Document:

ex_361792.htm

Exhibit 4.30

 

 

Private and Confidential

 

 

DATED 26 November 2021

 

 

ANTWERP SHIPPING LTD

 

BUSAN SHIPPING LTD

 

KEELUNG SHIPPING LTD

 

and

 

OAKLAND SHIPPING LTD (1)

 

 

- and -

 

PIRAEUS BANK S.A. (2)

 

 

___________________________________

 

 

FACILITY AGREEMENT

 

in respect of revolving credit facility of

 

up to USD16,500,000

 

____________________________________

 

 

PIRAEUS

 

Index

 

 

 

 

 

	
			Clause

				
			 

				Page
	 	 	 
	
			1

				
			Purpose, definitions and construction

				
			1

			
	
			2

				
			The Commitment and cancellation

				
			17

			
	
			3

				
			Interest and Interest Periods

				
			19

			
	
			4

				
			Repayment and prepayment

				
			22

			
	
			5

				
			Fees and expenses

				
			24

			
	
			6

				
			Payments and taxes; accounts and calculations

				
			26

			
	
			7

				
			Representations and warranties

				
			28

			
	
			8

				
			Undertakings

				
			33

			
	
			9

				
			Conditions

				
			44

			
	
			10

				
			Events of Default

				
			45

			
	
			11

				
			Indemnities

				
			49

			
	
			12

				
			Unlawfulness, increased costs and bail-in

				
			49

			
	
			13

				
			Application of moneys, set off, pro-rata payments and miscellaneous

				
			51

			
	
			14

				
			Accounts

				
			53

			
	
			15

				
			Assignment, transfer and lending office

				
			54

			
	
			16

				
			Notices and other matters

				
			55

			
	
			17

				
			Governing law

				
			57

			
	
			18

				
			Jurisdiction

				
			57

			
	
			19

				
			Borrowers’ obligations

				
			59

			
	
			Schedule 1

				
			Form of Drawdown Notice

				62
	
			Schedule 2

				
			Conditions precedent

				63
	
			Schedule 3

				
			Form of Compliance Certificate

				68
	
			Execution Page

				69

 

 

 

 

 

THIS AGREEMENT dated           November 2021 is made BY and BETWEEN:

 

(1)         ANTWERP SHIPPING LTD, BUSAN SHIPPING LTD, KEELUNG SHIPPING LTD and OAKLAND SHIPPING LTD as joint and several Borrowers; and

 

(2)         PIRAEUS BANK S.A. as Lender.

 

NOW IT IS HEREBY AGREED AS FOLLOWS:

 

Purpose, definitions and construction

 

Purpose

 

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrowers a revolving credit facility in an amount not exceeding sixteen million five hundred thousand Dollars (USD16,500,000) to meet the general corporate needs of the Borrowers and/or the Corporate Guarantor and/or its Subsidiaries, upon and subject to the terms and conditions of this Agreement.

 

Definitions

 

In this Agreement, unless the context otherwise requires:

 

“Advance” means each borrowing of a proportion of the Available Commitment by the Borrowers or (as the context may require) the principal amount of such borrowing;

 

"affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;

 

“Approved Broker” means such second-hand ship sale and purchase broker as the Lender may agree is an Approved Broker for the purposes of this Agreement;

 

“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms;

 

“Available Commitment” means:

 

on the Execution Date, the amount of the Loan Facility as at that date; and

 

thereafter at any relevant time, the lesser of (i) the total undrawn amount of the Loan Facility (as reduced and/or cancelled under this Agreement and/or as may be re-borrowed pursuant to clause 4.2.2) and (ii) the amount which, when added to the Loan and the Existing Loan, would equal 80% of the aggregate Valuation Amounts at that date;

 

“Bail-In Action” means the exercise of any Write-down and Conversion Powers;

 

“Bail-In Legislation” means, in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

 

 

1

 

 

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

 

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

 

“Borrowers” means each of Antwerp Shipping Ltd (“Antwerp”), Busan Shipping Ltd (“Busan”), Keelung Shipping Ltd (“Keelung”) and Oakland Shipping Ltd (“Oakland”), each a company incorporated in the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands, and in the plural means all of them;

