Document:

Exhibit 10.27

 

Baltic Trading Limited

Director Restricted Stock Grant Agreement

 

THIS AGREEMENT, made as of April 9, 2014, between BALTIC TRADING LIMITED (the “Company”) and                                        (the “Participant”).

 

WHEREAS, the Company has adopted and maintains the Baltic Trading Limited 2010 Equity Incentive Plan (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;

 

WHEREAS, the Plan provides that the Board of Directors of the Company (the “Board of Directors”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and

 

WHEREAS, the Board of Directors has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:

 

1.              Grant of Restricted Stock.  Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Board of Directors hereby grants to the Participant 7,269 restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01 per share (“Common Stock”).

 

2.              Grant Date.  The Grant Date of the Restricted Stock is April 9, 2014.

 

3.              Incorporation of Plan.  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board of Directors, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.

 

4.              Vesting.  Subject to the further provisions of this Agreement, the Restricted Stock shall vest on the earlier of (i) the date of the annual shareholders meeting of the Company next following the date hereof (the “Annual Meeting Date”) and (ii) the occurrence of a Change in Control, as defined in Section 3.8(a) of the Plan, as in effect on the date of such occurrence (each such date, the “Vesting Date”).

 

5.              Restrictions on Transferability.  Until a share of Restricted Stock vests, the Participant shall not transfer the Participant’s rights to such share of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or

 

 

involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights.

 

6.              Termination of Service.

 

(a)                                 In the event that the Participant’s Service with the Company terminates before the Vesting Date for any reason other than the Participant’s death or disability (as defined in the Plan), the Restricted Stock, together with any property received in respect of such shares, as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing the Restricted Stock, together with any cash dividends or other property received in respect of such shares.  For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following:  an employee or a director of, or a consultant to, the Company.

 

(b)                                 In the event that the Participant’s Service with the Company terminates before the Vesting Date for reason of the Participant’s death or disability (as defined in the Plan), all shares of Restricted Stock shall become vested immediately prior to such termination of Service.

 

7.              Issuance of Shares.

 

(a)                                 Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Participant a stock certificate, registered in the name of the Participant, evidencing the shares of Restricted Stock or shall instruct its transfer agent to issue shares of Restricted Stock which shall be maintained in book entry form on the books of the transfer agent.  Such certificate may bear the following legend:

 

“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE BALTIC TRADING LIMITED 2010 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN GENCO SHIPPING & TRADING LIMITED AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF BALTIC TRADING LIMITED.”

 

If the Restricted Stock is in book entry form, it shall be subject to electronic coding or stop order indicating that such shares of Restricted Stock are restricted by the terms of this Agreement and the Plan.  Such legend, electronic coding or stop order shall not be removed until such shares of Restricted Stock vest.

 

(b)                                 Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4 hereof, (i) in the case of certificated shares, in exchange for the surrender to the Company of the certificates evidencing the Restricted Stock, delivered to the Participant under Section 7(a) hereof, and the certificates evidencing any other securities received in respect of such

 

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shares, if any, the Company shall issue and deliver to the Participant (or the Participant’s legal representative, beneficiary or heir) a certificate evidencing such shares of Restricted Stock and such other securities, free of the legend provided in Section 7(a) hereof and (ii) in the case of book entry shares, the Company shall cause to be lifted and removed any electronic coding or stop order established pursuant to Section 7(a) hereof.

 

(c)                                  The Company may require as a condition of the delivery of stock certificates or the removal of any electronic coding or stop order, pursuant to Section 7(b) hereof, that the Participant remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the applicable shares.  The Board of Directors, in its sole discretion, may permit the Participant to satisfy such obligation by delivering shares of Common Stock or by directing the Company to withhold from delivery shares of Common Stock, in either case valued at their Fair Market Value on the Vesting Date with fractional shares being settled in cash.

 

(d)                                 The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefor or an appropriate book entry is made on the books of the transfer agent reflecting the issuance thereof pursuant to Section 7(a) hereof, and then only from the date such certificate is issued or such book entry is made.  Upon the issuance of a stock certificate or the making of an appropriate book entry on the books of the transfer agent, the Participant shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability and the forfeiture provisions, as set forth in this Agreement.

 

8.              Securities Matters.  The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”) of any interests in the Plan or any shares of Common Stock to be issued thereunder or to effect similar compliance under any state laws.  The Company shall not be obligated to cause to be issued any shares, whether by means of stock certificates or appropriate book entries, unless and until the Company is advised by its counsel that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded.  The Board of Directors may require, as a condition of the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any certificates bear such legends and any book entries be subject to such electronic coding, as the Board of Directors, in its sole discretion, deems necessary or desirable.  The Participant specifically understands and agrees that the shares of Common Stock, if and when issued, may be “restricted securities,” as that term is defined in Rule 144 under the 1933 Act and, accordingly, the Participant may be required to hold the shares indefinitely unless they are registered under such Act or an exemption from such registration is available.

 

9.              Dividends, etc.  Any cash dividends or other property (but not including securities) received by a Participant with respect to a share of Restricted Stock shall be returned to the Company in the event such share of Restricted Stock is forfeited.  Any securities received by a Participant with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests and shall be forfeited if such share of Restricted

 

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Stock is forfeited.  Unless the Board of Directors otherwise determines, such securities shall bear the legend or be subject to the electronic coding or stop order set forth in Section 7(a) hereof.

 

10.       Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing.

 

11.       Right of Discharge Preserved.  Nothing in this Agreement shall confer upon the Participant the right to continue as a director of or in other service of the Company, or affect any right which the Company may have to terminate such service.

 

12.       Integration.  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.

 

13.       Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

14.       Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the provisions governing conflict of laws.

 

15.       Obligation to Notify.  If the Participant makes the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service and shall within the same 10-day period remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to such inclusion in Participant’s income. The Participant should consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted Stock and the advantages and disadvantages of filing the Section 83(b) election.  The Participant acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Section 83(b), even if the Participant requests the Company or its representatives to make this filing on his or her behalf.

 

16.       Reduction in Benefits.  Unless the Participant and the Company agree otherwise in writing, in the event that the Participant would incur an Excise Tax on any payments or benefits under this Agreement as a result of a Change of Control (or any other change

 

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described in Section 280G(b)(2) of the Code), the Company shall reduce the payments or benefits to be paid to or granted to Participant hereunder to the greater of (i) the maximum amount payable to the Participant without the imposition of any Excise Tax with respect to the Restricted Stock and (ii) the amount that yields the Participant the greatest after-tax amount of benefits under this Agreement after taking into account any Excise Tax imposed on Participant, whether due to payments and benefits under this Agreement or otherwise.  “Excise Tax” means the tax imposed by Section 4999 of the Code and any successor tax.  The determination of whether the Participants payments and benefits should be reduced and the amount of any such reduction shall be made by independent counsel selected by the Participant and reasonably acceptable to the Company (“Independent Counsel”).  For purposes of such determination, (x) the total amount of payments and benefits received by the Participant as a result of such Change in Control (or such other change) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of Independent Counsel, a payment or benefit hereunder (in whole or in part) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code and the Treasury Regulations under Section 280G of the Code (the “Regulations”), or such “excess parachute payments” (in whole or in part) are not subject to the Excise Tax; (y) the amount of the payments and benefits hereunder that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of such payments and benefits or (B) the amount of “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code (after applying clause (x) hereof); and (z) the value of any noncash benefits or any deferred payment or benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  All fees and expenses of Independent Counsel shall be borne by the Company.

 

17.       Participant Acknowledgment.  The Participant hereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.

 

[Signature page follows]

 

5

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

 

 

	
 
    	
BALTIC   TRADING LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
John   C. Wobensmith
    
	
 
    	
Title:
    	
President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

6Exhibit 10.48

 

 

 

UP TO US$148,000,000 SENIOR SECURED CREDIT AGREEMENT

 

among

 

BALTIC TRADING LIMITED

 

as Borrower,

 

VARIOUS LENDERS

 

and

 

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

as Administrative Agent

and as Security Agent

 

 

Dated as of December 31, 2014

 

 

NORDEA BANK FINLAND PLC, NEW YORK BRANCH and

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL),

as Mandated Lead Arrangers

 

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

as Bookrunner

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.
    	
DEFINITIONS   AND ACCOUNTING TERMS
    	
1
    
	
 
    	
 
    	
 
    
	
1.01
    	
Defined   Terms
    	
1
    
	
 
    	
 
    	
 
    
	
1.02
    	
Other   Definitional Provisions
    	
24
    
	
 
    	
 
    	
 
    
	
1.03
    	
Rounding
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
AMOUNT   AND TERMS OF CREDIT FACILITIES
    	
25
    
	
 
    	
 
    	
 
    
	
2.01
    	
The   Commitments
    	
25
    
	
 
    	
 
    	
 
    
	
2.02
    	
Notice   of Borrowing
    	
26
    
	
 
    	
 
    	
 
    
	
2.03
    	
Disbursement   of Funds
    	
27
    
	
 
    	
 
    	
 
    
	
2.04
    	
Notes
    	
27
    
	
 
    	
 
    	
 
    
	
2.05
    	
Pro   Rata Borrowings
    	
28
    
	
 
    	
 
    	
 
    
	
2.06
    	
Interest
    	
28
    
	
 
    	
 
    	
 
    
	
2.07
    	
Interest   Periods
    	
29
    
	
 
    	
 
    	
 
    
	
2.08
    	
Increased   Costs, Illegality, Market Disruption, etc.
    	
30
    
	
 
    	
 
    	
 
    
	
2.09
    	
Compensation
    	
32
    
	
 
    	
 
    	
 
    
	
2.10
    	
Change   of Lending Office; Limitation on Additional Amounts
    	
32
    
	
 
    	
 
    	
 
    
	
2.11
    	
Replacement   of Lenders
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
COMMITMENT   COMMISSION; FEES
    	
34
    
	
 
    	
 
    	
 
    
	
3.01
    	
Commitment   Commission; Fees
    	
34
    
	
 
    	
 
    	
 
    
	
3.02
    	
[Reserved]
    	
34
    
	
 
    	
 
    	
 
    
	
3.03
    	
Mandatory   Reduction of Commitments
    	
34
    
	
 
    	
 
    	
 
    
	
3.04
    	
[Reserved]
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
PREPAYMENTS;   PAYMENTS; TAXES
    	
35
    
	
 
    	
 
    	
 
    
	
4.01
    	
Voluntary   Prepayments
    	
35
    
	
 
    	
 
    	
 
    
	
4.02
    	
Mandatory   Repayments and Commitment Reductions
    	
36
    
	
 
    	
 
    	
 
    
	
4.03
    	
Method   and Place of Payment
    	
38
    
	
 
    	
 
    	
 
    
	
4.04
    	
Net   Payments; Taxes
    	
38
    
	
 
    	
 
    	
 
    
	
4.05
    	
Application   of Proceeds
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
CONDITIONS   PRECEDENT
    	
42
    
	
 
    	
 
    	
 
    
	
5.01
    	
Closing   Date
    	
42
    
	
 
    	
 
    	
 
    
	
5.02
    	
Conditions   to the Initial Borrowing Date
    	
44
    

 

i

 

TABLE OF CONTENTS
 (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
5.03
    	
Conditions   to each Term Loan Borrowing Date
    	
47
    
	
 
    	
 
    	
 
    
	
5.04
    	
Conditions   to each Borrowing Date
    	
49
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
REPRESENTATIONS   AND WARRANTIES
    	
50
    
	
 
    	
 
    	
 
    
	
6.01
    	
Corporate/Limited   Liability Company/Limited Partnership Status
    	
50
    
	
 
    	
 
    	
 
    
	
6.02
    	
Corporate   Power and Authority
    	
50
    
	
 
    	
 
    	
 
    
	
6.03
    	
Title;   Maintenance of Properties
    	
50
    
	
 
    	
 
    	
 
    
	
6.04
    	
Legal   Validity and Enforceability
    	
50
    
	
 
    	
 
    	
 
    
	
6.05
    	
No   Violation
    	
51
    
	
 
    	
 
    	
 
    
	
6.06
    	
Governmental   Approvals
    	
51
    
	
 
    	
 
    	
 
    
	
6.07
    	
Balance   Sheets; Financial Condition; Undisclosed Liabilities
    	
52
    
	
 
    	
 
    	
 
    
	
6.08
    	
Litigation
    	
53
    
	
 
    	
 
    	
 
    
	
6.09
    	
True   and Complete Disclosure
    	
53
    
	
 
    	
 
    	
 
    
	
6.10
    	
Use   of Proceeds; Margin Regulations
    	
53
    
	
 
    	
 
    	
 
    
	
6.11
    	
Taxes;   Tax Returns and Payments
    	
53
    
	
 
    	
 
    	
 
    
	
6.12
    	
Compliance   with ERISA
    	
54
    
	
 
    	
 
    	
 
    
	
6.13
    	
Security   Documents
    	
56
    
	
 
    	
 
    	
 
    
	
6.14
    	
Representations   and Warranties in Documents
    	
56
    
	
 
    	
 
    	
 
    
	
6.15
    	
Subsidiaries
    	
56
    
	
 
    	
 
    	
 
    
	
6.16
    	
Compliance   with Statutes, etc.
    	
56
    
	
 
    	
 
    	
 
    
	
6.17
    	
Investment   Company Act
    	
56
    
	
 
    	
 
    	
 
    
	
6.18
    	
Pollution   and Other Regulations
    	
56
    
	
 
    	
 
    	
 
    
	
6.19
    	
Labor   Relations
    	
57
    
	
 
    	
 
    	
 
    
	
6.20
    	
Patents,   Licenses, Franchises and Formulas
    	
58
    
	
 
    	
 
    	
 
    
	
6.21
    	
Financial   Indebtedness
    	
58
    
	
 
    	
 
    	
 
    
	
6.22
    	
Insurance
    	
58
    
	
 
    	
 
    	
 
    
	
6.23
    	
Concerning   the Collateral Vessels
    	
58
    
	
 
    	
 
    	
 
    
	
6.24
    	
Citizenship
    	
58
    
	
 
    	
 
    	
 
    
	
6.25
    	
Vessel   Classification
    	
58
    
	
 
    	
 
    	
 
    
	
6.26
    	
Money   Laundering and Sanctions Laws
    	
58
    
	
 
    	
 
    	
 
    
	
6.27
    	
No   Immunity
    	
59
    
	
 
    	
 
    	
 
    
	
6.28
    	
Fees   and Enforcement
    	
59
    

 

ii

 

TABLE OF CONTENTS
 (continued)

 

	
 
    	
 
    	
Page
    
	
6.29
    	
Form of   Documentation
    	
59
    
	
 
    	
 
    	
 
    
	
6.30
    	
No   Material Adverse Change
    	
59
    
	
 
    	
 
    	
 
    
	
6.31
    	
Pari   Passu or Priority Status
    	
60
    
	
 
    	
 
    	
 
    
	
6.32
    	
Solvency;   Winding-up, etc.
    	
60
    
	
 
    	
 
    	
 
    
	
6.33
    	
Completeness   of Documentation
    	
60
    
	
 
    	
 
    	
 
    
	
6.34
    	
No   Undisclosed Commissions
    	
61
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
AFFIRMATIVE   COVENANTS
    	
61
    
	
 
    	
 
    	
 
    
	
7.01
    	
Information   Covenants
    	
61
    
	
 
    	
 
    	
 
    
	
7.02
    	
Books,   Records and Inspections
    	
64
    
	
 
    	
 
    	
 
    
	
7.03
    	
Maintenance   of Property; Insurance Mortgagee Interest Insurance
    	
64
    
	
 
    	
 
    	
 
    
	
7.04
    	
Corporate   Franchises
    	
64
    
	
 
    	
 
    	
 
    
	
7.05
    	
Compliance   with Statutes, etc.
    	
65
    
	
 
    	
 
    	
 
    
	
7.06
    	
Compliance   with Environmental Laws
    	
65
    
	
 
    	
 
    	
 
    
	
7.07
    	
ERISA
    	
65
    
	
 
    	
 
    	
 
    
	
7.08
    	
End   of Fiscal Years; Fiscal Quarters
    	
66
    
	
 
    	
 
    	
 
    
	
7.09
    	
Performance   of Obligations
    	
66
    
	
 
    	
 
    	
 
    
	
7.10
    	
Payment   of Taxes
    	
67
    
	
 
    	
 
    	
 
    
	
7.11
    	
Further   Assurances
    	
67
    
	
 
    	
 
    	
 
    
	
7.12
    	
Deposit   of Earnings
    	
68
    
	
 
    	
 
    	
 
    
	
7.13
    	
Ownership   of Subsidiaries and Collateral Vessels
    	
68
    
	
 
    	
 
    	
 
    
	
7.14
    	
Citizenship;   Flag of Collateral Vessel; Collateral Vessel Classifications; Operation of   Collateral Vessels
    	
68
    
	
 
    	
 
    	
 
    
	
7.15
    	
Use   of Proceeds
    	
70
    
	
 
    	
 
    	
 
    
	
7.16
    	
Charter   Contracts
    	
70
    
	
 
    	
 
    	
 
    
	
7.17
    	
Management   Agreement
    	
70
    
	
 
    	
 
    	
 
    
	
7.18
    	
Separate   Existence
    	
70
    
	
 
    	
 
    	
 
    
	
7.19
    	
Sanctions
    	
71
    
	
 
    	
 
    	
 
    
	
7.20
    	
Maintenance   of Listing
    	
71
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
NEGATIVE   COVENANTS
    	
72
    
	
 
    	
 
    	
 
    
	
8.01
    	
Liens
    	
72
    
	
 
    	
 
    	
 
    
	
8.02
    	
Consolidation,   Merger, Sale of Assets, etc.
    	
73
    

 

iii

 

TABLE OF CONTENTS
 (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
8.03
    	
Dividends
    	
75
    
	
 
    	
 
    	
 
    
	
8.04
    	
Indebtedness
    	
76
    
	
 
    	
 
    	
 
    
	
8.05
    	
Advances, Investments   and Loans
    	
77
    
	
 
    	
 
    	
 
    
	
8.06
    	
Transactions   with Affiliates
    	
77
    
	
 
    	
 
    	
 
    
	
8.07
    	
Financial   Covenants
    	
78
    
	
 
    	
 
    	
 
    
	
8.08
    	
Limitation   on Modifications of Certain Documents; etc
    	
79
    
	
 
    	
 
    	
 
    
	
8.09
    	
Limitation   on Certain Restrictions on Subsidiaries
    	
79
    
	
 
    	
 
    	
 
    
	
8.10
    	
Limitation   on Issuance of Capital Stock
    	
80
    
	
 
    	
 
    	
 
    
	
8.11
    	
Business
    	
80
    
	
 
    	
 
    	
 
    
	
8.12
    	
Manager
    	
80
    
	
 
    	
 
    	
 
    
	
8.13
    	
Bank   Accounts
    	
81
    
	
 
    	
 
    	
 
    
	
8.14
    	
Jurisdiction   of Employment
    	
81
    
	
 
    	
 
    	
 
    
	
8.15
    	
Operation   of Collateral Vessels
    	
81
    
	
 
    	
 
    	
 
    
	
8.16
    	
Corrupt   Practices;
    	
81
    
	
 
    	
 
    	
 
    
	
8.17
    	
No   Investments
    	
81
    
	
 
    	
 
    	
 
    
	
SECTION 9.
    	
EVENTS   OF DEFAULT
    	
81
    
	
 
    	
 
    	
 
    
	
9.01
    	
Payments
    	
81
    
	
 
    	
 
    	
 
    
	
9.02
    	
Representations, etc.
    	
82
    
	
 
    	
 
    	
 
    
	
9.03
    	
Covenants
    	
82
    
	
 
    	
 
    	
 
    
	
9.04
    	
Default   Under Other Agreements
    	
82
    
	
 
    	
 
    	
 
    
	
9.05
    	
Bankruptcy, etc.
    	
82
    
	
 
    	
 
    	
 
    
	
9.06
    	
ERISA
    	
83
    
	
 
    	
 
    	
 
    
	
9.07
    	
Security   Documents
    	
84
    
	
 
    	
 
    	
 
    
	
9.08
    	
Guaranty
    	
84
    
	
 
    	
 
    	
 
    
	
9.09
    	
Judgments
    	
84
    
	
 
    	
 
    	
 
    
	
9.10
    	
[Reserved];
    	
84
    
	
 
    	
 
    	
 
    
	
9.11
    	
[Reserved];
    	
84
    
	
 
    	
 
    	
 
    
	
9.12
    	
[Reserved];
    	
84
    
	
 
    	
 
    	
 
    
	
9.13
    	
Termination   of Business
    	
84
    
	
 
    	
 
    	
 
    
	
9.14
    	
[Reserved];
    	
 
    
	
 
    	
 
    	
 
    
	
9.15
    	
Authorizations   and Consents
    	
85
    

 

iv

 

TABLE OF CONTENTS
 (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
9.16
    	
Arrest;   Expropriation
    	
85
    
	
 
    	
 
    	
 
    
	
9.17
    	
Failure   to Comply with Final Judgment
    	
85
    
	
 
    	
 
    	
 
    
	
9.18
    	
Breach   of Sanctions
    	
85
    
	
 
    	
 
    	
 
    
	
9.19
    	
[Reserved];
    	
85
    
	
 
    	
 
    	
 
    
	
SECTION 10.
    	
AGENCY   AND SECURITY TRUSTEE PROVISIONS
    	
86
    
	
 
    	
 
    	
 
    
	
10.01
    	
Appointment
    	
86
    
	
 
    	
 
    	
 
    
	
10.02
    	
Nature   of Duties
    	
86
    
	
 
    	
 
    	
 
    
	
10.03
    	
Lack   of Reliance on the Agents
    	
87
    
	
 
    	
 
    	
 
    
	
10.04
    	
Certain   Rights of the Agents
    	
87
    
	
 
    	
 
    	
 
    
	
10.05
    	
Reliance
    	
87
    
	
 
    	
 
    	
 
    
	
10.06
    	
Indemnification
    	
88
    
	
 
    	
 
    	
 
    
	
10.07
    	
The   Administrative Agent in its Individual Capacity
    	
88
    
	
 
    	
 
    	
 
    
	
10.08
    	
Holders
    	
88
    
	
 
    	
 
    	
 
    
	
10.09
    	
Resignation   by the Administrative Agent
    	
88
    
	
 
    	
 
    	
 
    
	
10.10
    	
Collateral   Matters
    	
89
    
	
 
    	
 
    	
 
    
	
10.11
    	
Delivery   of Information
    	
91
    
	
 
    	
 
    	
 
    
	
SECTION 11.
    	
MISCELLANEOUS
    	
92
    
	
 
    	
 
    	
 
    
	
11.01
    	
Payment   of Expenses, etc.
    	
92
    
	
 
    	
 
    	
 
    
	
11.02
    	
Right   of Setoff
    	
93
    
	
 
    	
 
    	
 
    
	
11.03
    	
Notices
    	
93
    
	
 
    	
 
    	
 
    
	
11.04
    	
Benefit   of Agreement; Assignments; Participations
    	
94
    
	
 
    	
 
    	
 
    
	
11.05
    	
No   Waiver; Remedies Cumulative
    	
96
    
	
 
    	
 
    	
 
    
	
11.06
    	
Payments   Pro Rata
    	
96
    
	
 
    	
 
    	
 
    
	
11.07
    	
Calculations;   Computations
    	
97
    
	
 
    	
 
    	
 
    
	
11.08
    	
Agreement   Binding
    	
97
    
	
 
    	
 
    	
 
    
	
11.09
    	
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF   JURY TRIAL
    	
97
    
	
 
    	
 
    	
 
    
	
11.10
    	
Counterparts
    	
99
    
	
 
    	
 
    	
 
    
	
11.11
    	
Effectiveness
    	
99
    
	
 
    	
 
    	
 
    
	
11.12
    	
Headings   Descriptive
    	
99
    
	
 
    	
 
    	
 
    
	
11.13
    	
Amendment   or Waiver; etc.
    	
99
    

 

v

 

TABLE OF CONTENTS
 (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
11.14
    	
Survival
    	
101
    
	
 
    	
 
    	
 
    
	
11.15
    	
Domicile   of Loans
    	
101
    
	
 
    	
 
    	
 
    
	
11.16
    	
Confidentiality
    	
101
    
	
 
    	
 
    	
 
    
	
11.17
    	
Register
    	
102
    
	
 
    	
 
    	
 
    
	
11.18
    	
Judgment   Currency
    	
103
    
	
 
    	
 
    	
 
    
	
11.19
    	
Language
    	
103
    
	
 
    	
 
    	
 
    
	
11.20
    	
Waiver   of Immunity
    	
103
    
	
 
    	
 
    	
 
    
	
11.21
    	
USA   PATRIOT Act Notice
    	
103
    
	
 
    	
 
    	
 
    
	
11.22
    	
Severability
    	
104
    
	
 
    	
 
    	
 
    
	
11.23
    	
Flag   Jurisdiction Transfer
    	
104
    

 

vi

 

TABLE OF CONTENTS
 (continued)

 

	
SCHEDULE   I
    	
-
    	
Commitments
    
	
SCHEDULE   II
    	
-
    	
Lender Addresses
    
	
SCHEDULE   III
    	
-
    	
Subsidiaries
    
	
SCHEDULE   IV
    	
-
    	
Required Insurance
    
	
SCHEDULE   V
    	
-
    	
ERISA
    
	
SCHEDULE   VI
    	
-
    	
Collateral Vessels
    
	
SCHEDULE   VII
    	
-
    	
Notice Addresses
    
	
SCHEDULE   VIII
    	
-
    	
Scheduled Term Amortization Payments and Scheduled   Revolving Commitment Reductions
    
	
SCHEDULE   IX
    	
-
    	
Financial Indebtedness
    
	
 
    	
 
    	
 
    
	
EXHIBIT A
    	
-
    	
Form of Notice of Borrowing
    
	
EXHIBIT B-1
    	
-
    	
Form of Term Note
    
	
EXHIBIT B-2
    	
-
    	
Form of Revolving Note
    
	
EXHIBIT C
    	
-
    	
Form of Guaranty
    
	
EXHIBIT D
    	
 
    	
Form of Collateral Vessel Mortgage
    
	
EXHIBIT E
    	
-
    	
Form of Pledge Agreement
    
	
EXHIBIT F
    	
 
    	
Form of Assignment of Insurances
    
	
EXHIBIT G
    	
-
    	
Form of Assignment of Earnings
    
	
EXHIBIT H
    	
 
    	
Form of Assignment of Charter
    
	
EXHIBIT I
    	
 
    	
Form of Assignment of Hedging Agreement
    
	
EXHIBIT J
    	
-
    	
Form of Compliance Certificate
    
	
EXHIBIT K
    	
-
    	
Form of Subordination Provisions
    
	
EXHIBIT L
    	
-
    	
Form of Assignment and Assumption Agreement
    
	
EXHIBIT M
    	
-
    	
Form of Solvency Certificate
    

 

i

 

CREDIT AGREEMENT, dated as of December 31, 2014, among BALTIC TRADING LIMITED, a company incorporated under the laws of the Republic of the Marshall Islands (the “Borrower”), the Lenders party hereto from time to time, NORDEA BANK FINLAND PLC, NEW YORK BRANCH (“Nordea”) and SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), as Mandated Lead Arrangers (the “Lead Arrangers”), NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Administrative Agent (in such capacity, the “Administrative Agent”) and as Security Agent under the Security Documents (in such capacity, the “Security Agent”), and NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as bookrunner (the “Bookrunner”).  All capitalized terms used herein and defined in Section 1.01 are used herein as therein defined.

 

W I T N E S S E T H:

 

WHEREAS, subject to and upon the terms and conditions herein set forth, the Lenders are willing to make available to the Borrower the Credit Facilities provided for herein:

 

NOW, THEREFORE, IT IS AGREED:

 

SECTION 1.     Definitions and Accounting TermsDefined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Acceptable Classification Society” shall mean American Bureau of Shipping, Nippon Kaiji Kyokai, Lloyd’s Register of Shipping, Bureau Veritas and DNV GL, or such first class vessel classification society that is a member of the International Association of Classification Societies that the Required Lenders may approve from time to time.

 

“Acceptable Flag Jurisdiction” shall mean the Republic of the Marshall Islands, Liberia, Hong Kong or such other flag jurisdiction as may be acceptable to the Required Lenders.

 

“Additional Collateral” shall mean additional Collateral satisfactory to the Required Lenders posted in favor of the Security Agent to cure non-compliance with Section 8.07(d) (it being understood that cash collateral comprised of Dollars (which shall be valued at par) shall be deemed satisfactory provided it is in an aggregate amount sufficient to cure such non-compliance.

 

“Administrative Agent” shall have the meaning provided in the first paragraph of this Agreement, and shall include any successor thereto.

