigned in favour of Credit Suisse AG pursuant to an assignment and assumption agreement and as amended and restated on or about the same hereof pursuant to an amending and restating agreement made or to be made between (inter alios) (i) Britto Shipping as borrower, (ii) the banks and financial institutions listed in schedule 1 thereof as lenders, (iii) the banks and financial institutions listed in schedule 2 as swap banks, (iv) Credit Suisse as agent and security trustee], in respect of a loan facility of up to $11,300,000, as from time to time further amended or supplemented; and

 

(c)                                  the loan agreement dated 6 October 2008 as amended and supplemented by three side letters dated 15 January 2009, 13 March 2009 and 31 July 2009, as amended and restated pursuant to an amending and restating agreement dated 16 October 2013, made between (i) Hongbo Shipping as borrower, (ii) the banks and financial institutions named therein as lenders and (iii) DVB Bank America N.V. as agent and security trustee [as the same has been or will be amended and restated pursuant to an amending and restating agreement made or to be made between (inter alios) (i) the banks and financial institutions listed in schedule 1 thereof as lenders, (iii) the banks and financial institutions listed in schedule 2 thereof as swap banks, (iv) Credit Suisse AG as agent and (v) Credit Suisse AG as security trustee], and as from time to time further amended or supplemented,

 

and in the singular means any one of them;

 

“Confidential Information” means all information received by the Lender under Clauses (d) and 10.18 of this Agreement and clause 11.3(c) of the Corporate Guarantee of which the Lender becomes aware in its capacity as, or for the purpose of becoming, Lender;

 

“Confidentiality Undertaking” means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrower and the Lender;

 

“Confirmation” and “Early Termination Date”, in relation to any continuing Transaction, have the meanings given in the relevant Master Agreement;

 

“Contractual Currency”  has the meaning given in Clause 20.4;

 

“Corporate Guarantee”  means a guarantee to be granted by the Corporate Guarantor in the Agreed Form;

 

“Corporate Guarantor” means Product Shipping Limited (formerly known as Products Shipping Limited) , a corporation incorporated in the Marshall Islands  whose registered

 

3

 

office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands  (and includes its respective successors);

 

“Dollars” and “$”  means the lawful currency for the time being of the United States of America;

 

“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Lender  and which arise out of the use or operation of the Ship, including (but not limited to):

 

(a)                                 except to the extent that they fall within paragraph (b);

 

(i)                                     all freight, hire and passage moneys;

 

(ii)                                  compensation payable to the Borrower or the Lender in the event of requisition of the Ship for hire;

 

(iii)                               remuneration for salvage and towage services;

 

(iv)                              demurrage and detention moneys;

 

(v)                                 contributions of any nature whatsoever in respect of general average;

 

(vi)                              damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship; and

 

(vii)                           all moneys which are at any time payable under any Insurances in respect of loss of hire; and

 

(b)                                 if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

 

“Earnings Account”  means an account in the name of the Borrower with the Lender in Basel designated “[name of Owner] - Earnings Account”, or any other account (with that or another office of the Lender) which is designated by the Lender as the Earnings Account in relation to the Ship for the purposes of this Agreement;

 

“Effective Date” has the meaning given to it in the Amending and Restating Agreement;

 

“Environmental Claim”  means:

 

(a)                                 any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

 

(b)                                 any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

 

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

 

“Environmental Incident”  means:

 

(a)                                 any release of Environmentally Sensitive Material from the Ship; or

 

4

 

(b)                                 any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

 

(c)                                  any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship  is actually liable to be arrested and/or where the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

 

“Environmental Law”  means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

 

“Environmentally Sensitive Material”  means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

 

“Event of Default”  means any of the events or circumstances described in Clause 0;

 

Existing Charter” means the bareboat charterparty in respect of the Ship, dated 8 April 2008 and made between the Existing Charterer and the Borrower as nominee of Top Ships Inc. pursuant to the addendum no. 1 thereto dated 20 August 2008, as further amended by an addendum no. 2 thereto dated 21 November 2008 for an initial term of 10 years at a daily rate of $14,550;

 

“Existing Charterer” means Daelim Corporation of 10F KCC I Bldg, 45 4ga Namdaemunre, Jung gu Seoul, Korea;

 

“FATCA” means:

 

(a)                                 sections 1471 to 1474 of the Code or any associated regulations;

 

(b)                                 any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

 

(c)                                  any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

 

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA;

 

“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction;

 

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Lender is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

 

“Finance Documents”  means:

 

(a)                                 this Agreement;

 

5

 

(b)                                 the Amending and Restating Agreement;

 

(c)                                  the Loan Assignment;

 

(d)                                 the Master Agreement;

 

(e)                                  the Master Agreement Assignments;

 

(f)                                   the Corporate Guarantee;

 

(g)                                  the Guarantees;

 

(h)                                 the General Assignment;

 

(i)                                     the Mortgage;

 

(j)                                    the Account Pledge;

 

(k)                                 the Bareboat Charter Assignment;

 

(l)                                     any Charter Assignment;

 

(m)                             the Share Security Deed;

 

(n)                                 the Approved Manager’s Undertaking; and

 

(o)                                 any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the other documents referred to in this definition;

 

“Financial Indebtedness”  means, in relation to a person (the “debtor”), a liability of the debtor:

 

(a)                                 for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

 

(b)                                 under any loan stock, bond, note or other security issued by the debtor;

 

(c)                                  under any acceptance credit, guarantee or letter of credit facility or dematerialised equivalent made available to the debtor;

 

(d)                                 under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

 

(e)                                  under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

 

(f)                                   under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person;

 

“Final Maturity Date” means the date falling on the earlier of (i) the fifth anniversary of the Effective Date and (ii) 30 November 2019;

 

6

 

“FR8 Venture” means FR8 Venture Shipping Corporation, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (“FR8 Venture”);

 

“GAAP”  means generally accepted accounting principles in the United States of America;

 

“General Assignment” means a first priority general assignment of the Earnings, the Insurances and any Requisition Compensation dated 23 February 2009 and executed by the Borrower in favour of Alpha Bank A.E. as assigned by Alpha Bank A.E to the Original Lender and as amended and restated pursuant to an amending and restating agreement dated 31 March 2014, as assigned in favour of the Lender pursuant to the Loan Assignment and further amended and restated in the form attached to the Amending and Restating Agreement as schedule [ ·] and  as from time to time further amended or supplemented;

 

“Guarantee” means a guarantee to be granted by each Guarantor in the Agreed Form and, in the plural, means any or all of them;

 

“Guarantor” means each of FR8 Venture, Britto Shipping, Hongbo Shipping, LR Mimosa, MR Aquarius, MR Arcturus, MR Aries, MR Canopus, MR Kentaurus, MR Leo, MR Sirius, Pasha Finance and Warhol Shipping and, in the plural, means any or all of them;

 

“Hongbo Shipping” means Hongbo Shipping Company Limited, a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;

 

“Initial Market Value” means the Market Value of the Ship determined no later than 10 days prior to the Effective Date in accordance with the valuations to be provided to the Lender pursuant to  paragraph [(d)(xvii)] of clause 4.2 of the Amending and Restating Agreement;

 

“Insurances”  means:

 

(a)                                 all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, effected in respect of that, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and

 

(b)                                 all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;

 

“Interest Period”  means a period determined in accordance with Clause 6;

 

“IPO” means an initial public offering of the share capital of the Corporate Guarantor on NASDAQ or NYSE (or any other stock exchange in the United States of America which is approved by the Lender);

 

“ISM Code”  means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

 

“ISPS Code”  means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;

 

“ISSC”  means a valid and current International Ship Security Certificate issued under the ISPS Code;

 

7

 

“Legal Reservations” means:

 

(a)                                 the limitations on enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors; and

 

(b)                                 any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered as a condition precedent under this Agreement;

 

“Lender”  means Credit Suisse AG of Zurich Switzerland, acting through its office at St. Alban-Graben 1-3, PO Box CH-4002, Basle, Switzerland (or through another branch notified to the Borrower under Clause 25.6) or its direct or indirect successor or assign;

 

“LIBOR”  means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:

 

(a)                                 the applicable Screen Rate; or

 

(b)                                 if no Screen Rate is available for that period, the rate per annum determined by the Lender to be the arithmetic mean (rounded upwards to 4 decimal places) of the rates, as supplied to the Lender at its request, quoted by each Reference Bank to leading banks in the London Interbank Market;

 

as of 11 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period, provided that if such rate is below zero, LIBOR shall be deemed to be zero;

 

“Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984;

 

“LMA” means the Loan Market Association;

 

“Loan”  means at any time prior to the Effective Date, the amount of $11,300,000 and at all times thereafter the principal amount for the time being outstanding under this Agreement;

 

“Loan Assignment” means the assignment of all the rights of the Original Lender to, in or in connection with the Original Loan Agreement and certain Security Documents (as therein defined) [dated on the same hereof] and made between the Original Lender, the Lender and the Borrower;

 

“LR Mimosa” means LR Mimosa Limited, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Major Casualty”  means any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $750,000 or the equivalent in any other currency;

 

“Mandatory Cost” means in relation to any period a percentage calculated for such period at an annual rate equal to the cost to the Lender of complying with any regulation (as defined in Clause 1.2);

 

“Margin”  means, during any Margin Period, when the Security Cover Percentage on relevant Margin Review Date is:

 

(a)                                 equal to or more than 250 per cent., 2.75 per cent. per annum;

 

(b)                                 more than 167 per cent. and less than 250 per cent., 2.90 per cent. per annum; and

 

8

 

(c)                                  equal to or less 167 per cent., 3.25 per cent. per annum;

 

“Margin Period” means each six-month period commencing on a Margin Review Date;

 

“Margin Review Date”  means each date on which the Margin is determined in accordance with Clause 0 with the first such date to fall on the Effective Date and each subsequent date to fall at 6-monthly intervals thereafter;

 

“Market Value” means the market value thereof determined in accordance with Clause 0;

 

“Master Agreement” means a master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) and collateral schedule thereto in the Agreed Form made between the Borrower and the Lender and includes all Transactions from time to time entered into and Confirmations from time to time exchanged thereunder;

 

“Master Agreement Assignment”  means, in relation to the Master Agreement, the assignment of the Master Agreement in favour of the Lender executed or to be executed by the Borrower, in the Agreed Form;

 

“Mortgage”  means the first preferred Panamanian Mortgage in respect of the Ship dated [·] and executed by the Lender in favour of Alpha Bank A.E., as assigned in favour of the Original Lender and amended by a first addendum thereto dated [·], as further  assigned in favour of the Lender by the Mortgage Assignment, as further amended and supplemented pursuant to the terms of the Mortgage Addendum and as from time to time further amended or supplemented;

 

“Mortgage Addendum” has the meaning given to it in the Amending and Restating Agreement;

 

“Mortgage Assignment” has the meaning given to it in the Amending and Restating Agreement;

 

“MR Aquarius” means MR Aquarius Limited, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“MR Arcturus”  means MR Arcturus Limited (formerly known as FR8 ENDEAVOUR SHIPPING CORPORATION), a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“MR Aries” means MR Aries Limited, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“MR Canopus” means MR Canopus Limited, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“MR Kentaurus” means MR Kentaurus Limited (formerly known as Stena FR8 2 Shipping Corporation), a corporation incorporated in the Marshall Islands and whose registered OFFICE is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“MR Leo” means MR Leo Limited, a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

9

 

“MR Sirius” means MR Sirius Limited (formerly known as Stena FR8 1 Shipping Corporation), a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Negotiation Period”  has the meaning given in Clause 0;

 

“Obligor” means the Borrower or a Security Party;

 

“Original Loan Agreement” means the loan agreement originally dated 18 August 2008, as amended and supplemented by (i) a first supplemental agreement dated 23 February 2009, (ii) a second supplemental agreement dated 3 April 2009, (iii) a side letter dated 2 July 2009, (iv) a third supplemental agreement dated 25 November 2009, (v) a fourth supplemental agreement dated 14 October 2011, (vi) a fifth supplemental agreement dated 28 February 2013 and (vii) a sixth supplemental agreement dated 16 October 2013, made between the Borrower and Alpha Bank A.E., as assigned to the Original Lender pursuant to a loan assignment dated 31 March 2014 and as amended and restated pursuant to an amending a restating agreement dated 31 March 2014;

 

“Original Lender” means DVB Bank SE acting through its office at Platz der Republik 6, D-60325, Frankfurt Am Main, Germany

 

“Party”  means a party to this Agreement;

 

“Pasha Finance” means Pasha Finance Inc., a corporation incorporated in the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Payment Currency”  has the meaning given in Clause 0;

 

“Permitted Security Interests”  means:

 

(a)                                 Security Interests created by the Finance Documents;

 

(b)                                 Security Interests created by the Finance Documents (as defined in each Collateral Loan Agreement);

 

(c)                                  liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

 

(d)                                 liens for salvage;

 

(e)                                  liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

 

(f)                                   liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the trading, chartering, operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause (h);

 

(g)                                  any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

 

(h)                                 Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

 

10

 

“Pertinent Document”  means:

 

(a)                                 any Finance Document;

 

(b)                                 any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;

 

(c)                                  any other document contemplated by or referred to in any Finance Document; and

 

(d)                                 any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

 

“Pertinent Jurisdiction”,  in relation to a company, means:

 

(a)                                 England and Wales;

 

(b)                                 the country under the laws of which the company is incorporated or formed;

 

(c)                                  a country in which the company has the centre of its main interests or which the company’s central management and control is or has recently been exercised;

 

(d)                                 a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

 

(e)                                  a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

 

(f)                                   a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as a main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

 

“Pertinent Matter”  means:

 

(a)                                 any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

 

(b)                                 any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

 

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

 

“Potential Event of Default”  means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender (acting reasonably) and/or the satisfaction of any other condition, would constitute an Event of Default;

 

“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Lender in accordance with market practice in the London Interbank Market (and if quotations would

 

11

 

normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);

 

“Reference Bank”  means the banks as agreed and designated as such by the Lender from time to time;

 

“Repayment Date” means a date on which a repayment is required to be made under Clause 8.2;

 

“Relevant Person”  has the meaning given in Clause 18.7;

 

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

 

“Screen Rate”  means the London interbank offered rate administered by ICE Benchmark Administration Limited (or if ICE Benchmark Administration Limited ceases to act in the role of administering and publishing LIBOR rates, the equivalent rate published by a subsequently appointed administrator for LIBOR) for Dollars for the relevant period displayed on page LIBOR01 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters.  If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower;

 

“Secured Liabilities”  means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or the Master Agreement or any judgment relating to any Finance Document or the Master Agreement; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

 

“Security Cover Percentage”  means, at any time, the percentage which the aggregate of the amounts referred to in paragraphs (a) and (b) of Clause 15.1 represent of the aggregate of the Loan and the Swap Exposure;

 

“Security Interest”  means:

 

(a)                                 a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

 

(b)                                 the security rights of a plaintiff under an action in rem; and

 

(c)                                  any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

 

“Security Party”  means the Corporate Guarantor, the Guarantors, the Shareholder, any Approved Manager and any other person (except the Lender, the Existing Charterer and the Original Lender) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within definition of “Finance Documents”;

 

“Security Period”  means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrower and the Security Parties that:

 

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(a)                                 all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents and the Master Agreement have been paid;

 

(b)                                 no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or the Master Agreement;

 

(c)                                  neither the Borrower nor any Security Party has any future or contingent liability under Clauses 20 or 22 or any other provision of this Agreement or another Finance Document or the Master Agreement; and

 

(d)                                 the Lender does not consider that there is a significant risk that any payment or transaction under a Finance Document or the Master Agreement would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or the Master Agreement or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

 

“Share Security Deed” means the deed dated 31 March 2014, as amended and restated in the form attached to the Amending and Restating Agreement as schedule [·], made between the Shareholder and the Lender, as from time to time further amended or supplemented;

 

“Shareholder” means AMCI Products Limited, corporation incorporated in the Marshall Islands  whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Ship” means the 2009-built product carrier of 50,000 metric tons deadweight built by SPP SHIPBUILDING CO. LTD. and registered in the ownership of Lichtenstein Shipping under the laws and flag of Panama with the name “LICHTENSTEIN”;

 

“Swap Exposure”  means, as at any relevant date, the amount certified by the Lender to be the aggregate net amount in Dollars which would be payable by the Borrower to Lender under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Transactions;

 

“Total Loss”  means:

 

(a)                                 actual, constructive, compromised, agreed or arranged total loss;

 

(b)                                 any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the Borrower or the Existing Charterer; and

 

(c)                                  any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless it is within 45 days (and in the case of any highjacking or theft, within 4 months) redelivered to the full control of the Borrower or the Existing Charterer;

 

“Total Loss Date”  means:

 

(d)                                 in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

 

13

 

(e)                                  in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

 

(i)                                     the date on which a notice of abandonment is given to the insurers; and

 

(ii)                                  the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

 

(f)                                   in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred;

 

“Transaction”  has the meaning given in the Master Agreement;

 

“US Tax Obligor” means:

 

(a)                                 the Borrower if it is resident for tax purposes in the US; or

 

(b)                                 an Obligor, some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes; and

 

“Warhol Shipping” means Warhol Shipping Company Limited, a corporation incorporated in Liberia and whose registered office is at 80 Broad Street, Monrovia, Liberia.

 

Construction of certain terms

 

In this Agreement:

 

“administration notice”  means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;

 

“approved”  means, for the purposes of Clause 13, approved in writing by the Lender;

 

“asset”  includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

 

“company”  includes any partnership, joint venture and unincorporated association;

 

“consent”  includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

 

“contingent liability”  means a liability which is not certain to arise and/or the amount of which remains unascertained;

 

“document”  includes a deed; also a letter or fax;

 

“excess risks”  means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

 

“expense”  means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

 

14

 

“law”  includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

 

“legal or administrative action”  means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

 

“liability”  includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

 

“months”  shall be construed in accordance with Clause 1.3;

 

“obligatory insurances”  means, in relation to the Ship, all insurances effected, or which the Borrower is obliged to effect, under Clause 0 or any other provision of this Agreement or another Finance Document;

 

“parent company”  has the meaning given in Clause 1.4;

 

“person”  includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

 

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

 

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association, which is a member of the international group of Protection and Indemnity Associations, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 

“regulation”  includes any regulation, rule, official directive, request or guideline (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

“subsidiary”  has the meaning given in Clause 1.4;

 

“tax”  includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine;

 

“war risks” includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83); and

 

“which is continuing” or “is continuing”, a Potential Event of Default is continuing if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.

 

Meaning of “month”

 

A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

 

15

 

(a)                                 on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

 

(b)                                 on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

 

and “month” and “monthly” shall be construed accordingly.

 

Meaning of “subsidiary”

 

A company (S) is a subsidiary of another company (P) if:

 

(a)                                 a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

 

(b)                                 P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

 

(c)                                  P has the direct or indirect power to appoint or remove a majority of the directors of S; or

 

(d)                                 P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,

 

and any company of which S is a subsidiary is a parent company of S.

 

General Interpretation

 

In this Agreement:

 

(a)                                 references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

 

(b)                                 references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

 

(c)                                  words denoting the singular number shall include the plural and vice versa; and

 

(d)                                 Clauses 1.1 to 1.5 apply unless the contrary intention appears.