 

“Break Costs” means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Lender at any time and from time to time as having been incurred by the Lender in maintaining or funding the Loan or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

 

any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1, or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

 

the Borrowers failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

 

“Casualty Amount" means five hundred thousand Dollars (USD500,000) (or the equivalent in any other currency);

 

“Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

 

“Charter Assignment” means a second priority specific assignment of any Extended Employment Contract required to be executed hereunder by any Owner in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may require in its sole discretion;

 

“Classification” means, in relation to each Mortgaged Vessel, the highest class available for a vessel of her type with the relevant Classification Society;

 

2

 

 

“Classification Society” means, in relation to each Mortgaged Vessel, any classification society which is a member of the International Association of Classification Societies which the Lender shall, at the request of the Borrowers, have agreed in writing shall be treated as the classification society in relation to such Mortgaged Vessel for the purposes of the relevant Ship Security Documents;

 

“Code” means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

 

“Commitment” means sixteen million five hundred thousand Dollars (USD16,500,000) which the Lender is obliged to lend to the Borrowers under this Agreement, as such amount may be reduced and/or cancelled under this Agreement;

 

“Compliance Certificate” means a certificate substantially in the form set out in schedule 3 signed by the chief financial officer of the Corporate Guarantor;

 

“Compulsory Acquisition” means, in respect of a Mortgaged Vessel, requisition for title or other compulsory acquisition including, if that Mortgaged Vessel is not released therefrom within the Relevant Period, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) by or on behalf of any Government Entity or other competent authority or by pirates, hijackers, terrorists or similar persons; "Relevant Period" means for the purposes of this definition of Compulsory Acquisition either (i) one (1) calendar month or, (ii) in respect of pirates, hijackers, terrorists or similar persons, if relevant underwriters confirm in writing (in terms satisfactory to the Lender) prior to the end of such one (1) month period that such capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation will be fully covered by the Owner’s relevant insurances, the shorter of twelve (12) months after the date upon which the relevant incident occurred and such period at the end of which the relevant cover expires;

 

“Corporate Guarantee” means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrowers under this Agreement required to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may require;

 

“Corporate Guarantor” means Euroseas Ltd., a corporation listed on NASDAQ and incorporated in the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

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

 

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

 

3

 

 

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

 

“Drawdown Notice” means, in relation to each Advance, a notice substantially in the form of schedule 1;

 

“Drawdown Period” means the period commencing on the Execution Date and ending on the earliest of (i) the date falling one month prior to the Maturity Date and (ii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

 

“Earnings” means, in respect of a Vessel, all moneys whatsoever from time to time due or payable to its Owner during the Facility Period arising out of the use or operation of that Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to that Owner in event of requisition of that Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) of any charterparty or other contract (including any contract of affreightment) for the employment of that Vessel (including any proceeds under any loss of hire insurance, if applicable);

 

“Earnings Account” means, in respect of each Borrower, an interest bearing USD current account opened or (as the context may require) to be opened by such Borrower with the Lender and includes any sub-accounts thereof and any other account designated in writing by the Lender to be an Earnings Account for the purposes of this Agreement, and in the plural means all of them;

 

“Earnings Account Pledge” means, in respect of each Earnings Account, a second priority pledge required to be executed hereunder between the Borrower which is the owner thereof and the Lender in respect of such Borrower’s Earnings Account in such form as the Lender may require, and in the plural means all of them;

 

“EIAPP Certificate” means the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to a Vessel;

 

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention having a similar effect, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

 

“Environmental Affiliate” means any agent or employee of any Borrower, the Manager or any other Group Member or any other person having a contractual relationship with any Borrower, the Manager or any other Group Member in connection with any Mortgaged Vessel or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from any Mortgaged Vessel;

 

4

 

 

“Environmental Approvals” means all authorisations, consents, licences, permits, exemptions or other approvals required under applicable Environmental Laws;

 

“Environmental Claim” means (i) any claim by, or directive from, any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, “claim” shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

 