 

“Affiliate” shall mean, with respect to any Person, any other Person (including, for purposes of Section 8.06 only, all directors, officers and partners of such Person) directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person; provided, however, that for purposes of Section 8.06, an Affiliate of the Borrower shall include any Person that directly or indirectly owns more than 5% of any class of the capital stock of the Borrower and any officer or director of the Borrower or any of its Subsidiaries.  A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the

 

 

power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.  Notwithstanding anything to the contrary contained above, for purposes of Section 8.06, neither the Administrative Agent, nor the Security Trustee, nor any Lead Arranger, nor any Lender (or any of their respective affiliates) shall be deemed to constitute an Affiliate of the Borrower or its Subsidiaries in connection with the Credit Documents or its dealings or arrangements relating thereto.

 

“Agents” shall mean, collectively, the Administrative Agent and the Security Agent.

 

“Aggregate Appraised Value” shall mean at any time, the sum of the Appraised Value of all Collateral Vessels owned by the Subsidiary Guarantors at such time which are not then subject to an Event of Loss.

 

“Agreement” shall mean this Credit Agreement, as modified, supplemented, amended or restated from time to time.

 

“Applicable Margin” shall mean 3.00% per annum.

 

“Appraisal” shall mean, with respect to a Collateral Vessel, a written appraisal by an Approved Appraiser of the fair market value of such Collateral Vessel on the basis of a charter-free arm’s length transaction between any able buyer and seller not under duress.

 

“Appraised Value” shall mean (i) for any Collateral Vessel at any time, the arithmetic average of the fair market values of such Collateral Vessel on an individual charter free basis as set forth on the Appraisals of at least two Approved Appraisers most recently delivered to, or obtained by, the Administrative Agent prior to such time pursuant to Sections 5.02(e) or 7.01(d) and (ii) for any other vessel, (x) the relevant value calculated pursuant to any required methodology pursuant to any existing contractual obligation addressing the manner in which such other vessel is to be appraised or valued, or, as applicable, (y) as determined in subparagraph (i) or subparagraph (ii)(x) of the definition of “Appraised Value”.

 

“Approved Appraiser” shall mean Clarkson Valuations Ltd, Fearnleys, Howe Robinson Shipbrokers, Simpson Spence & Young Ltd, or R.S. Platou ASA for the purposes of providing an Appraisal for a Collateral Vessel.

 

“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement substantially in the form of Exhibit L (appropriately completed).

 

“Assignment of Charter” shall mean an assignment of charter substantially in the form of Exhibit H.

 

“Assignment of Earnings” shall mean an assignment of earnings substantially in the form of Exhibit G.

 

2

 

“Assignment of Hedging Agreement” shall mean an assignment of hedging agreements substantially in the form of Exhibit I.

 

“Assignment of Insurances” shall mean an assignment of insurances substantially in the form of Exhibit F.

 

“Authorized Officer” shall mean the chairman of the board, the president, any vice president, the treasurer, the secretary, any assistant secretary, any other financial officer, an authorized manager and any other officer (or a Person or Persons so designated by any officer) of any Obligor.

 

“Available Revolving Loan Commitment” shall mean initially the amount equal to the sum of up to US$115,000,000 as such amount is reduced from time to time pursuant to Section 4.02(i).

 

“Bankruptcy Code” shall have the meaning provided in Section 9.05.

 

“Builder” shall mean Yangfan Group Co., Ltd.

 

“Borrower” shall have the meaning provided in the first paragraph of this Agreement.

 

“Borrowing” shall mean a borrowing of Loans from all the Lenders (other than any Lender which has not funded its share of a Borrowing in accordance with this Agreement) having Commitments on a given date having the same Interest Period.

 

“Borrowing Date” shall mean (i) the date on which a Term Loan is incurred by the Borrower pursuant to Section 2.01(a) or (ii) the date on which Revolving Loans are incurred by the Borrower pursuant to Section 2.01(b).

 

“Business Day” shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close in Stockholm, New York City and London.

 

“Cash Equivalents” shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company having capital, surplus and undivided profits aggregating in excess of $200,000,000, with maturities of not more than one year from the date of acquisition by such Person, (iii) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such Person, and (v) investments in money market funds substantially

 

3

 

all of whose assets are comprised of securities of the types described in clauses (i) through (iv) above.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. § 9601 et seq.

 

“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, if not already enacted as of the Closing Date, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” shall mean:

 

(a)                                 if the Borrower ceases to own directly or indirectly, 100% of the capital stock or other equity interest in any Subsidiary Guarantor other than subsequent to the sale of the Collateral Vessel owned by such Subsidiary Guarantor and the prepayment of the Loan or reduction of the Revolving Loan Facility required hereby; and/or

 

(b)                                 if any person, or group of persons, acting in concert, other than one or more of the Permitted Holders, shall at any time become the owner, directly or indirectly, beneficially or of record, of shares representing more than 30% of the outstanding voting or economic equity interest of the Borrower or control the appointment of members of the board of directors of the Borrower, unless the new shareholder(s) is/are acceptable to the Lenders; and/or

 

(c)                                if the Permitted Holders, collectively, cease to be the owner, directly or indirectly, beneficially or of record, of shares representing more than 30% of the outstanding voting interests of the Borrower.

 

“Claims” shall have the meaning provided in the definition of “Environmental Claims”.

 

“Closing Date” shall have the meaning provided in Section 11.11.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.  Section references to the Code are to the Code as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.

 

4

 

“Collateral” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Pledge Agreement Collateral, all Earnings Collateral and Insurance Collateral, all Collateral Vessels, and all cash and Cash Equivalents at any time delivered as collateral thereunder or as required hereunder.

 

“Collateral Disposition” shall mean (i) the sale, lease, transfer or other disposition other than pursuant to a charter by the Borrower or any Subsidiary Guarantor to any Person other than the Borrower or a Subsidiary Guarantor of any Collateral Vessel or (ii) any Event of Loss.

 

“Collateral Vessel” shall mean (a) each Term Loan Vessel, and (b) each Revolving Loan Vessel.

 

“Collateral Vessel Mortgage” shall mean a first preferred mortgage, in substantially the form of Exhibit D attached hereto, or a first priority mortgage and related deed of covenant (as applicable) in such form as may be reasonably satisfactory to the Administrative Agent and the Borrower (including, without limitation, any first preferred mortgage or first priority mortgage and related deed of covenant, as applicable, delivered pursuant to a Flag Jurisdiction Transfer), as such mortgage (and deed of covenant, if applicable) may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof granted by the applicable Collateral Vessel Owner in favor of the Security Agent, as security trustee, as mortgagee.

 

“Collateral Vessel Owner” shall mean, at any time, a Subsidiary Guarantor which owns a Collateral Vessel.

 

“Commitment” shall mean, for each Lender, a Term Loan Commitment, or a Revolving Loan Commitment.

 

“Commitment Commission” shall have the meaning provided in Section 3.01(a).

 

“Consolidated Tangible Net Worth” shall mean the Net Worth of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP after appropriate deduction for any minority interest in Subsidiaries.

 

“Contingent Obligation” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Financial Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of

 

5

 

such primary obligation or (d) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and any products warranties extended in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if the less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

“Credit Document Obligations” shall mean, except to the extent consisting of obligations, liabilities or indebtedness with respect to Hedging Agreements, the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest, fees and indemnities (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Obligor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding)) (other than an Excluded Swap Obligation) of each Obligor to the Lender Creditors (provided, in respect of the Lender Creditors which are Lenders, such aforementioned obligations, liabilities and indebtedness shall arise only for such Lenders (in such capacity) in respect of Loans and/or Commitments), whether now existing or hereafter incurred under, arising out of, or in connection with this Agreement and the other Credit Documents to which such Obligor is a party (including, in the case of each Obligor that is a Subsidiary Guarantor, all such obligations, liabilities and indebtedness of such Obligor under the Guaranty) (other than Excluded Swap Obligations) and the due performance and compliance by such Obligor with all of the terms, conditions and agreements contained in this Agreement and in such other Credit Documents.

 

“Credit Documents” shall mean this Agreement, each Note, each Security Document, the Guaranty, and, after the execution and delivery thereof, each additional guaranty or additional security document executed pursuant to Section 7.11.

 

“Credit Facilities” shall mean, collectively, the Term Loan Facility and the Revolving Loan Facility.

 

“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

 

“Defaulting Lender” shall mean any Lender with respect to which a Lender Default is in effect.

 

“Delivery Date” shall mean the date the applicable Term Loan Vessel is delivered to the relevant Collateral Vessel Owner under the terms of the relevant Shipbuilding Contract.

 

6

 

“Dividend” with respect to any Person shall mean that such Person has declared or paid a dividend or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common stock or the right to purchase any of such stock of such Person) or cash to its stockholders, partners or members as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or partnership or membership interests outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock of, or equity interests in, such Person outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock or other equity interests).  Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes.

 

“Dollars” and the sign “$” shall each mean lawful money of the United States.

 

“Earnings Accounts” shall mean those certain deposit accounts of the Borrower and the Subsidiary Guarantors, respectively designated in the Pledge Agreement as being pledged to the Security Agent, which deposit accounts shall be held by Nordea, and into which the Borrower shall procure that all hires, freights, insurance proceeds, income and other sums payable in respect of the Collateral Vessels are credited and which amounts shall be freely available to the Borrower and the Subsidiary Guarantors, provided that no Default or Event of Default has occurred and is continuing and notice has not been given to the Borrower by the Administrative Agent that such amounts shall not be freely available.

 

“Earnings Collateral” shall have the meaning ascribed thereto in the Assignment of Earnings.

 

“ECP” shall have the meaning assigned to such term in the definition of Excluded Swap Obligation.

 

“Eligible Transferee” shall mean and include a commercial bank, insurance company, financial institution, fund or other Person which regularly purchases interests in loans or extensions of credit of the types made pursuant to this Agreement, any other Person which would constitute a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act as in effect on the Closing Date or other “accredited investor” (as defined in Regulation D of the Securities Act), provided that neither (i) any Obligor or any Affiliate of any Obligor nor (ii) any natural Person shall be an Eligible Transferee at any time.

 

“Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “Claims”), including, without limitation, (a) any and all Claims by governmental

 

7

 

or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.

 

“Environmental Law” shall mean any applicable Federal, state, foreign or local statute, Legal Requirement, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on the Borrower or any of its Subsidiaries, relating to the environment, and/or Hazardous Materials, including, without limitation, CERCLA; OPA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 5101 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

 

“Environmental Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment.

 

“Equity Interests” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest.

 

“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, and the regulations promulgated and rulings issued thereunder.  Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary of the Borrower would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“Eurodollar Rate” shall mean with respect to each Interest Period for a Loan, the offered rate (rounded upward to the nearest 1/100 of one percent) for deposits of Dollars for a period equivalent to such period at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period as is displayed on Reuters LIBOR 01 Page (or such other service as may be nominated by the ICE Benchmark Administration (or the successor thereto if the ICE Benchmark Administration is no longer making a London Interbank Offered Rate available) (the “Screen Rate”), provided that if the Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement; provided, further that if on such date no such rate is so displayed, the Eurodollar Rate for such period shall be the arithmetic average (rounded upward to the nearest 1/100 of 1%) of the rate quoted to the Administrative

 

8

 

Agent by the Reference Banks for deposits of Dollars in an amount approximately equal to the amount in relation to which the Eurodollar Rate is to be determined for a period equivalent to such applicable Interest Period by the prime banks in the London interbank Eurodollar market at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period, in each case divided (and rounded upward to the nearest 1/100 of 1%) by a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D); provided that in the event the Eurodollar Rate calculated in the immediately preceding proviso shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

 

“Event of Default” shall have the meaning provided in Section 9.

 

“Event of Loss” shall mean any of the following events: (x) the actual or constructive total loss of a Collateral Vessel or the agreed or compromised total loss of a Collateral Vessel; or (y) the capture, condemnation, confiscation, expropriation, requisition for title and not hire, purchase, seizure or forfeiture of, or any taking of title to, a Collateral Vessel.  An Event of Loss shall be deemed to have occurred: (i) in the event of an actual loss of a Collateral Vessel, at the time and on the date of such loss or if that is not known at noon Greenwich Mean Time on the date which such Collateral Vessel was last heard from; (ii) in the event of damage which results in a constructive or compromised or arranged total loss of a Collateral Vessel, at the time and on the date on which notice claiming the loss of the Collateral Vessel is given to the insurers; or (iii) in the case of an event referred to in clause (y) above, at the time and on the date on which such event is expressed to take effect by the Person making the same.  Notwithstanding the foregoing, if such Collateral Vessel shall have been returned to any Obligor following any event referred to in clause (y) above prior to the date upon which payment is required to be made under Section 4.02(b), no Event of Loss shall be deemed to have occurred by reason of such event.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934.

 

“Excluded Swap Obligation” shall mean, with respect to any Obligor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Obligor of, or the grant by such Obligor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Obligor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder (each an “ECP”) at the time the Guaranty of such Obligor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

 

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“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal  withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.10) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 4.04, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 4.04(c), (d) any U.S. federal withholding Taxes imposed under FATCA.

 

“Executive Order” shall have the meaning provided in Section 6.26(a).

 

“Existing Facility” shall mean that certain US$150,000,000 Amended and Restated Credit Agreement, dated as of November 30, 2010 among (i) the Borrower, (ii) the banks and financial institutions listed in Schedule I thereto, as lenders, and (iii) Nordea, as administrative agent and as security trustee, as amended.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement to implement the foregoing.

 

“Federal Funds Rate” shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:00 A.M. (New York time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.

 

“Fees” shall mean all amounts payable pursuant to or referred to in Section 3.01.

 

“Financial Covenants” shall mean the covenants set forth in Section 8.07.

 

“Financial Indebtedness’ shall mean any obligation for the payment or repayment of money, whether present or future, actual or contingent, in respect of (i) moneys borrowed; (ii) any acceptance credit; (iii) any bond, note, debenture, loan stock or similar instrument; (iv) any

 

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finance or capital lease; (v) receivables sold or discounted (other than on a non-recourse basis; (vi) deferred payments for assets or services; (vii) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); (viii) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; (ix) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and (x) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in clauses (i) through (ix) above; provided that the Financial Indebtedness shall not in any event include trade payables and expenses accrued in the ordinary course of business.

 

“First Reduction Date” shall mean with respect to the Revolving Loan Facility, June 30, 2015.

 

“Flag Jurisdiction” shall mean the flag jurisdiction of the Collateral Vessel on the initial Borrowing Date for such Collateral Vessel, which, for the avoidance of doubt, must be an Acceptable Flag Jurisdiction.

 

“Flag Jurisdiction Transfer” shall mean the transfer of the registration and flag of a Collateral Vessel from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction, provided that the following conditions are satisfied with respect to such exchange or transfer:

 

(a)                                 On each Flag Jurisdiction Transfer Date, the Obligor which is consummating a Flag Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate vessel registry a Collateral Vessel Mortgage (which Collateral Vessel Mortgage shall, to the extent possible, be registered as a “continuation mortgage” to the original Collateral Vessel Mortgage recorded in the initial Acceptable Flag Jurisdiction) with respect to the Collateral Vessel being transferred (the “Transferred Collateral Vessel”) and such Collateral Vessel Mortgage shall be effective to create in favor of the Security Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Transferred Collateral Vessel, subject only to Permitted Liens.  All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Security Agent to perfect and preserve such security interests shall have been duly effected and the Security Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Security Agent.

 

(b)                                 On each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received from counsel to the Obligors consummating the relevant Flag Jurisdiction Transfer reasonably satisfactory to the Administrative Agent practicing in those jurisdictions in which the Transferred Collateral Vessel is registered and/or the Obligor owning such Transferred Collateral Vessel is organized, opinions which shall be addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (x) be in form and substance reasonably

 

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acceptable to the Administrative Agent and (y) cover the perfection of the security interests granted pursuant to the Collateral Vessel Mortgage(s) and such other matters incident thereto as the Administrative Agent may reasonably request.

 

(c)                                  On each Flag Jurisdiction Transfer Date:

 

(i)                                     the Administrative Agent shall have received (x) a certificate of ownership issued by the registry of the applicable Acceptable Flag Jurisdiction  showing the registered ownership of the Transferred Collateral Vessel transferred on such date in the name of the relevant Subsidiary Guarantor and (y) a certificate of ownership and encumbrance or, as applicable, a transcript of registry with respect to the Transferred Collateral Vessel transferred on such date, indicating no record liens other than Liens in favor of the Security Agent and/or the Lenders and Permitted Liens; and

 

(ii)                                  the Administrative Agent shall have received a report, in form and scope reasonably satisfactory to the Administrative Agent, from a firm of independent marine insurance brokers reasonably acceptable to the Administrative Agent with respect to the insurance maintained by the Obligor in respect of the Transferred Collateral Vessel transferred on such date, together with a certificate from such broker certifying that such insurances (x) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are customarily insured against by similarly situated insureds for the protection of the Security Agent as mortgagee and (y) conform with the insurance requirements of the respective Collateral Vessel Mortgages.

 

(d)                                 On or prior to each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received a certificate, dated the Flag Jurisdiction Transfer Date, signed by an Authorized Officer, member, general partner or attorney in fact of the Obligor consummating such Flag Jurisdiction Transfer, certifying that (i) all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise referred to herein shall have been obtained and remain in effect or that no such approvals and/or consents are required and (ii) there exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon such Flag Jurisdiction Transfer or the other transactions contemplated by this Agreement.

 

(e)                                  On each Flag Jurisdiction Transfer Date, the conditions precedent set forth in Section 5, as applicable, for the Transferred Collateral Vessel shall have been satisfied.

 

(f)                                   On each Flag Jurisdiction Transfer Date, (i) no Event of Default has occurred and is continuing and (ii) all representations and warranties contained herein or in any other Credit Document shall be true and correct in all material respects (it being understood and agreed that any representation or warranty which by its terms is made as

 

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of a specified date shall be required to be true and correct in all material respects only as of such specified date).

 

“Flag Jurisdiction Transfer Date” shall mean the date on which a Flag Jurisdiction Transfer occurs.

 

“Fleet Market Value’ means the aggregate Appraised Value of the Fleet

Vessels.

 

“Fleet Vessels’ means any vessel (including the Collateral Vessels) from time to time owned by the Borrower or any of its Subsidiaries.

 

“Foreign Pension Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Borrower or any one or more of its Subsidiaries primarily for the benefit of employees of the Borrower or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, and which plan would be covered by Title IV of ERISA but which is not subject to ERISA by reason of Section 4(b)(4) of ERISA.

 

“GAAP” shall have the meaning provided in Section 11.07(a).

 

“Genco” shall mean Genco Shipping and Trading Ltd.

 

“Governmental Authority” shall mean the government of the United States, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guaranty” shall mean the guaranty substantially in the form of Exhibit C hereto to be executed by each Subsidiary Guarantor.

 

“Hazardous Materials” shall mean: (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority under Environmental Laws.

 

“Hedging Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement, interest rate floor

 

 

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agreement, foreign currency swap, or other similar agreement or arrangement meant to hedge interest rate or currency fluctuations under this Agreement.

 

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

“Initial Borrowing Date” shall mean the date occurring after the Closing Date on which the initial Borrowing of a Loan hereunder occurs.

 

“Insurance  Collateral” shall have the meaning ascribed thereto in the Assignment of Insurances.

 

“Interest Determination Date” shall mean, with respect to any Loan, the second Business Day prior to the commencement of any Interest Period relating to such Loan.

 

“Interest Period” shall have the meaning provided in Section 2.07.

 

“Investments” shall have the meaning provided in Section 8.05.

 

“ISM Code” shall mean the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time.

 

“ISPS Code” shall mean the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004.

 

“Lead Arrangers” shall have the meaning provided in the first paragraph of this Agreement.

 

“Leaseholds” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

 

“Legal Requirement” shall mean, as to any Person, any law, treaty, convention, statute, ordinance, decree, award, requirement, order, writ, judgment, injunction, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority which is binding on such Person.

 

“Lender” shall mean each financial institution with a Commitment and/or with outstanding Loans and listed on Schedule I hereto, as well as any Person which becomes a “Lender” hereunder pursuant to Section 11.04(b).

 

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“Lender Creditors” shall mean the Lenders holding from time to time outstanding Loans and/or Commitments, the Administrative Agent and the Security Agent, each in their respective capacities.

 

“Lender Default” shall mean, as to any Lender, (a) the refusal (which has not been retracted) of such Lender or the failure of such Lender (which has not been cured) to make available its portion of any Borrowing when required to do so in accordance with the terms of this Agreement, (b) such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, or (c) such Lender having notified the Administrative Agent and/or any Obligor (x) that it does not intend to comply with its obligations under Sections 2.01(a) or (b), as the case may be, in circumstances where such non-compliance would constitute a breach of such Lender’s obligations under the respective Section or (y) of the events described in preceding clause (b); provided that, for purposes of (and only for purposes of) Section 2.11, the term “Lender Default” shall also include, as to any Lender, (i) any Affiliate of such Lender that has “control” (within the meaning provided in the definition of “Affiliate”) of such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, (ii) any previously cured “Lender Default” of such Lender under this Agreement, unless such Lender Default has ceased to exist for a period of at least 90 consecutive days, (iii) any default by such Lender with respect to its obligations under any other credit facility to which it is a party and which the Administrative Agent believes in good faith has occurred and is continuing, and (iv) the failure of such Lender to make available its portion of any Borrowing within one (1) Business Day of the date (x) the Administrative Agent (in its capacity as a Lender) or (y) Lenders constituting the Required Lenders has or have, as applicable, funded its or their portion thereof.

 

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security interest of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice validly filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

 

“Loan” shall mean each Term Loan and each Revolving Loan.

 

“Management Agreement” shall mean the management agreement between the Borrower and Manager dated March 15, 2010, as amended from time to time, and pursuant to which the Manager provides strategic, commercial, technical, financial and administrative services to the Borrower.

 

“Manager” shall mean Genco and/or one or more of its Affiliates.

 

“Margin Regulations” shall mean Regulations U and X issued by the Board of Governors of the United States Federal Reserve System and any successor regulations thereto, as in effect from time to time.

 

“Margin Stock” shall have the meaning provided in Regulation U.

 

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“Market Disruption Event” shall mean either of the following events:

 

(a)                                  if, at or about noon on the Interest Determination Date for the relevant Interest Period, the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Administrative Agent to determine the Eurodollar Rate for the relevant Interest Period; or

 

(b)                                  before close of business in New York on the Interest Determination Date for the relevant Interest Period, the Administrative Agent receives notice from a Lender or Lenders whose outstanding Loans exceed 50% of the aggregate Loans outstanding at such time that (i) the cost to such Lenders of obtaining matching deposits in the London interbank Eurodollar market for the relevant Interest Period would be in excess of the Eurodollar Rate for such Interest Period or (ii) such Lenders are unable to obtain funding in the London interbank Eurodollar market.

 

“Material Adverse Effect” shall mean any event, change or condition that, individually or taken as a whole has had or could reasonably be expected to have a material adverse effect (v) on the rights or remedies of the Lender Creditors, (w) on the ability of the Borrower or any Subsidiary Guarantor, or the Borrower and its Subsidiaries taken as a whole, to perform its or their obligations to the Lender Creditors, (x) with respect to the Transaction or (y) on the property, assets, operations, liabilities, condition (financial or otherwise), or prospects of the Borrower or any Subsidiary Guarantor, or the Borrower and its Subsidiaries taken as a whole.

 

“Materiality Amount” shall mean $5,000,000.

 

“Maturity Date” shall mean the fifth anniversary of the Closing Date.

 

“Minimum Liquidity” shall have the meaning provided in Section 8.07(a).

 

“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors.

 

“Multiemployer Plan” shall mean an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) which is a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) and which is currently contributed to by (or to which there is a current obligation to contribute of) the Borrower or a Subsidiary of the Borrower or any ERISA Affiliate (other than any Person who is considered an ERISA Affiliate solely pursuant to subsection (m) or (o) of Section 414 of the Code), and any such “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) to which the Borrower or a Subsidiary of the Borrower or any ERISA Affiliate (other than any Person who is considered an ERISA Affiliate solely pursuant to subsection (m) or (o) of Section 414 of the Code) contributed to or had an obligation to contribute to such “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) during the preceding five-year period.

 

“Net Worth” shall mean, as to any Person, the sum of its capital stock, capital in excess of par or stated value of shares of its capital stock, retained earnings and any other account which, in accordance with GAAP, constitutes stockholders’ equity, but excluding treasury stock.

 

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“Non-Consenting Lender” shall have the meaning provided in Section 11.13(b).

 

“Non-Defaulting Lender” shall mean and include each Lender other than a Defaulting Lender.

 

“Nordea” shall have the meaning provided in the first paragraph of this Agreement.

 

“Note” shall mean each Term Note and each Revolving Note.

 

“Notice of Borrowing” shall have the meaning provided in Section 2.02.

 

“Notice Office” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21st Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

“Obligations” shall mean all amounts owing to the Administrative Agent, the Security Agent or any Lender pursuant to the terms of this Agreement or any other Credit Document.  Notwithstanding anything to the contrary contained herein or in any other Credit Document, in no event will the Obligations include any Excluded Swap Obligations.

 

“Obligors” shall mean the Borrower and each Subsidiary Guarantor and “Obligor” shall mean any one of them.

 

“OFAC” shall have the meaning provided in Section 6.26(b).

 

“OPA” shall mean the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701 et seq., 46 U.S.C. §3703(a) et seq.

 

“Organizational Documents” with respect to the Borrower or any Subsidiary Guarantor shall mean the Memorandum of Association or Certificate of Incorporation, as the case may be, Certificate of Formation (including, without limitation, by the filing or modification of any certificate of designation), By-Laws, limited liability company agreement or partnership agreement (or equivalent organizational documents).

 

“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).

 

“Other Creditors” shall mean any Lender or any affiliate thereof and their successors and assigns if any (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason), with which the Borrower enters into any Hedging Agreements from time to time.

 

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“Other Obligations” shall mean all obligations, liabilities and indebtedness (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Obligor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding, but excluding for the avoidance of doubt, any Excluded Swap Obligations) owing by any Obligor to the Other Creditors under, or with respect to (including, in the case of any Subsidiary Guarantor, all such obligations (other than Excluded Swap Obligations), liabilities and indebtedness under the Guaranty), any Hedging  Agreement, whether such Hedging Agreement is now in existence or hereafter arising, and the due performance and compliance by such Obligor with all of the terms, conditions and agreements contained therein.

 

“Other Taxes” shall have the meaning provided in Section 4.04(b).

 

“Overhead Expenses” shall mean any and all administrative and overhead expenses, including, without limitation, expenses for payroll and benefits, insurance, real estate, travel, technology, rent, utilities, dues and subscriptions, marketing and communications, service agreements, office equipment and supplies, inspections and appraisals for vessels, business development and taxes.

 

“Participant Register” shall have the meaning provided in Section 11.04(a).

 

“PATRIOT Act” shall have the meaning provided in Section 11.21.

 

“Payment Date” shall mean the last Business Day of each September, December, March and June, commencing with the last Business Day of the first full fiscal quarter following the Initial Borrowing Date.

 

“Payment Office” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21st Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

“Permitted Holders” shall mean Genco.

 

“Permitted Liens” shall have the meaning provided in Section 8.01.

 

“Person” shall mean any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.

 

“Plan” shall mean any “employee pension benefit plan” as defined in Section 3(2) of ERISA, which is currently maintained or contributed to by (or to which there is a current obligation to contribute of) the Borrower or a Subsidiary of the Borrower or any ERISA Affiliate and which is subject to ERISA.

 

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“Pledge Agreement” shall mean the pledge agreement in connection with the Earnings Account and the Equity Interests of each of the Borrower and the Subsidiary Guarantor substantially in the form of Exhibit E to be executed by the Borrower and each Subsidiary Guarantor, as applicable.

 

“Pledge Agreement Collateral” shall mean all “Collateral” as defined in the Pledge Agreement.

 

“Pledged Securities” shall mean “Securities” as defined in the Pledge Agreement pledged (or required to be pledged) pursuant thereto.

 

“Pro Rata Share” shall have the definition provided in Section 4.05.

 

“Recipient” shall mean (a) any Agent and (b) any Lender.

 

“Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

 

“Reference Banks” shall mean, at any time, (a) if there are two or fewer Lenders at such time, each Lender and (b) if there are three or more Lenders at such time, each Lead Arranger and one other Lender as shall be determined by the Administrative Agent.

 

“Register” shall have the meaning provided in Section 11.17.

 

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.

 

“Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

 

“Replaced Lender” shall have the meaning provided in Section 2.11.

 

“Replacement Lender” shall have the meaning provided in Section 2.11.

 

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan (other than any Plan maintained by a Person who is considered an ERISA Affiliate solely pursuant to subsection (m) or (o) of Section 414 of the Code or any Multiemployer Plan) that is subject to Title IV of ERISA other than those events as to which the 30-day notice period referred to in Section 4043 is waived.