 

Headings

 

In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

 

FACILITY

 

Facility

 

(a)                                 Subject to the other provisions of this Agreement, the Lender has made available to the Borrower a term loan facility not exceeding the lesser of (i) 40 per cent. of the Initial Market Value of the Ship and (B) and (ii) $11,300,000.

 

16

 

(b)                                 To the extent that the amount of $11,300,000 is higher than 40 per cent. of the Initial Market Value of the Ship, the Loan shall, at the Effective Date be permanently reduced by such excess amount.

 

Purpose of Advances

 

The Borrower has used each Advance only for the purpose stated in the preamble to this Agreement.

 

DRAWDOWN

 

[Clause no longer relevant — Loan fully drawn]

 

INTEREST

 

Payment of normal interest

 

Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period applicable to it shall be paid by the Borrower on the last day of that Interest Period.

 

Normal rate of interest

 

Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of (a) the applicable Margin, (b) LIBOR and (c) Mandatory Costs (if any) for that Interest Period.

 

Payment of accrued interest

 

In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

 

Notification of Interest Periods and rates of normal interest

 

The Lender shall notify the Borrower of (a) each rate of interest and (b) the duration of each Interest Period, as soon as reasonably practicable after each of (a) and (b) is determined.

 

Obligation of Reference Banks to quote

 

If the Lender is a Reference Bank, it shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement.

 

Absence of quotations by Reference Banks

 

If any Reference Bank fails to supply a quotation, the Lender shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 0.

 

Market disruption

 

The following provisions of this Clause 0 apply if:

 

(a)                                 no Screen Rate is available for an Interest Period and 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date, provide quotations to the Lender in order to fix LIBOR; or

 

(b)                                 at least 1 Business Day before the start of an Interest Period, LIBOR fixed by the Lender would not accurately reflect the cost to the Lender of funding the Loan (or any part of it)

 

17

 

during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

 

(c)                                  at least 1 Business Day before the start of an Interest Period, for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) during the Interest Period.

 

Notification of market disruption

 

The Lender shall promptly notify the Borrower stating the circumstances falling within Clause 0 which have caused its notice to be given.

 

Suspension of drawdown

 

[Clause no longer relevant — Loan fully drawn]

 

Negotiation of alternative rate of interest

 

If the Lender serves a notice under Clause 0, the Borrower and the Lender shall use reasonable efforts to agree, within 30 days after the date on which the Lender serves its notice under Clause 0 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund the Loan (or any part of it) during the Interest Period concerned.

 

Application of agreed alternative rate of interest

 

Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

 

Alternative rate of interest in absence of agreement

 

If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant  circumstances are continuing at the end of the Negotiation Period, then the Lender shall set an interest period and interest rate to the Borrower as representing the cost of funding of the Lender in Dollars or in any available currency of the Loan (or any part thereof) plus the Mandatory Cost (if any) and the Margin; and the procedure provided for by this Clause 0 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Lender.

 

Notice of prepayment

 

If the Borrower does not agree with an interest rate set by the Lender under Clause 0, the Borrower may give the Lender not less than 7 Business Days’ notice of its intention to prepay at the end of the interest period set by the Lender.

 

Prepayment

 

A notice under Clause 0 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

 

Application of prepayment

 

The provisions of Clause 0 shall apply in relation to the prepayment.

 

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Margin Review

 

For the purposes of determining the Margin which is to apply during each Margin Period, the Lender shall determine the Security Cover Percentage on each Margin Review Date by reference to valuations of the Ship at that time which comply with the requirements of Clause 0. The applicable Margin in respect of the first Margin Period shall be determined by reference to the Initial Market Value of the Ship.

 

INTEREST PERIODS

 

Commencement of Interest Periods

 

The first Interest Period in respect of the Loan shall commence on the Effective Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

Duration of normal Interest Periods

 

Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

 

(a)                                 3, 6 or 12 months as notified by the Borrower to the Lender not later than 11:00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

 

(b)                                 3 months, if the Borrower fails to notify the Lender by the time specified in paragraph (a); or

 

(c)                                  such other period as the Lender may agree with the Borrower.

 

Duration of Interest Periods for repayment instalments.

 

In respect of a Repayment Instalment due to be repaid on a particular Repayment Date, an Interest Period for the part of the Loan equal to such Repayment Instalment shall end on that Repayment Date (if such date is before the end of the Interest Period then current).

 

Non-availability of matching deposits for Interest Period selected

 

If, after the Borrower has selected and the Lender has agreed an Interest Period longer than 3 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months.

 

Execution of Master Agreement

 

Signature of the Master Agreement does not commit the Lender to conclude Transactions, or even to offer terms for doing so, but does provide a contractual framework within which Transactions may be concluded and secured, assuming that the Lender is willing to conclude any Transaction at the relevant time and that, if that is the case, mutually acceptable terms can then be agreed at that time. If the Lender does not agree to enter into Transactions with the Borrower, the Borrower can hedge any part of the interest rate risk under this Agreement with other banks or financial institutions Provided that such hedging arrangements shall be made on an unsecured basis and the rights of the relevant banks or financial institutions thereunder shall be fully subordinated to the rights of the Lender under the Finance Documents.

 

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DEFAULT INTEREST

 

Payment of default interest on overdue amounts

 

The Borrower shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrower under any Finance Document which the Lender or the other designated payee does not receive on or before the relevant date, that is:

 

(a)                                 the date on which the Finance Documents provide that such amount is due for payment; or

 

(b)                                 if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

 

(c)                                  if such amount has become immediately due and payable under Clause 0, the date on which it became immediately due and payable.

 

Default rate of interest

 

Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 2.0 per cent. above:

 

(a)                                 in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and 6.3(b); or

 

(b)                                 in the case of any other overdue amount, the rate set out at Clause 6.3(b).

 

Calculation of default rate of interest

 

The rates referred to in Clause 6.2 are:

 

(a)                                 the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

 

(b)                                 the Margin plus Mandatory Costs (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:

 

(i)                                     LIBOR; or

 

(ii)                                  if the Lender (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to the Reference Banks from such other sources as the Lender (after consultation with the Reference Banks) may from time to time determine.

 

Notification of interest periods and default rates

 

The lender shall promptly notify the Borrower of each interest rate determined by the Lender under Clause 6.3 and of each period selected by it for the purposes of paragraph 6.3(b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Lender’s notification.

 

Payment of accrued default interest

 

Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

 

Compounding of default interest

 

Any such interest which is not paid shall be compounded at the end of the relevant interest period.

 

20

 

Application to Master Agreement

 

For the avoidance of doubt, this Clause 6 does not apply to any amount payable under the Master Agreement in respect of any continuing Transaction as to which section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall apply.

 

REPAYMENT AND PREPAYMENT

 

Amount of Repayment Instalments

 

The Borrower shall repay each Advance as follows:

 

(a)                                 in the case of Advance A, by:

 

(i)                           20 equal consecutive quarterly instalments  in the amount of $97,000 each (the “Advance A Repayment Instalments”); and

 

(ii)                       a balloon instalment of $8,060,000 (the “Advance A Balloon Instalment”),

 

Provided that if the amount of Advance A as at the Effective Date is less than $10,000,000, each of the Advance A Repayment Instalments and the Advance A Balloon Instalment will be reduced pro rata by an amount in aggregate equal to that shortfall; and

 

(b)                                 in the case of the Advance B, by 20 equal consecutive quarterly instalments in the amount of $65,000 each (the “Advance B Repayment Instalments” and together with the Advance A Repayment Instalments, the “Repayment Instalments”) Provided that if the amount of Advance B as at the Effective Date is less than $1,300,000, each of the Advance B Repayment Instalments will be reduced pro rata by an amount in aggregate equal to that shortfall.

 

Repayment Dates

 

(a)                                 The first Repayment Instalment in respect of each Advance shall be repaid on the earlier of (i) the date falling 3 months after the  Effective Date and (ii) 31 March 2015; and

 

(b)                                 each subsequent Repayment Instalment in respect of each Advance shall be repaid at three-monthly intervals thereafter and the relevant last Repayment Instalment, together with the Advance A Balloon Instalment, shall be repaid on the Final Maturity Date.

 

Final Maturity Date

 

On the Final Maturity Date, the Borrower shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

 

Voluntary prepayment

 

Subject to the following conditions, the Borrower may prepay the whole or any part of an Advance on the last day of an Interest Period relevant thereto.

 

Conditions for voluntary prepayment

 

The conditions referred to in Clause 0 are that:

 

(a)                                 a partial prepayment shall be in amount equal to a Repayment Instalment in respect of the Advance which is being prepaid or a higher integral multiple thereof;

 

21

 

(b)                                 the Lender has received from the Borrower at least  5 days’ prior written notice specifying the amount to be prepaid, the Advance against which the prepayment is to be applied and the date on which the prepayment is to be made; and

 

(c)                                  the Borrower has provided evidence satisfactory to the Lender that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

 

Effect of notice of prepayment

 

A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

 

Mandatory prepayment

 

The Borrower shall be obliged to prepay the Loan and to comply with Clause 0:

 

(a)                                 if the Ship is sold, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

 

(b)                                 if the Ship becomes a Total Loss, on the earlier of the date falling 150 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.

 

Amounts payable on prepayment

 

A prepayment shall be made together with accrued interest (and any other amount payable under Clause 0 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause (b) but without premium or penalty.

 

Application of partial prepayment

 

Each partial prepayment shall be applied pro rata against the Repayment Instalments of the relevant Advance and the Advance A Balloon Instalment (if applicable).

 

No reborrowing

 

No amount repaid or prepaid may be reborrowed.

 

Unwinding of Transactions

 

On or prior to any repayment or prepayment of the Loan under this Clause 0 or any other provision of this Agreement, the Borrower shall, at its cost (if any) and at the Lender’s absolute discretion:

 

(a)                                 wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Transactions so that the notional principal amount of the continuing Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time pursuant to Clause 0; or

 

(b)                                 provide the Lender with additional security in all respects acceptable to the Lender at its (as applicable) absolute discretion to secure the amount determined by the Lender to be equal to the difference between the notional principal amount of the continuing Transactions and the amount of the Loan as reducing from time to time thereafter pursuant to Clause 0.

 

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[CONDITIONS PRECEDENT]

 

[Clause no longer relevant — Loan fully drawn]

 

REPRESENTATIONS AND WARRANTIES

 

General

 

The Borrower represents and warrants on the date of the Amending and Restating Agreement (which representations and warranties shall survive the execution of this Agreement and shall be deemed repeated throughout the Security Period on the last day of each Interest Period with respect to the facts and circumstances then existing) to the Lender as follows.

 

Status

 

The Borrower is a corporation duly incorporated and validly existing and in good standing under the laws of the Republic of Liberia.

 

Share capital and ownership

 

The Borrower is authorised to issue 500 registered and/or bearer shares without par value all of which shares have been issued in registered form, and the direct legal and beneficial title of all those shares is held, free of any Security Interest or other claim, by the Shareholder.

 

Corporate power

 

The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

 

(a)                                 to maintain the registration of the Ship in its ownership under an Approved Flag;

 

(b)                                 to execute the Finance Documents to which it is a party; and

 

(c)                                  to continue to borrow under this Agreement, to enter into Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party.

 

Consents in force

 

All the consents referred to in Clause 0 remain in force and nothing has occurred which makes any of them liable to revocation.

 

Legal validity; effective Security Interests

 

The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

 

(a)                                 constitute the Borrower’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and

 

(b)                                 create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

 

subject to any Legal Reservations.

 

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No third party Security Interests

 

Without limiting the generality of Clause 0, at the time of the execution and delivery of each Finance Document to which the Borrower is a party:

 

(a)                                 the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

 

(b)                                 no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

 

No conflicts

 

The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

 

(a)                                 any law or regulation; or

 

(b)                                 its constitutional documents; or

 

(c)                                  any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

 

No withholding taxes

 

All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

 

No default

 

No Event of Default or Potential Event of Default has occurred and is continuing.

 

Information

 

All information which has been provided in writing by or on behalf of the Borrower or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 0; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 0; and there has been no material adverse change in the financial position or state of affairs of the Borrower or any Security Party from that disclosed in the latest of those accounts.

 

No litigation

 

No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which would, in either case, be likely to have a material adverse effect on its financial condition or an adverse effect on its reputation or operation.

 

Validity and completeness of Existing Charter.

 

(a)                                 the Existing Charter constitutes valid, binding and enforceable obligations of the Borrower and, to the best of the Borrower’s knowledge (having made due enquiry), the Existing Charterer respectively in accordance with its terms;

 

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(b)                                 the copy of the Existing Charter delivered to the Lender before the date of the Amending and Restating Agreement is a true and complete copy; and

 

(c)                                  other than as previously provided or disclosed to the Lender, no amendments or additions to  the Existing Charter have been agreed nor has the Borrower and, to the best of the Borrower’s knowledge ((having made due enquiry), the Existing Charterer waived any of their respective rights under the Existing Charter.

 

No rebates etc.

 

There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, the Existing Charterer or a third party in connection with the employment by the Borrower of the Ship, other than as disclosed to the Lender in writing on or prior to the date of the Amending and Restating Agreement.

 

Compliance with certain undertakings

 

At the date of the Amending and Restating Agreement, the Borrower is in compliance with Clauses 0, 0, 0 and 0.

 

Taxes paid

 

The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship.

 

ISM Code and ISPS Code compliance

 

All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship have been complied with.

 

FATCA FFI and US Tax Obligor

 

None of the Obligors is a FATCA FFI or a US Tax Obligor.

 

GENERAL UNDERTAKINGS

 

General

 

The Borrower undertakes with the Lender to comply with the following provisions of this Clause 0 at all times during the Security Period except as the Lender may otherwise permit.

 

Title; negative pledge

 

The Borrower will:

 

(a)                                 hold the legal title to, and own the entire beneficial interest in the Ship, her Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for Permitted Security Interests; and

 

(b)                                 not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future (including, but not limited to, the Borrower’s rights against the Lender under the Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by the Lender under the Master Agreement),

 

No disposal of assets

 

The Borrower will not transfer, lease or otherwise dispose of:

 

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(a)                                 all or a substantial part of its assets (other than the Ship Provided that no Event of Default has occurred at the time of sale or would result from such sale and the Borrower has complied with Clause 0 and the other terms and provisions of this Agreement), whether by one transaction or a number of transactions, whether related or not; or

 

(b)                                 any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,

 

but paragraph (a) does not apply to any charter of the Ship as to which Clause 0 applies.

 

No other liabilities or obligations to be incurred

 

The Borrower will not incur any liability or obligation or any other Financial Indebtedness except:

 

(a)                                 Permitted Security Interests;

 

(b)                                 liabilities and obligations under the Finance Documents to which it is a party;

 

(c)                                  liabilities or obligations reasonably incurred in the ordinary course of trading, operating, chartering, maintaining and repairing the Ship; and

 

(d)                                 Transactions.

 

Information provided to be accurate

 

All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

 

Provision of financial statements

 

The Borrower will send, and will procure that each of the Guarantors and the Corporate Guarantor will send to the Lender:

 

(a)                                 as soon as possible, but in no event later than 180 days after the end of each financial year of the Borrower, the annual audited accounts of the Borrower (if available), each certified as to their correctness by its chief financial officer;

 

(b)                                 as soon as possible, but in no event later than 180 days after the end of each financial year of the Corporate Guarantor, the annual audited consolidated accounts of the Corporate Guarantor and its subsidiaries, certified as to their correctness by its chief financial officer;

 

(c)                                  as soon as possible, but in no event later than 60 days after the end of each quarter in each financial year of the Corporate Guarantor, the unaudited quarterly consolidated accounts of the Corporate Guarantor and its subsidiaries, certified as to their correctness by its chief financial officer; and

 

(d)                                 promptly, at the request of the Lender (acting reasonably), such further financial information about the Borrower, the Guarantors, the Corporate Guarantor, any other Security Party and the Ship as the Lender may reasonably require including, but not limited to, charter arrangements, Financial Indebtedness, financial condition, commitments, operations, operating expenses and loan repayment profiles.

 

26

 

 

Form of financial statements

 

All accounts (audited and unaudited) delivered under Clause 11.6 will:

 

(a)                                 be prepared in accordance with all applicable laws and GAAP consistently applied;

 

(b)                                 give a true and fair view of the state of affairs of the Borrower, the Guarantors or the Corporate Guarantor and its subsidiaries at the date of those accounts and of its or their profit for the period to which those accounts relate; and

 

(c)                                  fully disclose or provide for all significant liabilities of the Borrower, the Guarantors or the Corporate Guarantor and its subsidiaries.

 

Shareholder and creditor notices

 

The Borrower will send to the Lender, at the same time as they are despatched, copies of all communications which are despatched to the Borrower’s shareholders or creditors or any class of them. To the extent any such communications are included or referred to in any public filings made by the Corporate Guarantor, the Borrower shall be deemed to have complied with their obligations pursuant to this Clause 10.8.

 

Consents

 

The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

 

(a)                                 for the Borrower to perform its obligations under any Finance Document to which it is a party or the Master Agreement;

 

(b)                                 for the validity or enforceability of any Finance Document to which it is a party or the Master Agreement;

 

(c)                                  for the Borrower to continue to own and operate the Ship,

 

and the Borrower will comply with the terms of all such consents.

 

Maintenance of Security Interests

 

The Borrower will:

 

(a)                                 at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create, subject to any Legal Reservations; and

 

(b)                                 without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

 

Notification of litigation

 

The Borrower will provide the Lender with details of any legal or administrative action involving the Borrower or the Ship, its Earnings or its Insurances or any Security Party as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of the Finance Documents taken as a whole.

 

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No amendments to Existing Charter

 

The Borrower will  not agree to any material amendment or supplement to, or waive or fail to enforce, the Existing Charter or any of its provisions (and for the avoidance of doubt, but without limitation, any amendment in respect of the charter hire, the decrease of the charter period and the identity of the parties is considered material); and

 

No amendment to Master Agreement

 

The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, the Master Agreement or any of its provisions.

 

Transactions under Master Agreement.

 

The Borrower will not enter into any Transaction pursuant to the Master Agreement except Transactions that fall into paragraphs (a) and (b) of the definition of Transaction.

 

Principal place of business

 

The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 28.2(a); and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in any place other than in Athens, Manila, Dubai or Singapore.

 

Confirmation of no default

 

The Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by any director of the Borrower and which:

 

(a)                                 states that no Event of Default has occurred; or

 

(b)                                 states that no Event of Default has occurred, except for a specified event or matter, of which all material details are given.

 

Notification of default

 

The Borrower will notify the Lender as soon as the Borrower becomes aware of:

 

(a)                                 the occurrence of an Event of Default; or

 

(b)                                 any matter which indicates that an Event of Default may have occurred,

 

and will keep the Lender fully up-to-date with all developments.

 

Provision of further information

 

The Borrower will, as soon as practicable after receiving the request, provide the Lender with any additional financial or other information relating:

 

(a)                                 to the Borrower, the Ship, the Earnings or the Insurances; or

 

(b)                                 to any other matter relevant to, or to any provision of, a Finance Document,

 

which may be requested by the Lender at any time (acting reasonably).