“Environmental Incident” means, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from any Relevant Ship; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship which involves collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, where the Relevant Ship, the Manager and/or the relevant Owner and/or the relevant Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship and where such Relevant Ship is actually or potentially liable to be arrested as a result and/or where the Manager and/or the relevant Owner and/or other Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable;

 

“Environmental Laws” means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the USA);

 

“Environmentally Sensitive Material” means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

 

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

 

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

 

“Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

 

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

 

“Existing Loan Agreement” means a loan agreement dated 8 November 2019 (as amended by a supplemental agreement dated 16 July 2020) made between the Borrowers as joint and several borrowers and the Lender as lender in respect of a loan of up to USD32,000,000;

 

5

 

 

“Extended Employment Contract” means, in respect of a Mortgaged Vessel and at any relevant time, any bareboat charterparty (irrespective of the duration of such charterparty) or any time charterparty or other contract of employment of such ship (including the entry of a Vessel in any pool) which has a remaining tenor exceeding nine (9) months (including any options to renew or extend such tenor) at such time;

 

“Facility Period” means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising, actual or contingent, have been irrevocably paid, performed and/or complied with;

 

“FATCA” means:

 

sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

 

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

 

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

 

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

 

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

 

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

 

“Flag State” means in respect of each Vessel, the country, which is acceptable to the Lender, on whose flag such Vessel is or is to be registered in the ownership of her Owner;

 

“General Assignment” means, in respect of each Mortgaged Vessel, the second priority deed of assignment of its earnings, insurances and requisition compensation executed or to be executed by the relevant Owner in favour of the Lender in such form as the Lender may require, and in the plural means all of them;

 

“Government Entity” means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

 

6

 

 

“Group” means, at any relevant time, the Corporate Guarantor and its Subsidiaries (including the Borrowers);

 

“Group Member” means any member of the Group;

 

“HMT” means Her Majesty’s Treasury;

 

"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary;

 

“IAPP Certificate” means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

 

“Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

 

“Insurances” means, in respect of a Vessel, all policies and contracts of insurance (which expression includes all entries of that Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of its Owner (whether in the sole name of that Owner, or in the joint names of that Owner and the Mortgagee or otherwise) in respect of that Vessel or otherwise howsoever in connection with that Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

 

“Interest Payment Date” means the last day of an Interest Period and, if an Interest Period is longer than three (3) months, the date falling at the end of each successive period of three (3) months from the start of such Interest Period;

 

“Interest Period” means each period for the calculation of interest in respect of the Loan ascertained in accordance with clauses 3.2 and 3.3;

 

“ISM Code” means in relation to its application to the Borrowers, the Vessels and their operation:

 

‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 December 1993 and incorporated on 19 May 1994 into Chapter IX of the International Convention for Safety of Life at Sea 1974 (SOLAS 1974); and

 

all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including, without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 December 1995,

 

7

 

 

as the same may be amended, supplemented or replaced from time to time;

 

“ISM Code Documentation” means, in relation to a Mortgaged Vessel, the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to that Mortgaged Vessel within the periods specified by the ISM Code;

 

“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

 

“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulations issued pursuant thereto;

 

“ISSC” means an International Ship Security Certificate issued in respect of a Mortgaged Vessel pursuant to the ISPS Code;

 

“Latest Accounts” means, in respect of any fiscal year of the Corporate Guarantor, the latest annual audited consolidated accounts of the Corporate Guarantor;

 

“Lender” means Piraeus Bank S.A. having its registered office at 4 Amerikis Street, 105 64 Athens, Greece, acting through its branch at 170 Alexandras Ave., 115 21 Athens, Greece (fax no. +30 210 373 9783);

 

“LIBOR” means, in relation to the Loan or any part of the Loan:

 

the applicable Screen Rate at or about 11.45 a.m. (London time) on the Quotation Day for Dollars and for a period equal in length to the Interest Period then applicable to the Loan or that part of the Loan; or

 

in case of Screen Rate Replacement Event, the Replacement Benchmark on the Quotation Day for Dollars and for a period equal in length to the Interest Period,

 

and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;

 

“Lightweight” means, in respect of each Mortgaged Vessel, the lightweight tonnage of that Mortgaged Vessel as provided in (i) that Mortgaged Vessel’s capacity plan or (ii) at the Lender’s discretion that Mortgaged Vessel’s trim and stability booklet;