 

“Representative” shall have the definition provided in Section 4.05(d).

 

“Required Insurance” shall mean insurance as set forth on Schedule IV hereto.

 

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“Required Lenders” shall mean, at any time, Non-Defaulting Lenders the sum of whose outstanding Term Loans, Revolving Commitments (or after the termination thereof, Revolving Loans) and Term Loan Commitments at such time represents in excess of 66 2/3% of the sum of all outstanding Term Loans, Revolving Commitments (or after the termination thereof, Revolving Loans) and Term Loan Commitments of Non-Defaulting Lenders.

 

“Restricted Party” shall mean a person (a) that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person); (b) that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of, a country which is subject to country-wide/comprehensive Sanctions Laws which attach legal effect to being domiciled, registered as located or having its main place of business in, or incorporated in such country; (c) that is directly or indirectly owned or controlled by a Person referred to in clauses (a) and/or (b) above; or (d) with which any Lender is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws.

 

“Returns” shall have the meaning provided in Section 6.11(b).

 

“Revolving Loan” shall have the meaning provided in Section 2.01(b).

 

“Revolving Loan Commitment” shall mean, for each Lender, the amount set forth opposite such Lender’s name in Schedule I hereto directly below the column entitled “Revolving Loan Commitment”, as same may be (x) terminated pursuant to Sections 3.02, 3.03 and/or 9, as applicable, (y) adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 2.11 or 11.04(b), or (z) otherwise reduced pursuant to Section 4.02(i).

 

“Revolving Loan Facility” shall mean the senior secured revolving loan facility in the aggregate principal amount of up to $115,000,000 provided under this Agreement.

 

“Revolving Loan Vessel” shall mean, at any time, each of the Revolving Loan Vessels listed on Schedule VI hereto under the heading “Revolving Loan Vessels”.

 

“Revolving Note” shall have the meaning provided in Section 2.04(a).

 

“S&P” shall mean Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc., and its successors.

 

“Sanctions Authority” shall mean the United Nations, the European Union, the member states of the European Union, the United States of America and any authority acting on behalf of any of them in connection with Sanctions Laws.

 

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

 

“Sanctions List” shall mean any list of prohibited persons or entities published in

 

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connection with Sanctions Laws by or on behalf of any Sanctions Authority that has the effect of prohibiting transactions with such persons, including the Specially Designated Nationals and Blocked Persons List and other prohibited party lists maintained by U.S. Treasury Office of Foreign Assets Control (“OFAC”) or maintained by OFAC or any list of Persons issued by OFAC pursuant to the including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2011 (the “Executive Order”), at its official website or any replacement website or other replacement official publication, which has the effect of barring.

 

“Screen Rate” shall have the meaning provided in the definition of Eurodollar Rate.

 

“Secured Creditors” shall mean collectively the Other Creditors together with the Lender Creditors.

 

“Secured Obligations” shall mean (a) the Credit Document Obligations, (b) the Other Obligations, (c) any and all sums advanced by the Security Agent in order to preserve the Collateral or preserve its security interest in the Collateral, (d) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Obligors referred to in clauses (a) and (b) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Security Agent of its rights hereunder, together with reasonable attorneys’ fees and court costs, and (e) all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under the Security Documents.  In no event will the Secured Obligations include any Excluded Swap Obligations.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Security Agent” shall mean the Administrative Agent acting as mortgagee, security trustee or security agent for the Secured Creditors pursuant to the Security Documents.

 

“Security Documents” shall mean the Guaranty, the Pledge Agreement, the Assignment of Hedging Agreement, the Assignment of Earnings, the Assignment of Charter, the Assignment of Insurances, each Collateral Vessel Mortgage and, after the execution and delivery thereof, each additional security document executed pursuant to Section 7.11.

 

“Shareholder Rights Agreement” shall mean the Shareholders Rights Agreement entered into as of March 5, 2010 by and between the Borrower and Mellon Investor Services LLC (operating with the service name BNY Mellon Shareowner Services), a New Jersey limited liability company, as rights agent, without giving effect to any material amendments, modifications or supplements thereto without the prior written consent of the Administrative Agent.

 

“Shipbuilding Contract” shall mean each of the shipbuilding contracts between (x) the Borrower or its guaranteed nominee, as buyer and the Builder, as builder dated November

 

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13, 2013 respecting Hull No. BC64K-BT03, and (y) the Borrower or its guaranteed nominee, as buyer and the Builder, as builder dated November 13, 2013 respecting Hull No. BC64K-BT04, respectively.

 

“Specified Currency” shall have the meaning provided in Section 11.18.

 

“Subsequent Reduction Date” means (x) the last day of each quarter after the First Reduction Date and (y) the Maturity Date as set forth on Schedule VIII hereof.

 

“Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time.

 

“Subsidiary Guarantor” shall mean each wholly-owned direct and indirect Subsidiary of the Borrower that owns, directly or indirectly, any Collateral Vessel, on a joint and several basis, each such Subsidiary to be party to the Guaranty or execute a counterpart thereof after the Closing Date.

 

“Swap Obligation” shall mean, with respect to any Obligor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Taxes” shall mean all present or future taxes, levies, imposts, duties, fees, assessments, deductions, withholdings or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Loan” shall have the meaning provided in Section 2.01(a).

 

“Term Loan Commitment” shall mean, the amount set forth opposite such Lender’s name in Schedule I hereto as the same may be (x) terminated pursuant to Sections 3.02, 3.03 and/or 9, as applicable, or (y) adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 2.11 or 11.04(b).

 

“Term Loan Commitment Termination Date” shall mean with respect to a Term Loan Vessel, the earliest of (a) the Delivery Date of such Term Loan Vessel and (b) four months after the scheduled delivery date as set forth in the relevant Shipbuilding Contract for such Term Loan Vessel.

 

“Term Loan Facility” shall mean the delayed draw term loan facility in the aggregate principal amount of up to US$33,000,000 pertaining to the Term Loan Vessels as provided under this Agreement.

 

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“Term Loan Vessel” shall mean each of the Term Loan Vessels listed on Schedule VI hereto under the heading “Term Loan Vessels”.

 

“Term Note” shall have the meaning provided in Section 2.04(a).

 

“Test Period” shall mean each period of four consecutive fiscal quarters, in each case taken as one accounting period.

 

“Total Assets” shall mean the amount which is equal to the total assets of the Borrower and its Subsidiaries on a consolidated basis as shown in the Borrower’s applicable financial statements.

 

“Total Commitment” shall mean, at any time, the sum of the Commitments of each of the Lenders at such time.

 

“Total Revolving Loan Commitment” shall mean, at any time, the sum of the Revolving Loan Commitments of each of the Lenders at such time.

 

“Total Term Loan Commitment” shall mean, at any time, the sum of the Term Loan Commitments of each of the Lenders at such time.

 

“Transaction” shall mean, collectively, (a) the acquisition of each Term Loan Vessel, (b) the entering into of the Credit Documents and the incurrence of Loans hereunder and (c) the payment of all fees and expenses in connection with the foregoing.

 

“Transferred Collateral Vessel” shall have the meaning provided in the definition of “Flag Jurisdiction Transfer” in this Section 1.01.

 

“UCC” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

 

“Unfunded Current Liability” of any Plan shall mean the amount, if any, as of the most recent valuation date for the applicable Plan, by which the present value of the Plan’s benefit liabilities determined in accordance with actuarial assumptions at such time consistent with those prescribed by Section 430 of the Code and Section 303 of ERISA, exceeds the fair market value of all plan assets allocable to such liabilities under Title IV of ERISA.

 

“United States” and “U.S.” shall each mean the United States of America.

 

“Unutilized Commitment” shall mean any Unutilized Revolving Loan Commitment and any Term Loan Commitment.

 

“Unutilized Revolving Loan Commitment” shall mean, at any time, the Total Revolving Loan Commitment at such time less the aggregate outstanding principal amount of all Revolving Loans made at such time.

 

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“Value Adjusted Total Assets” shall mean the Total Assets adjusted in each case for the difference of the book value of the Fleet Vessels and the Fleet Market Value.

 

“Vessel Acquisition Documentation” shall mean the documentation entered into by any Obligor or Subsidiary of any Obligor in connection with the acquisition of a Term Loan Vessel, including without limitation a Shipbuilding Contract.

 

“Wholly-Owned Subsidiary” shall mean, as to any Person, (a) any corporation 100% of whose capital stock (other than director’s qualifying shares) is at the time directly or indirectly owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (b) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has directly or indirectly a 100% equity interest at such time.

 

1.02                        Other Definitional Provisions .  (a)  Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Credit Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b)                                 As used herein and in the other Credit Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms not defined in Section 1.01 shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) unless the context otherwise requires, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Equity Interests, securities, revenues, accounts, leasehold interests and contract rights, (v) the word “will” shall be construed to have the same meaning and effect as the word “shall”, and (vi) unless the context otherwise requires, any reference herein (A) to any Person shall be construed to include such Person’s successors and assigns and (B) to the Borrower or any other Obligor shall be construed to include the Borrower or such Obligor as debtor and debtor-in-possession and any receiver or trustee for the Borrower or any other Obligor, as the case may be, in any insolvency or liquidation proceeding.

 

(c)                                  The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(d)                                 The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

1.03                        Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by

 

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the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding up if there is no nearest number).

 

SECTION 2.                            Amount and Terms of Credit Facilities

 

2.01                        The Commitments. Subject to and upon the terms and conditions set forth herein, each Lender with a Term Loan Commitment severally agrees to make a term loan or term loans (each, a “Term Loan” and, collectively, the “Term Loans”) to the Borrower, which Term Loans:  (i) may only be incurred pursuant to two single drawings each made by the Borrower on or after the Delivery Date of the applicable Term Loan Vessel, which shall occur in each case on or after the Closing Date and prior to the Term Loan Commitment Termination Date for such Term Loan Vessel, (ii) shall be denominated in Dollars, (iii) each drawing shall not exceed $16,500,000, and (iv) shall be made by each such Lender in an aggregate principal amount which does not exceed the Term Loan Commitment of such Lender on the relevant Delivery Date, provided that any Term Loans shall be used by the Borrower in accordance with Section 6.10(a) of this Agreement. Once repaid, Term Loans incurred hereunder may not be reborrowed.

 

Notwithstanding the foregoing or anything to the contrary contained in Section 5.03, a Term Loan may be made to fund amounts due on the Delivery Date of each Term Loan Vessel under the relevant Shipbuilding Contract before the conditions precedent set forth in subsections (b),(c), (d), (e) and (h) of Section 5.03 are satisfied, provided that arrangements have been made,  satisfactory to the Administrative Agent, that such conditions will be met immediately upon delivery of the relevant Term Loan Vessel and, provided, further, that in any such circumstance, the Administrative Agent shall (A) on the applicable Borrowing Date, preposition an amount equal to the aggregate principal amount of the applicable Term Loan at a bank or other financial institution (the “Builder’s Bank”) satisfactory to the Administrative Agent (on behalf of the Lenders), which funds shall be held at the Builder’s Bank in the name and under the joint  control of the Administrative Agent and the Borrower  or relevant Subsidiary Guarantor and (B) issue a SWIFT MT 199 or other similar communication (each such communication, a “Disbursement Authorization”) authorizing the release of such funds by the Builder’s Bank on the relevant Delivery Date provided that each of the conditions precedent set forth in Section 5.03 (other than the conditions precedent set forth subsections (b),(c), (d), (e) and (h) of such Section 5.03) are satisfied in form and substance satisfactory to the Administrative Agents (on behalf of Lenders), including but not limited to a protocol of delivery and acceptance duly executed by the relevant Subsidiary Guarantor and the Builder, countersigned by a representative of the Administrative Agent; and provided further, that if the Delivery Date of the relevant Term Loan Vessel does not occur within fifteen (15) Business Days following the relevant Borrowing Date, the funds held at the Builder’s Bank shall (at the Borrower’s expense) be returned to the Administrative Agent for further distribution to the Lenders; and provided further, that notwithstanding any other provision set forth in this Agreement, in the event that a Term Loan has been prepositioned in accordance with the terms of this Section 2.01, the duration of the first Interest Period applicable to the relevant Term Loan shall be one (1) month, which Interest Period shall terminate upon the applicable Delivery Date (as provided in Section 2.07 hereof) and thereafter shall revert to the duration of each Interest Period elected by the Borrower’s in accordance with such Section 2.07.

 

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(b)                                 Subject to and upon the terms and conditions set forth herein, each Lender with a Revolving Loan Commitment severally agrees to make, at any time and from time to time on or after the Closing Date, a revolving loan or revolving loans (each, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the Borrower, which Revolving Loans (i) shall be denominated in Dollars, (ii) may be repaid and reborrowed in accordance with the provisions hereof, (iii) shall not exceed for any such Lender at any time outstanding that aggregate principal amount which equals the Revolving Loan Commitment of such Lender at such time and (iv) shall not exceed in aggregate principal amount at any time outstanding the Available Revolving Loan Commitment at such time; provided that any Revolving Loans shall be used by the Borrower in accordance with Section 6.10(b) of this Agreement.

 

2.02                        Notice of Borrowing   Whenever the Borrower desires to incur Loans hereunder, it shall give the Administrative Agent at the Notice Office at least three (3) Business Days’ prior notice (which may be telephonic provided a written notice is delivered by the Borrower to the Administrative Agent immediately thereafter) of each Loan to be incurred hereunder, provided that (in each case) any such notice shall be deemed to have been given on a certain day only if given before 12:00 Noon (New York time) on such day.  Each such written notice (each, a “Notice of Borrowing”), except as otherwise expressly provided in Section 2.08, shall be irrevocable and shall be given by the Borrower substantially in the form of Exhibit A, appropriately completed to specify and include:

 

(a)                                 the aggregate principal amount of the Loans to be incurred pursuant to such Borrowing,

 

(b)                                 the date of such Borrowing (which shall be a Business Day),

 

(c)                                  whether the Loans being incurred pursuant to such Borrowing shall constitute Term Loans or Revolving Loans,

 

(d)                                 in the case of a Term Loan, the name of the Term Loan Vessel to which the Term Loan relates;

 

(e)                                  the initial Interest Period to be applicable thereto in accordance with Section 2.07, and

 

(f)                                   in the case of a Borrowing of Revolving Loans the amount of the Available Revolving Loan Commitment after giving effect to such Borrowing.

 

The Administrative Agent shall promptly (and in no event less than three (3) Business Days prior to the proposed Borrowing Date) give each Lender notice of such proposed Borrowing, of such Lender’s proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing.

 

2.03                        Disbursement of Funds.  Except as otherwise specifically provided in the immediately succeeding sentence, no later than 12:00 Noon (New York time) on the date specified in each Notice of Borrowing, each Lender will make available its pro rata portion of

 

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each such Borrowing requested to be made on such date.  All such amounts shall be made available in Dollars and in immediately available funds at the Payment Office of the Administrative Agent and the Administrative Agent will make available to the Borrower (on such day to the extent of funds actually received by the Administrative Agent prior to 12:00 Noon (New York time) on such day) at the Payment Office, in the account specified in the applicable Notice of Borrowing, the aggregate of the amounts so made available by the Lenders.  Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent such Lender’s portion of any Borrowing to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender.  If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent.  The Administrative Agent shall also be entitled to recover on demand from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower until the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Rate and (ii) if recovered from the Borrower, the rate of interest applicable to the respective Borrowing, as determined pursuant to Section 2.06.

 

2.04                        Notes. (a)  The Borrower’s obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 11.17 and shall, if requested by such Lender, also be evidenced by (i) in the case of Term Loans, a promissory note duly executed and delivered by the Borrower substantially in the form of Exhibit B-1, with blanks appropriately completed in conformity herewith (each, a “Term Note” and, collectively, the “Term Notes”) and (ii) in the case of Revolving Loans, by a promissory note duly executed and delivered by the Borrower substantially in the form of Exhibit B-2, with blanks appropriately completed in conformity herewith (each, a “Revolving Note” and, collectively, the “Revolving Notes”).

 

(b)                                 Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will, prior to any transfer of any of its Notes, endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby.  Failure to make any such notation or any error in any such notation or endorsement shall not affect the Borrower’s obligations in respect of such Loans.

 

(c)                                  Notwithstanding anything to the contrary contained above in this Section 2.04 or elsewhere in this Agreement, Notes shall be delivered only to Lenders that at any time specifically request the delivery of such Notes.  No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrower shall affect or in any manner impair the obligations of the Borrower to pay the Loans (and all related Obligations) incurred by the Borrower that would

 

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otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the Credit Documents.  Any Lender that does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations on such Note otherwise described in preceding clause (b).  At any time (including, without limitation, to replace any Note that has been destroyed or lost) when any Lender requests the delivery of a Note to evidence any of its Loans, the Borrower shall promptly execute and deliver to such Lender, c/o the Administrative Agent, the requested Note in the appropriate amount or amounts to evidence such Loans, provided that, in the case of a substitute or replacement Note, the Borrower shall have received from such requesting Lender (i) an affidavit of loss or destruction and (ii) a customary lost/destroyed Note indemnity, in each case in form and substance reasonably acceptable to the Borrower and such requesting Lender, and duly executed by such requesting Lender.

 

2.05                        Pro Rata Borrowings.  All Borrowings of Term Loans and Revolving Loans under this Agreement shall be incurred from the Lenders pro rata on the basis of their Term Loan Commitments or Revolving Loan Commitments, as the case may be.  It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.

 

2.06                        Interest.  (a)  The Borrower agrees to pay interest in respect of the unpaid principal amount of each Loan from the date of Borrowing thereof until the maturity thereof (whether by acceleration or otherwise) at a rate per annum which shall be equal to the sum of the Applicable Margin plus the Eurodollar Rate for the relevant Interest Period, each as in effect from time to time.

 

(b)                                 If the Borrower fails to pay any amount payable by it under a Credit Document on its due date, interest shall accrue on the overdue amount (in the case of overdue interest to the extent permitted by law) from the due date up to the date of actual payment (both before and after judgment) at a rate which is, subject to paragraph (c) below, 2% plus the rate then borne by such Loan.  Any interest accruing under this Section 2.06(b) shall be immediately payable by the Borrower on demand by the Administrative Agent.

 

(c)                                  If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to such Loan:

 

(i)                                     the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

 

(ii)                                  the rate of interest applying to the overdue amount during that first Interest Period shall be 2% plus the rate which would have applied if the overdue amount had not become due.

 

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Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

 

(d)                                 Accrued and unpaid interest shall be payable (i) in arrears on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of 3 months, on each date occurring at 3 month intervals after the first day of such Interest Period, and (ii) on any repayment or prepayment (on the amount repaid or prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.

 

(e)                                  Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for each Interest Period applicable to the Loans to be made pursuant to the applicable Borrowing and shall promptly notify the Borrower and the respective Lenders thereof.  Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.

 

2.07                        Interest Periods.  At the time the Borrower gives any Notice of Borrowing in respect of the making of any Loan (in the case of the initial Interest Period applicable thereto) or on the third Business Day prior to the expiration of an Interest Period applicable to such Loan (in the case of any subsequent Interest Period) (provided that any such notice shall be deemed to be given on a certain day only if given before 12:00 Noon (New York time)), it shall have the right to elect, by giving the Administrative Agent notice thereof, the interest period (each an “Interest Period”) applicable to such Loan, which Interest Period shall, at the option of the Borrower, be a 1((or, with the consent of the Administrative Agent, less than one) month, provided that such no such consent shall be required for the initial Borrowing in respect of any Collateral Vessel), 3 or 6 month period (or such other period as all the Lenders may agree); provided that:

 

(i)                                     all Loans comprising a Borrowing shall at all times have the same Interest Period;

 

(ii)                                  subject to clause (iii) below, each Interest Period for any Loan after the initial Interest Period with respect thereto shall commence on the day on which the immediately preceding Interest Period applicable thereto expires;

 

(iii)                               if any Interest Period relating to a Loan begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;

 

(iv)                              if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the first succeeding Business Day; provided, however, that if any Interest Period for a Loan would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;

 

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(v)                                 no Interest Period in respect of any Borrowing of Loans shall be selected which extends beyond the Maturity Date;

 

(vi)                              any Interest Period commencing less than one month prior to the Maturity Date shall end on the Maturity Date;

 

(vii)                           if an Event of Default has occurred and is continuing, unless the Required Lenders otherwise agree, the Interest Period shall be one (1) month;

 

(viii)                        if, at any time, the Borrower shall select an Interest Period of less than one month for any Loan, then the Eurodollar Rate applicable to such Loan for such Interest Period shall be based on (x) the Screen Rate at such time, if available, or (y) if the Screen Rate is not then available, the rate supplied by the Reference Banks to the Administrative Agent to determine the Eurodollar Rate for such Interest Period; and

 

(ix)                              no Interest Period shall be selected which extends beyond any date upon which a scheduled repayment of Loans will be required to be made under Section 4.02(a) or 4.02(b) if the aggregate principal amount of Loans which have Interest Periods which will expire after such date will be in excess of the aggregate principal amount of Loans then outstanding less the aggregate amount of such required repayment on such date.

 

If upon the expiration of any Interest Period applicable to a Borrowing of Loans, the Borrower has failed to elect a new Interest Period to be applicable to such Loans as provided above, the Borrower shall be deemed to have elected a one (1) month Interest Period to be applicable to such Loans effective as of the expiration date of such current Interest Period.

 

2.08                        Increased Costs, Illegality, Market Disruption, etc.  (a) In the event that any Lender shall have reasonably determined in good faith (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto):

 

(i)                                     at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Loan because of, without duplication, the introduction of or effectiveness of any Change in Law since the Closing Date in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy or otherwise or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, for example, but not limited to:  (A) a change in the basis of taxation of payment to any Lender of the principal of or interest on such Loan or any other amounts payable hereunder (except for changes in the rate of tax on, or determined by reference to, the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which such Lender or the entity controlling such Lender is organized or in which the principal office of such Lender or the entity controlling such Lender or such Lender’s applicable lending office is located or any subdivision thereof or therein), but without duplication of any amounts payable in respect of Taxes pursuant to Section 4.04, (B) a change in official reserve requirements but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate, or (C) a change that will have the

 

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effect of increasing the amount of capital adequacy required or requested to be maintained by such Lender, or any corporation controlling such Lender, based on the existence of such Lender’s Commitments hereunder or its obligations hereunder; or

 

(ii)                                  at any time, that the making or continuance of any Loan has been made unlawful by any law or governmental rule, regulation or order;

 

then, and in any such event, such Lender shall promptly give notice (by telephone confirmed in writing) to the Borrower and, in the case of clause (ii) above, to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the Lenders).  Thereafter (x) in the case of clause (i) above, the Borrower agrees (to the extent applicable), to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased costs or reductions to such Lender or such other corporation and (y) in the case of clause (ii) above, the Borrower shall take one of the actions specified in Section 2.08(b) as promptly as possible and, in any event, within the time period required by law.  In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.08(a) shall, absent manifest error (but subject to Section 2.10 (to the extent applicable)), be final and conclusive and binding on all the parties hereto.  Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.08(a), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for the calculation of such additional amounts;provided that, subject to the provisions of Section 2.10(b), the failure to give such notice shall not relieve the Borrower from its obligations hereunder.

 

(b)                                 At any time that any Loan is affected by the circumstances described in Section 2.08(a)(i), the Borrower may, and in the case of a Loan affected by the circumstances described in Section 2.08(a)(ii), the Borrower shall, either (x) if the affected Loan is then being made initially, cancel the respective Borrowing by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date or the next Business Day that such Borrower was notified by the affected Lender or the Administrative Agent pursuant to Section 2.08(a)(i) or (ii) or (y) if the affected Loan is then outstanding, upon at least three (3) Business Days’ written notice to the Administrative Agent, in the case of any Loan, repay all outstanding Borrowings (within the time period required by the applicable law or governmental rule, governmental regulation or governmental order) which include such affected Loans in full in accordance with the applicable requirements of Section 4.02; provided that if more than one Lender is affected at any time in the same manner and to the same extent, then all affected Lenders must be treated the same pursuant to this Section 2.08(b).

 

(c)                                  If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of such Loan for the relevant Interest Period shall be the rate per annum which is the sum of:

 

(i)                                     the Applicable Margin; and

 

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(ii)                                  the rate determined by each Lender and notified to the Administrative Agent, which expresses the actual cost to each such Lender of funding its participation in such Loan for a period equivalent to such Interest Period from whatever source it may reasonably select.

 

(d)                                 If a Market Disruption Event occurs and the Administrative Agent or the Borrower so require, the Administrative Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.  Any alternative basis agreed pursuant to the immediately preceding sentence shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties.  If no agreement is reached pursuant to this clause (d), the rate provided for in clause (c) above shall apply for the entire Interest Period.

 

(e)                                  If any Reference Bank ceases to be a Lender under this Agreement, (x) it shall cease to be a Reference Bank and (y) the Administrative Agent shall, with the approval (which shall not be unreasonably withheld) of the Borrower, nominate as soon as reasonably practicable another Lender to be a Reference Bank in place of such Reference Bank.

 

2.09                        Compensation.  The Borrower agrees to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting and the calculation of such compensation; provided that no Lender shall be required to disclose any information that would be confidential or price sensitive), for all reasonable and documented losses, expenses and liabilities (including, without limitation, any such loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Loans but excluding any loss of anticipated profits) which such Lender may sustain in respect of Loans made to the Borrower:  (i) if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of Loans does not occur on a date specified therefor in a Notice of Borrowing (whether or not withdrawn by the Borrower or deemed withdrawn pursuant to Section 2.08(a)); (ii) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 2.08(a), Section 4.01 or Section 4.02 or as a result of an acceleration of the Loans pursuant to Section 9) of any of its Loans, or assignment of its Loans pursuant to Section 2.11, occurs on a date which is not the last day of an Interest Period with respect thereto; (iii) if any prepayment of any of its Loans is not made on any date specified in a notice of prepayment given by the Borrower; or (iv) as a consequence of any other Default or Event of Default arising as a result of the Borrower’s failure to repay Loans or make payment on any Note held by such Lender when required by the terms of this Agreement.

 

2.10                        Change of Lending Office; Limitation on Additional Amounts.  (a)  Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 2.08(a), Section 2.08(b) or Section 4.04 with respect to such Lender, it will, if requested by the Borrower, use reasonable good faith efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage (other than any such disadvantage that is immaterial and any cost that is reimbursed by the Borrower), with the object of avoiding the consequence of the

 

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event giving rise to the operation of such Section.  Nothing in this Section 2.10 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender provided in Sections 2.08 and 4.04.

 

(b)                                 Notwithstanding anything to the contrary contained in Sections 2.08, 2.10 or 4.04 of this Agreement, unless a Lender gives notice to the Borrower that it is obligated to pay an amount under any such Section within 180 days of the later of (x) the date the Lender incurs the respective increased costs, Taxes, loss, expense or liability, reduction in amounts received or receivable or reduction in return on capital or (y) the date such Lender has actual or constructive knowledge of its incurrence of the respective increased costs, Taxes, loss, expense or liability, reductions in amounts received or receivable or reduction in return on capital, then such Lender shall only be entitled to be compensated for such amount by the Borrower pursuant to said Section 2.08, 2.09 or 4.04, as the case may be, to the extent the costs, Taxes, loss, expense or liability, reduction in amounts received or receivable or reduction in return on capital are incurred or suffered on or after the date which occurs 180 days prior to such Lender giving notice to the Borrower that it is obligated to pay the respective amounts pursuant to said Section 2.08, 2.09 or 4.04, as the case may be.  This Section 2.10(b) shall have no applicability to any Section of this Agreement other than said Sections 2.08, 2.09 and 4.04.

 

2.11                         Replacement of Lenders.  (x)  If any Lender becomes a Defaulting Lender, (y) upon the occurrence of any event giving rise to the operation of Section 2.08(a), Section 2.08(b) or Section 4.04 with respect to any Lender which results in such Lender charging to the Borrower increased costs in excess of those being generally charged by the other Lenders, or (z) as provided in Section 11.13(b) in the case of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders, the Borrower shall have the right, if no Event of Default will exist immediately after giving effect to the respective replacement, to either replace such Lender (the “Replaced Lender”) with one or more other Eligible Transferee or Eligible Transferees, none of whom shall constitute a Defaulting Lender at the time of such replacement (collectively, the “Replacement Lender”) reasonably acceptable to the Administrative Agent, provided that:

 

(i)                                     at the time of any replacement pursuant to this Section 2.11, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 11.04(b) (and with all fees payable pursuant to said Section 11.04(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the Commitments and outstanding Loans of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum (without duplication) of (x) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender, and (y) an amount equal to all accrued, but unpaid, Commitment Commission owing to the Replaced Lender pursuant to Section 3.01; and

 

(ii)                                  all obligations of the Borrower due and owing to the Replaced Lender at such time (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement.