 

Provision of copies and translation of documents

 

The Borrower will supply the Lender with a sufficient number of copies of any of the documents referred to in Clause 11.16; and, if the Lender so requires, in respect of any of

 

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those documents, the Borrower will provide, a certified English translation prepared by a translator approved by the Lender in respect.

 

“Know your customer” checks.

 

If:

 

(a)                                 the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of the Amending and Restating Agreement;

 

(b)                                 any change in the status of the Borrower or any Security Party after the date of the Amending and Restating Agreement; or

 

(c)                                  a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

 

obliges the Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Lender or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

10.20                 Provision of originals of the Existing Charter and charter guarantee

 

The Borrower shall forthwith upon the Lender’s request, deliver to the Lender an original of the Existing Charter and any charter guarantee issued or to be issued thereunder, duly executed by the parties thereto.

 

CORPORATE UNDERTAKINGS

 

General

 

The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit (such permission not to be unreasonably withheld or delayed in the case of Clause 11.3).

 

Maintenance of status

 

The Borrower will maintain its separate corporate existence and remain in good standing under the laws of its country of incorporation.

 

Negative undertakings

 

The Borrower will not:

 

(a)                                 carry on any business other than the ownership, chartering and operation of the Ship; or

 

(b)                                 at any time when an Event of Default has occurred or will result from the payment of a dividend or the making of a distribution, pay any dividend or make any other form of distribution; or

 

(c)                                  effect any form of redemption, purchase or return of share capital; or

 

29

 

(d)                                 provide any form of credit or financial assistance to:

 

(i)                                     a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

 

(ii)                                  any company in or with which such a person is directly or indirectly interested or connected,

 

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length;

 

(e)                                  open or maintain any account with any bank or financial institution except accounts with the Lender for the purposes of the Finance Documents;

 

(f)                                   issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

 

(g)                                  acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Transactions; or

 

(h)                                 enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

 

Sanctions

 

The  Borrower understands that Lender - be it due to applicable laws or due to internal rules and regulations — is prohibited from conducting transactions, including finance transactions, with the government of or any person or entity owned or controlled by the government of Restricted Countries or Restricted Persons.

 

The Borrower confirms and undertakes that it shall not transfer, make use of or provide the benefits of any money, proceeds or services provided by or received from the Lender to any Restricted Persons or conduct any business activity (such as entering into any ship acquisition agreement, any ship refinancing agreement and/or any charter agreement) related to a vessel, project, asset or otherwise for which money, proceeds or services have been received from the Lender with any Restricted Persons.

 

In this Clause 0:

 

Restricted Countries means Cuba, Iran, Myanmar, North Korea, Sudan and Syria and any additional countries notified by the Lender to the Borrower based on respective sanctions being imposed by the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) or any of the regulative bodies referred to in the definition of Restricted Persons.

 

Restricted Persons means persons, entities or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, (ii) subject to any sanction administrated by the United Nations, the European Union, the State Secretariat for Economic Affairs of Switzerland (“SECO”), OFAC, HM Treasury of the United Kingdom, the Monetary Authority of Singapore (“MAS”) and the Hong Kong Monetary Authority (“HKMA”) and/or any other applicable country and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).

 

No money laundering

 

In relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other

 

30

 

arrangements affected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that (i) it is acting for its own account; (ii) it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement, and (iii) the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and/or Art 305 bis of the Swiss Penal Code.

 

INSURANCE

 

General

 

The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may (in the case of Clauses 12.2(d), 12.3(e), 12.3(f) and 12.12 acting reasonably) otherwise permit.

 

Maintenance of obligatory insurances

 

The Borrower shall keep the Ship insured at its expense against:

 

(a)                                 fire and usual marine risks (including hull and machinery and excess risks);

 

(b)                                 war risks;

 

(c)                                  protection and indemnity risks; and

 

(d)                                 any other risks against which the Lender considers having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.

 

Terms of obligatory insurances

 

The Borrower shall effect such insurances:

 

(a)                                 in Dollars;

 

(b)                                 in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) the Market Value of the Ship and (ii) 120 per cent. of the Loan;

 

(c)                                  in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international insurance market;

 

(d)                                 in relation to protection and indemnity risks in respect of the full tonnage of the Ship;

 

(e)                                  on approved terms; and

 

(f)                                   through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

 

31

 

 

Further protections for the Lender

 

In addition to the terms set out in Clause 12.3, the Borrower shall procure that the obligatory insurances shall:

 

(a)                                 subject always to paragraph (b), name the Borrower as the sole named assured unless the interest of every other named assured is limited:

 

(i)                                     in respect of any obligatory insurances for hull and machinery and war risks;

 

(A)                               to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and

 

(B)                               to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

 

(ii)                                  in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

 

and every other named assured has undertaken in writing to the Lender (in such form as it requires) that any deductible shall be apportioned between the Borrower and every other named assured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;

 

(b)                                 whenever the Lender requires, name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(c)                                  name the Lender as loss payee with such directions for payment as the Lender may specify;

 

(d)                                 provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

 

(e)                                  provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender; and

 

(f)                                   provide that the Lender may make proof of loss if the Borrower fails to do so.

 

Renewal of obligatory insurances

 

The Borrower shall:

 

(a)                                 at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance; and

 

(b)                                 procure that the approved brokers and/or the war risks and protection and indemnity associations with which the renewal of the obligatory insurances is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

 

Copies of policies; letters of undertaking

 

The Borrower shall use its best endeavours to ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking substantially in the form required by the Lender and including undertakings by the approved brokers that:

 

32

 

(a)                                 they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

 

(b)                                 they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

 

(c)                                  they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

 

(d)                                 they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

 

(e)                                  they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Lender.

 

Copies of certificates of entry

 

The Borrower shall use its best endeavours to ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Lender with:

 

(a)                                 a certified copy of the certificate of entry for the Ship;

 

(b)                                 a letter or letters of undertaking in such form as may be required by the Lender; and

 

(c)                                  a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

 

Payment of premiums

 

The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances.

 

Guarantees

 

The Borrower shall use its best endeavours to ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

Compliance with terms of insurances

 

The Borrower shall not, or if the Ship is subject to a demise charter, the Borrower shall use its best endeavours to ensure that the charterer of the Ship shall not, do nor omit to do (nor permit to be done or not to be done), any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular the Borrower shall, or if the Ship is subject to a demise charter, the Borrower shall use its best endeavours to ensure that the charterer of the Ship shall:

 

(a)                                 take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in

 

33

 

Clause 12.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

 

(b)                                 not make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances;

 

(c)                                  make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

 

(d)                                 not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

Alteration to terms of insurances

 

The Borrower shall not be entitled to make or agree to any material alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

 

Settlement of claims

 

The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

Provision of copies of communications

 

The Borrower shall provide the Lender copies of all material written communications which the Lender will reasonably request  between the Borrower and:

 

(a)                                 the approved brokers;

 

(b)                                 the approved protection and indemnity and/or war risks associations; and

 

(c)                                  the approved insurance companies and/or underwriters, which relate directly or indirectly to:

 

(i)                                     the Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

(ii)                                  any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

Provision of information

 

In addition, the Borrower shall, and if the Ship is subject to a demise charter the Borrower shall use its best endeavours to, promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) reasonably requests for the purpose of:

 

(a)                                 obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

34

 

(b)                                 effecting, maintaining or renewing any such insurances as are referred to in Clause 0 or dealing with or considering any matters relating to any such insurances,

 

and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a).

 

Mortgagee’s interest and additional perils insurances

 

The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance, a mortgagee’s political risks insurance and a mortgagee’s interest marine insurance each in an amount equal to 120 per cent. of the Loan, on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Lender in respect of all premiums and other documented expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

Review of insurance requirements

 

The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of the Amending and Restating Agreement which are, in the reasonable opinion of the Lender, significant and likely to affect the Borrower  or the Ship and its or their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower Provided that if no Event of Default shall have occurred and be continuing, the Borrower shall only be obliged to indemnify the Lender in respect of all fees and other expenses incurred by the Lender in relation to the review of the insurances by such insurance consultants once in each calendar year.

 

Modification of insurance requirements

 

The Lender shall notify the Borrower of any proposed modification under Clause 0 to the requirements of this Clause 12 which the Lender considers reasonably necessary in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 12 and shall bind the Borrower accordingly.

 

Compliance with mortgagee’s instructions

 

If the Borrower has not complied with the requirements notified to them by the Lender pursuant to Clause 0 to the absolute satisfaction of the Lender, acting reasonably, within 10 days of the Lender’s notice, the Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 0.

 

SHIP COVENANTS

 

General

 

The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit (such permission not to be unreasonably withheld or delayed in the case of Clauses

 

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13.2 (in respect of the change of the name and the Approved Flag of the Ship), 13.6, 13.12 and 13.15) .

 

Ship’s name and registration

 

The Borrower shall keep the Ship registered in its name under the relevant Approved Flag; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship.

 

Repair and classification

 

The Borrower shall keep the Ship in a good and safe condition and state of repair:

 

(a)                                 consistent with first-class ship ownership and management practice;

 

(b)                                 so as to maintain the Ship with the highest class applicable to vessels of the same age, type and specification as the Ship at a classification society which is a member of the International Association of Classification Societies acceptable to the Lender free of any overdue recommendations or conditions; and

 

(c)                                  so as to comply with all laws and regulations applicable to vessels registered at ports in the relevant Approved Flag State or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

 

Modification

 

The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value.

 

Removal of parts

 

The Borrower shall nor remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the Mortgage Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without risk of damage to the Ship.

 

Surveys

 

The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender provide the Lender, with copies of all survey reports.

 

Inspection

 

(a)                                 The Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose) to board the Ship at all times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections Provided that (i) the Borrower has received 5 days’ prior written notice of the Lender’s intention to conduct such inspection and (ii) the Lender shall use its best endeavours not to interrupt the trading schedule of the Ship.

 

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(b)                                 All costs and expenses incurred by it in connection with any such inspection shall be for the account of the Borrower Provided that (a) so long as no Event of Default shall have occurred and (b) the Ship is found to be in a satisfactory condition (in the reasonable opinion of the Lender) the Borrower shall not be obliged to pay any fees and expenses in respect of more than one inspection of the Ship in any calendar year.

 

Prevention of and release from arrest

 

The Borrower shall promptly discharge:

 

(a)                                 all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, the Earnings or the Insurances;

 

(b)                                 all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and

 

(c)                                  all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances,

 

and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

 

Compliance with laws etc.

 

The Borrower shall:

 

(a)                                 comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship, its ownership, operation and management or to the business of the Borrower;

 

(b)                                 not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

 

(c)                                  in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Lender has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

 

Provision of information

 

The Borrower shall promptly provide the Lender with any information which it reasonably requests regarding:

 

(a)                                the Ship, its employment, position and engagements;

 

(b)                                 the Earnings and payments and amounts due to the master and crew of the Ship;

 

(c)                                  any material expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

 

(d)                                 any towages and salvages; and

 

(e)                                  its compliance, the Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code,

 

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and, upon the Lender’s request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the Borrower’s or the Approved Manager’s Document of Compliance.

 

Notification of certain events

 

The Borrower shall immediately notify the Lender in writing, of:

 

(a)                                 any casualty which is or is likely to be or to become a Major Casualty;

 

(b)                                 any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

(c)                                  any requirement or recommendation made by any insurer or classification society or by any competent authority which is not complied with promptly and in any case within the time limits set by the relevant insurer or classification society;

 

(d)                                 any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire;

 

(e)                                  any intended dry docking of the Ship;

 

(f)                                   any Environmental Claim made against the Borrower or in connection with the Ship or any Environmental Incident;

 

(g)                                  any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, the Approved Manager or otherwise in connection with the Ship; or

 

(h)                                 any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

 

and the Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of the Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

 

Restrictions on chartering, appointment of managers etc.

 

The Borrower shall not, in relation to the Ship:

 

(a)                                 other than the Existing Charter, let the Ship on demise charter for any period;

 

(b)                                 enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months other than with the prior written consent of the Lender;

 

(c)                                  enter into any charter in relation to the Ship under which more than 4 months’ hire (or the equivalent) is payable in advance;

 

(d)                                 charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

 

(e)                                  appoint a manager of the Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment (other than with the prior written consent of the Lender (such consent not to be unreasonably withheld));

 

(f)                                   de-activate or lay up the Ship; or

 

(g)                                  enter the Ship with a different classification society; or

 

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(h)                                 put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $2,000,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or for any other reason.

 

Notice of Mortgage

 

The Borrower shall keep the relevant Mortgage registered against the Ship as a valid first priority mortgage, carry on board the Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Lender.

 

Sharing of Earnings

 

The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings (other than any arrangements for the sharing of Earnings included in the Existing Charter).

 

Charter Assignment

 

If the Borrower enters into any bareboat or demise charter or any other charter which is of 12 months or more in duration (including, without limitation, the Existing Charter), or is capable of exceeding 12 months in duration, in respect of the Ship, the Borrower shall, promptly on entering into the same (i) execute in favour of the Lender an assignment of such charter (which shall include, without limitation, the service of a notice of assignment on the relevant charterer, and the Borrower shall use its best endeavours to procure an acknowledgement of such notice from that charterer) and (ii) in the case that such charter is a demise or bareboat charter, execute, and shall use its best endeavours to procure the execution by the charterer of, a tripartite deed in relation thereto, each in such form and on such terms as the Lender may require, and shall deliver to the Lender such other documents as the Lender may require.

 

ISPS Code

 

The Borrower shall comply with the ISPS Code and in particular, without limitation, shall:

 

(a)                                 procure that the Ship and the company responsible for the Ship’s compliance with the ISPS Code comply with the ISPS Code; and

 

(b)                                 maintain for the Ship an ISSC; and

 

(c)                                  notify the Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

 

SECURITY COVER

 

Minimum required security cover

 

Clause 14.2 applies if the Lender notifies the Borrower that:

 

(a)                                 the Market Value of the Ship; plus

 

(b)                                 the net realisable value of any additional security previously provided under this Clause 14,

 

is below 150  per cent. of the aggregate of the Loan and of the Swap Exposure.

 

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Provision of additional security; prepayment

 

If the Lender serves a notice on the Borrower under Clause 14.1, the Borrower shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling 1 month after the date on which the Lender’s notice is served under Clause 14.1 (the “Prepayment  Date”) unless at least 1 Business Day before the Prepayment Date they have provided, or ensured that a third party has provided, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and which has been documented in such terms as the Lender may approve or require.

 

Valuation of Ship

 

The Market Value of the Ship at any date is that shown by the arithmetic mean of 2 written valuations each prepared:

 

(a)                                 as at a date not more than 30 days prior;

 

(b)                                 by an Approved Broker appointed by the Lender;

 

(c)                                  with or without physical inspection of the Ship (as the Lender may require);

 

(d)                                 on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment; and

 

(e)                                  after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

 

Value of additional vessel security

 

The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 14.3.

 

Valuations binding

 

Any valuation under Clause 14.3 or 14.4 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Lender makes of any additional security which does not consist of or include a Security Interest.

 

Provision of information

 

The Borrower shall promptly provide the Lender and any Approved Shipbroker or expert acting under Clause 14.3 or 14.4 with any information which the Lender or the Approved Shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Shipbroker or the Lender (or the expert appointed by them) consider prudent.

 

Payment of valuation expenses

 

Without prejudice to the generality of the Borrower’s obligations under Clauses 19.2, 19.3 and 20.3, the Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any Approved Broker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with (i) any matter arising out of this Clause (ii) the valuations referred to in paragraph [(d)(xvii)] of clause 4.2 of the Amending and Restating Agreement on or prior to the Effective Date and (iii) the valuations required for the purpose of determining the applicable Margin pursuant to Clause 0

 

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Provided that until the occurrence of an Event of Default, the Borrower shall be obliged to pay such fees or expenses in relation to two sets of valuations per calendar year for the Ship.

 

Frequency of valuations

 

Subject to Clause 14.7, the Borrower acknowledges and agrees that the Lender may obtain valuations of the Ship at such times as the Lender shall deem necessary.

 

PAYMENTS AND CALCULATIONS

 

Currency and method of payments

 

All payments to be made by the Lender or by the Borrower under a Finance Document shall be made to the Lender:

 

(a)                                 by not later than 11.00 a.m. (New York City time) on the due date;

 

(b)                                 in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

 

(c)                                  to the account of the Lender at CREDIT SUISSE AG, Basel, Switzerland, (Credit Suisse AG , Ship Finance, IBAN Number: CH92 0483 5950 0000 9878 0, SWIFT: CRESCHZZ40A), or to such other account with such other bank as the Lender may from time to time notify to the Borrower.

 

Payment on non-Business Day

 

If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

 

(a)                                 the due date shall be extended to the next succeeding Business Day; or

 

(b)                                 if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

 

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

 

Basis for calculation of periodic payments

 

All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

 

Lender accounts

 

The Lender shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

Accounts prima facie evidence

 

If an account maintained under Clauses 15.4 shows an amount to be owing by the Borrower or a Security Party to the Lender, those accounts shall be prima facie evidence that that amount is owing to the Lender (save for manifest error).

 

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APPLICATION OF RECEIPTS

 

Normal order of application

 

Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document, after service of

 

notice on the Borrower under Clause 18.2(a), (b) or (c), shall be applied:

 

(a)                                 FIRST:  in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreement in the following order and proportions:

 

(i)                                     first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 19, 20, and 21 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in the Master Agreement);

 

(ii)                                  secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Documents  and the Master Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Lender at the time of application or distribution under this Clause 16); and

 

(iii)                               thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder); and

 

(b)                                 SECONDLY:  in retention of an amount equal to any amount not then due and payable under any Finance Document or the Master Agreement but which the Lender, by notice to the Borrower and the Security Parties, states in its opinion will or may become due and payable in the future and payable, in or towards satisfaction of them in accordance with the provisions of Clause 16.1(a); and

 

(c)                                  THIRDLY:  any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

 

Variation of order of application

 

If an Event of Default has occurred and is continuing, the Lender may by notice to the Borrower and the Security Parties provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

Notice of variation of order of application

 

The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

 

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Appropriation rights overridden

 

This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

 

APPLICATION OF EARNINGS; SWAP PAYMENTS

 

Payment of Earnings and Swap Payments

 

The Borrower undertakes with the Lender to ensure that throughout the Security Period:

 

(a)                                 (subject only to the provisions of the General Assignment in respect of the Ship), all the Earnings of the Ship are paid to the Earnings Account; and

 

(b)                                 all payments by the Lender to the Borrower under a Transaction shall be paid to the Earnings Account,

 

and unless and until an Event of Default shall have occurred, the Borrower shall be entitled to apply the Earnings in or towards meeting the costs and expenses from time to time incurred by or on behalf of the Borrower in connection with the operation, chartering, trading, repair or maintenance of the Ship and for payment of dividends (to the extent permitted pursuant to the terms of this Agreement) Provided that no Event of Default will result from the payment of such dividends.

 

Location of accounts

 

The Borrower shall promptly:

 

(a)                                 comply with any requirement of the Lender as to the location or re-location of the Earnings Account; and

 

(b)                                 execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account.

 

Debits for expenses etc.

 

The Lender shall be entitled (but not obliged) from time to time to debit the Earnings Account without prior notice in order to discharge any amount due and payable under Clause 19 or 20 to it or payment of which the Lender has become entitled to demand under Clause 19 or 20 and which remains unpaid for a period of up to 3 days.