 

“Loan” means the aggregate principal amount in respect of the Loan Facility owing to the Lender under this Agreement at any relevant time;

 

“Loan Facility” means the revolving credit facility provided by the Lender on the terms and subject to the conditions of this Agreement in an amount equal to the least of (i) sixteen million five hundred thousand Dollars (USD16,500,000) and (ii) an amount equal to, when aggregated with the amount of the Existing Loan as at the Execution Date, 50% of the aggregate Valuation Amounts of the Vessels (to be determined no more than 20 days prior to the Execution Date), as such amount may be reduced in accordance with clause 2.5 and the other terms of this Agreement;

 

8

 

 

“Management Agreement” means, in respect of each Mortgaged Vessel, the agreement between the relevant Owner and the Manager, in a form approved by the Lender, and in the plural means all of them;

 

“Manager” means Eurobulk Ltd., a corporation incorporated in Liberia with its registered address at 80 Broad Street, Monrovia, Liberia and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, or any other commercial and/or technical manager appointed by the Borrower, with the prior written consent of the Lender, as the manager of the Vessel;

 

“Manager's Undertaking” means, in respect of each Mortgaged Vessel, the second priority undertaking and assignment of insurances required to be executed hereunder by the Manager in favour of the Lender in such form as the Lender may require and in the plural means all of them;

 

“Margin” means 2.60% (two point six per cent) per annum;

 

“Material Adverse Effect” means a material adverse effect on (i) the Lender’s rights under, or the security provided by, any Security Document, (ii) the ability of any Security Party to perform or comply with any of its obligations under any Security Document to which it is a party or (iii) the value or nature of the financial condition of any Security Party (other than the Manager);

 

“Maturity Date” means the date falling 48 months after the Execution Date;

 

“MII & MAP Policy” means a mortgagee’s interest and (if required by the Lender) pollution risks insurance policy (including, but not limited to, additional perils (pollution) cover) in respect of each Mortgaged Vessel to be effected by the Lender on or before the Drawdown Date to cover the Mortgaged Vessels as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Lender in its sole discretion, insuring a sum of at least:

 

one hundred and ten per cent (110%) of

 

the aggregate of the Loan and the Existing Loan; or

 

if the Lender has effected a separate cover under the existing Loan Agreement, the Loan,

 

in respect of mortgagee’s interest insurance cover; and

 

one hundred and ten per cent (110%) of:

 

the aggregate of the Loan and the Existing Loan; or

 

if the Lender has effected a separate cover under the existing Loan Agreement, the Loan,

 

in respect of additional perils (pollution) cover;

 

9

 

 

“Money Laundering” has the meaning given to it in Article 1 of the Directive (EU) 2015/849 of the European Parliament and of the Council of the European Union of 20 May 2015;

 

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

 

“Mortgage” means:

 

in relation to each of Vessel A and Vessel B, the second preferred Marshall Islands mortgage of such Vessel required to be executed hereunder by the Owner thereof; and

 

in relation to each of Vessel C and Vessel D, the second priority Cypriot statutory mortgage and deed of covenant collateral thereto required to be executed hereunder by the Owner thereof,

 

each of which to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

 

“Mortgaged Vessel” means, at any relevant time, a Vessel which is at such time subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Vessel shall, for the purposes of this Agreement, be regarded as a Mortgaged Vessel as from the date on which the Mortgage of that Vessel has been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required to be paid to the Lender pursuant to clause 4.3 or 4.4 following the Total Loss or sale respectively of such Vessel and (ii) the end of the Facility Period;

 

“NASDAQ” means the stock exchange run by the US National Association of Securities Dealers with the main exchange located in the United States of America, originally an acronym for the National Association of Securities Dealers Automatic Quotations;

 

“Net Worth” means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

 

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

 

“Owner” means, in respect of each Vessel, the Borrower which is the owner thereof;

 

“Permitted Encumbrance” means any Encumbrance in favour of the Lender created pursuant to the Security Documents or the Prior Security Documents; any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrowers or any of them are actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

 

10

 

 