 

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Upon receipt by the Replaced Lender of all amounts required to be paid to it pursuant to this Section 2.11, the Administrative Agent shall be entitled (but not obligated) and is authorized (which authorization is coupled with an interest) to execute an Assignment and Assumption Agreement on behalf of such Replaced Lender, and any such Assignment and Assumption Agreement so executed by the Administrative Agent and the Replacement Lender shall be effective for purposes of this Section 2.11 and Section 11.04.  Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to (i) the Replacement Lender of the appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.08, 2.09, 4.04 and 11.01), which shall survive as to such Replaced Lender.

 

SECTION 3.                            Commitment Commission; Fees.

 

3.01                        Commitment Commission; Fees.  (a)  The Borrower agrees to pay the Administrative Agent for distribution to each Non-Defaulting Lender a commitment commission (the “Commitment Commission”) for the period from the Closing Date to and including the Maturity Date computed at a per annum rate equal to 40% of the Applicable Margin of the daily Unutilized Commitment, in each case, of such Non-Defaulting Lender.  Accrued Commitment Commission shall be due and payable in arrears on each Payment Date and on the Maturity Date (or, if earlier, the date upon which the Total Commitments are terminated).

 

(b)                                 The Borrower shall pay to the Administrative Agent, for the Administrative Agent’s own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent.

 

3.02                        [Reserved]

 

3.03                        Mandatory Reduction of Commitments.(a)[Reserved]

 

(b)                                 In addition to any other mandatory commitment reductions pursuant to this Section 3.03, the Total Term Loan Commitment shall terminate in its entirety on the Term Loan Commitment Termination Date.

 

(c)                                  [Reserved].

 

(d)                                 In addition to any other mandatory commitment reductions pursuant to this Section 3.03, on each Borrowing Date on which Term Loans are incurred, the Total Term Loan Commitment shall be permanently reduced by the aggregate principal amount of the Term Loans made on such Borrowing Date.

 

(e)                                  Each reduction to, or termination of, the Total Term Loan Commitment or the Total Revolving Loan Commitment, as applicable, pursuant to this Section 3.03 shall be applied to proportionately reduce or terminate, as the case may be, the Term Loan Commitment or Revolving Loan Commitment, as applicable, of each Lender with such a Commitment.

 

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(f)                                   The Credit Facilities shall terminate in their entirety on the Maturity Date.

 

SECTION 4.                            Prepayments; Payments; Taxes.

 

4.01                        Voluntary Prepayments. (a) The Borrower shall have the right to prepay the Loans, without premium or penalty except as provided by law, in whole or in part at any time and from time to time on the following terms and conditions:

 

(i)                                     the Borrower shall give the Administrative Agent, prior to 12:00 Noon (New York time) at its Notice Office, at least three (3) Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay such Loans, which notice shall specify whether Term Loans or Revolving Loans shall be prepaid, the amount of such prepayment and the specific Borrowing or Borrowings pursuant to which such Loans were made, which notice the Administrative Agent shall promptly transmit to each of the Lenders;

 

(ii)                                  each partial prepayment of Term Loans or Revolving Loans pursuant to this Section 4.01 shall be in an aggregate principal amount of at least $1,000,000 (or such lesser amount as is acceptable to the Administrative Agent in any given case) or integral multiples of $1,000,000;

 

(iii)                               at the time of any prepayment of Loans pursuant to this Section 4.01 which occurs on any date other than the last day of the Interest Period applicable thereto, the Borrower shall pay the amounts required pursuant to Section 2.09;

 

(iv)                              except as expressly provided in clause (v) below, each prepayment pursuant to this Section 4.01 in respect of any of the Revolving Loan or the Term Loan, as applicable, made pursuant to a Borrowing shall be applied pro rata to such Revolving Loan or Term Loan, as the case may be, comprising such Borrowing, provided that at the Borrower’s election in connection with any prepayment of Loans pursuant to this Section 4.01, such prepayment shall not, so long as no Event of Default then exists, be applied to any Loan of a Defaulting Lender until all other Loans of Non-Defaulting Lenders have been repaid in full; and

 

(v)                                 In the event of a refusal by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders as (and to the extent) provided in Section 11.13(b), the Borrower may, upon five (5) Business Days’ prior written notice to the Administrative Agent at the Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders) repay all Loans, together with accrued and unpaid interest, Fees, and other amounts owing to such Lender in accordance with, and subject to the requirements of, said Section 11.13(b) so long as (I) all Commitments of such Lender are terminated concurrently with such repayment pursuant to Section 4.02(g) (at which time Schedule I hereto shall be deemed modified to reflect the changed Commitments) and (II) the consents, if any, required under Section 11.13(b) in connection with the repayment pursuant to this clause (b) have been obtained except that to the extent such Lender has been replaced by a Replacement Lender, the Total Commitment shall not be reduced.

 

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(b)                                 Term Loans prepaid pursuant to this Section 4.01 may not be reborrowed.  Revolving Loans prepaid pursuant to Section 4.01(a) may be reborrowed until the Maturity Date subject to compliance with the terms and conditions of this Agreement.

 

4.02                        Mandatory Repayments and Commitment Reductions.

 

(a)                                 (i) On any day on which the sum of the aggregate outstanding principal amount of all Revolving Loans (after giving effect to all other repayments thereof on such date) exceeds the Available Revolving Loan Commitment at such time, the Borrower shall prepay Revolving Loans on such day in an amount equal to such excess and (ii) on each Payment Date the Total Revolving Loan Commitment shall be reduced and otherwise repaid as set forth in Section 4.02(i).

 

(b)                                 In addition to any other mandatory repayments or commitment reductions pursuant to this Section 4.02, the Borrower shall be required to repay the Term Loan, in Dollars in equal installments on each Payment Date commencing on the Payment Date that is three months after the Delivery Date of the applicable Term Loan Vessel to which such Term Loan relates, each such installment payment being equal to 1/60th of such Term Loan with the last payment installment being in an amount necessary to repay such Term Loan in full to be made on the Maturity Date.

 

(c)                                  In addition to any other mandatory repayments or commitment reductions required pursuant to this Section 4.02, but without duplication, on (i) the Business Day following the date of any Collateral Disposition involving a Collateral Vessel (other than a Collateral Disposition constituting an Event of Loss) and (ii) the earlier of (A) the date which is 180 days following any Collateral Disposition constituting an Event of Loss involving a Collateral Vessel and (B) the date of receipt by the Borrower, any Subsidiary Guarantor or the Administrative Agent of the insurance proceeds relating to such Event of Loss, the Borrower shall, (i) if the Collateral Vessel is a Term Loan Vessel, repay an aggregate principal amount of outstanding Term Loans related to that Term Loan Vessel or (ii) if the Collateral Vessel is a Revolving Loan Vessel, reduce Revolving Loan Commitments or prepay any Revolving Loans, as applicable, in an amount equal to the then aggregate outstanding Revolving Loan multiplied by a fraction, the numerator of which is the appraised value of the Revolving Loan Vessel subject to such Collateral Disposition and the denominator of which is the aggregate of the Appraised Value of all Revolving Loan Vessels then securing the Credit Facility.

 

(d)                                 Upon cancellation or repudiation of any Shipbuilding Contract in connection with a Term Loan Vessel, the Term Loan Commitment related to such Term Loan Vessel (calculated on a pro rata basis) shall immediately be reduced and cancelled.

 

(e)                                  Upon the occurrence of an Event of Default resulting from a breach of Section 8.07(d), the Borrower shall be required to immediately repay the Loans in accordance with the requirements of Section 4.02(k) in an amount required to cure such Event of Default, provided that it is understood and agreed that the requirement to repay Loans under this Section 4.02(e) shall not be deemed to be a waiver of any other right or remedy that any Lender may have as a result of an Event of Default resulting from a breach of Section 8.07(d).

 

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(f)                                   In addition to any other mandatory repayments or commitment reductions required pursuant to this Section 4.02, upon a Change of Control, (i) the Borrower shall be required to repay the outstanding principal amount of the Loans in their entirety within 60 days after the date of such Change of Control and (ii) the Credit Facilities shall terminate.

 

(g)                                  If, in any applicable jurisdiction, it becomes impossible or unlawful for any Lender or its affiliates to perform any of its obligations as contemplated in relation to the Credit Facilities or to fund or maintain its participation in the Loans, such Lender’s Unutilized Commitment shall be immediately reduced and cancelled and the Loans attributable to such Lender shall be immediately due and payable.

 

(h)                                 With respect to each repayment of Loans required by this Section 4.02, the Borrower may designate the specific Borrowing or Borrowings pursuant to which such Loans were made, provided that (i) repayments of Loans pursuant to this Section 4.02 may only be made on the last day of an Interest Period applicable thereto unless all Loans of the relevant Revolving Loan or Term Loan with Interest Periods ending on such date of required repayment have been paid in full and (ii) each repayment of any Loans comprising a Borrowing shall be applied pro rata among such Loans.  In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the preceding provisions of this clause (h), make such designation in its sole reasonable discretion with a view, but no obligation, to minimize breakage costs owing pursuant to Section 2.09.

 

(i)                                     On the First Reduction Date and on each of the Subsequent Reduction Dates the total amount of the Revolving Loan Facility available for drawing shall be reduced by an amount calculated by amortizing the initial available amount of the Revolving Credit Facility (x) on a straight-line basis (y) over a period commencing on the Closing Date and ending on that date at which the average age of the Revolving Loan Vessels would be 17 years in accordance with the reduction schedule as set out on Schedule VIII. The Borrower shall also make a mandatory repayment of principal on the First Reduction Date and on each Subsequent Reduction Date such that the outstanding principal amount of the Revolving Loan Facility is not in excess of the principal amount set forth on Schedule VIII on and after such First Reduction Date and each Subsequent Reduction Date as set forth on Schedule VIII. On the Maturity Date, the Revolving Loan Facility available shall be reduced to zero and the Borrower shall repay the Administrative Agent for the ratable account of the Lenders the aggregate principal amount of the Revolving Loan then outstanding.

 

(j)                                    Upon at least three (3) Business Days’ prior notice to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, at any time or from time to time, without premium or penalty, to terminate or reduce (i) the Term Loan Commitments, in whole or in part prior to the Term Loan Commitment Termination Date, in integral multiples of $1,000,000 in the case of partial reductions to the Term Loan Commitments and/or (ii) the Unutilized Revolving Loan Commitment, in whole or in part prior to the Maturity Date, in integral multiples of $1,000,000 in the case of partial reductions to the Revolving Loan Commitments, provided that,

 

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in each case, such reduction shall apply proportionately to permanently reduce the Commitment, as applicable, of each Lender. Such permanent reductions of the Unutilized Revolving Loan Commitments shall be applied to scheduled reductions of the Revolving Loan Commitment set out in Schedule VIII pro rata among all scheduled amortization.

 

(k)                                 Mandatory prepayments made in accordance with the terms of this Section 4.02 in respect of any of the Revolving Loan or the Term Loan, as applicable, shall be applied, pro rata between such Revolving Loan or Term Loan, as the case may be, and as against any scheduled reductions of the Revolving Loan Commitment set out on Schedule VIII pro rata among all scheduled amortization and the Available Revolving Loan Commitment shall be reduced accordingly.

 

4.03                        Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office of the Administrative Agent or such other office in the State of New York as the Administrative Agent may hereafter designate in writing.  Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.

 

4.04                        Net Payments; Taxes.

 

All payments made by any Obligor hereunder or under any Note will be made without setoff, counterclaim or other defense. All such payments will be made free and clear of, and without deduction or withholding for any Taxes imposed with respect to such payments unless required by applicable law. If applicable law requires the deduction or withholding of any Taxes from or in respect of any sum payable under any Note, then:

 

(i)                                     the Borrower shall be entitled to make such deduction or withholding,

 

(ii)                                  the Borrower shall pay the full amount deducted or withheld to the relevant taxing authority and

 

(iii)                               in the case of any Indemnified Taxes or Other Taxes, the Borrower agrees to pay the full amount of such Indemnified Taxes and Other Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Indemnified Taxes and Other Taxes, will not be less than the amount provided for herein or in such Note.

 

If any amounts are payable in respect of Indemnified Taxes or Other Taxes pursuant to the preceding sentence, the Borrower agrees to reimburse each Lender, upon the written request of such Lender, for Taxes imposed on or measured by the net income of such Lender pursuant to

 

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the laws of the jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located and for any withholding of Taxes as such Lender shall determine are payable by, or withheld from, such Lender, in respect of such amounts so paid to or on behalf of such Lender pursuant to the preceding sentence and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. The Borrower will furnish to the Administrative Agent within 45 days after the date of payment of any Indemnified Taxes or Other Taxes is due pursuant to applicable law certified copies of Tax receipts evidencing such payment by the Borrower.

 

(b)                                 Without duplicating the payments under subsection (a) above, the Borrower agrees to pay any and all present or future stamp, court or documentary Taxes and any other excise (in the nature of a documentary or similar Tax), property, intangible, filing or mortgage recording Taxes or charges or similar levies imposed by any Governmental Authority which arise from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Note excluding (i) such amounts imposed in connection with an Assignment and Assumption Agreement, grant of a participation, transfer or assignment to or designation of a new applicable lending office or other office for receiving payments under any Note, except to the extent that any such change is requested in writing by a Borrower and (ii) the registration or presentation of a Note that is mandatorily required by law (all such non-excluded Taxes described in this Section 4.04(b) being referred to as “Other Taxes”).

 

(c)                                  Any Recipient that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Recipient, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Recipient is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Recipient’s reasonable judgment such completion, execution or submission would subject such

 

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Recipient to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Recipient.

 

(d)                                 If the Administrative Agent or a Lender determines in its sole discretion that it has actually received or realized a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by an Obligor or with respect to which such Obligor has paid additional amounts pursuant to Section 4.04(a), it shall pay over such refund to such Obligor (but only to the extent of indemnity payments made, or additional amounts paid, by such Obligor under Section 4.04(a) with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender (including any Taxes imposed with respect to such refund) as is determined in the sole discretion of the Administrative Agent or Lender in good faith, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  In the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority, then such Obligor, upon the written request of the Administrative Agent or such Lender, agrees to repay within 30 days the amount paid over to such Obligor (without interest other than any interest imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender.  Nothing in this Section 4.04(d) shall require a Lender to disclose any confidential information (including, without limitation, its Tax returns or its calculations).

 

(e)                                  If a payment made to a Lender under any Note would be subject to withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code or an intergovernmental agreement) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this paragraph (e), if any applicable law requires the deduction or withholding of any Taxes from or in respect of any sum payable upon the Note, including any Taxes imposed under FATCA, the Administrative Agent shall be entitled to make deductions or withholding. “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(f)                                   Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.04(a) relating to the maintenance of a Participant Register and (iii) any Taxes excluded in Section 4.04(a) attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Note, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally

 

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imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Note or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (f).

 

4.05                        Application of Proceeds.  (a)  All monies collected by the Security Agent upon any sale or other disposition of the Collateral of each Obligor, together with all other monies received by the Administrative Agent or Security Agent under and in accordance with this Agreement and the other Credit Documents (except to the extent (i) such monies are for the account of the Administrative Agent or Security Agent only or (ii) released in accordance with the applicable provisions of this Agreement or any other Credit Document), shall be applied to the payment of the Secured Obligations in accordance as follows:

 

(i)                                     first, to the payment of all amounts owing the Security Agent of the type described in clauses (c) and (d) of the definition of “Secured Obligations”;

 

(ii)                                  second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Credit Document Obligations shall be paid to the Lenders as provided in Section 4.05(d) hereof, with each Lender receiving an amount equal to such outstanding Credit Document Obligations or, if the proceeds are insufficient to pay in full all such Credit Document Obligations, its Pro Rata Share of the amount remaining to be distributed;

 

(iii)                               third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Other Obligations shall be paid to the Other Creditors as provided in Section 4.05(d) hereof, with each Other Creditor receiving an amount equal to such outstanding Other Obligations or, if the proceeds are insufficient to pay in full all such Other Obligations, its Pro Rata Share of the amount remaining to be distributed; and

 

(iv)                              fourth, to the extent proceeds remain after the application pursuant to the preceding clauses (i) through (iii), inclusive, and following the termination of this Agreement and the Credit Documents in accordance with their terms, to the relevant Obligor or to whomever may be lawfully entitled to receive such surplus.

 

(b)                                 For purposes of this Agreement, “Pro Rata Share” shall mean, when calculating a Secured Creditor’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Creditor’s Credit Document Obligations or Other Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Credit Document Obligations or Other Obligations, as the case may be.

 

(c)                                  When payments to Secured Creditors are based upon their respective Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall be applied (for

 

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purposes of making determinations under this Section 4.05 only) (i) first, to their Credit Document Obligations and (ii) second, to their Other Obligations.  If any payment to any Secured Creditor of its Pro Rata Share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Credit Document Obligations or Other Obligations, as the case may be, of the other Secured Creditors, with each Secured Creditor whose Credit Document Obligations or Other Obligations, as the case may be, have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Credit Document Obligations or Other Obligations, as the case may be, of such Secured Creditor and the denominator of which is the unpaid Credit Document Obligations or Other Obligations, as the case may be, of all Secured Creditors entitled to such distribution.

 

(d)           All payments required to be made hereunder shall be made (x) if to the Lender Creditors, to the Administrative Agent under this Agreement for the account of the Lender Creditors, and (y) if to the Other Creditors, to the trustee, paying agent or other similar representative (each a “Representative”) for the Other Creditors or, in the absence of such a Representative, directly to the Other Creditors.

 

(e)           For purposes of applying payments received in accordance with this Section 4.05, the Security Agent shall be entitled to rely upon (i) the Administrative Agent under this Agreement and (ii) the Representative for the Other Creditors or, in the absence of such a Representative, upon the Other Creditors for a determination (which the Administrative Agent, each Representative for any Other Creditors and the Secured Creditors agree (or shall agree) to provide upon request of the Security Agent) of the outstanding Credit Document Obligations and Other Obligations owed to the Lender Creditors or the Other Creditors, as the case may be.  Unless it has actual knowledge (including by way of written notice from an Other Creditor) to the contrary, the Security Agent, shall be entitled to assume that no Hedging Agreements are in existence.

 

(f)            It is understood and agreed that each Obligor shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral pledged and Liens granted by it under and pursuant to the Security Documents and the aggregate amount of the Secured Obligations of such Obligor.

 

SECTION 5.         Conditions Precedent.

 

5.01        Closing Date.  This Agreement shall become effective on the date on which each of the following conditions is satisfied:

 

(a)           Credit Agreement. The Borrower, the Administrative Agent and each of the Lenders who are initially parties hereto shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent.

 

(b)           Officer’s Certificates. The Administrative Agent shall have received  a certificate in form and substance reasonably acceptable to the Administrative Agent signed by an Authorized Officer of the Borrower, with appropriate insertions, together with copies of the

 

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Organizational Documents of the Borrower and the resolutions of the Borrower referred to in such certificate authorizing the consummation of the Transaction and certifying that the conditions set forth in Sections 5.01(d), (e), (h) and (i) are satisfied (to the extent that, in each case, such conditions are not required to be acceptable (reasonably or otherwise) to the Administrative Agent).

 

(c)           PATRIOT Act.  The Obligors shall have provided, or procured the supply of, the “know your customer” information required pursuant to the PATRIOT Act, to each of the Lenders and the Administrative Agent in connection with their respective internal compliance regulations thereunder or other information requested by any Lender or the Administrative Agent to satisfy related checks under all applicable laws and regulations pursuant to the transactions contemplated hereby, in each case to the extent requested by any Lender or the Administrative Agent not later than 5 days prior to the Closing Date.

 

(d)           Material Adverse Effect. Since June 30, 2014, nothing shall have occurred (and neither the Administrative Agent nor any of the Lenders shall have become aware of any condition or circumstance not previously known to it or them) which the Administrative Agent or the Required Lenders shall determine has had a Material Adverse Effect.

 

(e)           Litigation.  On and as of the Closing Date, no litigation with respect to any Obligor shall be pending or, to the knowledge of any Obligor, threatened with respect to this Agreement or any other Credit Document or with respect to the Transaction or which the Administrative Agent or the Required Lenders shall determine has had, or could reasonably be expected to have, a Material Adverse Effect.

 

(f)            [Reserved]

 

(g)           Solvency Certificate.  On the Closing Date, the Borrower shall cause to be delivered to the Administrative Agent a solvency certificate from an Authorized Officer of the Borrower, substantially in the form of Exhibit M, which shall be addressed to the Administrative Agent and dated as of the Closing Date, setting forth the conclusion that, after giving effect to the Transaction and the incurrence of all the financings contemplated hereby, each Obligor individually (after giving effect to rights of contribution and subrogation) and the Borrower and its Subsidiaries taken as a whole, are not insolvent and will not be rendered insolvent by the incurrence of such indebtedness, and will not be left with unreasonably small capital with which to engage in its business and will not have incurred debts beyond its ability to pay such debts as they mature.

 

(h)           Approvals. On and as of the Closing Date, all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Transaction, the Loans, and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which, in the reasonable judgment of the Administrative Agent, restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction, the making of the Loans and the performance by the Obligors of the Credit Documents.  In addition, there shall not exist any

 

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judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the consummation of the Transaction, the making of the Loans or the performance by the Obligors of the Credit Documents.

 

(i)            No Default or Event of Default; Representations and Warranties. On and as of the Closing Date (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein or in any other Credit Document shall be true and correct in all material respects (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date,  or is only applicable as of the Initial Borrowing Date, shall be required to be true and correct in all material respects only as of such specified date).

 

5.02        Conditions to the Initial Borrowing Date.  The obligation of each Lender to make the Loans on the Initial Borrowing Date is subject to the satisfaction of each of the following conditions:

 

(a)           Closing Date; Existing Facility.  On or prior to the Initial Borrowing Date, (i) the Closing Date shall have occurred, (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested same the appropriate Term Note and/or Revolving Note executed by the Borrower, in each case in accordance with Section 2.04, and (iii) satisfactory arrangements shall have been made by the Borrower to repay the Existing Facility in full on such date.

 

(b)           Credit Facility Subscription. The Bookrunner shall have received commitments from Lenders in an amount sufficient to fully subscribe the Credit Facility.

 

(c)           Security Documents.  The Security Documents shall have been executed and delivered in form, scope and substance reasonably satisfactory to the Administrative Agent and the Lenders such that the Lenders shall have a first priority perfected security interest in the property purported to be covered thereby, and shall use commercially reasonable efforts to provide appropriate notices and consents related thereto, together granting a security interest and lien on all of such Obligor’s present and future Earnings Collateral and Insurance Collateral in each case together with proper Financing Statements (Form UCC-1) in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created thereby; with such exceptions as are reasonably acceptable to the Administrative Agent and the Lenders.

 

(d)           Vessel Documentation.  The Administrative Agent shall have received (i) certificates of ownership and class (with the appropriate notations) from the appropriate authorities showing the registered ownership of each Revolving Loan Vessel and the classification status thereof from an Acceptable Classification Society indicating that such Collateral Vessel meets the criteria specified in Section 7.14(c); (ii) results of maritime registry searches with respect to the Revolving Loan Vessels (which results shall be acceptable to the Administrative Agent), (iii) a certificate of ownership and encumbrance or, as applicable, the transcript of registry with respect to such Revolving Loan Vessel; (iv) immediately after the

 

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registration of the Collateral Vessel Mortgage over the applicable Collateral Vessel, a certificate of ownership and encumbrance or, as applicable, the transcript of registry with respect to such Revolving Loan Vessel indicating no record liens other than Liens in favor of the Security Agent and/or the Lenders and Permitted Liens; (v) a report, in form and scope acceptable to the Administrative Agent, from a reputable insurance consultant appointed by the Administrative Agent with respect to the insurance maintained in respect of the Revolving Loan Vessels, together with a certificate from insurance brokers acceptable to the Administrative Agent certifying that such insurances (a) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as is acceptable to the Administrative Agent and (b) conform with requirements of the Required Insurances and the Collateral Vessel Mortgage taken for the benefit of the Lenders in the respective Revolving Loan Vessel; (vi) certified copies of all agreements related to the technical and commercial management of each Collateral Vessel to which the Borrower or a Subsidiary Guarantor is a party; and (vii) certified copies of all ISM Code and ISPS Code documentation for each Revolving Loan Vessel; and

 

(e)           Collateral Vessel Mortgage.  The Obligor that owns a Collateral Vessel shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate vessel registry a Collateral Vessel Mortgage with respect to such Collateral Vessel and such Collateral Vessel Mortgage shall be effective to create in favor of the Security Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Collateral Vessel, subject only to Permitted Liens.

 

(f)            Appraisals.  The Administrative Agent shall have received Appraisals not older than thirty (30) days from two Approved Appraisers in acceptable scope, form and substance, stating the then current fair market value of the Revolving Loan Vessels on an individual charter-free basis. It being acknowledged that the Appraisals obtained by the Administrative Agent and set forth on Schedule VI to this Agreement shall satisfy the requirements of this Section 5.02(f).

 

(g)           Material Adverse Effect.  Since September 30, 2014, nothing shall have occurred (and neither the Administrative Agent nor any of the Lenders shall have become aware of any condition or circumstance not previously known to it or them) which the Administrative Agent or the Required Lenders shall determine has had a Material Adverse Effect.

 

(h)           Litigation.  No litigation by any entity (private or governmental) shall be pending or threatened with respect to any Obligor or any of its subsidiaries which the Administrative Agent or the Required Lenders shall determine has had, or could reasonably be expected to have, a Material Adverse Effect.

 

(i)            Legal Opinions. The Administrative Agent shall have received, on behalf of itself and the Lenders, the following legal opinions:

 

(i) special New York counsel to the Borrower and the Obligors (which shall be Kramer Levin Naftalis & Frankel LLP or another New York law firm reasonably acceptable to the Administrative Agent), an opinion

 

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addressed to the Administrative Agent and each of the Lenders and dated as of the initial Borrowing Date;

 

(ii) special Republic of the Marshall Islands counsel to each of the Obligors (which shall be Reeder & Simpson P.C. or another law firm qualified to render an opinion as to the Republic of the Marshall Islands law reasonably acceptable to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the initial Borrowing Date, and

 

(iii)  if applicable, counsel to each of the Obligors in the jurisdiction of the flag of such Collateral Vessel (other than the Marshall Islands, which is covered by the opinion in clause (ii)), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the initial Borrowing Date for such Collateral Vessel covering such matters as shall be required by the Administrative Agent

 

in each case which shall be in form and substance reasonably acceptable to the Administrative Agent;

 

(j)            Corporate Documentation. The Administrative Agent shall have received copies of the Organizational Documents of each Subsidiary Guarantor. to the extent not previously delivered, the Administrative Agent shall have received (i) a certificate, dated the relevant Borrowing Date and reasonably acceptable to the Administrative Agent, signed by an Authorized Officer of each Obligor with appropriate insertions, together with copies of the Organizational Documents of such Obligor and the resolutions of such Obligor referred to in such certificate authorizing the consummation of the Transaction, and (ii) copies of governmental approvals (if any) and good standing certificates which the Administrative Agent may have reasonably requested in connection therewith.

 

(k)           Fees.  All fees and all other reasonable fees and documented out-of-pocket costs and expenses (including, without limitation, the reasonable legal fees and expenses of Seward & Kissel LLP and other local counsel to the Administrative Agent) and other compensation due and payable on or prior to the Initial Borrowing Date, in each case, payable to the Administrative Agent, the Security Agent, the Lead Arrangers and the Lenders in respect of the transactions contemplated by this Agreement to the extent reasonably invoiced at least two (2) Business Days prior to the Initial Borrowing Date.

 

(l)            Solvency Certificate. The Borrower shall cause to be delivered to the Administrative Agent a solvency certificate from an Authorized Officer of the Borrower, substantially in the form of Exhibit M, which shall be addressed to the Administrative Agent and dated as of the Initial Borrowing Date, setting forth the conclusion that, after giving effect to the Transaction and the incurrence of all the financings contemplated hereby, each Obligor individually (after giving effect to rights of contribution and subrogation) and the Borrower and its Subsidiaries taken as a whole, are not insolvent and will not be rendered insolvent by the incurrence of such indebtedness, and will not be left with unreasonably small capital with which

 

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to engage in its business and will not have incurred debts beyond its ability to pay such debts as they mature.

 

(m)          Approvals. All necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Transaction, the Loans, and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which, in the reasonable judgment of the Administrative Agent, restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction, the making of the Loans and the performance by the Obligors of the Credit Documents.  In addition, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the consummation of the Transaction, the making of the Loans or the performance by the Obligors of the Credit Documents.