 

Borrower’s obligations unaffected

 

The provisions of this Clause 17 do not affect:

 

(a)                                 the liability of the Borrower to make payments of principal and interest on the due dates; or

 

(b)                                 any other liability or obligation of the Borrower or any Security Party under any Finance Document.

 

EVENTS OF DEFAULT

 

Events of Default

 

An Event of Default occurs if:

 

(a)                                 the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance

 

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Document save that such failure shall not constitute an Event of Default if (i) such failure is due to a bank payment transmission error and (ii) the Borrower or relevant Security Party remedies such failure within 3 days of notice from the Lender; or

 

(b)                                 any breach occurs of Clause 11.4, 11.5 or 14.2 hereof or clause [4.5] of the Amending and Restating Agreement; or

 

(c)                                  any breach occurs of Clause 10.2, 10.3, 11.2, 11.3 or clause 11.15 (Financial Covenants) of the Corporate Guarantee and such default continues unremedied for 3 days;

 

(d)                                 any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which, in the opinion of the Lender, is capable of remedy, and such default continues unremedied 15 days after written notice from the Lender requesting action to remedy the same; or

 

(e)                                  (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or

 

(f)                                   any representation, warranty or statement made or repeated by, or by an officer of, the Borrower or a Security Party in a Finance Document or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or

 

(g)                                  any of the following occurs in relation to any Financial Indebtedness of a Relevant Person (Provided that no Event of Default will occur under this Clause 19.1(f) if the Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iii) below does not exceed in aggregate the amount of $500,000 (or equivalent in any other currency)):

 

(i)                                     any Financial Indebtedness of a Relevant Person is not paid when due; or

 

(ii)                                  any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

 

(iii)                               a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

 

(iv)                              any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

 

(v)                                 any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

 

(h)                                 any of the following occurs in relation to a Relevant Person:

 

(i)                                     a Relevant Person becomes unable to pay its debts as they fall due; or

 

(ii)                                  any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $250,000 or more or the equivalent in another currency; or

 

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(iii)                               any administrative or other receiver is appointed over any asset of a Relevant Person; or

 

(iv)                              an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

 

(v)                                 any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

 

(vi)                              a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or

 

(vii)                           a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower, the Shareholder, the Guarantors or the Corporate Guarantor, which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

 

(viii)                        an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or

 

(ix)                              a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or

 

(x)                                 any meeting of the members or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of

 

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considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or

 

(xi)                              in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lender is similar to any of the foregoing; or

 

(i)                                     the Borrower ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Lender, is material in the context of this Agreement; or

 

(j)                                    it becomes unlawful in any Pertinent Jurisdiction or impossible:

 

(i)                                     for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

 

(ii)                                  for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

 

(k)                                 any consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which Lender considers material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

 

(l)                                     Stamatis Molaris ceases to be the chairman and/or chief executive officer of the Corporate Guarantor (unless he is replaced in either office by a person acceptable to the Lender); or

 

(m)                             it appears to the Lender that, without its prior consent, a change has occurred or probably has occurred after the date of the Amending and the Restating Agreement in the legal ownership of any of the shares in any of the Borrower, the Shareholder, the Guarantors or their shareholders (other than the Corporate Guarantor) or in the beneficial ownership of any of the shares in or the Approved Manager or in the ultimate control of the voting rights attaching to any of those shares unless the Borrower provides evidence acceptable to the Lender in its absolute discretion that no such change has occurred;

 

(n)                                 following the IPO, the shares of the Corporate Guarantor cease to be quoted on NASDAQ or NYSE or any other stock exchange in the United States of America which is approved by the Lender;

 

(o)                                any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest unless the relevant Security Party takes such action as requested by the Lender to remedy such invalidity or unenforceability and succeeds in doing so within 5 Business Days from its occurrence; or

 

(p)                                 the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

 

(q)                                 the Existing Charter is terminated or a material amendments is made without the prior written consent of the Lender unless otherwise permitted pursuant to the terms and conditions of this Agreement or it ceases to remain in full force and effect other than by mere effluxion of time (and for the avoidance of doubt, but without limitation, any amendment in respect of the charter hire, the decrease of the charter period and the identity of the parties is considered material); or

 

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(r)                                    an Event of Default (as defined in section 14 of a Master Agreement) occurs; or

 

(s)                                   an Event of Default (as defined in the relevant Collateral Loan Agreement) under a Collateral Loan Agreement occurs; or

 

(t)                                    a Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason, except with the consent of the Lender or in the case where the Lender is responsible for such termination; or

 

(u)                                 any other event occurs or any other circumstances arise or develop including, without limitation:

 

(i)                                     an adverse change in the financial position, state of affairs or prospects of the Borrower, the Shareholder, any of the Guarantors or the Corporate Guarantor or another vessel owned, chartered or operated by a Relevant Person; or

 

(ii)                                  any accident or other event involving the Ship,

 

in the light of which the Lender, acting reasonably, considers that there is a significant risk that the Borrower, the Shareholder, any of the Guarantors or the Corporate Guarantor is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

 

Actions following an Event of Default

 

On, or at any time after, the occurrence of an Event of Default, the Lender shall:

 

(a)                                 serve on the Borrower a notice stating that all or part of the Loan and of the other obligations of the Lender to the Borrower under this Agreement are cancelled; and/or

 

(b)                                 serve on the Borrower a notice stating that all or part of the Loan together with accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

 

(c)                                  take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Lender is entitled to take under any Finance Document or any applicable law.

 

Termination of Loan

 

On the service of a notice under Clause 18.2(a), the Loan and all other obligations of the Lender to the Borrower under this Agreement shall be cancelled.

 

Acceleration of Loan

 

On the service of a notice under Clause 18.2(b), all or, as the case may be, the part of the Loan specified in the notice together with accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

 

Multiple notices; action without notice

 

The Lender may serve notices under Clauses 18.2(a) or 18.2(b) simultaneously or on different dates and it and/or the Lender may take any action referred to in Clause 18.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

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Exclusion of Lender’s liability

 

Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrower or a Security Party:

 

(a)                                 for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

 

(b)                                 as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

 

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been directly and mainly caused by the dishonesty or the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

 

Relevant Persons

 

In this Clause 18, a “Relevant Person” means the Borrower, a Security Party, and any company which is a subsidiary of the Borrower or a Security Party or of which the Borrower or a Security Party is a subsidiary; but excluding any company which is dormant and the value of whose gross assets is $50,000 or less.

 

Interpretation

 

In Clause 18.1(g) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(h) “petition” includes an application.

 

FEES AND EXPENSES

 

Drop dead, arrangement, commitment and fees

 

The Borrower has paid or shall pay (as applicable) to Lender:

 

(a)                                 on 8 August 2014 a non-refundable drop-dead fee in an amount equal to 0.10 per cent. of the Loan, being the date on which the Lender confirmed that credit approval for executing the Amended and Restated Loan Agreement the had been obtained;

 

(b)                                 a non-refundable arrangement fee in an amount equal to 1.00 per cent. of the Loan due and payable on 11 August 2014 (being the date of acceptance by the Borrower of the Lender’s commitment letter setting out the terms of the Amended and Restated Loan Agreement) but in any event not prior to the IPO Provided that if the drop dead referred to in paragraph (a) above has been paid by the time that the arrangement fee becomes payable, the arrangement fee shall be reduced to an amount equal to 0.90 per cent. of the Loan; and

 

(c)                                  a commitment fee at the rate of 1.35 per cent. per annum on the amount of the Loan payable quarterly in arrears during the period commencing on the date of the IPO or 31 August 2014 (whichever is earlier) and ending on the Effective Date, such commitment fee to be payable quarterly in arrears and on the last day of that period.

 

For the avoidance of doubt, the arrangement fee referred to in paragraph (b) above shall not be payable if the IPO does not proceed.

 

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Costs of negotiation, preparation etc.

 

The Borrower shall pay to the Lender promptly the amount of all expenses reasonably incurred by the lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

 

Costs of variations, amendments, enforcement etc.

 

The Borrower shall pay to the Lender, on the Lender’s demand, the amount of all expenses (in the case of paragraph (a) below, reasonably) incurred by the Lender in connection with:

 

(a)                                 any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

 

(b)                                 any consent or waiver by the Lender under or in connection with a Finance Document, or any request for such a consent or waiver;

 

(c)                                  the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or

 

(d)                                 any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

 

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

 

Documentary taxes

 

The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

 

Certification of amounts

 

A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to it under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

INDEMNITIES

 

Indemnities regarding borrowing and repayment of Loan

 

The Borrower shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

(a)                                 [an Advance not continuing being made available on the Effective Date for any reason other than a default by the Lender;]

 

(b)                                 the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

 

(c)                                  any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 6); and

 

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(d)                                 the occurrence of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

 

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

 

Breakage costs

 

Without limiting its generality, Clause 20.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by the Lender:

 

(a)                                 in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

 

(b)                                 in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or that part which the Lender determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

 

Miscellaneous indemnities

 

The Borrower shall fully indemnify the Lender severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by the Lender, in any country, as a result of or in connection with:

 

(a)                                 any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document; or

 

(b)                                 any other Pertinent Matter,

 

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct of the officers or employees of the Lender.

 

Without prejudice to its generality, this Clause 20.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

 

Currency indemnity

 

If any sum due from the Borrower or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

 

(a)                                 making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

 

(b)                                 obtaining an order or judgment from any court or other tribunal; or

 

(c)                                  enforcing any such order or judgment,

 

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the Borrower shall indemnify the Lender concerned against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

 

In this Clause 20.4 the “available rate of exchange” means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

 

This Clause 20.4 creates a separate liability of the Borrower which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

Application to Master Agreement

 

For the avoidance of doubt, Clause 20.4 does not apply in respect of sums due from the Borrower to the Lender under or in connection with the Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of the Master Agreement shall apply.

 

Certification of amounts

 

A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

Future indemnity liabilities

 

Any future indemnification liabilities under this Clause 20 or any other provision of this Agreement or any other Finance Document or the Master Agreement shall survive (as shall the liability of the Borrower, the Guarantors and the Corporate Guarantor for the same) up to a maximum period of two years Provided that if such liability has arisen during the Security Period, it shall survive the end of the aforementioned two-year period.

 

NO SET-OFF OR TAX DEDUCTION

 

No deductions

 

All amounts due from the Borrower under a Finance Document shall be paid:

 

(a)                                 without any form of set-off, counter-claim or condition; and

 

(b)                                 free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

 

Grossing-up for taxes

 

If the Borrower is required by law to make a tax deduction from any payment:

 

(a)                                 the Borrower shall notify the Lender as soon as it becomes aware of the requirement;

 

(b)                                 the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

 

(c)                                  the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

 

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Evidence of payment of taxes

 

Within 2 months after making any tax deduction, the Borrower shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

 

Exclusion of tax on overall net income

 

In this Clause 21 “tax deduction” means any deduction or withholding for or on account of any present or future tax except (i) tax on the Lender’s overall net income and (ii) a FATCA Deduction.

 

Application to Master Agreement

 

For the avoidance of doubt, Clause 21 does not apply in respect of sums due from the Borrower to the Lender under or in connection with a Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement shall apply.

 

FATCA Information

 

(a)                                 Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:

 

(i)                                     confirm to that other Party whether it is:

 

(A)                               a FATCA Exempt Party; or

 

(B)                               not a FATCA Exempt Party;

 

(ii)                                  supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA;

 

(iii)                               supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

 

(b)                                 If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

 

(c)                                  Paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

 

(i)                                     any law or regulation;

 

(ii)                                  any fiduciary duty; or

 

(iii)                               any duty of confidentiality.

 

(d)                                 If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under

 

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them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

FATCA Deduction and gross-up by Obligor

 

(a)                                 If an Obligor is required to make a FATCA Deduction, that Obligor shall make that FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA.

 

(b)                                 If a FATCA Deduction is required to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required.

 

(c)                                  The Borrower shall promptly upon becoming aware that an Obligor must make a FATCA Deduction (or that there is any change in the rate or the basis of a FATCA Deduction) notify the Lender accordingly. Similarly, the Lender shall notify the Borrower and that Obligor on becoming so aware in respect of a payment payable to it.

 

(d)                                 Within thirty days of making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Obligor making that FATCA Deduction or payment shall deliver to the Lender evidence reasonably satisfactory to the Lender that the FATCA Deduction has been made or (as applicable) any appropriate payment has been paid to the relevant governmental or taxation authority.

 

FATCA Deduction by the Lender

 

The Lender may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Lender shall not be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. If the Lender becomes aware that it must make a FATCA Deduction in respect of a payment to the Borrower (or that there is any change in the rate or the basis of such FATCA Deduction), the Lender shall notify the Borrower.

 

ILLEGALITY, ETC

 

Illegality

 

This Clause 22 applies if the Lender notifies the Borrower that it has become, or will with effect from a specified date, become:

 

(a)                                 unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

 

(b)                                 contrary to, or inconsistent with, any regulation,

 

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

 

Notification and effect of illegality

 

On the Lender notifying the Borrower under Clause 22.1, the obligations of the Lender under this Agreement shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in accordance with Clause 7.

 

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Mitigation

 

If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 23.2, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

 

(a)                                 have an adverse effect on its business, operations or financial condition; or

 

(b)                                 involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

 

(c)                                  involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

 

INCREASED COSTS

 

Increased costs

 

This Clause 23 applies if the Lender considers that as a result of:

 

(a)                                 the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

 

(b)                                 complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) in effect on or which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

 

the Lender (or a parent company of it) has incurred or will incur an “increased cost”.

 

Meaning of “increased cost”.

 

In this Clause 23, “increased cost” means, in relation to the Lender (or a parent company of it):

 

(a)                                 an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, or having taken an assignment of rights under, this Agreement, of funding or maintaining the Loan or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums;

 

(b)                                 a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

 

(c)                                  an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan;

 

(d)                                 a liability to make a payment which is calculated by reference to any amounts received or receivable by the Lender under this Agreement; or

 

(e)                                  the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (the “Basel II Accord”) or any other law or regulation implementing the Basel II

 

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Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel II Accord as well as “the international framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010 (“Basel III Accord”) or any other law or regulation implementing the Basel III Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel III Accord and in both case as from time to time implemented by the Lender (whether such implementation, application or compliance is by a government, regulator, supervisory authority, the Lender or its holding company),

 

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21.

 

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

 

Payment of increased costs

 

The Borrower shall pay to the Lender, within 30 days from the Lender’s demand, the amounts which the Lender from time to time notifies the Borrower that it has specified to be necessary to compensate it for the increased cost.

 

Notice of prepayment

 

If the Borrower is not willing to continue to compensate the Lender for the increased cost under Clause 23.3, the Borrower may give the Lender not less than 14 days’ notice of their intention to prepay the Loan.

 

Prepayment

 

A notice under Clause 23.4 shall be irrevocable and on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

 

Application of prepayment

 

Clause 0 shall apply in relation to the prepayment.

 

SET-OFF

 

Application of credit balances

 

The Lender may without prior notice:

 

(a)                                 apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrower to the Lender under any of the Finance Documents; and

 

(b)                                 for that purpose:

 

break, or alter the maturity of, all or any part of a deposit of the Borrower;

 

(i)                                     convert or translate all or any part of a deposit or other credit balance into Dollars; and

 

55

 

(ii)                                  enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

 

Existing rights unaffected

 

The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

 

No Security Interest

 

This Clause 24 gives the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

 

TRANSFERS AND CHANGES IN LENDING OFFICE

 

Transfer by Borrower

 

The Borrower may not, without the consent of the Lender, transfer any of its rights, liabilities or obligations under any Finance Document.

 

Assignment by Lender.

 

The Lender may assign all or any of the rights and interests which it has under or by virtue of the Finance Documents as follows:

 

(a)                                 in the case of an assignment which is:

 

(i)                                     imposed upon the Lender by a central bank or any other regulatory authority;

 

(ii)                                  made following the occurrence of an Event of Default which is continuing; or

 

(iii)                               made to an affiliate of the Lender,

 

without the consent of, but with notice to, the Borrower; and

 

(b)                                 in all other circumstances, with the prior consent of the Borrower (such consent not to be unreasonably withheld or delayed).

 

Rights of Assignee.

 

In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee of any of the Lender’s rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee as a result of the breach or misrepresentation, irrespective of whether the Lender would have incurred a loss of that kind or amount.

 

Sub-participation; subrogation assignment

 

The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

 

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Disclosure of information

 

The Lender may disclose to a potential assignee or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document unless the information is clearly of a confidential nature or price sensitive.

 

Change of lending office

 

The Lender may change its lending office by giving notice to the Lender and the change shall become effective on the later of:

 

(a)                                 the date on which the Borrower receives the notice; and

 

(b)                                 the date, if any, specified in the notice as the date on which the change will come into effect.

 

Replacement of Reference Bank

 

If any Reference Bank ceases to be the Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower and the Lender otherwise agree, the Lender, after consulting the Borrower, shall appoint another bank to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective.

 

Security over Lender’s rights

 

In addition to the other rights provided to the Lender under this Clause 25, the Lender may without consulting with or obtaining consent from the Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure its obligations including, without limitation:

 

(a)                                 any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

 

(b)                                 if the Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by the Lender as security for those obligations or securities;

 

(c)                                  except that no such charge, assignment or Security Interest shall:

 

(i)                                     release the Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

 

(ii)                                  require any payments to be made by the Borrower or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

 

No additional costs

 

If at the time of, or immediately after, any assignment by the Lender of any part of its rights, benefits and/or obligations under this Agreement, or any change in the office through which the Lender lends for the purposes of this Agreement, the Borrower would be obliged to pay to the assignee or (in the case of a change of lending office) the Lender under Clauses 4.7, 21.2 or 23.1 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender under the relevant clauses in the absence of such assignment or change of office, the Borrower shall not be obliged to pay that excess Provided that the provisions of this Clause 0 do not apply if at the relevant time any Event of Default has occurred which is continuing.

 

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VARIATIONS AND WAIVERS

 

Variations, waivers etc.

 

Subject to Clause 26.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower and the Lender, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

 

Exclusion of other or implied variations

 

Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

 

(a)                                 a provision of this Agreement or another Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred by any Finance Document or by the general law,

 

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

 

NOTICES

 

General

 

Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, fax or e-mail; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

 

Addresses for communications

 

A notice by letter, fax or e-mail shall be sent:

 

(a)                                 to the Borrower:                                                        c/o Empire Navigation Inc.

88 Vouliagmenis Avenue

Elliniko — Athens

167 77, Greece

Fax: +30 2109604210,

E-mail: legal@empirenavigation.com

FAO: Theodore Kokkinis

 

(b)                                 to the Lender:                                                                    St. Alban-Graben 1-3

4002 Basel

Switzerland

Fax No: +41 61 266 79 39

Email: [·]

FAO: Ship Finance

 

58

 

(Attn: Mr Joerg Remde)

 

or to such other address as the relevant party may notify the other.