“Permitted Liens” means any lien on any Mortgaged Vessel for master's, officer's or crew's wages outstanding in the ordinary course of trading, any lien for salvage and any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Lender) exceeding the Casualty Amount any lien arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue (and while such obligations are not overdue) or which are being contested in good faith by bona fide and appropriate proceedings (and for the payment of which adequate, freely-available reserves have been provided) unless such proceedings or the continued existence of such lien makes likely the sale, forfeiture or loss of, or of any interest in, any Mortgaged Vessel, and liens securing liabilities for Taxes against which adequate, freely-available reserves have been provided;

 

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

 

“Prepayment Ratio” means, in respect of the sale or Total Loss of a Mortgaged Vessel, the Valuation Amount of such Mortgaged Vessel immediately prior to such sale or Total Loss divided by the Security Value immediately prior to such sale or Total Loss;

 

“Prior Security Document” means any Security Document as defined as such in the Existing Loan Agreement;

 

“Proceedings” means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

 

“Quotation Day” means, in relation to any period for which an interest rate is to be determined, the date falling two (2) Banking Days before the first day of that period unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days);

 

“Reduction Date” means any date on which the amount of the Loan Facility is reduced under the provisions of clause 2.5;

 

“Registry” means, in relation to each Vessel, the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register such Vessel, the relevant Owner’s title thereto and the relevant Mortgage under the laws and flag of the Flag State;

 

11

 

 

“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

 

“Relevant Ship” means each of the Mortgaged Vessels and any other ship from time to time (whether before or after the date of this Agreement) owned by any Group Member;

 

“Replacement Benchmark” means a benchmark rate which is:

 

formally designated, nominated or recommended as the replacement for a Screen Rate by:

 

the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or

 

any Relevant Nominating Body,

 

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Benchmark" will be the replacement under paragraph (ii) above; or

 

in the opinion of the Lender and the Borrower, generally accepted in the international loan markets as the appropriate successor to a Screen Rate; or

 

in the opinion of the Lender and the Borrower, an appropriate successor to a Screen Rate;

 

“Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrowers lawfully to borrow the Loan and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

 

“Required Security Amount” means the amount in USD (as certified by the Lender) which is at any relevant time one hundred and twenty five per cent (125%) of the aggregate of the Loan and the Existing Loan;

 

“Requisition Compensation” means, in respect of a Vessel, all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of that Vessel;

 

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;

 

12

 

 

“Restricted Person” means a person that is:

 

listed on, or directly or indirectly owned or controlled (as such terms are defined by the relevant Sanctions Authority) by a person listed on, any Sanctions List;

 

located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of, a country or territory that is the target of country or territory -wide Sanctions (“Sanctions Restricted Jurisdiction”); or

 

otherwise a target of Sanctions;

 

“Safekeeping Securities Account” means the account opened or to be opened by the Lender with the Shipping Branch located at 137-139 Filonos Street, Piraeus, Greece Lending Office for the safekeeping of the shares held by the Lender in the issued share capital of each Borrower and which shall be pledged in favour of the Lender pursuant to the Shares Pledges;

 

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

 

the United States government;

 

the United Nations;

 

the European Union or any of its Member States;

 

the United Kingdom;

 

any country to which any Security Party or any other member of the Group or any affiliate of any of them is bound; or

 

the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Sanctions Authorities.

 

“Sanctions Authorities” means together, the United States Department of State, HMT and OFAC and in the singular means each of them;

 

“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets in the UK” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

 

“Sanctions Restricted Jurisdiction” means a country or territory that is the target of country or territory -wide Sanctions;

 

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower;

 

13

 

 

“Screen Rate Replacement Event” means, in relation to a Screen Rate:

 

the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrower, materially changed;

 

(i)         

 

the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

 

information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

 

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

 

the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

 

in the opinion of the Lender and the Borrower, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement;

 

“Security Documents” means this Agreement, the Mortgages, the Corporate Guarantee, the General Assignments, any Charter Assignments, the Earnings Account Pledges, the Shares Pledges, the Manager’s Undertakings, any Tripartite Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrowers pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

 

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

 