 

(n)           No Conflicts.  On the Initial Borrowing Date, after giving effect to the consummation of the Transaction, the making of the Loans and the performance by the Obligors of the Credit Documents, the financings incurred in connection therewith and the other transactions contemplated hereby, there shall be no conflict with, or default under any material agreement to which the Borrower or any Subsidiary Guarantor is a party.

 

(n)           Perfection. All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Security Agent to perfect and preserve the security interests described in clauses (b) through and (e) above shall have been duly effected and the Security Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Security Agent.

 

(o)           Maximum Leverage Ratio. The Administrative Agent shall have received evidence satisfactory  to it that as of the fiscal quarter ending September 30, 2014, the ratio of Financial Indebtedness to Value Adjusted Total Assets provided for under Section 8.07(c) was not greater than 0.70 to 1.00 (it being acknowledged that  any compliance certificate delivered to the Administrative Agent  under the Existing Facility evidencing such compliance shall be deemed satisfactory evidence).

 

5.03        Conditions to each Term Loan Borrowing Date.  The obligation of each Lender to make a Term Loan on the Delivery Date of a Term Loan Vessel is subject to the satisfaction of each of the following conditions:

 

(a)           Closing Date. On or prior to each Delivery Date, (i) the Closing Date shall have occurred and (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested same, the Term Note executed by the Borrower, in each case in accordance with Section 2.04(a).

 

(b)           Delivery of Collateral Vessel. The relevant Subsidiary Guarantor shall have received or shall receive substantially simultaneously with the release of the Term Loan to

 

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the Builder’s Bank in accordance with the terms of Section 2.01(a) on the Delivery Date with respect to the relevant Term Loan Vessel, title to such Term Loan Vessel, and such Subsidiary Guarantor shall at such time be the record and beneficial owner of such Term Loan Vessel free and clear of all liens other than the Permitted Liens.

 

(c)           Security Documents. The Security Documents for the respective Term Loan Vessel shall have been executed and delivered in form, scope and substance satisfactory to the Administrative Agent and the Lenders such that the Lenders shall have a first priority perfected security interest in the property purported to be covered thereby, and shall use commercially reasonable efforts to provide appropriate notices and consents related thereto, together granting a security interest and lien on all of such Obligor’s present and future Earnings Collateral and Insurance Collateral in each case together with proper Financing Statements (Form UCC-1) in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created thereby; with such exceptions as are reasonably acceptable to the Administrative Agent and the Lenders.

 

(d)           Vessel Documentation. The Administrative Agent shall have received on or before the Delivery Date: (i) certificates of ownership and class (with the appropriate notations) from the appropriate authorities showing the registered ownership of each Term Loan Vessel and the classification status thereof from an Acceptable Classification Society indicating that such Term Loan Vessel meets the criteria specified in Section 7.14(c); (ii) results of maritime registry searches with respect to the Term Loan Vessel (which results shall be acceptable to the Administrative Agent), (iii) a certificate of ownership and encumbrance or, as applicable, the transcript of registry with respect to such Term Loan Vessel and (iv) immediately after the registration of the Collateral Vessel Mortgage over the applicable Term Loan Vessel, a certificate of ownership and encumbrance or, as applicable, the transcript of registry with respect to such Term Loan Vessel indicating no record liens other than Liens in favor of the Security Agent and/or the Lenders and Permitted Liens; (v) a report, in form and scope acceptable to the Administrative Agent, from a reputable insurance consultant appointed by the Administrative Agent with respect to the insurance maintained in respect of the Term Loan Vessel, together with a certificate from insurance brokers acceptable to the Administrative Agent certifying that such insurances (a) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as is acceptable to the Administrative Agent and (b) conform with requirements of the Required Insurances and the Collateral Vessel Mortgage taken for the benefit of the Lenders in the respective Term Loan  Vessel; (vi) certified copies of all agreements related to the technical and commercial management of the applicable Term Loan Vessel to which the Borrower or a Subsidiary Guarantor is a party; and (vii) certified copies of all ISM Code and ISPS Code documentation for the applicable Term Loan Vessel; and

 

(e)           Collateral Vessel Mortgage. The Obligor that owns the Term Loan Vessel shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate vessel registry a Collateral Vessel Mortgage with respect to such Term Loan Vessel and such Collateral Vessel Mortgage shall be effective to create in favor of the Security Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Term Loan  Vessel, subject only to Permitted Liens.

 

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(f)            Appraisals. The Administrative Agent shall have received Appraisals not older than thirty (30) days from two Approved Appraisers in acceptable scope, form and substance, stating the then current fair market value of the relevant Term Loan Vessel on an individual charter-free basis.

 

(g)           Corporate Documentation. The Administrative Agent shall have received copies of the Organizational Documents of each Subsidiary Guarantor.

 

(h)           Legal Opinion. The Administrative Agent shall have received, on behalf of itself and the Lenders, a legal opinion from counsel, in its capacity as counsel to the Borrower in respect of the flag state of each Term Loan Vessel, in form and substance reasonably acceptable to the Administrative Agent addressed to the Administrative Agent and the Lenders.

 

5.04        Conditions to each Borrowing Date.  The obligation of each Lender to make Loans on any Borrowing Date is subject to the satisfaction of each of the following conditions:

 

(a)           Borrowing Notice. The Administrative Agent shall have received a Notice of Borrowing as required by Section 2.02.

 

(b)           Representations and Warranties. Before and after giving effect to the Loans being incurred on such date, all representations and warranties contained herein or in any other Credit Document shall be true and correct in all material respects both before and after giving effect to such Loans with the same effect as though such representations and warranties had been made on the date of such Loans (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).

 

(c)           No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing, or would result from the Loans being incurred on such date.

 

The acceptance of the benefits of each Loan shall constitute a representation and warranty by the Borrower to the Administrative Agent and each of the Lenders that all of the applicable conditions specified in Section 5 and applicable to such Borrowing have been satisfied or waived as of that time.  All of the applicable Notes, certificates, legal opinions and other documents and papers referred to in Section 5, unless otherwise specified, shall be delivered to the Administrative Agent at the Notice Office for the account of each of the Lenders.

 

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SECTION 6.   Representations and Warranties.  In order to induce the Lenders to enter into this Agreement and to make the Loans, the Borrower makes the following representations and warranties, after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans, with the borrowing of each Loan on or after the Closing Date being deemed to constitute a representation and warranty that the matters specified in this Section 6 are true and correct in all material respects on and as of the Closing Date and on each Borrowing Date (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date):

 

6.01        Corporate/Limited Liability Company/Limited Partnership Status.  Each Obligor (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and (ii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications, except for failures to be so qualified which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

6.02        Corporate Power and Authority.  Each Obligor has the corporate or other applicable power and authority to (i) own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (ii) execute, deliver and perform the terms and provisions of each of the Credit Documents to which it is party and has taken or will take in due course all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of each of such Credit Documents.

 

6.03        Title; Maintenance of Properties.

 

Except as permitted by Section 8.01, the Borrower has good and indefeasible title to all properties owned by it, free and clear of all Liens, other than Permitted Liens.

 

6.04        Legal Validity and Enforceability.

 

(a)           Each Obligor has duly executed and delivered each of the Credit Documents to which it is party, and each of such Credit Documents constitutes the legal, valid and binding obligation of such Obligor enforceable against such Obligor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).

 

(b)           After the execution and delivery thereof and upon the taking of the actions mentioned in the immediately succeeding sentence, each of the Security Documents creates in favor of the Security Agent for the benefit of the Secured Creditors a legal, valid and enforceable fully perfected first priority security interest in and Lien on all right, title and interest of the Obligors party thereto in the Collateral described therein, subject only to Permitted Liens.  Subject to Sections 5.02(b) and 6.06, no filings or recordings are required in order to perfect the

 

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security interests created under any Security Document except for filings or recordings which shall have been made on or prior to each Borrowing Date.

 

(c)           Each of the Credit Documents is or, when executed will be, in proper legal form under the laws of the Republic of the Marshall Islands and the applicable Acceptable Flag Jurisdiction for the enforcement thereof under such laws, subject only to such matters which may affect enforceability arising under the law of the State of New York.  To ensure the legality, validity, enforceability or admissibility in evidence of each such Credit Document in the Republic of the Marshall Islands and the applicable Acceptable Flag Jurisdiction, it is not necessary that any Credit Document or any other document be filed or recorded with any court or other authority in the applicable Acceptable Flag Jurisdiction, except as have been made, or will be made, in accordance with Section 5.

 

(d)           None of the Obligors has a place of business in any jurisdiction which requires any of the Security Documents to be filed or registered in that jurisdiction to ensure the validity of the Security Documents to which it is a party unless all such filings and registrations have been made or will be made, in accordance with Section 5.

 

6.05        No Violation.  Neither the execution, delivery or performance by any Obligor of the Credit Documents to which it is a party, nor compliance by it with the terms and provisions thereof, will (i) contravene any material provision of any applicable law, statute, rule or regulation or any applicable order, writ, injunction or decree of any court or governmental instrumentality, (ii) violate or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except Permitted Liens) upon any of the material properties or assets of any Obligor pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which any Obligor is a party or by which it or any of its material property or assets is bound or to which it may be subject or (iii) violate any provision of the Organizational Documents of any Obligor.

 

6.06        Governmental Approvals.

 

(a)           No order, consent, approval, license, authorization or validation of, or filing, recording or registration with or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Obligor of any Credit Document to which it is a party or (ii) the legality, validity, binding effect or enforceability of any Credit Document to which it is a party, in each case, except (x) as have been obtained or made or (y) filings or other requisite actions necessary to perfect or establish the priority of the Liens created under the Security Documents.

 

(b)           No fees or taxes, including, without limitation, stamp, transaction, registration or similar taxes, are required to be paid to ensure the legality, validity, or enforceability of this Agreement or any of the other Credit Documents other than recording and filing fees and/or taxes which have been, or will be, paid as and to the extent due.  Under the

 

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laws of the Republic of the Marshall Islands, the choice of the laws of the State of New York as set forth in the Credit Documents which are stated to be governed by the laws of the State of New York is a valid choice of law, and the irrevocable submission by each Obligor to jurisdiction and consent to service of process and, where necessary, appointment by such Obligor of an agent for service of process, in each case as set forth in such Credit Documents, is legal, valid, binding and effective.

 

6.07        Balance Sheets; Financial Condition; Undisclosed Liabilities.

 

(a)           (i) The audited consolidated balance sheet of the Borrower and its Subsidiaries at December 31, 2013 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of the Borrower and its Subsidiaries for the fiscal year ended on December 31, 2013 in each case furnished to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries at the date of said financial statements and the results for the respective periods covered thereby and (ii) the unaudited consolidated balance sheet of the Borrower and its Subsidiaries at September 30, 2014 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of the Borrower and its Subsidiaries for the nine-month period ended on such date, furnished to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial condition of the Borrower and its Subsidiaries at the date of said financial statements and the results for the period covered thereby, subject to normal year-end adjustments.  All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.

 

(b)           All financial statements provided pursuant to Section 7.01(a) and Section 7.01(b) have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.

 

(c)           Except as fully disclosed in the balance sheets delivered pursuant to Section 6.07(a) or (b), there were as of the date of delivery of the first balance sheets no liabilities or obligations with respect to the Borrower or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be materially adverse to the Borrower and its Subsidiaries taken as a whole.  As of the date of delivery of the first balance sheets, none of the Obligors knows of any basis for the assertion against it of any liability or obligation of any nature that is not fairly disclosed (including, without limitation, as to the amount thereof) in the balance sheets delivered pursuant to Section 6.07(a) which, either individually or in the aggregate, could be materially adverse to the Borrower and its Subsidiaries taken as a whole.

 

(d)           [Reserved].

 

(e)           Since the Closing Date, except as permitted in Section 8.03, the Borrower has not paid any Dividends.

 

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6.08        Litigation.  There is no litigation pending or, to the knowledge of any Obligor, threatened (i) with respect to the Credit Documents or (ii) which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

6.09        True and Complete Disclosure.

 

(a)           All factual information (taken as a whole) furnished by or on behalf of the Obligors in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Credit Documents to which any Obligor is a party) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein was, as of the date such information was furnished (or, if such information expressly relates to a specific date, as of such specific date), taken as a whole, true and accurate in all material respects and did not fail to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time as such information was provided (or, if such information expressly relates to a specific date, as of such specific date).

 

(b)           The projections delivered to the Administrative Agent and the Lenders prior to the Closing Date have been prepared in good faith and are based on reasonable assumptions (it being understood that such financial projections are subject to uncertainties and contingencies, which may be beyond the control of the Borrower and that no assurances are given by the Borrower that the projections will be realized).

 

6.10        Use of Proceeds; Margin Regulations.

 

(a)           All proceeds of the Term Loans shall be used (i) solely to finance, in part, the construction cost of the Term Loan Vessels.

 

(b)           All proceeds of the Revolving Loans shall be used (i) to refinance the Borrower’s existing indebtedness under the Existing Facility, and (ii) for the Borrower’s and its Subsidiaries general corporate and working capital purposes.

 

(c)           No part of the proceeds of any Loan will be used to buy or carry any Margin Stock or to extend credit for the purpose of buying or carrying any Margin Stock.  Neither the making of any Loan nor the use of the proceeds thereof will violate or be inconsistent with the Margin Regulations.

 

(d)           No proceeds of the Loans shall be made available directly or indirectly to or for the benefit of a Restricted Party nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws.

 

6.11        Taxes; Tax Returns and Payments.

 

(a)           All payments which an Obligor is liable to make under the Credit Documents to which it is a party can properly be made without deduction or withholding for or

 

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on account of any tax payable under any law of any relevant jurisdiction applicable as of the Closing Date.

 

(b)           The Borrower and each of its Subsidiaries has timely filed with the appropriate taxing authorities (or obtained extensions with respect thereto) all U.S. federal income tax returns, statements, forms and reports for taxes and all other material U.S. and non-U.S. tax returns, statements, forms and reports for taxes required to be filed by or with respect to the income, properties or operations of the Borrower and/or any of its Subsidiaries (the “Returns”).  All such Returns accurately reflect in all material respects all liability for taxes of the Borrower and its Subsidiaries as a whole for the periods covered thereby.  The Borrower and each of its Subsidiaries has at all times paid, or have provided adequate reserves (in accordance with GAAP) for the payment of, all taxes payable by them.

 

(c)           There is no action, suit, proceeding, investigation, audit, or claim now pending or, to the best knowledge of any Obligor, threatened by any authority regarding any taxes relating to the Borrower or any of its Subsidiaries.

 

(d)           As of the Closing Date, neither the Borrower nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of material taxes of the Borrower or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of the Borrower or any of its Subsidiaries not to be subject to the normally applicable statute of limitations.

 

6.12        Compliance with ERISA.  (a)  Except as would not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate,

 

(i)            each Plan (and each related trust, insurance contract or fund), other than any Multiemployer Plan and each trust related to the Multiemployer Plan, is in compliance with its terms and with all applicable laws, including without limitation ERISA and the Code;

 

(ii)           each Plan (and each related trust, if any), other than any Multiemployer Plan and any trust related to the Multiemployer Plan, which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service, or still has a remaining period of time in which to apply for or receive such letter and to make any amendments necessary to obtain a favorable determination;

 

(iii)          no Reportable Event has occurred;

 

(iv)          to the knowledge of the Borrower, no Multiemployer Plan is insolvent or in reorganization;

 

(v)           no Plan (other than a Multiemployer Plan) has an Unfunded Current Liability;

 

(vi)          each Plan (other than a Multiemployer Plan) which is subject to Section 412 of the Code or Section 302 of ERISA satisfies the minimum funding standard of such

 

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sections of the Code or ERISA, and no such Plan has applied for or received a waiver of the minimum funding standard or an extension of any amortization period, within the meaning of Section 412 of the Code or Section 303 of ERISA;

 

(vii)         all contributions required to be made by the Borrower or any of its Subsidiaries or ERISA Affiliates with respect to a Plan subject to Title IV of ERISA have been or will be timely made (except as disclosed on Schedule V hereto);

 

(viii)        neither the Borrower nor any of its Subsidiaries nor any ERISA Affiliate has any liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4975 of the Code or reasonably expects to incur any such liability under any of the foregoing sections with respect to any Plan;

 

(ix)          neither the Borrower nor any of its Subsidiaries nor any ERISA Affiliate has received written notice from the PBGC or a plan administrator (in the case of a Multiemployer Plan) indicating that proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer any Plan which is subject to Title IV of ERISA;

 

(x)           no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan, other than a Multiemployer Plan, (other than routine claims for benefits) is pending, or, to the best knowledge of the Borrower, expected or threatened;

 

(xi)          using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Borrower and its Subsidiaries and ERISA Affiliates have not incurred any liabilities to any Plans which are Multiemployer Plans as a result of a complete withdrawal therefrom;

 

(xii)         no lien imposed under the Code or ERISA on the assets of the Borrower or any of its Subsidiaries or any ERISA Affiliate with respect to a Plan exists and no event has occurred which could reasonably be expected to give rise to any such lien on account of any Plan (other than a Multiemployer Plan); and

 

(xiii)        the Borrower and its Subsidiaries do not maintain or contribute to any employee welfare plan (as defined in Section 3(1) of ERISA and subject to ERISA) which provides post-employment health benefits to retired employees or other former employees (other than as required by Section 601 of ERISA or other similar and applicable law).

 

(b)           Except as would not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, (i) each Foreign Pension Plan has been maintained in compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities; (ii) all contributions required to be made with respect to a Foreign Pension Plan have been or will be timely made; (iii) neither the Borrower nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal

 

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from any Foreign Pension Plan; and (iv) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of the Borrower’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.

 

6.13        Security Documents.  After the execution and delivery thereof and upon the taking of the actions mentioned in the immediately succeeding sentence, each of the Security Documents will create in favor of the Security Trustee for the benefit of the Secured Creditors a legal, valid and enforceable fully perfected first priority security interest in and Lien on all right, title and interest of the Obligors party thereto in the Collateral described therein, subject to no other Liens subject only to Permitted Liens.  No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings to be made on or prior to the Closing Date pursuant to the Security Documents.

 

6.14        Representations and Warranties in Documents.  On each Borrowing Date, all representations and warranties made by the Borrower and its Subsidiaries in the other Credit Documents were true and correct in all material respects at the time at which such representations and warranties were made (or deemed made).

 

6.15        Subsidiaries.  On and as of the Closing Date, the Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule III.  Schedule III sets forth, as of the Closing Date, the percentage ownership (direct and indirect) of the Borrower in each class of capital stock or other Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof.  All outstanding shares of Equity Interests of each Subsidiary of the Borrower have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights.  No Subsidiary of the Borrower has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights.

 

6.16        Compliance with Statutes, etc.  Each Obligor is in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such noncompliance as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

6.17        Investment Company Act.  Neither the Borrower nor any Subsidiary Guarantor is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

6.18        Pollution and Other Regulations.  (a)    Each Obligor is in compliance with all applicable Environmental Laws governing its business, except for such failures to comply as could not reasonably be expected to have a Material Adverse Effect, and no Obligor is liable for any material penalties, fines or forfeitures for failure to comply with any of the foregoing.

 

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(b)           All licenses, permits, registrations or approvals to the Borrower’s knowledge required for the business of the Borrower and each Subsidiary Guarantor, as conducted as of the Closing Date, under any Environmental Law have been secured and the Borrower and each Subsidiary Guarantor is in substantial compliance therewith, except for such failures to secure or comply as could not reasonably be expected to have a Material Adverse Effect.

 

(c)           Neither the Borrower nor any Subsidiary Guarantor is, to its knowledge, in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Borrower or such Subsidiary Guarantor is a party or which would affect the ability of the Borrower or such Subsidiary Guarantor to operate any Collateral Vessel, Real Property or other facility and no event has occurred and is continuing which would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

 

(d)           There are no Environmental Claims pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary Guarantor which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(e)           There are no facts, circumstances, conditions or occurrences on or relating to any Collateral Vessel, Real Property or other facility owned or operated by the Borrower or any Subsidiary Guarantor that is reasonably likely (i) to form the basis of an Environmental Claim against the Borrower, any Subsidiary Guarantor or any Collateral Vessel, Real Property or other facility owned by the Borrower or any Subsidiary Guarantor, or (ii) to cause such Collateral Vessel, Real Property or other facility to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case, such Environmental Claims or restrictions that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.

 

6.19        Labor Relations.  Neither the Borrower nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect and there is (i) no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries or, to the Borrower’s knowledge, threatened against any of them before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the Borrower’s knowledge, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Borrower or any of its Subsidiaries or, to the Borrower’s knowledge, threatened against the Borrower or any of its Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of the Borrower or any of its Subsidiaries, except (with respect to the matters specified in clauses (i), (ii) and (iii) above) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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6.20        Patents, Licenses, Franchises and Formulas.  Each of the Borrower and each of its Subsidiaries owns, or has the right to use, all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others, except for such failures and conflicts which could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

6.21        Financial Indebtedness.  Schedule X sets forth a true and complete list of all Financial Indebtedness of the Borrower and its Subsidiaries as of the Closing Date and which is to remain outstanding after the Closing Date, in each case showing the aggregate principal amount thereof and the name of the borrower thereunder and any other entity which directly or indirectly guarantees such debt.

 

6.22        Insurance.  Schedule IV hereto sets forth a true and complete listing of all insurance maintained by each Obligor with, as of the Closing Date, the amounts insured (and any deductibles) set forth therein.

 

6.23        Concerning the Collateral Vessels. The name, registered owner (which shall be a Subsidiary Guarantor), vessel type, deadweight tonnage, builder’s hull number, estimated delivery date and contract price of each Collateral Vessel shall be set forth on Schedule VI hereto. Each Collateral Vessel owned or to be owned by a Subsidiary Guarantor or the Borrower will be operated in material compliance with all applicable law, rules and regulations.

 

6.24        Citizenship.  The Borrower and each other Obligor which owns or operates, or will own or operate, one or more Collateral Vessel is (or at the time it becomes an owner thereof, will be) qualified to own and operate such Collateral Vessel under the laws of the Acceptable Flag Jurisdiction.

 

6.25        Vessel Classification.  Each Collateral Vessel is or will be classified in the highest class available for vessels of its age and type by an Acceptable Classification Society, free of any conditions or recommendations, other than as permitted, or as will be permitted, under the Vessel Mortgages.

 

6.26        Money Laundering and Sanctions Laws.

 

(a)           To the extent applicable, each Obligor is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) all United States laws relating to terrorism or money laundering including the Executive Order, (iii) the PATRIOT Act and (iv) under any European Union or other applicable law, rule or regulation.  No part of the proceeds of the Loans will be used by any Obligor, directly or, to the knowledge of any Obligor after making due inquiry, indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or

 

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anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

(b)           None of the Obligors nor, to the knowledge of the Borrower after making due inquiry, any Affiliate of any Obligor, is, or will be after consummation of the Transaction and application of the proceeds of the Loans, a Restricted Party.

 

(c)           The Borrower does not deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any United States anti-terrorism laws.

 

(d)           Each Obligor and their respective directors, officers or, to the knowledge of the Borrower after making due inquiry, employees, agents or representatives has been and is in compliance with Sanctions Laws.

 

(e)           No Obligor, nor their respective directors, officers or, to the knowledge of the Borrower after making due inquiry, employees, agents or representatives (i) is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or (ii) is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws by any Sanctions Authority.

 

6.27        No Immunity.  The Borrower does not, nor does any other Obligor or any of their respective properties, have any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of any jurisdiction.

 

6.28        Fees and Enforcement.  No fees or taxes, including, without limitation, stamp, transaction, registration or similar taxes, are required to be paid to ensure the legality, validity, or enforceability of this Agreement or any of the other Credit Documents other than recording taxes which have been, or will be, paid as and to the extent due.  Under the laws of the each applicable Acceptable Flag Jurisdiction, the choice of the laws of the State of New York as set forth in the Credit Documents which are stated to be governed by the laws of the State of New York is a valid choice of law, and the irrevocable submission by each Obligor to jurisdiction and consent to service of process and, where necessary, appointment by such Obligor of an agent for service of process, in each case as set forth in such Credit Documents, is legal, valid, binding and effective.

 

6.29        Form of Documentation.  Each of the Credit Documents is in proper legal form under the laws of the applicable Acceptable Flag Jurisdiction for the enforcement thereof under such laws, subject only to such matters which may affect enforceability arising under the law of the State of New York.  To ensure the legality, validity, enforceability or admissibility in evidence of each such Credit Document in the applicable Acceptable Flag Jurisdiction, it is not

 

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necessary that any Credit Document or any other document be filed or recorded with any court or other authority in the applicable Acceptable Flag Jurisdiction, except as have been made, or will be made, in accordance with Section 5.

 

6.30.       No Material Adverse Effect. Since September 31, 2014, nothing has occurred that has had or could reasonably be expected to have a Material Adverse Effect.

 

6.31        Pari Passu or Priority Status. The claims of the Administrative Agent, the Security Agent and the Lenders against the Borrower and the other Obligors under this Agreement or the other Credit Documents will rank at least pari passu with the claims of all unsecured creditors of the Borrower or any other Obligor, as the case may be (other than claims of such creditors to the extent that they are statutorily preferred), and senior in priority to the claims of any creditor of the Borrower or any other Obligor who is also an Obligor.

 

6.32        Solvency; Winding-up, etc.  On and as of the Closing Date and each Borrowing Date and after giving effect to the Transaction and to all Financial Indebtedness (including the Loans) being incurred or assumed and Liens created by the Obligors in connection therewith (i) the sum of the assets (including its right of contribution and subrogation it may have with respect to any other Person), at a fair valuation, of each Obligor on a stand-alone basis and of the Borrower and its Subsidiaries taken as a whole will exceed their respective debts, (ii) each Obligor on a stand-alone basis and the Borrower and its Subsidiaries taken as a whole have not incurred and do not intend to incur, and do not believe that they will incur, debts beyond their respective ability to pay such debts as such debts mature, and (iii) each Obligor on a stand-alone basis and the Borrower and its Subsidiaries taken as a whole do not have unreasonably small working capital with which to continue their respective businesses.  For purposes of this Section 6.31(a), “debt” means any liability on a claim, and “claim” means (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

(a)           Subject to Section 8.02, neither the Borrower nor any other Obligor has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to its knowledge and belief) threatened against any of them for the winding-up, dissolution or for the appointment of a liquidator, administrator, receiver, administrative receiver, trustee or similar officer of any of them or any or all of their assets or revenues nor have any of them sought any other relief under any applicable insolvency or bankruptcy law.

 

6.33        Completeness of Documentation The copies of the Management Agreements and any Vessel Acquisition Documentation delivered to the Administrative Agent are true and complete copies of each such document constituting valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and no action has been

 

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taken, to the best knowledge of the Borrower, by the parties thereto which would in any way render such document inoperative or unenforceable.

 

6.34.       No Undisclosed Commissions. There are and will be no commissions, rebates, premiums or other payments by or to or on account of any Obligor, their shareholders or directors in connection with the financings of the Transaction as a whole other than as disclosed to the Administrative Agent in writing.

 

SECTION 7.   Affirmative Covenants.  The Borrower hereby covenants and agrees that on and after the Closing Date and until the Total Commitment has terminated and the Loans and Notes (in each case together with interest thereon), Fees and all other Obligations (other than indemnities described in Section 11.01(b) which are not then due and payable) incurred hereunder and thereunder, are paid in full:

 

7.01        Information Covenants.  The Borrower will furnish to the Administrative Agent, with sufficient copies for each of the Lenders:

 

(a)           Quarterly Financial Statements.  Commencing with the quarter ending December 31, 2014, within 45 days after the close of each of the first three quarterly accounting periods in each fiscal year of the Borrower, the unaudited consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of income and cash flows, in each case for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, and in each case, setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by an Authorized Officer of the Borrower, subject to normal year-end audit adjustments.

 

(b)           Annual Financial Statements.  Within 90 days after the close of each fiscal year of the Borrower, (i) the audited consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and statement of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified by Deloitte and Touche LLP or other independent certified public accountants of recognized national standing (including shipping sector specialists) reasonably acceptable to the Administrative Agent, together with a report of such accounting firm stating that in the ordinary course of its regular audit of the financial statements of the Borrower and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm obtained no knowledge of any Default or Event of Default pursuant to Section 8.07, which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.

 

(c)           Projections, etc.  As soon as available but not more than 45 days after the end of each calendar year, cash flow projections of the Borrower and its Subsidiaries in reasonable detail for the calendar year in which such cash flow projections are actually delivered.