 

Effective date of notices

 

Subject to Clauses 27.4 and 27.5:

 

(a)                                 a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

 

(b)                                 a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

 

Service outside business hours

 

However, if under Clause 27.3 a notice would be deemed to be served:

 

(a)                                 on a day which is not a business day in the place of receipt; or

 

(b)                                 on such a business day, but after 5 p.m. local time,

 

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

Illegible notices

 

Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

 

Valid notices

 

A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

 

(a)                                 the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

 

(b)                                 in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

 

Electronic communication

 

The Lender and the Borrower, agree that information may be sent via e-mail to each other, and to (or from) third parties involved in the provision of services. In particular, the Borrower is aware that:

 

(a)                                 the unencrypted information is transported over an open, publicly accessible network and can, in principle, be viewed by others, thereby allowing conclusions to be drawn about a banking relationship;

 

(b)                                 the information can be changed and manipulated by a third party;

 

59

 

(c)                                  the sender’s identity (sender of the e-mail) can be assumed or otherwise manipulated;

 

(d)                                 the exchange of information can be delayed or disrupted due to transmission errors, technical faults, disruptions, malfunctions, illegal interventions, network overload, the malicious blocking of electronic access by third parties, or other shortcomings on the part of the network provider. In certain situations, time-critical orders and instructions might not be processed on time;

 

(e)                                  the Lender assumes no liability for any loss incurred as a result of manipulation of the e-mail address or content nor is it liable for any loss incurred by the Borrower and any other Relevant Persons due to interruptions and delays in transmission caused by technical problems.

 

The Lender is entitled to assume that all the orders and instructions, and communications in general, received from the Borrower or a third party are from an authorised individual, irrespective of the existing signatory rights in accordance with the commercial register (or any other applicable equivalent document) or the specimen signature provided to the Lender. The Borrower shall further procure that all third parties referred to herein agree with the use of e-mails and are aware of the above terms and conditions related to the use of e-mail.

 

English language

 

Any notice under or in connection with a Finance Document shall be in English.

 

Meaning of “notice”

 

In this Clause 27, “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

 

SUPPLEMENTAL

 

Rights cumulative, non-exclusive

 

The rights and remedies which the Finance Documents give to the Lender are:

 

(a)                                 cumulative;

 

(b)                                 may be exercised as often as appears expedient; and

 

(c)                                  shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

 

Severability of provisions

 

If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

 

Counterparts

 

A Finance Document may be executed in any number of counterparts.

 

60

 

Third party rights

 

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

Disclosure

 

The Borrower authorises the Lender and (subject to any confidentiality obligations or confidentiality restrictions arising from Swiss law or other applicable banking secrecy and data protection legislation) the Lender authorises the Borrower to disclose all information related or connected to:

 

(a)                                 the Ship or any other vessel owned or operated by a Security Party;

 

(b)                                 the negotiation, drafting and content of this Agreement, the Finance Documents and any Master Agreement;

 

(c)                                  the Loan; or

 

(d)                                 any Security Party,

 

to any service provider (included but not limited to professional advisers, auditors, lawyers, accountants, surveyors, valuers, insurers, insurance advisers and brokers) or other party (including, without limitation, the U.S. Securities and Exchange Commission) which the Borrower or (as the case may be) the Lender may deem necessary in connection with this Agreement or any other Finance Document (including, without limitation, any Master Agreement), or the protection or (in the case of the Lender) enforcement of its rights thereunder (including, but not limited to, any person or affiliate of the Lender in Switzerland or elsewhere).

 

The Borrower hereby releases the Lender and each of its officers, directors, employees, head office, professional advisers, auditors and representatives (together, “the Disclosing Party”) from any confidentiality obligations or confidentiality restrictions arising from Swiss law or other applicable banking secrecy and data protection legislation which would prevent a Disclosing Party from disclosing any information in accordance with Clause 28.5.

 

CONFIDENTIALITY

 

29.0                        Confidential Information

 

The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 29.5 and 29.1 and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

 

29.1                       Disclosure of Confidential Information

 

The Lender may disclose:

 

(a)                                 to any of its affiliates and any of its or their officers, directors, employees, professional advisers, auditors and representatives such Confidential Information as the Lender shall consider appropriate (acting reasonably) if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

 

(b)                                 to any person:

 

61

 

(i)                                     to whom it assigns or transfers (or may intend to assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents (in accordance with the terms thereof) or which succeeds (or which may potentially succeed) it as Lender and, in each case, to any of that person’s affiliates, representatives and professional advisers;

 

(ii)                                  with whom it enters into, whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Security Parties and to any of that person’s affiliates, representatives and professional advisers;

 

(iii)                               appointed by the Lender or by a person to whom sub-paragraphs (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

 

(iv)                              who invests in or otherwise finances (or may intend to invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above;

 

(v)                                 to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

 

(vi)                              to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;

 

(vii)                           to whom or for whose benefit the Lender charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 0 provided that such person to whom Confidential Information is to be given pursuant to this paragraph (vii) is informed in writing;

 

(viii)                        who is a Party, a member of the Group or any related entity of the Borrower;

 

(ix)                              as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or

 

(x)                                 with the consent of the Corporate Guarantor;

 

in each case, such Confidential Information as the Lender shall consider appropriate if:

 

(A)                               in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

 

(B)                               in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

 

62

 

(C)                               in relation to sub-paragraphs (v) and (vi) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender, it is not practicable so to do in the circumstances;

 

(c)                                  to any person appointed by the Lender or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the Lender;

 

(d)                                 to any person as may be required for the protection or enforcement of the Lender’s rights under this Agreement and the other Finance Documents; and

 

(e)                                  with the prior consent of the Borrower (such consent not to be unreasonably withheld or delayed) to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Security Parties if the rating agency to whom the Confidential Information is to be given has entered a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the Lender.

 

29.2                       Entire agreement

 

Clause 28.5 and this Clause 29 constitute the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

 

29.3                       Inside information

 

The Lender acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Lender undertakes not to use any Confidential Information for any unlawful purpose.

 

29.4                       Notification of disclosure

 

The Lender agrees (to the extent permitted by law and regulation) to inform the Borrower:

 

(a)                                 of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 29.1 except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

 

(b)                                 upon becoming aware that Confidential Information has been disclosed in breach of this Clause 0.

 

63

 

29.5                       Continuing obligations

 

The obligations in this Clause 0 are continuing and, in particular, shall survive and remain binding on the Lender for a period of 12 months from the earlier of:

 

(a)                                 the date on which all amounts payable by the Security under or in connection with this Agreement have been paid in full and the Loan has been cancelled or otherwise cease to be available; and

 

(b)                                 the date on which the Lender otherwise ceases to be the Lender.

 

LAW AND JURISDICTION

 

English law

 

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

 

Exclusive English jurisdiction

 

Subject to Clause 0, the courts of England shall have exclusive jurisdiction to settle any Dispute.

 

Choice of forum for the exclusive benefit of the Lender

 

Clause 0 is for the exclusive benefit of the Lender which reserves the right:

 

(a)                                 to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and

 

(b)                                 to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

 

The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.

 

Process agent

 

The Borrower irrevocably appoints Empire Navigation (UK) Limited at their office for the time being, presently at 61 Brompton Road, 1st Floor, Knightsbridge, London SW3 1DP,  to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.

 

Lender’s rights unaffected

 

Nothing in this Clause 0 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

 

Meaning of “proceedings”

 

In this Clause 0, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure and a “Dispute” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement.

 

64

 

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

 

65

 

EXECUTION PAGE

 

	
BORROWER
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED   by
    	
 
    	
)
    
	
 
    	
 
    	
)
    
	
for and on behalf of
    	
 
    	
)
    
	
LICHTENSTEIN SHIPPING
    	
 
    	
)
    
	
COMPANY LIMITED
    	
 
    	
)
    
	
in the presence of:
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
LENDER
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED   by
    	
 
    	
)
    
	
 
    	
 
    	
)
    
	
for and on behalf of
    	
 
    	
)
    
	
CREDIT SUISSE AG
    	
 
    	
)
    
	
in the presence of:
    	
 
    	
)
    

 

66Exhibit 10.11

 

DATED 19 AUGUST 2014

 

STARBOARD HOLDING CO. (the “Seller”)

 

-and-

 

LR HOLDING LIMITED (the “Buyer”)

 

 

SHARE PURCHASE AGREEMENT

 

 

 

INDEX

 

CLAUSE DESCRIPTION

 

	
1.
    	
INTERPRETATION
    	
 
    
	
2.
    	
CONDITIONS
    	
 
    
	
3.
    	
SALE AND PURCHASE AND WAIVER OF PRE-EMPTION RIGHTS
    	
 
    
	
4.
    	
CONSIDERATION
    	
 
    
	
5.
    	
COMPLETION
    	
 
    
	
6.
    	
CONDUCT OF CLAIMS
    	
 
    
	
7.
    	
CONFIDENTIALITY AND ANNOUNCEMENTS
    	
 
    
	
8.
    	
WARRANTIES
    	
 
    
	
9.
    	
INDEMNITY
    	
 
    
	
10.
    	
FURTHER ASSURANCE
    	
 
    
	
11.
    	
ASSIGNMENT
    	
 
    
	
12.
    	
ENTIRE AGREEMENT
    	
 
    
	
13.
    	
VARIATION AND WAIVER
    	
 
    
	
14.
    	
COSTS
    	
 
    
	
15.
    	
NOTICE
    	
 
    
	
16.
    	
LIABILITY
    	
 
    
	
17.
    	
SEVERANCE
    	
 
    
	
18.
    	
AGREEMENT SURVIVES COMPLETION
    	
 
    
	
19.
    	
THIRD PARTY RIGHTS
    	
 
    
	
20.
    	
SUCCESSORS
    	
 
    
	
21.
    	
COUNTERPARTS
    	
 
    
	
22.
    	
LANGUAGE
    	
 
    
	
23.
    	
GOVERNING LAW AND JURISDICTION
    	
 
    
	
24.
    	
SUBJECTS (BUYER’S BOD APPROVAL/RAISED EQUITY)
    	
 
    
	
25.
    	
BAREBOAT CHARTERER’S CONSENTS
    	
 
    
	
26.
    	
COMMISSION
    	
 
    

 

 

	
·
    	
SCHEDULE 1- PARTICULARS OF THE COMPANIES
    
	
 
    	
 
    
	
·
    	
SCHEDULE 2 -CONDITIONS
    
	
 
    	
 
    
	
·
    	
SCHEDULE 3 - PRE-COMPLETION UNDERTAKINGS
    
	
 
    	
 
    
	
·
    	
SCHEDULE 4 -COMPLETION
    
	
 
    	
 
    
	
·
    	
PART 1- WHAT THE SELLER SHALL DELIVER TO THE BUYER AT   COMPLETION 
    
	
 
    	
 
    
	
·
    	
PART 2- WHAT THE BUYER  SHALL   DELIVER TO THE SELLER AT COMPLETION
    
	
 
    	
 
    
	
·
    	
PART 3- MATTERS FOR THE BOARD MEETINGS AT COMPLETION
    
	
 
    	
 
    
	
·
    	
SCHEDULE 5- SELLER’S WARRANTIES
    
	
 
    	
 
    
	
·
    	
SCHEDULE 6- CONDUCT OF CLAIMS
    
	
 
    	
 
    
	
·
    	
SCHEDULE 7- RETAINED CLAIMS
    
	
 
    	
 
    
	
·
    	
SCHEDULE 8 - BAREBOAT CHARTER
    

 

 

THIS AGREEMENT is made on 19 August, 2014 

 

BETWEEN

 

(1)                                 STARBOARD HOLDINGS CO. incorporated and registered in The Republic of the Marshall Islands with company number 31658 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960 (the “Seller”); and

 

(2)                                 LR HOLDING LIMITED incorporated and registered in The Republic of the Marshall Islands the with company number 70401 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960 (the “Buyer”).

 

WHEREAS

 

(A)                               Pasha Finance Inc. is a corporation incorporated in The Republic of the Marshall Islands and is authorised to issue 100 registered shares of no par value all of which have been issued and have been fully paid and non-assessable and are represented by share certificate no. 6 (the “Pasha Share”).

 

(B)                               Further particulars of the Company (as defined below) at the date of this Agreement are set out in Part A of Schedule 1.

 

(C)                               The Seller has agreed to sell the Pasha Share and the Buyer has agreed to buy the Pasha Share subject to the terms and conditions of this Agreement.

 

IT IS AGREED as follows:

 

1.                                           INTERPRETATION

 

1.1                              The definitions and rules of interpretation in this Clause apply in this Agreement.

 

“Accounts” means the unaudited management accounts of the Companies as at and to the Completion Date, comprising the individual accounts of the Companies including in each case a balance sheet and profit and loss account, which the Seller shall prepare (in accordance with International Financial Reporting Standards (IFRS),) for the purpose of calculating the Working Capital Amount (if any) or for Buyer’s auditing purposes as the case may be in accordance with standard internal policies and procedures for internal management reporting purposes and on the same basis as that adopted in preparing management accounts in relation to the Company’s Group in the last two years, provided that such accounts shall fully reflect all costs associated with the removal prior to Completion of any conditions of class imposed by the Classification Society in respect of the Vessel (whether such costs are incurred prior to the Completion). No off balance sheet arrangements should exist at the Completion Date.

 

“Agreement” means this agreement together with any Schedules and documents appended hereto and includes any amendment and variation thereof in accordance with its terms;

 

“Bank Loans” means any and all amounts due in respect of the Loan Agreement;

 

“Bareboat Charter or Charter” means the bareboat charter party entered into in respect of the Vessel between the Company as owner and the Bareboat Charterer as charterer, a full  copy of which is attached in Schedule 8 of this Agreement;

 

“Bareboat Charterer” means,  “BB Cape Talara Shipping Company Limited”, of Trust

 

 

Company Limited, Trust Company Complex, Ajeltake Island, Majuro guaranteed by Schoeller Holdings Ltd. of Dodekanison Str., 4043 Limassol / PO Box 51624, CY3507, Limassol, Cyprus.

 

“Books and Records” means minutes books, stock books, stock ledgers, books of account, manuals, general, financial, warranty and shipping records, excluding finance and tax books, records and files (or copies thereof) necessary for Seller to comply with the IFRS financial reporting framework and its tax obligations.

 

“Business” means the business of the Company, namely the ownership of the Vessel engaged in the transportation of a broad range of clean and dirty oil products;

 

“Business Day” means a day (other than a Saturday, Sunday or public holiday) when banks in Athens, London and New York are open for business;

 

“Buyer’s Account” means the Buyer’s account to be nominated by the Buyer prior to the Completion Date.

 

“Buyer’s Warranties” means the warranties set out in Clause 8.5;

 

“Cape Talara” means motor vessel Cape Talara (IMO number:9569994)

 

“Cash In Account” means the aggregate of any cash standing to the credit of the accounts of the Company at Completion;

 

“Claim” has the meaning set out in Clause 6;

 

“Classification Society” means the classification society in respect of the Vessel, details of which are set out in Part B of Schedule 1;

 

“Commission” means the lump sum of United States Dollars Two Hundred Thousand (US$ 200,000) due and payable to Messrs. Carriers Chartering Corp. of Athens, Greece, latest within seven (7) Business Days post Completion, such amount to be billed and split equally between the Seller and the Buyer;

 

“Company” means Pasha Finance Inc.;

 

“Completion” means completion of the sale and purchase of the Pasha Share in accordance with this Agreement;

 

“Completion Date” means the date on which Completion occurs;

 

“Conditions” means the conditions set out in Schedule 2;

 

“Delivery Period” means the period between 30 September, 2014 to 31 October, 2014 during which Completion should occur, in Seller’s option.

 

“Director” means a director of any of the Companies, whose name is set out in Part A of Schedule 1;

 

“Disclosed” means fairly disclosed in:

 

(a)                                 the Disclosure Letter; or

 

(b)                                 in writing to any of Stamatis Molaris, Natalia Athanasiou, Stewart Crawford, Nikos Arkadis, Andreas Makris and Theodore Kokkinis on or before the date of this Agreement and Completion (as applicable) ;

 

“Disclosure Letter” means the confirmation letter accompanied with a full set of documents and information in

 

 

respect of the Company and the Business made available by the Seller to the Buyer and the Buyer’s Representatives duly executed by an authorized signatory of the Company (including, for the avoidance of doubt, any written responses made available to the Buyer and the Buyer’s Representatives to Completion);

 

“Encumbrance” means any mortgage, charge, pledge, lien, assignment, hypothecation, title retention, option, right of first refusal, right of pre-emption or any other security interest granted to any third party having a similar effect to any of them (or an agreement or commitment to create any of them);

 

“Group” means, in relation to a company, that company, any company which is a holding company or a subsidiary of it and any other subsidiaries of any such holding company; and each company in a group is a member of the group. Unless the context otherwise requires, the application of the definition of Group to any company at any time will apply to the company as it is at that time;

 

“Hires in advance” means the amount of any advance charter hire payments received by the Seller (through the Company) prior to Completion in respect of the Vessel for any period on or after the Completion Date (including, for the avoidance of doubt, communications, victualling and entertaining charges), such amount to be agreed in writing between the Seller and the Buyer prior to Completion;

 

“holding company” and “subsidiary” means a “holding company” and “subsidiary” as defined in section 1159 of the Companies Act 2006;

 

“Indemnity” has the meaning given to it in Clause 9; 

 

“Initial Purchase Price” means an amount equal to:

 

(a)                   US$ THIRTY NINE FIVE HUNDRED MILLION (US$ 39,500,000) plus

 

(b)              any Cash in Account;

 

“Intellectual Property” means any business names, trading names, trademarks, logos or other intellectual property;

 

“IPO” means the initial public offering to be effected by the Issuer, subject to various conditions, in a securities exchange, including but not limited to relevant proceeds;

 

“Issuer” means Product Shipping Limited a company incorporated and registered in the Republic of the Marshall Islands with company number 69474 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH96960

 

“Loan Agreement” means the Loan Agreement dated 21 May 2008, (as amended and supplemented) and made between inter alia Pasha Finance Inc and HSH Nordbank AG as swap and issuing bank and documentary agent and Piraeus Bank A.E. as Account Agent and Bank of Cyprus;

 

“Long-stop Date” means 31 October, 2014 or such later date as the Seller and the Buyer may agree in writing;

 

“Material Adverse Change” means any change, development, effect, fact or circumstance occurring after the date of this Agreement and prior to or on the Completion Date that has had or will in all likelihood have a material adverse effect on the Business, position (financial, trading or otherwise) or prospects of any of the Company, including a material adverse change in the condition of the Vessel or the suspension or revocation of any license or approval which is necessary for the operation of the Business of the Company and/or any

 

 

material breach of the Seller’s Warranties in paragraphs 1 and 5.2(a) of Schedule 5 and/or any material breach of the Pre-Completion Undertakings;

 

“MoA” has the meaning set out in Schedule 2;

 

“Pasha Share” has the meaning given to it in Recital A;

 

“Pasha Finance Inc.” means a company incorporated and registered in the Republic of the Marshall Islands with company number 27365 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH96960

 

“Pre-Completion Undertakings” means the undertakings given by the Seller as detailed in Schedule 3;

 

“Proceedings” has the meaning set out in Schedule 6;

 

“Purchase Price” means an amount equal to:

 

(a)              the Initial Purchase Price; and

 

(b)              either (i) less the Working Capital Amount (if the Working Capital Amount is negative); or (ii) plus the Working Capital Amount (if the Working Capital Amount is positive);

 

“Representatives” means all representatives of a Party including employees, directors, agents, advisors, attorneys, solicitors, accountants, counsels, consultants, potential investors, lending institutions and other representatives;

 

“Retained Assets and Liabilities” means any and all trade accounts receivable and all P&I crew medical claims receivable held by the Company as at Completion together with the specified insurance claims, claims by the Companies and claims against the Companies as set out in Schedule 7;

 

“Retained Group” means the Seller and other members of the Seller’s Group (other than the Company);

 

“Seller’s Account” means together the bank account(s) to be advised/nominated by the Seller prior to the Completion Date;

 

“Seller’s Warranties” means  the warranties set out in Schedule 5;

 

“Tax” or “Taxation” means all forms of taxation and statutory, governmental, state, federal, provincial, local, government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities wherever chargeable and whether in Greece or in any other jurisdiction, and any penalty, fine, surcharge, interest, charges or costs relating thereto;

 

“Taxation Authority” means the Inland Revenue Authority of Greece and any other governmental or other authority whatsoever competent to impose any Tax, whether in Greece or elsewhere;

 

“Third Party Claim” has the  meaning set out in Schedule 6;

 

“Transaction” means the transaction contemplated by this Agreement or any part of that transaction;

 

“US$” means the lawful currency of the United States of America;

 

“Vessel” means the motor vessel Cape Talara;

 

 

“Working Capital” means the aggregate net assets of the Companies at the date of Completion excluding the Vessel, the Hires in Advance, the Cash In Account, the Retained Assets and Liabilities and the Bank Loans; and

 

“Working Capital Amount” means the amount of Working Capital calculated by reference to the Accounts as at the date of Completion.