“Security Value” means the amount in USD (as certified by the Lender) which is, at any relevant time, the aggregate of (a) the Valuation Amounts of the Mortgaged Vessels, as most recently determined in accordance with clause 8.2.2 hereof and (b) the net realizable market value of any additional security for the time being actually provided to the Lender pursuant to clause 8.2.1(b), it being agreed however that in case of additional security in the form of cash in Dollars, the same will be valued on a Dollar for Dollar basis;

 

14

 

 

“Shareholder” means Eurocon Ltd., a corporation incorporated in the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Shares Pledge” means the second priority pledge of the shares of and in each Borrower to be executed by the Shareholder in favour of the Lender, to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

 

“Ship Security Documents” means, in relation to each Mortgaged Vessel, the relevant Mortgage, the relevant General Assignment, any relevant Charter Assignment, any relevant Tripartite Deed and the relevant Manager’s Undertaking;

 

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

 

“Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly);

 

“Total Assets” and “Total Liabilities” mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by the Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with International Financial Reporting Standards or US GAAP provided that the value of any ship shall be the market value thereof calculated in accordance with clause 8.2.5(i) and not as set out in the Latest Accounts;

 

“Total Loss” means, in relation to a Mortgaged Vessel:

 

the actual, constructive, compromised or arranged total loss of such Mortgaged Vessel; or

 

Compulsory Acquisition; or

 

any hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Mortgaged Vessel not falling within the definition of Compulsory Acquisition, unless such Mortgaged Vessel be released and restored to the relevant Owner within sixty (60) days after such incident;

 

“Tripartite Deed” means, if a Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer’s interest in the insurances of that Vessel, required to be executed by Borrower who is the owner thereof and the relevant charterer in favour of the Lender in such form as the Lender may require in its sole discretion and the relevant charterer may agree;

 

15

 

 

“Underlying Documents” means, together, any Extended Employment Contracts and the Management Agreements;

 

“Unlawfulness” means any event or circumstance which is the subject of a notification by the Lender to the Borrowers under clause 12.1;

 

“USA” means the United States of America;

 

"US Tax Obligor" means:

 

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

 

(b)         a Security Party some or all of whose payments under the Security Documents          are from sources within the USA for US federal income tax purposes;

 

“Valuation Amount” means, in respect of each Vessel, the value thereof most recently determined under clause 8.2.2;

 

“Vessel A” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Busan under the Marshall Islands flag with the name “SYNERGY BUSAN”;

 

“Vessel B” means the 2008-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Antwerp under the Marshall Islands flag with the name “SYNERGY ANTWERP”;

 

“Vessel C” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Oakland under the Cypriot flag with the name “SYNERGY OAKLAND”;

 

“Vessel D” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Keelung under the Cypriot flag with the name “SYNERGY KEELUNG”;

 

“Vessels” means, together, Vessel A, Vessel B, Vessel C and Vessel D; and

 

”Write-down and Conversion Powers” means, in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule.

 

Construction

 

In this Agreement, unless the context otherwise requires:

 

clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

 

references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

 

16

 

 

references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated;

 

references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority;

 

references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to the Lender shall also include a Transferee Lender;

 

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

 

references to a time of day are, unless otherwise stated, to Athens time;

 

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

 

references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

 

references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

 

a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrowers except for manifest error;

 

if any document, term or other matter or thing is required to be approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated;

 

time shall be of the essence in respect of all obligations whatsoever of the Borrowers under this Agreement, howsoever and whensoever arising;

 

and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible;

 

a Default and an Event of Default) is "continuing" if it has not been remedied or waived.

 

17

 

 

References to currencies

 

Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

 

Contracts (Rights of Third Parties Act) 1999

 

Except for clause 18, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

 

The Commitment and cancellation

 

Agreement to lend

 

The Lender, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrowers upon and subject to the terms of this Agreement, the Loan Facility in one or multiple Advances for the purposes stated in clause 1.1, subject to the terms and conditions contained in this Agreement.

 

Drawdown

 

Subject to the terms and conditions of this Agreement, each Advance shall be made available to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 14:00 p.m. on the second Banking Day before the date, which shall be a Banking Day falling within the Drawdown Period, on which the Borrowers propose that Advance is made available.