 

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(d)           Appraisal Reports.  At the time of delivery of the compliance certificates provided for in Section 7.01(e) required in connection with the second and fourth quarterly accounting periods in each fiscal year of the Borrower, and at any other time within 14 days of the written request of the Administrative Agent, Appraisals for each Collateral Vessel dated no more than 45 days prior to the delivery thereof in form and substance reasonably acceptable to the Administrative Agent and from two Approved Appraisers.  All such Appraisals shall be conducted by, and made at the expense of, the Borrower (it being understood that the Administrative Agent may and, at the request of the Required Lenders, shall, upon notice to the Borrower, obtain such Appraisals and that the cost of all such Appraisals will be for the account of the Borrower); provided that, unless an Event of Default shall then be continuing, in no event shall the Borrower be required to pay for more than two appraisal reports from two Approved Appraisers obtained pursuant to this Section 7.01(d) in any single fiscal year of the Borrower, with the cost of any such reports in excess thereof to be paid by the Lenders on a pro rata basis.

 

(e)           Officer’s Compliance Certificates.  At the time of the delivery of the financial statements provided for in Sections 7.01(a) and (b), a certificate of an Authorized Officer of the Borrower substantially in the form of Exhibit J to the effect that, to such officer’s knowledge, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof (in reasonable detail), which certificate shall (x) set forth the calculations required to establish whether the Borrower is in compliance with the Financial Covenants at the end of the relevant fiscal quarter or year, as the case may be and (y) certify that there have been no changes to any of the representations or warranties set forth in each of the Security Documents since the Initial Borrowing Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 7.01(e), or if there have been any such changes, a list in reasonable detail of such changes and whether the Borrower and the other Obligors have otherwise taken all actions required to be taken by them pursuant to such Security Documents or any one of them.

 

(f)            Notice of Default, Material Litigation or Event of Loss.  Promptly, and in any event within three (3) Business Days after the Borrower obtains actual knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or Event of Default which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto, (ii) any material litigation or governmental investigation or proceeding pending or threatened against the Borrower or any Subsidiary Guarantor, (iii) any Event of Loss in respect of any Collateral Vessel, (iv) any damage or injury caused by or to a Collateral Vessel in excess of $5,000,000, and (v) any material default under any charter relating to a Collateral Vessel.

 

(g)           Other Reports and Filings.  Promptly, copies of all financial information, proxy materials and other information and reports, if any, which the Borrower or any of its Subsidiaries has filed with the Securities and Exchange Commission (or any successor thereto) or deliver to holders of its Financial Indebtedness pursuant to the terms of the documentation governing such Financial Indebtedness (or any trustee, agent or other representative therefor).

 

(h)           Environmental Matters.  Promptly upon, and in any event within five (5) Business Days after, the Borrower obtains knowledge thereof, written notice of any of the

 

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following environmental matters occurring after the Closing Date, except to the extent that such environmental matters could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect:

 

(i)            any Environmental Claim pending or threatened in writing against the Borrower or any Subsidiary Guarantor or any Collateral Vessel or property owned or operated or occupied by the Borrower or any Subsidiary Guarantor;

 

(ii)           any condition or occurrence on or arising from any Collateral Vessel or property owned or operated or occupied by the Borrower or any Subsidiary Guarantor that (A) results in noncompliance by the Borrower or such Subsidiary Guarantor with any applicable Environmental Law or (B) could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any Subsidiary Guarantor or any such Collateral Vessel or property;

 

(iii)          any condition or occurrence on any Collateral Vessel or property owned or operated or occupied by the Borrower or any Subsidiary Guarantor that could reasonably be expected to cause such Collateral Vessel or property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Borrower or such Subsidiary Guarantor of such Collateral Vessel or property under any Environmental Law; and

 

(iv)          the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Collateral Vessel or property owned or operated or occupied by the Borrower or any Subsidiary Guarantor as required by any Environmental Law or any governmental or other administrative agency; provided that in any event the Borrower shall deliver to the Administrative Agent all material notices received by the Borrower or any Subsidiary Guarantor from any government or governmental agency under, or pursuant to, CERCLA or OPA.

 

All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Borrower’s or such Subsidiary Guarantor’s response thereto.  In addition, the Borrower will provide the Administrative Agent with copies of all material communications with any government or governmental agency and all material communications with any Person relating to any Environmental Claim of which notice is required to be given pursuant to this Section 7.01(h), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Administrative Agent or the Required Lenders.

 

(i)            Sanctions Matters.     Promptly and in any event within three (3) Business Days after any Obligor obtains actual knowledge thereof, the relevant Obligor shall supply to the Administrative Agent (i) the details of any inquiry, claim, action, suit, proceeding or investigation pursuant to Sanctions Laws by any Sanctions Authority against it, any of its Subsidiaries, any of its Affiliates, any of its direct or indirect owners, or any of their respective directors, officers, employees, agents or representatives as well as information on what steps are being taken to answer or oppose such inquiry, claim, action, suit, proceeding or investigation and (ii) that any Obligor, any of its Subsidiaries, any of its Affiliates, or any of its direct or indirect

 

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owners, or any of their respective directors, officers, employees agents or representatives has become or is likely to become a Restricted Party.

 

(j)            Other Information.  From time to time, such other information with respect to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries as the Administrative Agent (or the Lenders through the Administrative Agent) may reasonably request.

 

7.02        Books, Records and Inspections.  The Borrower will, and will cause the Subsidiary Guarantors to, keep proper books of record and account in which full, true and correct entries, in conformity in all material respects with generally accepted accounting principles and all requirements of law, shall be made of all dealings and transactions in relation to its business.  The Borrower will, and will cause the Subsidiary Guarantors to, permit officers and designated representatives of the Administrative Agent and the Lenders as a group to visit and inspect, during regular business hours and under guidance of officers of the Borrower or any Subsidiary Guarantor, any of the properties of the Borrower or any Subsidiary Guarantor, and to examine the books of account of the Borrower or such Subsidiary Guarantor and discuss the affairs, finances and accounts of the Borrower or such Subsidiary Guarantor with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable advance notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or the Required Lenders may request; provided that, unless an Event of Default exists and is continuing at such time, the Administrative Agent and the Lenders shall not be entitled to request more than two such visitations and/or examinations in any fiscal year of the Borrower.

 

7.03        Maintenance of Property; Insurance Mortgagee Interest Insurance.  (a)  The Borrower will, and will cause each Subsidiary Guarantor to, (i) keep all material property necessary to its business in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted), (ii) maintain insurance with respect to material property that is not Collateral Vessels in at least such amounts and against at least such risks as are in accordance with normal industry practice for similarly situated insureds, (iii) maintain the Required Insurance with respect to the Collateral Vessels at all times, and (iv) furnish to the Administrative Agent, at the written request of the Administrative Agent, a complete description of the material terms of insurance carried, or, at the Borrower’s option, copies of such policies.

 

(b)           The Borrower will reimburse the Administrative Agent, the Security Trustee and/or the Lenders for all costs, fees and expenses incurred in relation to mortgagee interest insurance.

 

7.04        Corporate Franchises.  The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and patents (if any) used in its business, provided that nothing in this Section 7.04 shall prevent (i) sales or other dispositions of assets, consolidations or mergers by or involving the Borrower or any Subsidiary which are permitted in accordance with Section 8.02 or (ii) the abandonment by the Borrower or any

 

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Subsidiary of any rights, franchises, licenses and patents that could not be reasonably expected to have a Material Adverse Effect.

 

7.05        Compliance with Statutes, etc.  The Borrower will, and will cause each of its Subsidiaries to:

 

(a)           comply with all laws or regulations: (i) applicable to their business, except when the failure to comply could not reasonably be expected to have a Material Adverse Effect and (ii) applicable to each Collateral Vessel, its ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions Laws and the laws of the Flag Jurisdiction;

 

(b)           obtain, comply with and do all that is necessary to maintain in full force and effect any approvals required by any Environmental Law; and

 

(c)           without limiting paragraph (a) above, not employ any Collateral Vessel nor allow its employment, operation or management in any manner contrary to any applicable law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions Laws.

 

7.06        Compliance with Environmental Laws.  The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all Environmental Laws applicable to the ownership or use of any Collateral Vessel or property now or hereafter owned or operated by the Borrower or any of its Subsidiaries, pay or cause to be paid within a reasonable time period all costs and expenses incurred in connection with such compliance (except to the extent being contested in good faith), and keep or cause to be kept all such Collateral Vessel or property free and clear of any Liens imposed pursuant to such Environmental Laws.  Neither the Borrower nor any of its Subsidiaries will generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on or from any Collateral Vessel or property now or hereafter owned or operated or occupied by the Borrower or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any ports or property, except in each case in material compliance with all applicable Environmental Laws and as reasonably required by the trade in connection with the operation, use and maintenance of any such property or otherwise in connection with their businesses.

 

7.07        ERISA.  (a)  As soon as reasonably possible and, in any event, within 10 days after the Borrower knows or has reason to know of the occurrence of any of the following that could reasonably be expected to result in a Material Adverse Effect, the Borrower will deliver to the Administrative Agent a certificate of an Authorized Officer of the Borrower setting forth the details as to such occurrence and the action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to take:

 

(i)            that a Reportable Event has occurred (except to the extent that the Borrower has previously delivered to the Administrative Agent a certificate concerning such event pursuant to the next clause hereof); or

 

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(ii)           that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (which is not waived), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; or

 

(iii)          that a Plan (other than a Multiemployer Plan) has failed to satisfy the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, or an application has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code or Section 303 of ERISA with respect to a Plan (other than a Multiemployer Plan); or

 

(iv)          that any contribution required to be made by the Borrower or any of its Subsidiaries or any ERISA Affiliate with respect to a Plan subject to Title IV of ERISA or by the Borrower or any of its Subsidiaries with respect to a Foreign Pension Plan has not been timely made; or

 

(v)           that a Plan has been terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; or

 

(vi)          that Borrower or any of its Subsidiaries or any ERISA Affiliate has received written notice from the PBGC or a plan administrator (in the case of a Multiemployer Plan) indicating that proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; or

 

(vii)         that the Borrower or any of its Subsidiaries or any ERISA Affiliate has any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 4975 of the Code.

 

(b)           The Borrower and each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans administered by it, and shall monitor that all other Foreign Pension Plans into which it makes payments, obtain or retain (as applicable) registered status under and as required by applicable law and are administered in a timely manner in all respects in compliance with all applicable laws except where the failure to do any of the foregoing could not be reasonably likely to result in a Material Adverse Effect.

 

7.08        End of Fiscal Years; Fiscal Quarters.  The Borrower will cause (i) each of its and its Subsidiaries’ fiscal years to end on December 31 and (ii) each of its and its Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year or such other date as shall be agreed to by the Administrative Agent (such consent not to be unreasonably withheld).

 

7.09        Performance of Obligations.  The Borrower will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture,

 

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security agreement and other debt instrument (including, without limitation, the Credit Documents) by which it is bound, except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

7.10        Payment of Taxes.  The Borrower will, and will cause each of its Subsidiaries to, pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 8.01, provided that neither the Borrower nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it maintains adequate reserves with respect thereto in accordance with GAAP.

 

7.11        Further Assurances.  (a)  The Borrower, and each other Obligor, agrees that at any time and from time to time, at the expense of the Borrower or such other Obligor, it will promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary, or that the Administrative Agent may reasonably require, to perfect and protect any Lien granted or purported to be granted hereby or by the other Credit Documents, or to enable the Security Agent to exercise and enforce its rights and remedies with respect to any Collateral.  Without limiting the generality of the foregoing, the Borrower will execute, if required, and file, or cause to be filed, such financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), or amendments thereto, such amendments or supplements to the Collateral Vessel Mortgages (including any amendments required to maintain Liens granted by such Collateral Vessel Mortgages), and such other instruments or notices, as may be reasonably necessary, or that the Administrative Agent may reasonably require, to protect and preserve the Liens granted or purported to be granted hereby and by the other Credit Documents.

 

(b)           The Borrower hereby authorizes the Security Agent to file one or more financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), and amendments thereto, relative to all or any part of the Collateral without the signature of the Borrower, where permitted by law.  The Security Agent will promptly send the Borrower a copy of any financing or continuation statements which it may file without the signature of the Borrower and the filing or recordation information with respect thereto.

 

(c)           If at any time any Subsidiary of the Borrower owns a Collateral Vessel or owns, directly or indirectly, an interest in any Subsidiary which owns a Collateral Vessel and such Subsidiary has not otherwise satisfied the conditions precedent set forth in Section 5, the Borrower will cause such Subsidiary (and any Subsidiary which directly or indirectly owns the Equity Interests of such Subsidiary to the extent not an Obligor) to satisfy such conditions precedent set forth in Section 5 with respect to each relevant Collateral Vessel as such Subsidiary would have been required to satisfy pursuant to Section 5 of this Agreement had such Subsidiary been an Obligor on a Borrowing Date.

 

(d)           At the reasonable written request of any counterparty to a Hedging  Agreement entered into after the Closing Date (to the extent permitted under this Agreement to

 

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be entered into and secured) with one or more Lenders or any Affiliate thereof (even if, after the entry into such Hedging Agreement, the respective Lender subsequently ceases to be a Lender for any reason), the applicable Obligor and, at the written direction of the Security Agent, the mortgagee, shall promptly execute an amendment to each Collateral Vessel Mortgage adding obligations under such Hedging Agreement as an additional secured obligation under each Collateral Vessel Mortgage (and allowing such obligations to be secured on such basis as set forth in this Agreement or in the Pledge Agreement), and cause the same to be promptly and duly recorded, and such amendment shall be in form and substance reasonably satisfactory to the Security Agent.

 

7.12        Deposit of Earnings.  Each Obligor will cause the earnings derived from each of the respective Collateral Vessels, to the extent constituting Earnings Collateral  and Insurance Collateral, to be deposited by the respective account debtor in respect of such earnings into one or more of the Earnings Accounts maintained for such Obligor or the Borrower from time to time (it being understood that, absent an Event of Default, the Borrower and its Subsidiaries shall have full access to the funds within such Earnings Account).  Without limiting any Obligor’s obligations in respect of this Section 7.12, each Obligor agrees that, in the event it receives any earnings constituting Earnings Collateral and Insurance Collateral, or any such earnings are deposited other than in one of the Earnings Accounts, it shall promptly deposit all such proceeds into one of the Earnings Accounts maintained for such Obligor or the Borrower from time to time. No Obligor will enter into any agreement or arrangement for the sharing of any Earnings Collateral and Insurance Collateral (other than with respect to pooling arrangements in the ordinary course of business).

 

7.13        Ownership of Subsidiaries and Collateral Vessels.  (a)  The Borrower will directly (or indirectly through a Wholly-Owned Subsidiary of the Borrower), own 100% of the Equity Interests in each Subsidiary Guarantor.

 

(b)           The Borrower shall cause each Subsidiary Guarantor, to at all times, be directly wholly-owned by one or more Obligors.

 

(c)           The Borrower will cause each Collateral Vessel to be owned at all times by a single Subsidiary Guarantor that owns no other Collateral Vessels.

 

7.14        Citizenship; Flag of Collateral Vessel; Collateral Vessel Classifications; Operation of Collateral Vessels.  (a) The Borrower will, and will cause each Subsidiary Guarantor which owns or operates a Collateral Vessel to, be qualified to own and operate such Collateral Vessel under the laws of the Republic of the Marshall Islands or another Acceptable Flag Jurisdiction, in each case in accordance with the terms of the related Collateral Vessel Mortgage.  Notwithstanding the foregoing, any Obligor may transfer a Collateral Vessel to an Acceptable Flag Jurisdiction pursuant to the requirements set forth in the definition of “Flag Jurisdiction Transfer”.

 

(b)           The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to (i) comply with and satisfy in all material respects all applicable Legal Requirements of the jurisdiction of such Collateral Vessel’s home port, now or hereafter

 

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from time to time in effect, in order that such Collateral Vessel shall continue to be documented pursuant to the laws of the jurisdiction of its home port with such endorsements as shall qualify such Collateral Vessel for participation in the trades and services to which it may be dedicated from time to time or (ii) not do or allow to be done anything whereby such documentation is or could reasonably be expected to be forfeited.

 

(c)           Other than as a result of damage or casualty, the Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to keep such Collateral Vessel in a good and sufficient state of repair consistent with the ship-ownership and management practice employed by first class owners of vessels of similar size and type and so as to ensure that each Collateral Vessel is classified in the highest class available for vessels of its age and type with an Acceptable Classification Society, (x) with respect to any Collateral Vessel the acquisition of which is being financed by a Loan pursuant to the terms hereof on the date of acquisition thereof, free of any conditions or overdue requirements applicable to such Collateral Vessel and (y) with respect to any Collateral Vessel other than the Collateral Vessels referred to in the preceding clause (x), free of any overdue conditions or overdue requirements affecting the seaworthiness of such Collateral Vessel, provided that if the classification of any of the Collateral Vessels shall be subject to any such overdue requirements, the Borrower will and will cause each Subsidiary Guarantor which operates such Collateral Vessel to provide a written report to the Administrative Agent describing the overdue requirements and assessing the steps required to be taken to prevent such overdue requirements from affecting such Collateral Vessel’s classification.

 

(d)           The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to (i) make or cause to be made all repairs to or replacement of any damaged, worn or lost parts or equipment such that the value of such Collateral Vessel will not be materially impaired and (ii) except as otherwise contemplated by this Agreement, not remove any material part of, or item of, equipment owned by the Obligors installed on such Collateral Vessel except in the ordinary course of the operation and maintenance of such Collateral Vessel unless (x) 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 Lien (other than Permitted Liens) in favor of any Person other than the Security Agent and becomes, upon installation on such Collateral Vessel, the property of the Obligors and subject to the security constituted by the Collateral Vessel Mortgage or the Pledge Agreement or (y) the removal will not materially diminish the value of such Collateral Vessel.

 

(e)           The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to submit such Collateral Vessel to such periodical or other surveys as may be required for classification purposes and, upon the written request of the Security Agent, supply to the Security Agent copies of all survey reports and classification certificates issued in respect thereof.

 

(f)            The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to promptly pay and discharge all tolls, dues, taxes, assessments, governmental charges, fines, penalties, debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory Liens (other than Permitted Liens) on, or claims

 

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enforceable against, such Collateral Vessel other than any of the foregoing being contested in good faith and diligently by appropriate proceedings, and, in the event of arrest of any Collateral Vessel pursuant to legal process, or in the event of its detention in exercise or purported exercise of any such Lien or claim as aforesaid, procure, if possible, the release of such Collateral Vessel from such arrest or detention forthwith upon receiving notice thereof by providing bail or otherwise as the circumstances may require.

 

(g)           The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to maintain, or cause to be maintained by the charterer or lessee of any Collateral Vessel, a valid Certificate of Financial Responsibility (Oil Pollution) issued by the United States Coast Guard pursuant to the Federal Water Pollution Control Act to the extent that such certificate may be required by applicable Legal Requirements for any Collateral Vessel and such other similar certificates as may be required in the course of the operations of any Collateral Vessel pursuant to the International Convention on Civil Liability for Oil Pollution Damage of 1969, or other applicable Legal Requirements.

 

(h)           The Borrower will and will cause each Subsidiary Guarantor which operates a Collateral Vessel to cause such Collateral Vessels to be managed by the Manager.

 

7.15        Use of Proceeds.  The Borrower will use the proceeds of the Loans only as provided in Section 6.10.

 

7.16        Charter Contracts.  In connection with any charters having an indicated duration of in excess of 36 months (including any optional extensions or renewals) the applicable Obligor shall, at its own cost and expense, promptly and duly execute and deliver to the Security Agent an Assignment of Charter in respect of such charter contract, and (i) will use its commercially reasonable efforts to cause the charterer under such charter to execute and deliver to the Security Agent a consent to the Assignment of Charter in form and substance satisfactory to the Administrative Agent.

 

7.17        Management Agreement.  The Borrower will cause the Manager’s rights to payment under the Management Agreement and any liens created in favor of the Manager thereunder to be fully subordinated to those of the Lenders.

 

7.18        Separate Existence.  The Borrower will, and will cause each Subsidiary Guarantor to:

 

(a)           maintain its books, financial records and accounts, including checking and other bank accounts, and custodian and other securities safekeeping accounts, separate and distinct from those of the other Subsidiary Guarantors;

 

(b)           maintain its books, financial records and accounts (including inter-entity transaction accounts) in a manner so that it will not be difficult or costly to segregate, ascertain or otherwise identify their assets and liabilities separate and distinct from the assets and liabilities of the other Subsidiary Guarantors;

 

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(c)            not commingle any of its assets, funds or liabilities with the assets, funds or liabilities of the other Subsidiary Guarantors provided nothing herein shall prohibit a transfer of funds from the Earnings Account of such Obligor to the Borrower, provided that  at the time of such transfer no Default or Event of Default shall occur and be continuing;

 

(d)            observe all requisite organizational procedures and formalities, including the holding of meetings of the boards of directors as required by its Organizational Documents, the recordation and maintenance of minutes of such meetings, and the recordation of and maintenance of resolutions adopted at such meetings;

 

(e)            except as permitted by Section 8.02, not be consensually merged or consolidated with the other Subsidiary Guarantors (other than for financial reporting purposes);

 

(f)            all transactions, agreements and dealings between the Borrower and the Subsidiary Guarantors (including, in each case, transactions, agreements and dealings pursuant to which the assets or property of one is used or to be used by the other), will reflect the separate identity and legal existence of each such Person;

 

(g)            transactions between any of the Borrower and the Subsidiary Guarantors, on the one hand, and any third parties, on the other hand, will be conducted in the name of the Borrower or such Subsidiary Guarantor, as applicable, as an entity separate and distinct from the Borrower or such Subsidiary Guarantor, as applicable; and

 

(h)            no Subsidiary Guarantor will refer to the Borrower as a department or division of such Subsidiary Guarantor and will not otherwise refer to the Borrower in a manner inconsistent with its status as a separate and distinct legal entity.

 

7.19      Sanctions.Each Obligor shall ensure that none of it, nor any of its directors or officers, and shall use its best efforts to ensure that none of its employees, agents or representatives or any other person acting on any of their behalf is or will become a Restricted Party.

 

7.20      Maintenance of ListingThe Borrower shall maintain its listing on the New York Stock Exchange or such other reputable international stock exchange approved by the Administrative Agent (acting on the instructions of the Required Lenders) in writing, such approval not to be unreasonably withheld or delayed.

 

7.21        Most Favored Nation.

 

In the event that the Borrower or any of its Subsidiaries agree to the incorporation of any Financial Covenants (as defined below) which are more onerous than those contained in this Agreement into any other financing relating to the Borrower or any of its Subsidiaries (other than trade credit), the Borrower shall immediately notify the Administrative Agent and those financial covenants shall be deemed to apply to this Agreement as if set out in full herein. As used herein, “Financial Covenant” means a financial covenant applicable to the Borrower or any of its Subsidiaries which requires the maintenance of any particular financial

 

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ratio or metric, which applicable covenant has no equivalent provision in this Agreement or would be more restrictive as to the Borrower or any of the Subsidiaries than the corresponding provision set forth herein; provided however , that “Financial Covenant” shall not be deemed to include any covenant (i) relating to lender commitment reductions or terminations or the amount or payment terms of principal, interest or fees payable under any facility or additional collateral or other security granted to a lender or creditor under any facility or (ii) that would require the Borrower of any Subsidiary Guarantor to (x) provide additional collateral or other security  under this Agreement, any Security Document or any other Credit Document, whether due to Borrower’s failure to maintain a specified financial ratio or metric or otherwise, (y) maintain a particular collateral maintenance ratio or substantially similar financial ratio or metric or (z) relates to maintenance of minimum cash balances or liquidity or control  of such cash or Cash Equivalents subject to any such covenant.

 

SECTION 8.   Negative Covenants.  The Borrower hereby covenants and agrees that on and after the Closing Date and until the Total Commitment has terminated and the Loans and Notes (in each case together with interest thereon), Fees and all other Obligations (other than indemnities described in Section 11.01(b) which are not then due and payable) incurred hereunder and thereunder, are paid in full:

 

8.01      Liens.  The Borrower will not, and will not permit any of its Subsidiary Guarantors to, create, incur, assume or suffer to exist any Lien upon or with respect to any Collateral, whether now owned or hereafter acquired, or sell any such Collateral subject to an understanding or agreement, contingent or otherwise, to repurchase such Collateral (including sales of accounts receivable with recourse to the Borrower or any of its Subsidiaries); provided that the provisions of this Section 8.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “Permitted Liens”):

 

(a)            inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

 

(b)            Liens imposed by law, which were incurred in the ordinary course of business and do not secure Financial Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens, liens for necessaries, salvage liens, general average liens, liens in respect of or covered by insurance (including permitted deductibles) and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of the Collateral and do not materially impair the use thereof in the operation of the business of the Borrower or any Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the Collateral subject to any such Lien;

 

(c)            Liens created pursuant to the Security Documents;

 

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(d)            Liens arising out of judgments, awards, decrees or attachments with respect to which the Borrower or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review, provided that the aggregate amount of all such judgments, awards, decrees or attachments shall not exceed the Materiality Amount;

 

(e)            Liens in respect of seamen’s wages, chartering operations, drydocking and maintenance which are not past due and other maritime Liens arising in the ordinary course of business up to an aggregate amount not to exceed the Materiality Amount, which are for amounts (x) not more than 30 days past due or (y) which are being contested in good faith by appropriate proceedings, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the Collateral subject to any such Lien;

 

(f)             Liens granted in favor of Nordea, its branches and/or its Affiliates pursuant to the account agreements establishing the Earnings Account;

 

(g)            Liens which rank after the Liens created by the Security Documents to secure the performance of bids, tenders, bonds or contracts; provided that (i) such bids, tenders, bonds or contracts directly relate to the Collateral Vessels, are incurred in the ordinary course of business and do not relate to the incurrence of Financial Indebtedness for borrowed money, and (ii) at any time outstanding, the aggregate amount of Liens under this clause (h) shall not secure obligations in excess of the Materiality Amount;

 

(h)            Liens for salvage or general average for amounts which are not delinquent or which are being contested in good faith and by appropriate proceedings diligently conducted if adequate reserves with respect thereto are maintained on the books of the applicable Obligor in accordance with GAAP;

 

(i)             Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, Liens to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money) and Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that the aggregate value of all cash and property at any time encumbered pursuant to this clause (i) shall not exceed $2,500,000; and

 

(j)             Easements, rights-of-way, restrictions, encroachments, exceptions to title and other similar charges or encumbrances on any Vessel or any other property of the Borrower or any of its Subsidiaries arising in the ordinary course of business which do not materially detract from the value of such Vessel or the property subject thereto.

 

8.02         Consolidation, Merger, Sale of Assets, etc.   The Borrower will not, and will not permit any Subsidiary Guarantor to, wind up, liquidate or dissolve its affairs or enter into, any transaction of merger or consolidation, or convey, sell, lease, charter (otherwise than in

 

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the ordinary course of business but excluding any bareboat charter) or otherwise dispose of all or substantially all of its assets (determined on a consolidated basis) or any of the Collateral, or enter into any sale-leaseback transactions involving all or substantially all of its assets (determined on a consolidated basis) or any of the Collateral, except that:

 

(a)            the Borrower and each of its Subsidiaries may sell, lease or otherwise dispose of any vessel (or 100% of the Equity Interests of the Subsidiary that owns such vessel), provided that (i) in the case of any Collateral Vessels, such sale is made at fair market value (taking into consideration the Appraisals most recently delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 7.01(d) or delivered at the time of such sale to the Administrative Agent by the Borrower), (ii) in the case of the Collateral Vessels, 100% of the consideration in respect of such sale shall consist of cash or Cash Equivalents received by the Borrower, or the respective Subsidiary Guarantor which owned such Collateral Vessel, on the date of consummation of such sale, (iii) in the case of the Collateral Vessels, the net cash proceeds of such sale or other disposition shall be applied as required by Section 4.02, to repay the Loans, (iv) no Default or Event of Default shall exist at such time and (v) before and after giving effect to any sale of a Collateral Vessel, the Borrower shall be in compliance with the Financial Covenant set forth in Section 8.07(d);

 

(b)            (i) any Obligor may transfer assets or lease to or acquire or lease assets from any other Obligor and (ii) the Borrower or any Subsidiary of the Borrower (other than a Subsidiary Guarantor) may transfer assets or lease to or acquire or lease assets from the Borrower or any other Subsidiary of the Borrower (other than a Subsidiary Guarantor) or any Subsidiary of the Borrower (other than a Subsidiary Guarantor) may be merged into any Subsidiary of the Borrower (other than a Subsidiary Guarantor) or any Subsidiary Guarantor may be merged into the Borrower or any other Subsidiary Guarantor, in each case so long as (x) all actions necessary or desirable to preserve, protect and maintain the security interest and Lien of the Security Agent in any Collateral held by any Person involved in any such transaction are taken to the satisfaction of the Administrative Agent and (y) no Default or Event of Default exists after giving effect thereto;

 

(c)            following a Collateral Disposition permitted by this Agreement, the Subsidiary Guarantor that owned the Collateral Vessel that is the subject of such Collateral Disposition may dissolve (or the equivalent), provided that (x) the net cash proceeds of such Collateral Disposition shall be applied to repay the Loans as required by Section 4.02, (y) all of the proceeds of such dissolution shall be paid only to the Borrower or a Subsidiary Guarantor and (z) no Event of Default is continuing at the time of such dissolution;

 

(d)            the Borrower and its Subsidiaries may make dispositions made in the ordinary course of trading of the disposing entity (excluding dispositions of Collateral Vessels or other Collateral) including without limitation, the payment of cash as consideration for the purchase or acquisition of any asset or service or in the discharge of any obligation incurred for value in the ordinary course of trading;

 

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(e)            the Borrower and its Subsidiaries may make dispositions of assets (other than the Collateral Vessels or other Collateral) owned by them in exchange for other assets comparable or superior as to type and value;

 

To the extent the Required Lenders waive the provisions of this Section 8.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by Sections 8.02(a) or (b), such Collateral (unless sold to the Borrower or a Subsidiary of the Borrower) shall be sold free and clear of the Liens created by the Security Documents (which Liens shall be automatically released), and the Administrative Agent and Security Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing;

 

(f)            the Borrower may consolidate or merge with any other Person if (A) at the time of such transaction and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (B) the surviving entity in such consolidation or merger shall be the Borrower and the Borrower shall have delivered to the Administrative Agent, not less than ten (10) Business Days in advance of such consolidation or merger, an officer’s certificate signed by a senior financial officer of the Borrower, certifying (i) that no Default or Event of Default has occurred and is continuing (or would arise after giving effect to the intended consolidation or merger) and (ii) pro forma financial statements of the Borrower demonstrating the compliance of the Borrower with all covenants under this Agreement after giving effect to such merger or consolidation; and

 

(g)            the Borrower and its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale).