 

1.2                               Clause and Schedule headings do not affect the interpretation of this Agreement.

 

1.3                               A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality) and that person’s personal representatives, successors or permitted assignees.

 

1.4                               Unless the context otherwise requires, words in the singular shall include the plural and in the plural include the singular.

 

1.5                               Unless the context otherwise requires, a reference to one gender includes a reference to the other genders.

 

1.6                               Subject to Clause 11, a reference to any Party shall include that Party’s personal representatives, successors and permitted assigns.

 

1.7                               A reference to a company shall include any company, corporation or other body corporate wherever and however incorporated or established.

 

1.8                               A reference to a particular statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time, taking account of any amendment or re-enactment and includes any statute, statutory provision or subordinate legislation which it amends or re enacts and subordinates legislation for the time being in force made under it. Provided that, as between the Parties, no such amendment or re-enactment made after the date of this Agreement shall apply for the purposes of this Agreement to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely affect the rights of, any Party.

 

1.9                               Writing or written includes fax and e-mail.

 

1.10                        References to Clauses and Schedules are to the clauses and schedules of this Agreement; references to Paragraphs are to paragraphs of the relevant Schedule.

 

1.11                        Any reference to an English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any  legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to what most nearly approximates to the English legal term in that jurisdiction.

 

1.12                        Any words following the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, defamation, phrase or term preceding those terms.

 

1.13                        Unless the context otherwise requires, a time of day is a reference to Athens and/or London time.

 

2.                                      CONDITIONS

 

2.1                               Completion of this Agreement is subject to the Conditions being satisfied or waived in accordance with the terms of this Agreement.

 

2.2                               If any of the Conditions (except for the condition stipulated in section 7 of Schedule 2) have not been

 

 

satisfied or waived by the Long-stop Date and the Buyer notifies the Seller in writing on or after the Long-stop Date that it wishes to terminate this Agreement, then this Agreement (except for the provisions set out in Clause 2.3) shall terminate with effect from the date of the relevant notification and the Seller shall indemnify the Buyer and keep it indemnified against all claims, damages, losses, costs (including legal and other professional costs reasonably incurred) and liabilities whatsoever, which may arise directly out of or be occasioned or suffered in consequence of, or in connection with, the above termination.

 

2.3                               The following provisions shall continue to have effect, notwithstanding termination of this Agreement in accordance with Clause 2.2:

 

(a)                                      Clause 1;

 

(b)                                      Clause 2.2 and Clause 2.3;

 

(c)                                       Clause 7

 

(d)                                      Clause 12;

 

(e)                                       Clause 13;

 

(f)                                        Clause 14;

 

(g)                                       Clause 15;

 

(h)                                      Clause 21;

 

(i)                                          Clause 22; and

 

(j)                                         Clause 23.

 

 

2.4                               The Seller shall procure that all the Conditions are satisfied as soon as practicable after the date of this Agreement and in any event no later than the Long-stop Date.

 

2.5                               The Buyer and the Seller (including the Bareboat Charterer in accordance with the provisions of Clause 25) shall cooperate fully in all actions necessary to procure the satisfaction of the Conditions, the Pre-Completion Undertakings including, but not limited to, the provision of all information reasonably necessary to make any notification or filing or as requested by any relevant authority, obtain the required Consents as provided in Clause 25, keeping the other Party informed of the progress of any notification or filing and providing such assistance as may reasonably be required.

 

2.6                               The Buyer may, to such extent as it thinks fit and is legally entitled to do so, waive any of the Conditions (or make them conditions subsequent as the case may be) in relevant paragraphs of Schedule 2.

 

2.7                               Pending Completion or the earlier termination of this Agreement in accordance with its terms, the Seller shall comply with the Pre-Completion Undertakings.

 

3.                                      SALE AND PURCHASE AND WAIVER OF PRE-EMPTION RIGHTS

 

3.1                               On the terms of this Agreement and subject to the Conditions, the Seller shall sell, and the Buyer shall buy, with effect from Completion, the Pasha Share with full title guarantee and free from Encumbrances together with all rights that attach (or may in the future attach) to it including, in particular, the right to receive all dividends and distributions declared, made or paid after the Completion Date. For the avoidance of doubt the Seller is entitled to distribute any dividend accumulated by the Company prior to the Completion Date.

 

3.2                               The Seller waives any right of pre-emption or other restriction on transfer in respect of the Pasha Share conferred on it under the articles of incorporation of the Company or otherwise.

 

3.4                               Nothing in this Agreement shall operate as an agreement to transfer or shall transfer any right, title or interest in and to any Intellectual Property owned or licensed by the Seller or the other members of the Retained Group and the Buyer shall procure that after Completion neither any member of the Buyer’s Group nor any member of the Companies’ Group(s) shall use any such Intellectual Property owned or licensed by the Seller or any other member of the Retained Group, other than the name of the Vessel under the Charter.

 

4.                                      CONSIDERATION

 

The consideration for the sale of the Pasha Share shall be the payment of the Purchase Price in cash in accordance with the terms of this Clause 4.

 

4.1                               The Purchase Price shall be payable as follows:

 

(a)              the Initial Purchase Price shall be payable on Completion in accordance with Clause 5; and

 

(b)              such further payment or adjustment payment as is provided for under Clause 4.8 shall be made by the Buyer to the Seller or by the Seller to the Buyer (as the case may be) in accordance with the provisions of this Clause 4 and all related subsections..

 

4.2                               If this Agreement is not completed in accordance with its terms on the Completion Date as a result of either:

 

 

(a)              the Seller’s non-compliance with the terms of this  Agreement (as applicable); or

 

(b)              the Conditions set out in Schedule 2 (save section 7) not being satisfied or waived, the Buyer shall have the right, but not the obligation, to terminate this Agreement. In the event that Buyer decides in its absolute discretion to terminate this Agreement, the Seller shall indemnify the Buyer and keep it indemnified against all claims, damages, losses, costs (including legal and other professional costs reasonably incurred) and liabilities whatsoever, which may arise directly out of or be occasioned or suffered in consequence of, or in connection with, the above termination.

 

4.3                               The Seller shall prepare the Accounts and  shall calculate and notify the Buyer of the Working Capital Amount (together with a copy of the Accounts) within one week of Completion. The Buyer shall be entitled to review the Accounts and the calculation of the Working Capital Amount and shall be entitled to appoint a third party auditor at the Seller’s expense to do so.

 

4.4                               (a)                                 The Buyer and the Seller shall agree the Working Capital Amount within one month of Completion and the date of their agreement or, if an Independent Accountant  is appointed in accordance with Clause 4.4(d), the date of his determination, shall be the “Reconciled Amount Date”.

 

(b)                                 Unless within 15 Business Days after receipt of the Accounts pursuant to Clause 4.5 the Buyer notifies the Seller in writing of any disagreement relating to the Accounts or the calculation of the Working Capital Amount, the Parties shall be deemed to have accepted the Accounts and the calculation of the Working Capital Amount as accurate.

 

(c)                                  If within the period of 15 Business Days referred to in Clause 4.4(b) the Buyer notifies the Seller of any disagreement relating to the preparation of the Accounts or the calculation of the Working Capital Amount (“Notice of Disagreement”) and the Parties are able to resolve such disagreement or difference of opinion within five (5) Business Days of the Notice of Disagreement, the Parties shall be deemed to have accepted the Accounts and the calculation of the Working Capital Amount as accurate.

 

(d)                                 If the Seller and the Buyer are unable to reach agreement within five (5) Business Days after the Notice of Disagreement, the matter in dispute shall, upon written notice from either the Buyer or

 

 

the Seller to the other (“Referral Notice”) be referred for determination to such independent chartered accountant (“Independent Accountant”): (i) as the Seller and the Buyer may agree in writing within 5 Business Days after the service of the Referral Notice; or (ii) failing such agreement, as the President for the time being of the Institute of Chartered Accountants in England and Wales shall nominate on the application of either the Seller or the Buyer.

 

(e)                                  The Independent Accountant shall act on the following basis:

 

(i) the Independent Accountant shall be instructed to notify the Seller and the Buyer of his determination of the matter in dispute within 10 Business Days of such referral; (ii) the Independent Accountant shall act as an expert and not as an arbitrator, the Arbitration Act 1996 shall not apply and his decision on the matters referred to him shall (in the absence of manifest error) be final and binding on the Seller and the Buyer for the purposes of this Agreement; (iii) the Seller and the Buyer shall be entitled to make written submissions to the Independent Accountant; and (iv) the costs of the Independent Accountant shall be apportioned between the Seller and the Buyer as the Independent Accountant shall direct but each Party shall be responsible for its own costs of presenting its case to the Independent Accountant.

 

4.5                               Following agreement or determination of the Working Capital Amount, if the Working Capital Amount is: (a) a positive amount, the Buyer shall remit the Working Capital Amount to the Seller within three days of the Reconciled Amount Date; (b) a negative amount, the Seller shall remit the Working Capital Amount to the Buyer within three days of the Reconciled Amount Date; (c) zero, no payment shall be due from the Seller or the Buyer pursuant to this Clause 4.5.

 

4.6                               Any sums received by the Company or the Buyer following Completion which relate to any amounts receivable within the Retained Assets and Liabilities shall be held on trust for the Seller and the Buyer shall procure in any event that such sums are transferred to the Seller’s Account within three (3) Business Days of receipt.

 

4.7                               Any sums due by the Company which relate to any amounts owed by it in respect of claims against it within the Retained Assets and Liabilities shall be paid by the Seller to the Buyer and the Seller shall procure in any event that such sums are transferred to the Buyer’s Account no later than the date on which such sums fall due for payment.

 

 

5.                                      COMPLETION

 

5.1                               Subject to the provisions of this Agreement, Completion shall take place at the offices of HSH Nordbank in Piraeus at such date to be agreed in writing by the Seller and the Buyer.

 

5.2                               At Completion the Seller shall:

 

(a)                                 deliver the documents and evidence set out in Part 1 of Schedule 4;

 

(b)                                 procure that resolutions of board meeting of the Company at which the matters identified in Part 3 of Schedule 4 are carried out each duly signed by the Directors;

 

(c)                                  deliver any other documents referred to in this Agreement as being required to be delivered by the Seller; and

 

(d)                                 pay an amount equal to the aggregate of all Hires in Advance (unless set off in accordance with Clause 5.4) via electronic transfer to the Buyer’s Account unless at the Seller’s option it decides to deduct and set off such amounts from the payment of the Initial Purchase Price.

 

5.3                               At Completion the Buyer shall:

 

(a)                                 pay the Initial Purchase Price (adjusted for any setting off permitted by Clause 5.4, being free and clear from any tax, set off or deduction and ensure that the Seller receives an amount that would otherwise have been received had no such deductions been made and as per the provisions of clause 14.2) via electronic transfer to the Seller’s Account (and such payment shall constitute good discharge to the Buyer in respect of it) in accordance with Clause 4; and

 

(b)                                 deliver the documents and evidence set out in Part 2 of Schedule 4;

 

5.4                               Payments required under Clauses 5.2(d) and 5.3(a) may be netted against each other if agreed at any time in advance of Completion by the Buyer and Seller.

 

5.5                               If the respective obligations of the Seller under Clause 5.2 and of the Buyer under Clause 5.3 are not complied with in any material respect on the Completion Date, the Buyer or the Seller, as the case may be, may, without prejudice to any other rights it has:

 

(a)                                 proceed to Completion so far as practicable; or

 

(b)                                 defer Completion to a date no more than ten (10) Business Days after the agreed Completion date; or

 

(c)                                  terminate this Agreement.

 

5.6                               The Buyer or the Seller may defer Completion under  Clause 5.4 only once, but otherwise this Clause 5 applies to a Completion deferred under that clause as it applies to a Completion that has not been deferred.

 

5.7                               As soon as reasonably practicable after Completion, but not later than five  Business  Days, the Seller shall send to the Buyer (at the address referred to in Clause 15.2(b) and at the Seller’s expense the Books and Records except those that are required to be delivered at Completion.

 

 

6.                                      CONDUCT OF CLAIMS RELATING TO RETAINED ASSETS AND LIABILITIES

 

6.1                               Where the Buyer or the Company is entitled to recover from some other person (other than a company in the Retained Group) any sum in respect of amounts receivable, or is liable to any such other person in respect of any claim against it (in each case to the extent such amounts and claims fall with the definition of Retained Assets and Liabilities) the Buyer shall procure that the Company will take such commercially reasonable and prudent action as the Seller may require:

 

(a)                                 to recover such sums receivable and any sum so recovered will be paid to the Seller, after deduction of all reasonable incurred legal costs and expenses incurred in connection with such recovery;

 

(b)                                 to avoid, dispute, resist, appeal, contest, defend or compromise any such claim to its reasonable satisfaction and will not pay, accept or compromise any such claim without giving the Seller an opportunity to resist it.

 

6.2                               The Buyer shall procure that the Company shall:

 

(a)                                 as soon as reasonably practical notify the Seller in writing of any such claim against it; and

 

(b)                                 at all times disclose in writing to the Seller all information and documents relating to any claim or matter which gives or may give rise to a relevant claim to enable the Seller at its own expense and in the name of the Company to object to or to contest such claims.

 

6.3                               The provisions of this Clause apply only to amounts receivable and claims with the definition of Retained Assets and Liabilities and are without prejudice to the provisions of Schedule 6 in relation to Claims.

 

7.                                      CONFIDENTIALITY AND ANNOUNCEMENTS

 

7.1                               The Seller undertakes to the Buyer to keep confidential the terms of this Agreement and all information which it has acquired about the Buyer’s Group (as such Group is constituted immediately before Completion) and the Companies and to use the information only for the purposes contemplated by this Agreement.

 

7.2                               The Buyer undertakes to the Seller to keep confidential the terms of this Agreement and all information that it has acquired about the Seller or the Retained Group and to use the information only for the purposes contemplated by this Agreement.

 

7.3                               The Seller and the Buyer does not have to keep confidential or restrict its use of information about the Company after Completion.

 

7.4                               A Party does not have to keep confidential or to restrict its use of:

 

(a)                                 information that is or becomes public knowledge other than as a direct or indirect result of a breach of this Agreement; or

 

(b)                                 information that it receives from a source not connected with the Party to whom the duty of confidence is owed that it acquires free from any obligation of confidence to any other person.

 

7.5                               Any Party may disclose any information that it is otherwise required keeping confidential under this Clause 7:

 

 

(a)                                 to such professional advisers, consultants and employees or officers of its Group as are reasonably necessary to advise on this Agreement, or to facilitate the Transaction, if the disclosing Party procures that the people to whom the information is disclosed keep it confidential as if they were that Party; or

 

(b)                                 with the written consent of the other Party; or

 

(c)                                  to confirm that the Transaction has taken place and the date of the sale (but without otherwise revealing any other items of sale or making any other announcement); or

 

(d)                                 to the extent that the disclosure is required:

 

(i)                                     by law; or

 

(ii)                                  by a regulatory body, Taxation Authority or securities exchange; or

 

(iii)                               to make any filing with, or obtain any authorisation from, a regulatory body, Taxation Authority or securities exchange (including related authorities); or

 

(iv)                              under any arrangements in place under which negotiations relating to terms and conditions of employment are conducted; or

 

(v)                                 to protect the disclosing Party’s interest in any legal proceedings,

 

but in relation to (d) (except for securities exchange and related authorities) shall use reasonable endeavors to consult the other Parties and to take into account any reasonable requests they may have in relation to the disclosure before making it.

 

7.6                               Each Party shall supply any other Party with any information about itself, its Group or this Agreement as such other Party may reasonably require for the purposes of satisfying the requirements of a law, regulatory body or securities exchange (including related authorities) to which such other Party is subject.

 

8.                                      WARRANTIES

 

8.1                               The Seller warrants to the Buyer that each of its Seller’s Warranties are true in all material respects on the date of this Agreement and the Completion Date except as Disclosed in the Disclosure Letter.

 

8.2                               The Buyer warrants to the Seller that the Buyer’s Warranties are true in all material respects on the date of this Agreement and the Completion Date.

 

8.3                               Seller Warranties qualified by the expression so far as the Seller is aware (or any similar expression) are deemed to be given to the best of the knowledge, information and belief of the Seller after it has made due and careful enquiries.

 

8.4                               Each of the Seller Warranties is separate and, unless otherwise specifically provided, is not limited by reference to any other Seller Warranty or any other provision in this Agreement.

 

8.5                               The Buyer warrants  to the Seller that:

 

(a)                                 it is duly incorporated and validly existing under its laws of incorporation;

 

 

(b)                                 the Buyer has the requisite power and authority to enter into and perform this Agreement and the other documents referred to in it;

 

(c)                                  this Agreement and the other documents referred to in it constitute (or shall constitute when executed) valid, legal and binding obligations on the Buyer in the terms of this Agreement and such other documents;

 

(d)                                 compliance with the terms of this Agreement and the documents referred to in it shall not breach or constitute a material default under any of the following:

 

(i)                                     any agreement or instrument to which the Buyer is bound; or

 

(ii)                                  any order, judgment, decree or other restriction applicable to the Buyer; and

 

(e)                                  it is not insolvent and no step has been taken in any jurisdiction to initiate any process by or under which:

 

(i)                                     the ability of its creditors to take any action to enforce their debts is suspended, restricted or prevented; or

 

(ii)                                  some or all of its creditors accept, by agreement or in pursuance of a court order, an amount less than the sums owing to them in satisfaction of those sums with a view to preventing the dissolution of the Buyer; or

 

(iii)                               a person is appointed to manage the affairs, business and assets of the Buyer; or

 

(iv)                              the holder of a charge over all or any of the Buyer’s assets or is appointed to control the business and/or all or any assets of the Buyer.