 

8.03         Dividends. The Borrower will not, and will not permit any of its Subsidiary Guarantors to, authorize, declare or, pay any Dividends, except that:

 

(a)            any Subsidiary Guarantor may pay Dividends to the Borrower;

 

(b)            the Borrower may make, pay or declare cash Dividends; provided that, for all Dividends paid pursuant to this clause (b), (A) Dividends shall be paid within 90 days of the declaration thereof; (B) Dividends paid in respect of a fiscal quarter shall only be paid after the date of delivery of quarterly or annual financial statements for such fiscal quarter pursuant to Sections 7.01(a) and (b), as the case may be, and on or prior to 45 days after the last day of the immediately succeeding fiscal quarter, (C) no Default or Event of Default shall have occurred and be continuing at the time of declaration, (D) no Default or Event of Default shall have occurred and be continuing (or would arise after giving effect thereto) at the time of payment, and (E) on or prior to the declaration and payment of a Dividend, the Borrower shall deliver to the Administrative Agent an officer’s certificate signed by the senior financial officer of the Borrower, certifying that the requirements set forth in preceding clauses (A) through (D) are satisfied;

 

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(c)            the Borrower may purchase or redeem shares of common stock of the Borrower in market purchases under Rule 10b-18 or other purchases approved by the Borrower’s board of directors, any committee thereof or any authorized officer; provided that (A) no Default or Event of Default shall have occurred and be continuing at the time of any such purchases, (B) no Default or Event of Default shall arise after giving effect to any such purchases and (C) the Borrower in the exercise of its rights under this Section 8.03(c) shall not be permitted to purchase or redeem shares beneficially owned directly or indirectly by Peter Georgiopoulos; and

 

(d)            the Borrower may authorize, declare and distribute a dividend of Rights (as such term is defined and which are convertible into other securities as set forth in the Shareholder Rights Agreement) as contemplated by the Shareholder Rights Agreement.

 

8.04         Indebtedness   (a) The Subsidiary Guarantors will not contract, create, incur, assume or suffer to exist any Indebtedness (other than Indebtedness incurred pursuant to this Agreement and the other Credit Documents) except:

 

(i)  Indebtedness in a principal amount of up to Ten Million Dollars ($10,000,000) in the aggregate, on a consolidated basis, at any time outstanding, so long as at the time such Indebtedness is incurred: (x) no Default or Event of Default has occurred and is continuing, (y) such Indebtedness would not cause any Default or Event of Default, either on a pro forma basis for the most recently ended Test Period (or at the time of such incurrence, as applicable), or on a projected basis for the one year period following such incurrence, with each of the covenants set forth in Sections 8.07, and (z) the Borrower shall have delivered an officer’s certificate from the senior financial officer of the Borrower certifying that the conditions set forth in clause (x) and (y) above are satisfied and setting forth the calculations of the pro forma compliance described in clause (y) above in reasonable detail;

 

(ii)  Indebtedness permitted under Section 8.05(c);

 

(iii) the Subsidiary Guarantors may issue guarantees of Indebtedness permitted under Section 8.04(a)(i); and

 

(iv) the Subsidiary Guarantors may enter into and remain liable under Hedging Agreements entered into in the ordinary course of business and not for speculative purposes; provided that the obligations of the Subsidiary Guarantors thereunder are fully subordinate to their obligations hereunder on terms satisfactory to the Administrative Agent.

 

(v)    Indebtedness under the Existing Facility, provided that such Indebtedness is repaid in full on the initial Borrowing Date.

 

(b) Notwithstanding anything to the contrary set forth above in this Section 8.04, (i) no Subsidiary Guarantor shall incur any Financial Indebtedness for borrowed money (including Contingent Obligations in respect thereof) except for (x) Financial Indebtedness incurred pursuant to this Agreement and the other Credit Documents and (y) intercompany Indebtedness permitted pursuant to Section 8.05(c), and (ii) except as permitted under Section 8.04(a)(ii), the Subsidiary Guarantors shall not assume, incur or suffer to exist any Contingent Obligations in respect of any Indebtedness of any of its Subsidiaries which is not an Obligor.

 

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8.05        Advances, Investments and Loans .  The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any Equity Interests in, or make any capital contribution to any other Person (each of the foregoing an “Investment” and, collectively, “Investments”), except that the following shall be permitted:

 

(a)            the Borrower and its Subsidiaries may acquire and hold accounts receivable owing to any of them;

 

(b)            so long as no Event of Default exists or would result therefrom, the Borrower and its Subsidiaries may make loans and advances in the ordinary course of business to its employees so long as the aggregate principal amount thereof at any time outstanding which are made on or after the Closing Date (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $500,000;

 

(c)            the Subsidiary Guarantors may make intercompany loans and advances to the Borrower and between or among one another, and Subsidiaries of the Borrower other than the Subsidiary Guarantors may make intercompany loans and advances to the Borrower or any other Subsidiary of the Borrower, provided that any loans or advances to the Borrower or any Subsidiary Guarantors pursuant to this Section 8.05(c) shall be subordinated to the Obligations of the respective Obligor pursuant to written subordination provisions substantially in the form of Exhibit K;

 

(d)            the Borrower and its Subsidiaries may sell or transfer assets to the extent permitted by Section 8.02;

 

(e)            the Borrower may make Investments in the Subsidiary Guarantors and, so long as no Event of Default exists and is continuing, the Borrower may make Investments in its other Wholly-Owned Subsidiaries so long as management of the Borrower in good faith believe that, after giving effect to such Investment, the Borrower shall be able to meet its payment obligations in respect of this Agreement;

 

(f)            the Borrower may make Investments in its non-Wholly-Owned Subsidiaries; provided that the aggregate amount of all Investments under this clause (f) shall not exceed Ten Million Dollars ($10,000,000);

 

(g)            so long as no Event of Default exists or could reasonably be expected to result therefrom, the Borrower and its Subsidiaries (other than the Subsidiary Guarantors) may make Investments in joint ventures in the ordinary course of business; and

 

(h)            so long as no Event of Default exists or could reasonably be expected to result therefrom, the Borrower and its Subsidiaries (other than the Subsidiary Guarantors) may make Investments in a Person engaged in drybulk shipping operations.

 

8.06         Transactions with Affiliates .  The Borrower will not, and will not permit any of its Subsidiary Guarantors to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of such Person, other than

 

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on terms and conditions no less favorable to such Person as would be obtained by such Person at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that:

 

(a)            Dividends may be paid to the extent provided in Section 8.03;

 

(b)            loans and Investments may be made and other transactions may be entered into between the Borrower and its Subsidiaries to the extent not prohibited by Sections 8.04 and 8.05;

 

(c)            the Borrower and its Subsidiary Guarantors may pay customary director’s fees;

 

(d)             the Borrower and its Subsidiary Guarantors may enter into employment agreements or arrangements with their respective officers and employees in the ordinary course of business;

 

(e)            in lieu of Overhead Expenses incurred by the Borrower and its Subsidiary Guarantors, the Borrower and its Subsidiary Guarantors may pay amounts to one or more Affiliates in exchange for the provision of Overhead Expenses in respect of the Borrower and its Subsidiary Guarantors (so long as the cost paid by the Borrower and its Subsidiary Guarantors  is fair and reasonable); and

 

(f)             the Borrower may (x) enter into and perform the Management Agreement and pay fees thereunder and (y) pay management fees to Wholly Owned Subsidiaries in the ordinary course of business; and

 

(g)           The Borrower will not pay any fees or other amounts to its Affiliates other than as permitted by Sections 8.02, 8.03, 8.04, 8.05 and this Section 8.06.

 

8.07      Financial Covenants.Minimum Liquidity.  The Borrower will not permit at any time the aggregate of all cash and Cash Equivalents held by the Borrower and its Subsidiaries and undrawn amounts available to the Borrower under the Revolving Loan Facility to be less than the product of US$750,000 multiplied by the number of vessels owned by the Borrower or any of its Subsidiaries at such time; provided  that, an amount equal to US$500,000 multiplied by the number of Collateral Vessels shall at all times be (i) held with the Administrative Agent, (ii) undrawn under the Revolving Loan Facility or (iii) a combination of (i) and (ii) (the “Minimum Liquidity”).

 

(b)            Minimum Consolidated Net Worth.  The Borrower will not permit Consolidated Tangible Net Worth on the last day of any Test Period (beginning with the Test Period ending December 31, 2014) to be less than (a) US$232,796,091, plus (b) fifty per cent (50%) of the value of any primary offering of the Borrower occurring on or after April 30, 2013, (the minimum Consolidated Tangible Net Worth (as calculated pursuant to the foregoing) as of September 30, 2014 amounted to US$300,878,000).

 

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(c)           Maximum Leverage Ratio.  As of the last day of each fiscal quarter, maintain a ratio of Financial Indebtedness (including available but undrawn working capital lines) to Value Adjusted Total Assets of not greater than 0.70 to 1:00 from December 31, 2014 and at all times thereafter measured as of the last day of each fiscal quarter.

 

(d)           Collateral Maintenance.  The Borrower will not permit the sum of (i) the Aggregate Appraised Value of the Collateral Vessels which have not been sold, transferred, lost or otherwise disposed of (it being understood that permitted chartering arrangements do not constitute disposals for this purpose) and (ii) any Additional Collateral to fall below an amount that is equal to or less than 140% of the aggregate outstanding principal amount of the Loans; provided that any non-compliance with this Section 8.07(d) shall not constitute an Event of Default, so long as within 60 days of the occurrence of such non-compliance, the Borrower shall either (x) post Additional Collateral (and shall during such period, and prior to satisfactory completion thereof, be diligently carrying out such actions), (y) prepay Loans in an amount sufficient to cure such non-compliance or (z) permanently reduce the Total Commitment.

 

(e)           Changes to GAAP. If at any time after the Closing Date, the GAAP requirements materially change so as to impact the Financial Covenants set forth in Sections 8.07(a), (b), (c) and (d), and if agreed between the Borrower and the Administrative Agent (acting upon the written consent of the Required Lenders), this Agreement shall be amended and/or supplemented to reflect such changes.  If no such agreement is made, the GAAP requirements prior to any such change shall apply in determination of the Financial Covenants.

 

8.08        Limitation on Modifications of Certain Documents; etc.  (a)  The Borrower will not, and the Borrower will not permit any Subsidiary Guarantor to, amend, modify or change its Organizational Documents or any agreement entered into by it with respect to its Equity Interests, or enter into any new agreement with respect to its Equity Interests, other than any amendments, modifications or changes or any such new agreements which are not in any way materially adverse to the interests of the Lenders.

 

(b)           The Borrower or relevant Collateral Vessel Owner party to any Management Agreement or charter will not agree to any amendments thereto or grant any waiver thereunder, in each case, which would be materially adverse to the interests of the Lenders, without the consent of the Administrative Agent.

 

8.09        Limitation on Certain Restrictions on Subsidiaries  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Borrower or any Subsidiary, or pay any Financial Indebtedness owed to the Borrower or a Subsidiary, (b) make loans or advances to the Borrower or any Subsidiary or (c) transfer any of its properties or assets to the Borrower or any Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or a Subsidiary of the Borrower, (iv) customary provisions restricting assignment of any agreement

 

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(including a ship purchase agreement) entered into by the Borrower or a Subsidiary in the ordinary course of business, (v) any holder of a Lien on assets other than the Collateral may restrict the transfer of the asset or assets subject thereto, (vi) restrictions which are not more restrictive than those contained in this Agreement and (vii) with respect to the Subsidiaries of the Borrower that are not Subsidiary Guarantors only, restrictions under agreements relating to Financial Indebtedness permitted to be incurred by such Persons.

 

8.10     Limitation on Issuance of Capital Stock The Borrower will not permit any Subsidiary Guarantor to issue any capital stock (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock, except (i) for transfers and replacements of then outstanding shares of capital stock, (ii) for stock splits, stock dividends and additional issuances which do not decrease the percentage ownership of the Borrower or any of its Subsidiaries in any class of the capital stock of such Subsidiary, (iii) in the case of foreign Subsidiaries of the Borrower, to qualify directors to the extent required by applicable law and (iv) to the Borrower or another Subsidiary Guarantor.  All capital stock of any Subsidiary Guarantor issued in accordance with this Section 8.10(a) shall be delivered to the Security Agent pursuant to the Pledge Agreement.

 

8.11.        Business.  (a)  The Borrower will not (other than as provided in Section 8.11(b) below), and, as applicable, will not permit any of its Subsidiary Guarantors to, engage in any business or own any significant assets or have any material liabilities other than its (i) ownership of the Equity Interests of, and the management of, its Subsidiaries and (ii) the acquisition, ownership, management and operation of Collateral Vessels and assets owned on the Closing Date, and activities related thereto, provided that the Subsidiaries may engage in those activities that are incidental to (A) the maintenance of its legal existence (including the ability to incur fees, costs, expenses and taxes relating to such maintenance), (B) legal, tax and accounting matters in connection with any of the foregoing or following activities as a member of the consolidated group of the Borrower, (C) the entering into, and performing its obligations under, this Agreement, the other Credit Documents and its Organizational Documents, (D) holding any cash, Cash Equivalents and other property necessary or desirable in connection with, or incidental to, the ownership, management and operation of the Collateral Vessel; (E) paying or making of Dividends and Investments, incurring Financial Indebtedness consisting of (x) any guarantee of the obligations of any Obligor in favor of the Manager or other manager, (y) under the Credit Documents and (z) Contingent Obligations in respect of the acquisition of any Term Loan Vessel and any other activities to the extent permitted hereunder; (F) providing indemnification to officers and directors; and (G) any activities incidental or reasonably related to the foregoing.

 

(b)            The Borrower will not, and will not permit any of any Subsidiary Guarantor to, engage in any business other than the construction, ownership, management and operation of dry bulker vessels or other activities directly related thereto, and similar or related or complimentary businesses and those businesses in which they are engaged as of the Closing Date and activities directly related thereto and similar or related businesses.

 

8.12.        Manager.  The Borrowers and the Subsidiary Guarantors shall not, without the prior written consent of the Administrative Agent (such consent not be unreasonably

 

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withheld or delayed), (i) change the Manager of any Collateral Vessel, (ii) materially increase the compensation awarded to the Manager or (iii) substantially diminish the duties of the Manager under the Management Agreement.

 

8.13         Bank Accounts.  The Borrower will not, and will not permit any Subsidiary Guarantor to, maintain any deposit, savings, investment or other similar accounts other than the Earnings Accounts.

 

8.14.        Jurisdiction of Employment.  The Borrower will not, and will not permit the Subsidiary Guarantors or any third party charterer of a Collateral Vessel to employ or cause to be employed any Collateral Vessel in any country or jurisdiction in which the Borrower, the Subsidiary Guarantors or such third party charterer of a Collateral Vessel is prohibited by law from doing business, (ii) the Lien created by the applicable Collateral Vessel Mortgage will be rendered unenforceable or (iii) the Security Agent’s foreclosure or enforcement rights will be materially impaired or hindered.

 

8.15.       Operation of Collateral Vessels.  The Borrower will not, and will not permit any Subsidiary Guarantor to, engage in the following undertakings:

 

(a)            without giving prior written notice thereof to the Security Agent, change the registered owner, name, official or patent number, as the case may be, the home port or class of any Collateral Vessel; and

 

(b)            without the prior consent of the Administrative Agent (or, in the case of the registry, the Required Lenders) (such consent not to be unreasonably withheld), change the registered flag registry or classification society of any Collateral Vessel unless the change is to an Acceptable Flag Jurisdiction (and the requirements of the Flag Jurisdiction Transfer have been satisfied) or to an Acceptable Classification Society.

 

8.16.       Corrupt Practices; .   The Borrower and each Obligor shall not use any part of the proceeds of the Loans, directly or, to the knowledge of any Obligor, indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

8.17.       No Investments.  The Borrower and each Obligor shall not use any Investments, directly or, to the knowledge of any Obligor, indirectly, to or for the benefit of a Restricted Party nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws.

 

SECTION 9.   Events of Default.  Each of the following shall constitute an “Event of Default” for purposes of this Agreement and the other Credit Documents:

 

9.01      Payments.  The Borrower shall (i) default in the payment when due of any principal or interest payable in connection with any Loan or any Note or (ii) default in the payment when due of any other sums payable under a Credit Document or under any document

 

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relating to a Credit Document or, in the case of sums payable on demand, within five (5) Business Days after the date when first demanded; provided that if such failure to pay a sum when due is solely the result of an administrative or technical error, it shall not constitute an Event of Default unless such failure continues unremedied for more than three (3) Business Days; or

 

9.02      Representations, etc.  Any representation, warranty or statement made by any Obligor herein or in any other Credit Document or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or

 

9.03      Covenants.  Any Obligor shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Sections 7.01(f)(i), 7.03 (other than clause (a)(i) or (iv) thereof), 7.06, 7.19 or Section 8.07) or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement or any other Credit Document to which it is a party and, in the case of this clause (ii), such default shall continue unremedied for a period of 30 days after written notice to the Borrower by the Administrative Agent; or

 

9.04      Default Under Other Agreements.  (i)  The Borrower or any of its Subsidiaries shall default in any payment of any Financial Indebtedness (other than the Obligations) beyond the original period of grace, if any, provided in the instrument or agreement under which such Financial Indebtedness was created or (ii) the Borrower or any of its Subsidiaries shall default in the observance or performance of any agreement or condition relating to any Financial Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Financial Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Financial Indebtedness to become due prior to its stated maturity, or (iii) any Financial Indebtedness (other than the Obligations) of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by (x) a regularly scheduled required prepayment or (y) in connection with an asset sale, casualty or condemnation or other similar mandatory prepayment, prior to the stated maturity thereof, provided that it shall not be a Default or Event of Default under this Section 9.04 unless the aggregate principal amount of all Financial Indebtedness as described in preceding clauses (i) through (iii), inclusive, exceeds $5,000,000; or

 

9.05      Bankruptcy, etc.  The Borrower or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced against the Borrower or any of its Subsidiaries and the petition is not controverted within 30 days after service of summons (or such longer period as may be provided by such summons), or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any of its Subsidiaries, or the Borrower

 

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or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Borrower or any of its Subsidiaries or there is commenced against the Borrower or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days, or the Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or any of its Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Borrower or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any corporate action is taken by the Borrower or any of its Subsidiaries for the purpose of effecting any of the foregoing; or

 

9.06      ERISA.  If:

 

(a)            (i) any Plan (other than a Multiemployer Plan) shall fail to satisfy the minimum funding standard required for any plan year or part thereof under Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code or Section 303 of ERISA;

 

(ii) a Reportable Event shall have occurred;

 

(iii) a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (which is not waived) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days;

 

(iv) any Plan (other than a Multiemployer Plan) which is subject to Title IV of ERISA shall have had or is reasonably likely to have a trustee appointed to administer such Plan;

 

(v) any Plan which is subject to Title IV of ERISA is, or shall have been, terminated or the subject of termination proceedings under ERISA;

 

(vi) a contribution required to be made by the Borrower or any of its Subsidiaries or any ERISA Affiliate with respect to a Plan subject to Title IV of ERISA or by the Borrower or any of its Subsidiaries with respect to a Foreign Pension Plan is not timely made;

 

(vii) any Plan (other than a Multiemployer Plan) shall have an Unfunded Current Liability;

 

(viii) the Borrower or any of its Subsidiaries or any ERISA Affiliate has received written notice from the PBGC or a plan administrator (in the case of a Multiemployer Plan) indicating that proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan subject to Title IV of ERISA;

 

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(ix) the Borrower or any of its Subsidiaries or any ERISA Affiliate has or is reasonably likely to have any liability to or on account of a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4975 of the Code; or

 

(x)  a “default,” within the meaning of Section 4219(c)(5) of ERISA, shall occur with respect any Multiemployer Plan;

 

(b) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material and impending risk of incurring a liability; and

 

(c) such lien, security interest or liability, individually, and/or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect; or

 

9.07     Security Documents.  At any time after the execution and delivery thereof, any of the Security Documents shall, other than in accordance with the terms hereof or thereof, cease to be in full force and effect in any material respect, or shall cease in any material respect to give the Security Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral), in favor of the Security Agent, superior to and prior to the rights of all third Persons (except in connection with Permitted Liens), and subject to no other Liens (except Permitted Liens), or any “event of default” (as defined in any Collateral Vessel Mortgage) shall occur in respect of any Collateral Vessel Mortgage; or

 

9.08      Guaranty.  After the execution and delivery thereof, any Guaranty, or any material provision thereof, shall cease to be in full force or effect in any material respect as to the relevant Subsidiary Guarantor (unless such Subsidiary Guarantor is no longer a Subsidiary by virtue of a liquidation, sale, merger or consolidation permitted by Section 8.02) or any Subsidiary Guarantor (or Person acting by or on behalf of such Subsidiary Guarantor) shall deny or disaffirm such Subsidiary Guarantor’s obligations under the Guaranty to which it is a party; or

 

9.09      Judgments.  One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving in the aggregate for the Borrower and its Subsidiaries a liability (not paid or fully covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of sixty (60) Business Days, and the aggregate amount of all such judgments, to the extent not covered by insurance, exceeds the Materiality Amount; or

 

9.10         [Reserved];

 

9.11         [Reserved];

 

9.12         [Reserved];

 

9.13         Termination of Business.

 

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Any Obligor ceases or suspends or threatens to cease or suspend the carrying on of its business, or a part of its business (in each case other than in connection with drydockings, maintenance of the Collateral Vessel and other temporary suspensions of operations in the ordinary course of business) which, in the opinion of the Required Lenders, is material in the context of this Agreement; or

 

9.14      Material Adverse Effect. An event or series of events occurs which, in the reasonable opinion of the Required Lenders constitutes a Material Adverse Effect.

 

9.15      Authorizations and Consents.

 

Any consent necessary to enable a Collateral Vessel Owner to own, operate or charter the Collateral Vessel owned by it or to enable the Borrower or any other Obligor to comply with any provision which the Required Lenders consider material of a Credit Document is not granted, expires without being renewed, is revoked or becomes liable to be revoked or any condition of such a consent is not fulfilled, unless cured within thirty (30) Business Days; or

 

9.16      Arrest; Expropriation.

 

All or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, any Obligor are arrested, seized, nationalized, expropriated or compulsorily acquired by or under the authority of any government, unless cured within thirty (30) Business Days, and provided that in the reasonable opinion of the Administrative Agent, such occurrence would adversely affect any Obligor’s ability to perform its obligations under the Credit Documents to which it is a party; or

 

9.17      Failure to Comply with Final Judgment.  The Borrower or any of its Subsidiaries fail to comply with a final judgment issued by any court of competent jurisdiction; or

 

9.18      Breach of Sanctions.  Any Obligor or any of its Permitted Holders, directors, officers or employees, violates any Sanctions Laws or becomes a Restricted Party; or

 

9.19      Delisting. The Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in Section 7.20.

 

Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may, and upon the written request of the Required Lenders, shall by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Obligor (provided that, if an Event of Default specified in Section 9.05 shall occur, the result which would occur upon the giving of written notice by the Administrative Agent to the Borrower as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Commitments terminated, whereupon all Commitments of each Lender shall forthwith terminate immediately and any Commitment Commission shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans, Notes and all Obligations owing hereunder to be,

 

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whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor; or (iii) enforce, as Security Agent, all of the Liens and security interests created pursuant to the Security Documents.

 

SECTION 10. Agency and Security Trustee Provisions.

 

10.01    Appointment.  (a)  The Lenders in their capacity as Lenders and Other Creditors (by their acceptance of the benefits hereof and of the other Credit Documents) hereby irrevocably designate and appoint  Nordea, as Administrative Agent (for purposes of this Section 10 the term “Administrative Agent” shall include Nordea (and/or any of its affiliates) in its capacity as Security Agent pursuant to the Security Documents and in its capacity as mortgagee (if applicable) and security trustee pursuant to the Collateral Vessel Mortgages) to act as specified herein and in the other Credit Documents.  Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of such Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.  The Agents may perform any of their duties hereunder by or through its respective officers, directors, agents, employees or affiliates and, may assign from time to time any or all of its rights, duties and obligations hereunder and under the Security Documents to any of its banking affiliates.

 

(b)            The Lenders hereby irrevocably designate and appoint Nordea as security trustee solely for the purpose of holding legal title to the Collateral Vessel Mortgages on each of the Collateral Vessels in an Acceptable Flag Jurisdiction on behalf of the Lenders, from time to time, with regard to the (i) security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Lenders or any of them or for the benefit thereof under or pursuant to the Collateral Vessel Mortgages (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken by any Lender in the Collateral Vessel Mortgages), (ii) all money, property and other assets paid or transferred to or vested in any Lender or any agent of any Lender or received or recovered by any Lender or any agent of any Lender pursuant to, or in connection with the Collateral Vessel Mortgages, whether from the Borrower or any Subsidiary Guarantor or any other Person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Lender or any agent of any Lender in respect of the same (or any part thereof).  Nordea hereby accepts such appointment as security trustee.

 

10.02    Nature of Duties.(a)  The Agents shall have no duties or responsibilities except those expressly set forth in this Agreement and the Security Documents.  None of the Agents nor any of their respective officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by such Person’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final

 

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and non—appealable decision (any such liability limited to the applicable Agent to whom such Person relates).  The duties of each of the Agents shall be mechanical and administrative in nature; none of the Agents shall have by reason of this Agreement or any other Credit Document any fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon any Agents any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.

 

(b)                                 It is understood and agreed that the use of the term “agent” herein or in any other Credit Documents (or any other similar term) with reference to the Administrative Agent in such capacity is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

 

10.03                 Lack of Reliance on the Agents.  Independently and without reliance upon the Agents, each Lender and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Borrower and its Subsidiaries in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Borrower and its Subsidiaries and, except as expressly provided in this Agreement, none of the Agents shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter.  None of the Agents shall be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of the Borrower and its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of the Borrower and its Subsidiaries or the existence or possible existence of any Default or Event of Default.

 

10.04                 Certain Rights of the Agents.  If any of the Agents shall request instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Agents shall be entitled to refrain from such act or taking such action unless and until the Agents shall have received instructions from the Required Lenders; and the Agents shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, no Lender or the holder of any Note shall have any right of action whatsoever against the Agents as a result of any of the Agents acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders.

 

10.05                 Reliance.  Each of the Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, email,

 

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telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the applicable Agent reasonably believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.

 

10.06    Indemnification.  To the extent any of the Agents is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the applicable Agents, pro rata to their respective commitments for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by such Agents in performing their respective duties hereunder or under any other Credit Document, in any way relating to or arising out of this Agreement or any other Credit Document (including, without limitation, as a result of a breach of any Sanctions Laws by any Obligor or their respective directors, officers, employees, agents or representatives); provided that no Lender shall be liable in respect to an Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).  The indemnities contained in this Section 10.06 shall cover any cost, loss or liability incurred by each Indemnified Party in any jurisdiction arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, ISPS Code or any Environmental Law.