 

9.                                      INDEMNITY

 

The Seller shall indemnify the Buyer and the Company and keep them fully indemnified against all claims, damages, losses, costs (including legal and other professional costs reasonably incurred) and liabilities whatsoever which may arise directly out of or be occasioned or suffered in consequence of, or in connection with the Vessel, the Charter and the Company for the period prior to the Completion Date (the “Indemnity”).

 

10.                               FURTHER ASSURANCE

 

The Seller shall insofar as it is able to do so after Completion and at the Seller’s expense  execute and deliver all such documents, and do all such things, as the Buyer may from time to time reasonably require for the purpose of giving full effect to the provisions of this Agreement.

 

11.                               ASSIGNMENT

 

11.1                        Except as provided otherwise in this Agreement, no Party may assign, or grant any Encumbrance or security interest over, any of its rights under this Agreement or any document referred to in it.

 

11.2                        Each Party shall be entitled to assign its right to receive payments under this Agreement to a financial institution by way of security.

 

 

11.3                        Each Party that has rights under this Agreement is acting on its own behalf and not for the benefit of another person.

 

12.                               ENTIRE AGREEMENT

 

This Agreement, a side letter to be entered into between the Seller and the Buyer relating to the payments to be made at Completion and any other documents referred to in this Agreement, constitute the entire Agreement between the Parties and supersede and extinguish all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to its subject matter.

 

13.                               VARIATION AND WAIVER

 

13.1                        Any variation of this Agreement shall be in writing and signed by or on behalf of each Party.

 

13.2                        Any waiver of any right under this Agreement is only effective if it is in writing and signed by the waiving or consenting Party and it applies only in the circumstances for which it is given and shall not prevent the Party who has given the waiver from subsequently relying on the provision it has waived.

 

13.3                        No failure to exercise or delay in exercising any right or remedy provided under this Agreement or by law constitutes a waiver of such right or remedy or shall prevent any future exercise in whole or in part thereof.

 

13.4                        No single or partial exercise of any right or remedy under this Agreement shall preclude or restrict the further exercise of any such right or remedy.

 

13.5                        Unless specifically provided otherwise, rights arising under this Agreement are cumulative and do not exclude rights provided by law.

 

14.                               COSTS

 

14.1                        Unless otherwise provided, all costs in connection with the negotiation, preparation, execution and performance of this Agreement, and any documents referred to in it,  shall be borne by the Party that incurred those costs.

 

14.2                        Unless otherwise provided, all payments made by a Party under this Agreement shall be:

 

(a)                                 made without set-off or counterclaim; and

 

(b)                                 free and clear of, and without deduction for any taxes (existing or future)  unless that Party is required by law to pay such amount subject to such tax.

 

14.3                        If a Party is required to make a payment under this Agreement subject to any tax, it shall pay the other Party an additional amount to ensure that it receives the full amount that it would have received had such payment not been subject to such tax.

 

15.                               NOTICE

 

15.1                        A notice given under this Agreement:

 

(a)                                 shall be in writing in the English language (or be accompanied by a properly prepared translation into English);

 

(b)                                 shall be sent for the attention of the person, and to the address  or fax number, specified

 

 

in this Clause 15 (or such other address, fax number or person as each Party may notify to the others in accordance with the provisions of this Clause 15); and

 

(c)                                   shall be:

 

(i)                                     delivered personally; or

 

(ii)                                  sent by fax; or

 

(iii)                               sent by pre-paid first-class post or recorded delivery; or

 

(iv)                              (if the notice is to be served by post outside the country from which it is sent) sent by registered airmail.

 

15.2                        The addresses for service of notice are:

 

(a)                                 STARBOARD HOLDING CO.

 

(i)                                     address: c/o Bairactaris & Partners, 130 Kolokotroni street, 18536 Piraeus, Greece

 

(ii)                                  for the attention of: Vangelis Bairactaris,

 

(iii)                               fax number: +30210 4284627.

 

(b)                                 LR HOLDING LIMITED

 

(i)                                     address: c/o Empire Navigation Inc., 88 Vouliagmenis Avenue, Elliniko 16777 Athens, Greece,

 

(ii)                                  for the attention of: Theodore M Kokkinis, Senior Counsel

 

(iii)                               fax number: + 30 211 9604210.

 

15.3                        A notice is deemed to have been received:

 

(a)                                 if delivered personally, at the time of delivery; or

 

(b)                                 in the case of fax, at the time of transmission; or

 

(c)                                  in the case of pre-paid first class post or recorded delivery, five (5) Business Days from the date of posting; or

 

(d)                                 in the case of registered airmail, ten (10) Business Days from the date of posting; or

 

(e)                                  if deemed receipt under the previous paragraphs of this Clause 15.3 is not within business hours (meaning 9.00 am to 17.00 pm Monday to Friday on a day that is a Business Day), when business next starts in the place of receipt and all references to time are to local time in the place of deemed receipt.

 

15.4                        To prove service, it is sufficient to prove that the notice was transmitted by fax to the fax number of the Party or, in the case of post, that the envelope containing the notice was properly addressed and posted.

 

 

16.                               LIABILITY

 

16.1                        Where in this Agreement any liability is undertaken by two or more persons, the liability of each of them shall be joint and several.

 

16.2                        Notwithstanding anything else to the contrary set forth in this Agreement, no Party shall be liable to the other Parties for indirect, consequential, punitive or other special damages or damages for loss of profits or revenue, incurred by a Party or any third Party, whether in an action in contract or tort or otherwise even  if such Party has been advised of the possibility of such damages.

 

17.                               SEVERANCE

 

17.1                        If any provision of this Agreement (or part of a provision) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force.

 

17.2                        If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the Parties.

 

18.                               AGREEMENT SURVIVES COMPLETION

 

This Agreement (other than obligations that have already been fully performed) remains in full force after Completion.

 

19.                               THIRD PARTY RIGHTS

 

The Parties to this Agreement do not intend that any term of this Agreement should be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a Party.

 

20.                               SUCCESSORS

 

The rights and obligations of the Seller and the Buyer under this Agreement shall continue for the benefit of, and shall be binding on, their respective successors and assigns.

 

21.                               COUNTERPARTS

 

21.1                        This Agreement may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each Party had signed the same document.

 

21.2                        Transmission of an executed counterpart of this Agreement of the executed signature page of a counterpart of this Agreement (a) by fax or (b) by e-mail (in PDF, JPEG or other agreed format) shall take effect as delivery of an executed counterpart of this Agreement. If either method of delivery is adopted, without prejudice to the validity of the Agreement so made, each Party shall provide the others with the original of such counterpart as soon as reasonably possible thereafter.

 

21.3                        No counterpart shall be effective until each Party has executed at least one counterpart.

 

22.                               LANGUAGE

 

If this Agreement is translated into any language other than English, the English language text shall prevail.

 

 

23.                               GOVERNING LAW AND JURISDICTION

 

23.1                        This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including non-contractual disputes or claims) are governed by and construed in accordance with English law.

 

23.2                        The Parties hereby submit to and irrevocably agree that any dispute or claim that arises out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes or claims) will be resolved by arbitration in London Maritime Arbitrators Association (“LMAA”) in accordance with English Law and LMAA’s then prevailing arbitration rules.

 

Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute. In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to any court in England or other official organization in England having jurisdiction in such matter to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, unless appealed by either parties, shall be final, conclusive and binding upon the parties hereto.

 

23.3                        The Seller irrevocably appoints DLA PIPER LLP of DLA Piper UK LLP, 3 Noble street, London, EC2V7EE, England as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement and agrees that failure by a process agent to notify it of the process will not invalidate the proceedings concerned.

 

23.4                        The Buyer irrevocably appoints Empire Navigation (UK) Limited of 61 Brompton Road, London SW3 LDP, England as its agent for service of process in relation to any proceedings before the English  courts in connection with this Agreement and agrees that failure by a process agent to notify it of the process will not invalidate the proceedings concerned.

 

24.                               BUYER’S BOD APPROVAL — IPO

 

This Agreement remains subject to becoming effective on the Effective Date. This Agreement remains further subject and conditional upon completion of the Issuer having a minimum Raised Equity (i.e. any unrestricted cash contributed to the Issuer in exchange of shares) of US$ 160M (One Hundred and Sixty Million) (the “Minimum Raised Equity”) and the Buyer’s Board of Directors’ approval to be lifted by no later than 30  September, 2014 or such later date as may be agreed by both Parties in writing. If the Minimum Raised Equity threshold is not satisfied, then this Agreement (including the Transaction as a whole) will be null and void, of no further effect and all rights that any of the Parties might have against each other will be extinguished

 

 

25. BAREBOAT CHARTERER CONSENT AND COOPERATION

 

Immediately following signing of this Agreement by both Parties, the Seller undertakes to notify the Bareboat Charterer of the terms of this Agreement and exercise best efforts to obtain all necessary consents under the Charter in form and substance satisfactory to the Buyer and its financiers. (the “Consents”) The Consents should be obtained within August 2014 and will include but not be limited to allowing the Buyer to register a new mortgage on the Vessel. This Agreement will become effective upon obtaining the Consents. (the “Effective Date”) Each of the Seller and the Buyer hereby acknowledges and agrees to work closely together with relevant Bareboat Charterer and their respective financiers, thus allowing the Buyer to complete all necessary financing arrangements by the end of August, 2014 at the latest.

 

26. COMMISSION 

 

Following Completion, each Party undertakes to settle the Commission.

 

AS WITNESS the hands of the duly authorised representatives of the Parties hereto the day and year first before written.

 

	
SIGNED for and on behalf of
    	
 
    
	
Starboard Holding Co.
    	
 
    
	
by [Illegible]
    	
 
    
	
its duly appointed
    	
 
    
	
attorney-in-fact
    	
 
    
	
in the presence of: Polyxen: [Illegible]
    	
 
    

 

 

	
SIGNED for and on behalf of 
    	
 
    
	
LR HOLDING LIMITED
    	
 
    
	
by [Illegible]
    	
 
    
	
its duly authorised
    	
 
    
	
attorney-in-fact
    	
 
    
	
in the presence of:
    	
 
    

 

	
[ILLEGIBLE]
    	
 
    
	
ATTORNEY AT LAW
    	
 
    
	
Piraeus Bar Assn. No 1535
    	
 
    
	
DANIOLOS LAW FIRM
    	
 
    
	
13, Defteras Merarchias   Street
    	
 
    
	
Piraeus 185 35
    	
 
    
	
Tel +30 210 4138 800 · Fax +30 210 4138 809
    	
 
    

 

 

SCHEDULE 1

 

PART A-PARTICULARS OF THE COMPANY

 

	
Name:
    	
 
    	
Pasha Finance Inc.
    
	
 
    	
 
    	
 
    
	
Country of Incorporation:
    	
 
    	
Republic of the Marshall Islands
    
	
 
    	
 
    	
 
    
	
Registration number:
    	
 
    	
27363
    
	
 
    	
 
    	
 
    
	
Registered office:
    	
 
    	
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,   Republic of the Marshall Islands MH 96960
    
	
 
    	
 
    	
 
    
	
Maximum amount of shares that are authorised   under the articles of incorporation of the Subsidiary

Amount:

US$ Divided into:
    	
 
    	
 

100

No par value

 

100
    
	
 
    	
 
    	
 
    
	
Issued shares and stated capital
    	
 
    	
100 registered shares

Stated Capital of US$ 0
    
	
 
    	
 
    	
 
    
	
Registered shareholders (and number of shares   held):
    	
 
    	
Starboard Holdings Co.

100 shares
    
	
 
    	
 
    	
 
    
	
Directors:
    	
 
    	
Director-President:
   Nicollo Benvenuti

Director-Secretary-Treasurer:
   George Papadopoulos
    
	
 
    	
 
    	
 
    
	
Secretary:
    	
 
    	
as above
    
	
 
    	
 
    	
 
    
	
Auditor
    	
 
    	
PriceWaterhouse Coopers - Greece
    
	
 
    	
 
    	
 
    
	
Registered Charges
    	
 
    	
First Priority Mortgage in favour HSH  Nordbank
    

 

 

PART B-THE VESSEL

 

	
Owner:
    	
 
    	
Pasha Finance Inc.
    
	
 
    	
 
    	
 
    
	
Name of vessel:
    	
 
    	
MT Cape Talara
    
	
 
    	
 
    	
 
    
	
Flag state:
    	
 
    	
Marshall Islands
    
	
 
    	
 
    	
 
    
	
IMO number:
    	
 
    	
9569994
    
	
 
    	
 
    	
 
    
	
Registered official number:
    	
 
    	
3898
    
	
 
    	
 
    	
 
    
	
Classification:
    	
 
    	
Highest
    
	
 
    	
 
    	
 
    
	
Classification Society:
    	
 
    	
DNV-GL
    
	
 
    	
 
    	
 
    
	
Charter description:
    	
 
    	
Bare Boat Charter 8 years from delivery (delivery date was: 30   April 2010) plus 1 year plus 1 year at charterers’ option. Daily rate   US$15.750 gross. Charterers’ Purchase option from year 6 from delivery.
    

 

 

SCHEDULE 2

 

CONDITIONS

 

1.                                      The passing at a board meeting of the Seller of an effective resolution or resolutions approving the terms of, and authorising the execution of this Agreement.

 

2.                                      All consents (including but not limited to the Consents), authorisations or similar clearances required by any government, regulatory body or authority, any other person (including but not limited to the Bareboat Charterer) for Completion being granted in terms reasonably satisfactory to the Parties.

 

3.                                      The Seller procuring termination of all contracts as listed in the Disclosure Letter between the Company and certain third parties.

 

4.                                      The Seller procuring releases from all loan balances between the Company on the one hand and any company in the Retained Group on the other.

 

5.                                      No Material Adverse Change having occurred.

 

6.                                      The agreement of the security trustee or agent under the Loan Agreement to releasing, on the condition of the Completion and receipt of the Initial Purchase Price in the nominated account of the Seller, (i) the Company from its respective obligations under the Loan Agreement and the other Finance Documents (as defined in the Loan Agreement); and (ii) any security granted by the Company in respect of the Loan Agreement over the Pasha Share and the Vessel.

 

7.                                      The IPO being completed on terms satisfactory to the Buyer.

 

8.                                      The Seller delivering to the Buyer evidence dated no earlier than 2 Business Days prior to the Completion Date in respect of the Vessel showing that the Vessel is classed with the classification shown in Part B of Schedule 1 free from (a) any condition that would cause any such Vessel’s class to be suspended or withdrawn and (b) average damage affecting the Vessel’s class. For the avoidance of doubt, the provisions of this section 8 of Schedule 2 are without prejudice to the provisions of section 1.1(e) of Schedule 4 (Part I).

 

9.                                      The Seller delivering to the Buyer the Disclosure Letter for Buyer’s review and any comments that it might have.

 

 

SCHEDULE 3

 

Pre-Completion Undertakings

 

1.                                      The Seller undertakes to the Buyer that, from the date of this Agreement to Completion, the Company shall, except as permitted under this Agreement or any document referred to in this Agreement or with the prior written consent of the Buyer, and to the extent permitted under applicable laws or regulation:

 

1.1                               not reduce, repay, redeem or re-purchase any of its share capital or modify the rights attached to any of its shares or allot or issue or agree to allot or issue any shares or any securities to any person other than the Seller or grant or agree to grant rights which confer on any person other than the Seller any right to acquire any shares or other such interest;

 

1.2                               maintain its corporate existence that it shall not take any action or step to enter into any insolvency proceedings, including by appointing a liquidator or an administrator or  entering into any arrangement with any of its creditors;

 

1.3                               not acquire or dispose of, or agree to acquire or dispose of, the Vessel or any other asset except in the usual and ordinary course of its trade nor assume or incur a liability, obligation or expense (actual or contingent) except in the usual and ordinary course of its trade and on normal arm’s length terms;

 

1.4                               not take any action which is inconsistent with the provisions of this Agreement or which would constitute a breach of this Agreement;

 

1.5                               not incur any new expenditure in connection with the Vessel in excess of US$ 25,000, save in the case of an emergency;

 

1.6                               not enter into any new contracts in relation to the Vessel without the consent of the Buyer such consent not to be unreasonably withheld or delayed.

 

1.8                               use their respective best endeavours to maintain in force, without material amendment, each of its insurance policies and not do, or omit to do, anything which might:

 

(i)             make any of the policies void or voidable;

 

(ii)          entitle any of the insurers under any of the policies to refuse indemnity in relation to particular claims in whole  or in part;

 

(iii)       result in an increase in the premium payable under any of the policies; or

 

(iv)      prejudice the ability to effect insurance, on the same or better terms, in the future,

 

provided that this shall not prevent the notification to insurers of claims in circumstances which might give rise to claims under any of the policies in accordance with the terms of the relevant policies;

 

1.9                               not enter (without the consent of the Buyer, such consent not to be unreasonably withheld or delayed) into any borrowing or other financing or any lending commitments, being in each case commitments which are outside the ordinary course of its business or which exceed US$ 25,000 unless such borrowings are to be settled prior to or on Completion;

 

1.10                        not give any guarantee, indemnity or security with respect to another person’s obligation;

 

1.11                        not create any Encumbrance over its business or any of its assets except as arising by operation of law and in the usual and ordinary course of its trade;

 

 

1.12                        not make any admission of liability or any agreement, settlement or compromise in respect of any individual claims, disputes or litigation with any person, body or authority where the amount in dispute is in excess of US$ 25,000; or

 

1.13                        not enter into any agreement to do any of the foregoing.

 

2.                                      The Seller further undertakes to the Buyer that, from the date of this Agreement to Completion, it shall (without prejudice to its obligations in paragraph 1 above):

 

2.1                               consult in good faith with the Buyer on any action or decision which the Seller is proposing to take or make which, if so taken or made, is or is reasonably likely to be, material to the operation of the Company; and

 

2.2                               provide the Buyer and its agents, representatives and advisers with reasonable access to the Company and its records (and to inspect and take copies of the latter at their own expense) and provide the Buyer and its agents, representatives and advisers with such other information about the Company and the Vessel as the Buyer shall reasonably request.

 

3.                                      The Seller shall as soon as reasonably practicable disclose to the Buyer in writing any matter or thing which arises or becomes known to it before Completion which is or might reasonably be expected to constitute a breach of, any of the Seller’s Warranties or Pre-Completion Undertakings, or which is a breach of, or may otherwise give rise to a claim under, any other provision of this Agreement.

 

4.                                      The Seller shall as soon as reasonably practicable disclose to the Buyer in writing any matter or thing which arises or may arise or become known to it before Completion which has, or is likely to have, a material and/or adverse effect on the Business as presently conducted, or on the financial or trading position or prospects of the Company.

 

5.                                      The Seller shall continue updating the Disclosure Letter throughout to Completion.

 

6.                                      The required Consents of the Bareboat Charterers under the Charter for the Vessel shall have been obtained on
 terms reasonably acceptable to Buyer and satisfactory evidence thereof shall have been provided to the Buyer by the end of August, 2014 at the latest.