 

10.07    The Administrative Agent in its Individual Capacity.  With respect to its obligation to make Loans under this Agreement, each of the Agents shall have the rights and powers specified herein for a “Lender” and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term “Lenders,” “Secured Creditors”, “Required Lenders”, “holders of Notes” or any similar terms shall, unless the context clearly otherwise indicates, include each of the Agents in their respective individual capacity.  Each of the Agents may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Obligor or any Affiliate of any Obligor as if it were not performing the duties specified herein, and may accept fees and other consideration from the Borrower or any other Obligor for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.

 

10.08   Holders.  The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent.  Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.

 

10.09    Resignation by the Administrative Agent.

 

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(a)                                 The Administrative Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving thirty (30) Business Days’ prior written notice to the Borrower and the Lenders or appoint one of its Affiliates, including, without limitation, Nordea Bank AB (publ), London Branch, as a successor by giving five (5) Business Days’ prior written notice to the Borrower and the Lenders. A resignation by the Administrative Agent without the appointment of an Affiliate as successor as contemplated herein shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

 

(b)                                 Upon a notice of resignation delivered by the Administrative Agent pursuant to Section 10.09(a), the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrower.

 

(c)                                  If, following the Administrative Agent delivering a notice of resignation pursuant to Section 10.09(a), a successor Administrative Agent shall not have been so appointed within such thirty (30) Business Day period, the Administrative Agent, with the consent of the Borrower (which shall not be unreasonably withheld or delayed), shall then appoint a commercial bank or trust company with capital and surplus of not less than $500,000,000 as successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.

 

(d)                                 If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the twenty fifth (25th) Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.

 

10.10                 Collateral Matters.  (a)  Each Lender authorizes and directs the Security Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors.  Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.  The Security Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to, or during, an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Security Documents.

 

(b)                                 The Lenders hereby authorize the Security Agent, at its option and in its discretion, to release any Lien on any property granted to or held by the Security Agent under any Credit Document (i) upon termination of all Commitments and payment and satisfaction in

 

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full of the Obligations (other than contingent indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) that is sold or otherwise disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 8.02, (iii) in connection with any Flag Jurisdiction Transfer, provided that the requirements thereof are satisfied by the relevant Obligor, and (iv) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 11.13) or (v) as otherwise may be expressly provided in the relevant Security Documents.  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Security Agent’s authority to release its interest in particular types or items of Collateral pursuant to this Section 10.10.

 

(c)            The Security Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Obligor or is cared for, protected or insured or that the Liens granted to the Security Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Security Agent in this Section 10.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Security Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

(d)            (i) The Other Creditors shall not have any right whatsoever to do any of the following:  (A) exercise any rights or remedies with respect to the Collateral or to direct any Agent to do the same, including, without limitation, the right to (1) enforce any Liens or sell or otherwise foreclose on any portion of the Collateral, (2) request any action, institute any proceedings, exercise any voting rights, give any instructions, make any election or make collections with respect to all or any portion of the Collateral or (3) release any Obligor under any Credit Document or release any Collateral from the Liens of any Security Document or consent to or otherwise approve any such release; (B) demand, accept or obtain any Lien on any Collateral (except for Liens arising under, and subject to the terms of, the Credit Documents); (C) vote in any case concerning any Obligor under the Bankruptcy Code or any other proceeding under any reorganization, arrangement, adjudication of debt, relief of debtors, dissolution, insolvency, liquidation or similar proceeding in respect of the Obligors or any of their respective Subsidiaries (any such proceeding, for purposes of this clause (d)(i), a “Bankruptcy Proceeding”) with respect to, or take any other actions concerning the Collateral; (D) receive any proceeds from any sale, transfer or other disposition of any of the Collateral (except in accordance with this Agreement); (E) oppose any sale, transfer or other disposition of the Collateral; (F) object to any debtor-in-possession financing in any Bankruptcy Proceeding which is provided by one or more Lenders among others (including on a priming basis under Section 364(d) of the Bankruptcy Code); (G) object to the use of cash collateral in respect of the Collateral in any Bankruptcy Proceeding; or (H) seek, or object to the Lenders or any Agent seeking on an equal and ratable basis, any adequate protection or relief from the automatic stay with respect to the Collateral in any Bankruptcy Proceeding.

 

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(ii)            Each Other Creditor, by its acceptance of the benefits of this Agreement and the other Credit Documents, agrees that in exercising rights and remedies with respect to the Collateral, the Agents and the Lenders, with the consent of the Agents, may enforce the provisions of the Credit Documents and exercise remedies thereunder (or refrain from enforcing rights and exercising remedies), all in such order and in such manner as they may determine in the exercise of their sole business judgment.  Such exercise and enforcement shall include, without limitation, the rights to collect, sell, dispose of or otherwise realize upon all or any part of the Collateral, to incur expenses in connection with such collection, sale, disposition or other realization and to exercise all the rights and remedies of a secured lender under the UCC.  The Other Creditors by their acceptance of the benefits of this Agreement and the other Credit Documents hereby agree not to contest or otherwise challenge any such collection, sale, disposition or other realization of or upon all or any of the Collateral. Whether or not a Bankruptcy Proceeding has been commenced, the Other Creditors shall be deemed to have consented to any sale or other disposition of any property, business or assets of the Obligors and the release of any or all of the Collateral from the Liens of any Security Document in connection therewith.

 

(iii) To the maximum extent permitted by law, each Other Creditor waives any claim it might have against the Agents or the Lenders with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight whatsoever on the part of any Agent or the Lenders or their respective directors, officers, employees or agents with respect to any exercise of rights or remedies under the Credit Documents or any transaction relating to the Collateral (including, without limitation, any such exercise described in Section 10(d)(ii)), except for any such action or failure to act that constitutes willful misconduct or gross negligence of such Person.  To the maximum extent permitted by applicable law, none of either Agent or any Lender or any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Parent, any Subsidiary of Parent, any Other Creditor or any other Person or to take any other action or forbear from doing so whatsoever with regard to the Collateral or any part thereof, except for any such action or failure to act that constitutes willful misconduct or gross negligence of such Person.

 

10.11   Delivery of Information.  The Agents shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Agents from any Obligor, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of any Agent at the time of receipt of such request and then only in accordance with such specific request.

 

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SECTION 11. Miscellaneous.

 

11.01    Payment of Expenses, etc.  (a) The Borrower agrees that it shall  (i) pay all reasonable and documented out-of-pocket costs and expenses of each of the Agents and their Affiliates (which shall be limited, in the case of legal fees, to the reasonable and documented fees and disbursements of one legal counsel to the Administrative Agent and the Lead Arrangers, and local counsel (as necessary) to the Administrative Agent) in connection with the syndication of the Credit Facilities, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto (whether or not the transactions herein contemplated are consummated), and (ii) pay all reasonable and documented out-of-pocket costs and expenses of each of the Agents and the Lenders (including, without limitation, the reasonable fees and disbursements of counsel (excluding in-house counsel) for each of the Agents and for each of the Lenders) in connection with the enforcement or protection of its rights (A) in connection this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and (B) in connection with the Loans made hereunder, including such expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

 

(b)            In addition, the Borrower shall indemnify the Agents and each Lender, and each of their respective officers, directors, trustees, employees, representatives and agents (collectively, the “Indemnified Parties”) from, and hold each of them harmless against, any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits and out-of-pocket costs, expenses and disbursements (including reasonable and documented out-of-pocket attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of:

 

(i)          any investigation, litigation or other proceeding (whether or not any of the Agents, the Security Agent or any Lender is a party thereto) related to the entering into and/or performance of this Agreement or any other Credit Document or the use of proceeds of the Loans hereunder or the consummation of any transactions contemplated herein, or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents,

 

(ii)          the actual or alleged presence of Hazardous Materials on or from any Collateral Vessel or real property or facility at any time owned or operated by the Borrower or any Subsidiary,

 

(iii)     the generation, storage, transportation, handling, disposal or Environmental Release of Hazardous Materials at any location, whether or not owned or operated by the Borrower,

 

(iv)     the non-compliance of any Collateral Vessel or any real property or facility at any time owned or operated by the Borrower or any Subsidiary with

 

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Environmental Law or applicable foreign, federal, state and local laws, regulations, and ordinances (including applicable permits thereunder),

 

(v) any Environmental Claim asserted against the Borrower, any Subsidiary Guarantor or any Collateral Vessel or any real property or facility at any time owned or operated by the Borrower or any Subsidiary, or

 

(vi) conduct of any Obligor or any of its partners, directors, officers or employees, that violates any Sanctions Laws,

 

in each case excluding any losses, liabilities, claims, damages, penalties, actions, judgments, suits, costs, disbursements or expenses to the extent incurred by reason of the gross negligence of, the breach in bad faith of the Credit Documents by, or wilful misconduct of, any such Indemnified Party or by reason of a failure by any such Indemnified Party to fund its Commitments as required by this Agreement.  To the extent that the undertaking to indemnify, pay or hold harmless each of the Agents or any Lender set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law.  Notwithstanding the foregoing, no party hereto shall be responsible to any Person for any consequential, indirect, special or punitive damages which may be alleged by such Person arising out of this Agreement or the other Credit Documents.

 

11.02    Right of Setoff.  In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Subsidiary or the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Financial Indebtedness at any time held or owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of the Borrower or any Subsidiary Guarantor but in any event excluding assets held in trust for any such Person against and on account of the Obligations and liabilities of the Borrower or such Subsidiary Guarantor, as applicable, to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 11.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.

 

11.03   Notices.  Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopier or e-mail communication) and mailed, e-mailed, telecopied or delivered:  if to the Borrower, at the Borrower’s address specified on Schedule VII hereto; if to any Lender, at its address specified opposite its name on Schedule II hereto; and if to the Administrative Agent, at its Notice Office; or, as to any other Obligor, at such other address as shall be designated by such

 

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party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrower and the Administrative Agent.  All such notices and communications shall, (i) when mailed, be effective three (3) Business Days after being deposited in the mails, prepaid and properly addressed for delivery, (ii) when sent by overnight courier, be effective one (1) Business Day after delivery to the overnight courier prepaid and properly addressed for delivery on such next Business Day, or (iii) when sent by telecopier or e-mail, be effective when sent by telecopier or e-mail, except that notices and communications to the Administrative Agent shall not be effective until received by the Administrative Agent.

 

11.04    Benefit of Agreement; Assignments; Participations.  (a)  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, that (i) no Obligor may assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of the Lenders, (ii) although any Lender may grant participations in its rights hereunder, such Lender shall remain a “Lender” for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments hereunder except as provided in Section 11.04(b)) and no participant shall constitute a “Lender” hereunder and (iii) no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (x) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or Commitment Commission thereon (except (I) in connection with a waiver of applicability of any post-default increase in interest rates and (II) that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (x)) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Total Commitments shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (y) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or (z) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) securing the Loans hereunder in which such participant is participating.  In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loan or other obligations under the Note (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans or its other obligations under any Note) to any Person except to the extent that such disclosure is

 

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necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(b)            Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may:

 

(x)            assign all or a portion of its Commitment and/or its outstanding Loans to (i) its parent company and/or any Affiliate of such Lender or its parent company, (ii) in the case of any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor of such Lender or by an Affiliate of such investment advisor, or (iii) one or more Lenders or

 

(y)            assign, upon (i) delivery to the Administrative Agent of the satisfactory “know your customer”  documentation on the transferee, (ii) payment by such Lender or assignor to the Administrative Agent of a $5,000 assignment fee, (iii) receipt of the consent of the Administrative Agent and (iv) receipt of the consent of the Borrower (which consent shall not be unreasonably withheld or delayed and (A) shall not be required if any Default under Section 9.01 or 9.05 or any Event of Default is then in existence and (B) shall be deemed to have been granted within ten (10) Business Days from the day it has been sought unless expressly refused within that period), all, or if less than all, a portion equal to at least $10,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Commitments and outstanding principal amount of Loans hereunder to one or more Eligible Transferees (treating any fund that invests in bank loans and any other fund that invests in bank loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that, if an Event of Default has occurred the assigning Lender may assign such Commitment or Loans to any Person,

 

provided that (i) at such time Schedule I hereto shall be deemed modified to reflect the Commitments (and/or outstanding Loans, as the case may be) of such new Lender and of the existing Lenders, (ii) new Notes will be issued, at the Borrower’s expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.04 (with appropriate modifications) to the extent needed to reflect the revised Commitments (and/or outstanding Loans, as the case may be), (iii) the consent of the Administrative Agent shall be required in connection with any assignment pursuant to preceding clause (y) (which consent shall not be unreasonably withheld or delayed), and (iv) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $5,000.  To the extent of any assignment pursuant to this Section 11.04(b), the assigning Lender

 

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shall be relieved of its obligations hereunder with respect to its assigned Commitments (it being understood that the indemnification provisions under this Agreement (including, without limitation, Sections 2.08, 2.09, 4.04 and 11.01) shall survive as to such assigning Lender with respect to matters occurring prior to the date such assigning Lender ceases to be a Lender).  To the extent that an assignment of all or any portion of a Lender’s Commitments and related outstanding Obligations pursuant to Section 2.11 or this Section 11.04(b) would, at the time of such assignment, result in increased costs under Section 2.08, 2.09 or 4.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from any Change in Law after the date of the respective assignment).

 

(c)            Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and, with the consent of the Administrative Agent, any Lender which is a fund may pledge all or any portion of its Notes or Loans to a trustee for the benefit of investors and in support of its obligation to such investors; provided, however, no such pledge shall release a Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

 

11.05   No Waiver; Remedies Cumulative.  No failure or delay on the part of the Administrative Agent or any Lender or any holder of any Note in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any other Obligor and the Administrative Agent or any Lender or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder.  The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent or any Lender or the holder of any Note would otherwise have.  No notice to or demand on any Obligor in any case shall entitle any Obligor to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or any Lender or the holder of any Note to any other or further action in any circumstances without notice or demand.

 

11.06    Payments Pro Rata.  (a)  Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations hereunder, it shall distribute such payment to the Lenders (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.

 

(b)            Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or

 

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interest on, the Loans or Commitment Commission, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Obligor to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

 

(c)            Notwithstanding anything to the contrary contained herein, the provisions of the preceding Sections 11.06(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

 

11.07    Calculations; Computations.  (a)  The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders).  In addition, all computations determining compliance with the Financial Covenants shall utilize accounting principles and policies in conformity with those in effect on the Closing Date (with the foregoing generally accepted accounting principles, subject to the preceding proviso, herein called “GAAP”), subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.  Unless otherwise noted, all references in this Agreement to “GAAP” shall mean generally accepted accounting principles as in effect in the United States.

 

(b)            All computations of interest for Loans, Commitment Commission and other Fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, Commitment Commission or Fees are payable.

 

11.08    Agreement Binding.  The Borrower and each other Obligor agree that they shall be bound by the terms of this Agreement and the obligations and covenants expressed to be binding on each of them under this Agreement even if the terms, covenants or obligations contained hereunder are inconsistent with, or less favorable to the Borrower or such Obligor (as the case may be) than the Borrower’s or such Obligor’s rights and obligations under  any other document that they are a party to or are otherwise bound by, including without limitation, the Management Agreement, notwithstanding that the Lender Creditors are aware of or have been provided with such other document pursuant to this Agreement or otherwise.

 

11.09   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.  (a)  THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE COLLATERAL VESSEL MORTGAGES AND OTHER

 

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SECURITY DOCUMENTS, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY IN THE CITY OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE PARTIES TO THIS AGREEMENT FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH ON SCHEDULE VII HERETO, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OBLIGOR IN ANY OTHER JURISDICTION. THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS, AUTHORIZES AND EMPOWERS KRAMER LEVIN NAFTALIS & FRANKEL LLP, WITH OFFICES CURRENTLY LOCATED AT 1177 AVENUE OF AMERICAS, NEW YORK, NEW YORK 10036, ATTENTION: DAVID J. FISHER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE AND ACCEPT FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK, NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT; PROVIDED THAT ANY FAILURE ON THE PART OF THE BORROWER TO COMPLY WITH THE FOREGOING PROVISIONS OF THIS SENTENCE SHALL NOT IN ANY WAY PREJUDICE OR LIMIT THE SERVICE OF PROCESS OR SUMMONS IN ANY OTHER MANNER DESCRIBED ABOVE IN THIS SECTION 11.09 OR OTHERWISE PERMITTED BY LAW.

 

(b)            EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT

 

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ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)            EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

11.10    Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original (including if delivered by e-mail or facsimile transmission), but all of which shall together constitute one and the same instrument.  A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.

 

11.11    Effectiveness.  This Agreement shall become effective on the date (the “Closing Date”) on which the conditions set forth in Section 5.01 shall have been satisfied or waived by the Administrative Agent.

 

11.12    Headings Descriptive.  The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

 

11.13    Amendment or Waiver; etc.  (a)  Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Obligors party thereto and the Required Lenders, provided that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) directly and negatively affected,

 

(i)             Extend the timing for or reduce (x) the final scheduled maturity of any Loan or Note,(y)  the First Reduction Date or any Subsequent Reduction Date, (z) any scheduled payment in connection with the Loans or any part thereof set forth on Schedule VIII, or reduce the rate or reduce or extend the time of payment of interest on any Loan or Note or Commitment Commission (except (x) in connection with the waiver of applicability of any post-default increase in interest rates and (y) any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (i)), or reduce the principal amount thereof (except to the extent repaid in cash),

 

(ii)            release any of the Collateral (except as expressly provided in the Credit Documents),

 

(iii)           an increase in or extension of any Lender’s Commitment;

 

(iv)           amend, modify or waive any provision of this Section 11.13 or of any other Section that expressly requires the consent of all the Lenders to do so,

 

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(v)            reduce the percentage specified in the definition of Required Lenders (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the extensions of Loans and Commitments are included on the Closing Date),

 

(vi)           consent to the assignment or transfer by the Borrower or any Subsidiary Guarantor of any of its respective rights and obligations under this Agreement,

 

(vii)         substitute or replace the Borrower or any Subsidiary Guarantor or release any Subsidiary Guarantor from the Guaranty,

 

(viii)        reduce the Applicable Margin or reduce the amount of any payment of principal, interest, fees or commission;

 

provided, further, that no such change, waiver, discharge or termination shall (A) increase or extend the Commitments of any Lender over the amount thereof then in effect without the consent of such Lender (it being understood that waivers or modifications of Section 2.01(b), conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the  Commitments shall not constitute an increase of the Commitment of any Lender, and that an increase in the available portion of any Commitment of any Lender shall not constitute an increase in the Commitment of such Lender), (B) without the consent of each Agent, amend, modify or waive any provision of Section 10 as same applies to such Agent or any other provision as same relates to the rights or obligations of such Agent or (C) without the consent of the Security Agent, amend, modify or waive any provision relating to the rights or obligations of the Security Agent.

 

(b)            If, in connection with any proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by clauses (i) through (vi), inclusive, of the first proviso to Section 11.13(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required (any such Lender, a “Non-Consenting Lender”) is not obtained, then the Borrower shall have the right, so long as all Non-Consenting Lenders whose individual consent is required are treated as described in either clauses (i) or (ii) below, to either (i) replace each such Non-Consenting Lender (or, at the option of the Borrower if the respective Non-Consenting Lender’s consent is required with respect to less than all Loans (or related Commitments) of such Non-Consenting Lender, to replace only the respective Commitments and/or Loans of the respective Non-Consenting Lender which gave rise to the need to obtain such Non-Consenting Lender’s individual consent) with one or more Replacement Lenders pursuant to Section 2.11 so long as at the time of such replacement, each such Replacement Lender consents to the proposed  change, waiver, discharge or termination or (ii) terminate such Non-Consenting Lender’s Commitment (if such Non-Consenting Lender’s consent is required as a result of its Commitment), and/or repay the outstanding Loans and terminate any outstanding Commitments of such Non-Consenting Lender which gave rise to the need to obtain such Non-Consenting Lender’s consent, in accordance with Sections 3.02(b) and/or 4.01(a), provided that, unless the Commitments that are terminated and/or the Loans that are repaid pursuant to preceding clause (ii) are immediately

 

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replaced in full at such time through the addition of new Lenders or the increase of the Commitments and/or the outstanding Loans of existing Lenders (who in each case must specifically consent thereto), then in the case of any action pursuant to preceding clause (ii) the Required Lenders (determined before giving effect to the proposed action) shall specifically consent thereto, provided, further, that in any event the Borrower shall not have the right to replace a Lender, terminate such Lender’s Commitment or repay such Lender’s Loan solely as a result of the exercise of such Lender’s rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 11.13(a), provided, further that such Replacement Lender shall be a bank or financial institution.

 

(c)            The Administrative Agent and the Borrower may amend any Credit Document to correct administrative errors or omissions, or to effect administrative changes that are not adverse to any Lender.  Notwithstanding anything to the contrary contained herein, such amendment shall become effective without any further consent of any other party to such Credit Document.

 

(d)            Notwithstanding any other provision in this Section 11.13, an amendment or waiver which relates to the rights or obligations of the Administrative Agent may not be effected without the consent of the Administrative Agent.

 

11.14   Survival.  All indemnities set forth herein including, without limitation, in Sections 2.08, 2.09, 4.04 and 11.01 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Loans.

 

11.15   Domicile of Loans.  Each Lender may transfer and carry its pro rata portion of the Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender.  Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 11.15 would, at the time of such transfer, result in increased costs under Section 2.08, 2.09 or 4.04 from those being charged by the respective Lender prior to such transfer, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).

 

11.16   Confidentiality.  (a)  Subject to the provisions of clause (b) of this Section 11.16, each Lender agrees that it will not disclose without the prior consent of the Borrower (other than to its employees, auditors, advisors or counsel or to another Lender if the Lender or such Lender’s holding or parent company or board of trustees in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 11.16 to the same extent as such Lender) any information with respect to the Borrower or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document, provided that any Lender may disclose any such information (i) as has become generally available to the public other than by virtue of a breach of this Section 11.16(a) by the respective Lender, (ii) as may be required in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or

 

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elsewhere) or their successors, (iii) as may be required in respect to any summons or subpoena or in connection with any litigation, (iv) in order to comply with any law, order, regulation or ruling applicable to such Lender, (v) to the Administrative Agent or the Security Agent, (vi) to any auditor or professional financial or legal advisor of such Lender employed in the normal course of its business, (vii) to any branch, Affiliate or Subsidiary of such Lender or to the parent company, head office or regional office of such Lender in connection with the transactions contemplated herein and (viii) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or Commitments or any interest therein by such Lender (it being understood that for the purpose of this clause (viii), other than during the continuance of an Event of Default, the Lender shall use commercially reasonable efforts to apprise the Borrower of the potential transferee), provided that such prospective transferee expressly agrees to execute and does execute (including by way of customary “click through” arrangements) a confidentiality agreement and be bound by the confidentiality provisions contained in this Section 11.16.

 

(b)            The Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates any information related to the Borrower or any of its Subsidiaries (including, without limitation, any nonpublic customer information regarding the creditworthiness of the Borrower or its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 11.16 to the same extent as such Lender.

 

11.17    Register.  The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for purposes of this Section 11.17, to maintain a register (the “Register”) on which it will record the Commitments from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment and prepayment in respect of the principal amount of the Loans of each Lender.  Failure to make any such recordation, or any error in such recordation shall not affect the Borrower’s obligations in respect of such Loans.  With respect to any Lender, the transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitments shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitments and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitments and Loans shall remain owing to the transferor.  The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 11.04(b).  Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender.  The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 11.17, except to the extent caused by the Administrative Agent’s own gross negligence, willful misconduct or unlawful acts.

 

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11.18   Judgment Currency.  If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein or under the Notes (the “specified currency”) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent’s New York office on the Business Day preceding that on which final judgment is given.  The obligations of the Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency, such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the specified currency with such other currency; if the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the Borrower.

 

11.19    Language.  All correspondence, including, without limitation, all notices, reports and/or certificates, delivered by any Obligor to the Administrative Agent, the Security Agent or any Lender shall, unless otherwise agreed by the respective recipients thereof, be submitted in the English language or, to the extent the original of such document is not in the English language, such document shall be delivered with a certified English translation thereof.

 

11.20   Waiver of Immunity.  The Borrower, in respect of itself, each other Obligor, its and their process agents, and its and their properties and revenues, hereby irrevocably agrees that, to the extent that the Borrower, any other Obligor or any of its or their properties has or may hereafter acquire any right of immunity from any legal proceedings, whether in the United States, any Acceptable Flag Jurisdiction or elsewhere, to enforce or collect upon the Obligations of the Borrower or any other Obligor related to or arising from the transactions contemplated by any of the Credit Documents, including, without limitation, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, the Borrower, for itself and on behalf of the other Obligors, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the United States, any Acceptable Flag Jurisdiction or elsewhere.

 

11.21    USA PATRIOT Act Notice.  Each Lender hereby notifies each Obligor that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”), it is required to obtain, verify, and record

 

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information that identifies each Obligor, which information includes the name of each Obligor and other “know your customer” information that will allow such Lender to identify each Obligor in accordance with the PATRIOT Act and anti-money laundering rules and regulations, and each Obligor agrees to provide such information from time to time to any Lender.

 

11.22    Severability.  If any provisions of this Agreement or the other Credit Documents is held to be illegal, invalid or unenforceable: (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Credit Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions; provided that the Lenders shall charge no fee in connection with any such amendment.  The invalidity of a provision in a particular jurisdiction shall not invalid or render unenforceable such provision in any other jurisdiction.

 

11.23    Flag Jurisdiction Transfer.  In the event that the Borrower desires to implement a Flag Jurisdiction Transfer with respect to a Collateral Vessel, upon receipt of reasonable advance notice thereof from the Borrower, the Security Agent shall use commercially reasonably efforts to provide, or (as necessary) procure the provision of, all such reasonable assistance as any Obligor may request from time to time in relation to (i) the Flag Jurisdiction Transfer, (ii) the related deregistration of the relevant Collateral Vessel from its previous flag jurisdiction, and (iii) the release and discharge of the related Security Documents; provided that the relevant Obligor shall pay all documented out of pocket costs and expenses reasonably incurred by the Security Agent in connection with provision of such assistance.  Each Lender hereby consents in connection with any Flag Jurisdiction Transfer and subject to the satisfaction of the requirements thereof to be satisfied by the relevant Obligor, to (x) deregister such Collateral Vessel from its previous flag jurisdiction and (y) release and hereby direct the Security Agent to release the relevant Collateral Vessel Mortgage.  Each Lender hereby directs the Security Agent, and the Security Agent agrees to execute and deliver or, at the Borrower’s expense, file such documents and perform other actions reasonably necessary to release the relevant Collateral Vessel Mortgages when and as directed pursuant to this Section 11.23.

 

*     *     *

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

 

	
 
    	
BALTIC   TRADING LIMITED, as the Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John C. Wobensmith
    
	
 
    	
 
    	
Name:    John C. Wobensmith
    
	
 
    	
 
    	
Title:    President
    

 

Signature page to Baltic Trading Limited. Credit Agreement

 

 

	
 
    	
NORDEA   BANK FINLAND PLC, NEW YORK 
    	
 
    
	
 
    	
BRANCH, individually, as Administrative Agent,
    	
 
    
	
 
    	
Bookrunner, Mandated  Lead Arranger,   and  as 
    	
 
    
	
 
    	
Security Agent
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Boesen
    	
 
    
	
 
    	
 
    	
Name:    John Boesen
    	
 
    
	
 
    	
 
    	
Title:    EVP
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Martin Lunder
    	
 
    
	
 
    	
 
    	
Name:    Martin Lunder
    	
 
    
	
 
    	
 
    	
Title:    Senior Vice President
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
SKANDINAVISKA   ENSKILDA BANKEN AB (PUBL), 
    
	
 
    	
as Mandated  Lead Arranger
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mats   Holmström                /s/ Magnus Arve
    	
 
    
	
 
    	
 
    	
Name:   Mats Holmström       Magnus Arve
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

Signature page to Baltic Trading Limited. Credit Agreement

 

 

	
 
    	
NORDEA   BANK FINLAND PLC, NEW YORK 
    	
 
    
	
 
    	
BRANCH,   as Lender
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Boesen
    	
 
    
	
 
    	
 
    	
Name:    John Boesen
    	
 
    
	
 
    	
 
    	
Title:    EVP
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 /s/   Martin Lunder
    	
 
    
	
 
    	
 
    	
Name:    Martin Lunder
    	
 
    
	
 
    	
 
    	
Title:    Senior Vice President
    	
 
    

 

Signature page to Baltic Trading Limited. Credit Agreement

 

 

	
 
    	
SKANDINAVISKA   ENSKILDA BANKEN AB 
    
	
 
    	
(PUBL),   as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mats Holmström
    
	
 
    	
 
    	
Name:    Mats Holmström
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Magnus Arve
    
	
 
    	
 
    	
Name:    Magnus Arve
    
	
 
    	
 
    	
Title:
    

 

Signature page to Baltic Trading Limited. Credit Agreement

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