 

 

SCHEDULE 4

 

COMPLETION

 

PART I

 

WHAT THE SELLER SHALL DELIVER TO THE BUYER AT COMPLETION

 

1.                                     At Completion, the Seller will deliver or cause to be delivered to the Buyer the following in original form:

 

(a)                                 instruments of transfer duly executed by the Seller to the Buyer or its nominee of the Pasha Share sold by it, together with the original share certificates for the Pasha Share;

 

(b)                                 any power of attorney under which any document is executed on its behalf;

 

(c)                                  a certificates of goodstanding in respect of the Company issued by the relevant Marshall Islands authority;

 

(d)                                 evidence to the Buyer’s satisfaction of the authority of any person signing on its behalf.

 

(e)                                  a Class Maintenance Certificate issued by each Vessel’s Classification Society confirming that the Vessel fully maintains her Class without any recommendations/conditions. This certificate to be issued after any underwater survey (in Buyer’s option) and be dated not more than two days prior to the Completion Date;

 

(f)                                   The Disclosure Letter in its final form accompanied with a full set of all disclosures made throughout duly executed and stamped by the Seller’s authorized representative;

 

(g)                                  The delivery documentation at the time of the Vessel’s acquisition by the Company (including but not limited to relevant bill of sale and all other ancillary documents);

 

2.                                             At Completion, the Seller will deliver to the Buyer:

 

(a)                                 originals of the articles of incorporation, bylaws, proxy of incorporator, corporate seals, all statutory and minute and other record books and share certificate books of the Company in current use;

 

(b)                                 definitive certificates in respect of all shares owned by the Company (if  any);

 

(c)                                  the written resignations of all officers and directors of the Company executed as deeds;

 

(d)                                 a list of all bank accounts maintained by the Company;

 

(f)                                   bank statements evidencing the amount of Cash in Account at close of business on the Business Day preceding the Completion Date; and

 

(g)                                  a notice to the Bareboat Charterers notifying them of the transfer of shares as contemplated by this Agreement duly executed  and stamped by or on behalf of the Seller.

 

 

PART2

 

WHAT THE BUYER SHALL DELIVER TO THE SELLER AT COMPLETION

 

1.                                      At Completion, the Buyer shall deliver to the Seller certified copies of resolutions passed at a meeting of the board of directors of the Buyer approving the terms of, and authorising the execution of, this Agreement;

 

2.                                      any power of attorney under which any document is executed on its behalf;

 

3.                                      Certificate of goodstanding;

 

PART3

 

MATTERS FOR THE BOARD MEETINGS AT COMPLETION

 

1.                                      The Seller shall provide to the Buyer resolutions of board meetings of the Company, at which the following matters shall take place:

 

(a)                            the directors of the respective Company will approve the transfers of the relevant Pasha Share for registration and the entry of the Buyer in the register of members, in each case subject only to the transfers being subsequently presented duly stamped by the Buyer; and

 

(b)                            all existing mandates for the operation of bank accounts of the Companies will be revoked.

 

 

SCHEDULE 5

 

SELLER’S WARRANTIES

 

The Seller warrants to the Buyer as follows:

 

1.                            The Pasha Share

 

1.1                     The Pasha Share constitutes the entire issued and allotted share capital of Pasha Finance Inc. and is fully paid up.

 

1.2                     Immediately before Completion the Seller will be the legal and beneficial owner of the Pasha Share.

 

1.3                     Save as Disclosed, there is no Encumbrance on, over or affecting the Pasha Share and there is no agreement or commitment to give or create any such Encumbrance.

 

2.                            Constitution of the Company

 

2.1                     The information set out in Schedule 1 is complete and accurate in all respects.

 

2.2                     The Company has been duly incorporated and is validly existing as a company with limited liability under the laws of its country of incorporation.

 

2.3                     The copy of the constitution of the Company in the Disclosure Letter is true  and complete copy, and the Company has complied with all the provisions of its constitution.

 

2.4                     No person has the right (whether exercisable now or in future and whether contingent or not) to call for the issue or transfer of any share or loan capital of the Company under any option or other agreement or otherwise howsoever.

 

2.5                     The Company has no subsidiaries or any interest in any body corporate or joint venture.

 

3.                            Powers and obligations of the Seller

 

3.1                     The Seller is duly incorporated and is validly existing as a company with limited liability under the laws of its country of incorporation.

 

3.2                     As at the date of this Agreement, it is not aware of any fact, matter or circumstance causing any of the Seller Warranties to be breached other than as Disclosed.

 

3.3                     The Seller has the requisite power and authority and has taken all action necessary to execute and deliver, and to exercise its rights and perform its obligations under this Agreement and the other documents referred to in it.

 

3.4                     This Agreement and the other documents referred to in it constitute (or shall constitute when executed) valid, legal and binding obligations on the Seller in the terms of this Agreement and such other documents.

 

3.5                     Immediately before Completion the Seller will be entitled to sell and transfer the full legal and beneficial ownership in the Pasha Share to the Buyer on the terms set out in this Agreement.

 

3.6                     Compliance with the terms of this Agreement and the documents referred to in it shall not breach or constitute a material default under any of the following:

 

(a)                                 any agreement or instrument to which the Seller is bound; or

 

(b)                                 any order, judgment, decree or other restriction applicable to the Seller.

 

 

3.7                     The Seller has obtained and complied with all licences and other approvals required for or in connection with the execution of this Agreement.

 

4.                            Compliance with legal requirements

 

4.1                     The Company complies with all applicable laws and regulations of its place or incorporation and with all applicable laws, statutes, regulations and codes relating to anti-bribery and anti-corruption applicable to it.

 

4.2                     The Company has obtained all licences, permissions, consents and other approvals required for or in connection with the carrying on of its business in the places and in the manner in which business is now carried on; such licences, permissions, consents and approvals are in full force and effect.

 

4.3                     The Company has not been notified that any investigation or enquiry in respect of its affairs is being or has been conducted by any governmental, administrative or regulatory body.

 

4.4                     The Company has not entered into any agreement or other contractual arrangement in connection with the energy, shipping or shipbuilding sector of Iran, since NDAA legislation came into effect on July 1st, 2013.

 

5.                            Vessel

 

5.1                     The information set out in Part B  of Schedule 1 is complete and accurate in all respects.

 

5.2                     Save as Disclosed, the Vessel:

 

(a)                                 is the absolute property of the Company which owns it and as of Completion will be free from any mortgage, charge, lien, bill of sale or other Encumbrance;

 

(b)                                 is not the subject of any leasing, hiring or hire purchase agreement or agreement for payment on deferred terms or assignment or factoring licensing or other similar agreement (except the Charter);

 

(c)                                  is in the possession or under the control of the Company which owns it, as set out in Part B of Schedule 1; and

 

(d)                                 is properly registered in the ship registry which applies to it.

 

5.3                     Save as Disclosed, in respect of the Vessel:

 

 

(a)                                 the Vessel’s country and port of registry, IMO number, registered official number, registered ownership and classification are as specified in Part B of Schedule 1;

 

(b)                                 all class records are properly maintained and up to date, and there are no recommendations or notations outstanding;

 

(c)                                  all survey cycles are up to date;

 

(d)                                 the relevant Company listed in Part B of Schedule 1 as the owner of the Vessel has good legal and beneficial title to the Vessel;

 

(e)                                  as at Completion there will be no subsisting mortgages, charges or other Encumbrances in respect the Vessel, her earnings or insurances;

 

(f)                                   there are no charterparties in respect of the Vessel entered into by or on behalf of the relevant owner of the Vessel, except for the Charter specified in Part B of Schedule 1.

 

5.4                     So far as the Seller is aware the Vessel:

 

(a)                                 is free from arrest or, so far as the Seller is aware, is free from any risk or possibility of arrest to the extent not covered by the Indemnity;

 

(b)                                 is operationally seaworthy and fit for service;

 

(c)                                  is not subject to any subsisting option granted by the Seller or any member of the Seller’s Group to sell or charter out the Vessel, except under the Charter;

 

(d)                                 is not black listed by any country or the Arab Boycott League or any other national/international organisation and is not in breach of any sanctions imposed by the United Nations, the European Union, the United Kingdom, the United States of America, the Russian Federation or the People’s Republic of China;

 

(e)                                  is not subject to any arrangement for the pooling of revenues by the Seller or any member of Seller’s Group with any other party.

 

5.5                     The Company is not a party to any option or obligation to purchase or charter in or acquire any other vessel (whether conditional or not). There are no commissions or other payments in respect of any charter other than those referred to in it.

 

5.6                     So far as the Seller is aware, all of the Vessels’ equipment and machinery (which includes all mechanical, electrical, hydraulic and oil burning items of equipment and machinery of whatsoever function) on board the Vessel and material to the function of the Vessel complies with all relevant safety regulations and where relevant  is the subject of a fully maintained current certificate of inspection issued by the classification society or the relevant flag state authority or appropriate independent inspection body.

 

5.7                     So far as the Seller is aware no Vessel has, since its last dry-docking, touched bottom or been involved in any collision or other accident or any other incident which may affect class.

 

5.8                     Inspection and Delivery

 

(i)                  The Buyer have inspected the Vessel in Houston, Texas on 27.06.2014 and accepted the Vessel’s condition. (the “Pre-Purchase Inspection”) The Buyer have also inspected and accepted the Vessel’s classification records and the Buyer have accepted the Vessel following the Pre-Purchase Inspection and the Completion is, subject only to the terms and conditions of this Agreement, outright and definite.

 

 

(ii)               The Buyer acknowledges that the Seller made no representations or warranties in respect of the condition of the Vessel or any part thereof and hereby waive all its rights in respect of any warranty (other that any Seller’s Warranties given under this Agreement and/or any other representation, undertaking or disclosure made, which induced the Buyer to enter into this Agreement) or condition implied, on the part of the Seller and all (except claims due to causes that occurred prior to Completion) claims against the Seller arising out of the operation or performance of the Vessel (including in respect of the seaworthiness of the Vessel). In particular, and without prejudice to the generality of the foregoing, the Seller shall be under no liability whatsoever, howsoever arising, in respect of the injury, death, loss or damage of or to or in connection with the Vessel or any person (which expression includes, without prejudice to the generality thereof, states, governments, municipalities and local authorities) or property whatsoever, whether on board the Vessel or elsewhere, and irrespective of whether such injury, death, loss or damage arising from the un-seaworthiness of the Vessel. Nothing in this clause shall limit or exclude any liability for fraud, deceit, misconduct, negligence or misrepresentation. This subsection 5.8(ii) is acknowledged by the Buyer without prejudice to any rights that the Buyer might have under the Seller’s Warranties and/or any other provision of this Agreement, including but not limited to the Indemnity.

 

5.9                     So far as the Seller is aware, the Vessel complies with all applicable international conventions, all applicable laws, regulations and other requirements of the country of the Vessel’s registry and the country and ports to which the Vessel trades. The conventions, laws, regulations and requirements referred to in this clause include conventions, laws, regulations and the requirements concerning ship size, ship design, safety, operation of ship equipment, navigation, certification of seamen, pollution and all other matters concerning the safe construction, operation and maintenance of ships.

 

5.10              So far as the Seller is aware the Vessel has not, in the last 24 months, been detained or fined or, so far as the Seller is aware, threatened with detention or fines by reason of any actual or alleged breach of any maritime, local or international law or by any port authority inspectorate or port state control inspector nor, so far as the Seller is aware, has any of the Vessels been refused entry to any port.

 

5.11              So far as the Seller is aware, since the Vessel’s delivery to the Company, there have been no crew deaths or serious illness arising from health or hygiene matters on board or any serious injuries on board the Vessel.

 

5.12              The following information contained in the Disclosure Letter in respect of the Vessel is true, accurate, complete in all respects and not misleading in any material respect:

 

(a)                                 copies of current ship surveys;

 

(b)                                 copies of any charter arrangements (whether to or by the Company) of (including options); and

 

(c)                                  copies of ship management agreements and details of any pending material insurance claims.

 

5.13              So far as the Seller is aware the Vessel has at all times been insured:

 

(a)                                 against fire and usual marine risks (including excess risks, blocking and trapping) and war risks (including war protection and indemnity risks and terrorism risks) on an agreed value basis, for at least its minimum hull cover and no less than its fair market value;

 

(b)                                 against P&I risks for the highest amount then available in the insurance market for vessels of similar age, size and type as the relevant Vessel and a freight, demurrage and defence cover.

 

5.14              In relation to the Vessel, so far as the Seller is aware:

 

(a)                                 all applicable Environmental Laws have been complied with;

 

(b)                                 all applicable Environmental Approvals have been obtained and complied with;

 

 

(c)                        no notice of its non-compliance with any Environmental Law or Environmental Approval has been received by the Company or any of its affiliates;

 

(d)                       there are no Environmental Claims currently being brought against the Company owning the Vessel or any of their affiliates;

 

(e)                        there are no Environmental Claims pending or threatened against the Company owning the Vessel or any of their affiliates; and

 

(f)                         there has been no act or omission, accident or the like in the course of the use of the Vessel which has caused any environmental pollution or any sort for which any Sale Group Company or any operator or manager of any Vessel might be held liable or in respect of which any action, including but not limited to Environmental Claims, may be taken against the Vessel, the Company or any of its affiliates.

 

in this paragraph 5.14:

 

Environmental Approvals means consents, authorisations, licences and approvals of any governmental or public body or authorities or courts required in relation to each Vessel under the Environmental Laws;

 

Environmental Claim means  any and all enforcement, clean-up, removal or other governmental or regulatory action, order or claim instituted or made pursuant to any Environmental Law or Environmental Approval or otherwise; and

 

Environmental Laws means any national or international laws, rules, treaties and conventions concerning pollution or the protection of human health or the environment

 

 

6.                            Contracts

 

6.1                     The Seller has supplied to the Buyer complete, up-to-date and accurate copies of all contracts to which the Company is a party under which it (whether as principal or agent) provides or receives goods or services (including, without limitation, agency or management agreements) (together, the Contracts).

 

6.2                     The Company has no offer, bid, tender or proposal outstanding which by the acceptance or other act of some other person would give rise to any contract other than the Contracts.

 

6.3                     With regard to each of the Contracts, the Company has and, so far as the Seller is aware, each counterparty to such Contract has, complied with and is in compliance with its obligations under such Contract in all material respects.

 

7.                            Connected party transactions

 

Other than agreements or arrangements to be terminated at Completion, there are no agreements or arrangements between the Company and any member of the Seller’s Group for the supply of any goods or services or the use by one company of the property, rights or assets of the other.

 

8.                            Litigation

 

8.1                     The Company is not engaged in any litigation, arbitration, prosecution or other legal proceedings or in any proceedings or hearings before any statutory or governmental body, department, board or agency (except for debt collection in the normal course of business); and so far as the Seller is aware, no such matters are pending or threatened.

 

8.2                     There is no outstanding judgment, order, decree, arbitral award or decision of any  court, tribunal, arbitrator or governmental agency against any Company or any person for whose acts the Company may be vicariously liable.

 

9.                            Insolvency

 

9.1                     Neither the Company nor the Seller is insolvent or unable to pay its debts within the meaning of the insolvency legislation applicable to the company concerned.

 

9.2                     Neither the Company nor the Seller has stopped payment of its debts as they fall due.

 

9.3                     No step has been taken in any jurisdiction to initiate any process by or under which:

 

 

(a)                                 the ability of the creditors of the Company or the Seller to take any action to enforce their debts is suspended, restricted or prevented; or

 

(b)                                 some or all of the creditors of the Company or the Seller accept, by agreement or in pursuance of a court order, an amount less than the sums owing to them in satisfaction of those sums with a view to preventing the dissolution of the Company or the Seller; or

 

(c)                                  a person is appointed to manage the affairs, business and assets of the Company or the Seller; or

 

(d)                                 the holder of a charge over all or any of the Company’s or the Seller’s assets is appointed to control the business and/or all or any assets of the Company or the Seller.

 

9.3                     Neither the Company nor the Seller has been dissolved or entered into liquidation, administration, administrative receivership, receivership, a voluntary arrangement, a scheme of arrangement with creditors, any analogous or similar procedure in any jurisdiction or any other form of procedure relating to insolvency, reorganisation or dissolution in any jurisdiction.

 

9.4                     So far as the Seller is aware, no circumstances have arisen which are likely to result in a transaction to which the Company or the Seller is a party being set aside.

 

10.                     Taxation

 

All Taxation for which the Company is liable, the due date for payment of which is on or before Completion has been or will be paid prior to Completion.

 

 

SCHEDULE 6

 

CONDUCT OF CLAIMS

 

1.                            Conduct of third party claims

 

1.1                     The Buyer shall or procure that the Company shall inform the Seller in writing of any claim by any third party (“Third Party Claim”) which comes to the notice of the Buyer or any other member of the Buyer’s Group whereby it appears that the Seller is likely to become liable under any Claim within one month from the day on which such Third Party Claim comes to the notice of the Buyer or other member of the Buyer’s Group.

 

1.2                     Subject to the Buyer being indemnified and secured to its satisfaction in accordance with paragraph 1.4 of this Schedule:

 

(a)                                 the Buyer shall, and shall procure that the Company shall, take such action and give such information and assistance as the Seller may reasonably request in writing to avoid, dispute, resist, mitigate, compromise, or defend any Third Party Claim and to appeal against any judgment given in respect thereof including (without limitation) applying to postpone so far as legally possible the payment of any Taxation; and

 

(b)                                 on the written request of the Seller, the sole conduct of any legal proceedings of whatsoever nature arising out of any Third Party Claim (“Proceedings”) shall be delegated to the Seller. For this purpose, the Buyer shall give or procure to be given to the Seller all such assistance as the Seller may reasonably require and shall appoint such solicitors and other professional advisers as the Seller may nominate to act of behalf of the Buyer or the Companies in accordance with the Seller’s reasonable instructions.

 

1.3                     Where Proceedings are delegated to the Seller in accordance with paragraph 1.2(b) of this Schedule:

 

(a)                                 the Seller shall keep the Buyer fully and properly informed of the Proceedings, shall consult with the Buyer on any matter which is or is likely to be material in relation to any Proceedings and shall take account of all reasonable requirements  of the Buyer in relation to such Proceedings; and

 

(b)                                 the Seller shall not make any settlement or compromise of the Third Party Claim which is the subject of Proceedings, or agree to any matter in the conduct of such Proceedings which may affect the amount of the liability in connection with such Third Party Claim without the prior written approval of the Buyer, such approval not to be unreasonably withheld or delayed, and provided always that, in the event of the Buyer refusing approval of such settlement or compromise, the Seller shall have no liability in respect of any Claim arising there from in excess of the figure at which it could have settled or compromised the Third Party Claim and the Buyer shall be liable for any costs incurred since the proposed date of settlement or compromise.

 

1.4                     The Seller shall indemnify and secure the Buyer to its reasonable satisfaction in respect of all costs, charges and expenses reasonably and properly incurred by the Buyer as a consequence of any actions taken at the request of the Seller pursuant to paragraph 1.2(b) of this Schedule.

 

2.                            Contingent liabilities

 

If any Claim arises by reason of some liability of the Company which, at the time such Claim is notified to the Seller, is contingent only or otherwise not capable of being quantified, the Seller shall be under no obligation to make any payment in respect of such breach or Claim unless and until such liability ceases to be contingent or becomes capable of being quantified, as the case may be.

 

 

SCHEDULE 7

 

RETAINED CLAIMS

 

THE SELLER CONFIRMS THAT THERE ARE NONE WHATSOEVER

 

 

SCHEDULE 8

BAREBOAT CHARTER

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