 

The Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall, subject as provided in clause 3.5, be irrevocable.

 

Limitation and application of Advances

 

The amount of the Loan shall not exceed the amount of the Loan Facility.

 

The principal amount of any Advance specified in the Drawdown Notice for borrowing on a Drawdown Date shall, subject to the terms of this Agreement, be:

 

not more than the amount of the Available Commitment as at the relevant Drawdown Date; and

 

not less than USD100,000 but be an integral multiple of USD100,000.

 

The Security Value shall remain equal to, or in excess of, the Required Security Amount immediately after the borrowing of any Advance.

 

Each Advance shall be paid forthwith upon drawdown to such account as the Borrowers shall stipulate in the relevant Drawdown Notice.

 

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Availability

 

The Borrowers acknowledge that payment of an Advance referred to in clause 2.3.2 to the account or accounts specified in the Drawdown Notice shall satisfy the obligation of the Lender to lend that Advance to the Borrowers under this Agreement.

 

Reduction of Facility

 

Subject to the terms of this Agreement, the Loan Facility shall be reduced by sixteen (16) consecutive reductions, the first four (4) in the amount of one million five hundred thousand Dollars (USD1,500,000) each, the next eleven (11) in the amount of five hundred and sixty thousand (USD560,000) each and the sixteenth (16th) in the amount of four million three hundred and forty thousand (USD4,340,000), with the first such reduction taking place on the date falling three months after the Execution Date and subsequent reductions taking place at quarterly intervals thereafter, with the final reduction taking place on the Maturity Date.

 

Cancellation

 

The Borrowers may at any time during the Facility Period by notice to the Lender (effective only on actual receipt) cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, all or part of the undrawn Commitment or the Loan Facility. Any such notice of cancellation, once given, shall be irrevocable and the Commitment or Loan Facility shall be reduced accordingly.

 

The Borrowers may also at any time during the Facility Period by notice to the Lender (effective only on actual receipt) prepay and/or cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, the whole but not part only, but without prejudice to the Borrowers’ obligations under clauses 3.5, 6.6 and 12, of the Commitment (if any). Upon any notice of such prepayment and cancellation being given, the Commitment shall be reduced to zero, the Borrowers shall be obliged to prepay the Loan and the Lender's related costs (including but not limited to Break Costs, if any) on such date, but always without any premium or penalty if such prepayment is effected on the next Interest Payment Date, and the Lender shall be under no obligation to make available the Loan or any further Advances.

 

Consequence of reduction or cancellation of Facility

 

Whenever under the terms of this Agreement the Loan Facility is reduced and/or any part thereof is cancelled the Commitment shall be reduced by the amount of such reduction or cancellation and the reductions to be made on the Reduction Dates thereafter pursuant to clause 2.5 shall be reduced pro rata by an amount equal, in aggregate, to the amount of such reduction or cancellation.

 

Use of proceeds

 

Without prejudice to the Borrowers’ obligations under clause 8.1.4, the Lender shall not have any responsibility for the application of the proceeds of any Advance or any part thereof by the Borrowers.

 

19

 

 

The Borrowers shall not, and shall procure that each Security Party and each other Group Member and any Subsidiary of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in a Borrower or any other Security Party being in breach of any Sanctions or becoming a Restricted Person.

 

It is prohibited to use any part of the proceeds of the Loan for the purposes of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (τίτλους υβριδικών κεφαλαίων) of the Lender or other banks and/or financial institutions.

 

Interest and Interest Periods

 

Normal interest rate

 

The Borrowers must pay interest on each Advance and the Loan in respect of each Interest Period relating thereto on each Interest Payment Date at the rate per annum determined by the Lender to be the aggregate of (a) the Margin in respect thereof and (b) LIBOR (or any other applicable rate in accordance with the terms of this Agreement) for such period.

 

Selection of Interest Periods

 

Subject to clause 3.3, the Borrowers may by notice received by the Lender not later than 10:00 a.m. on the second Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1), three (3) or six (6) months or such other period as the Borrowers may select and the Lender may agree.

 

Determination of Interest Periods

 

Subject to clause 3.3.1 every Interest Period shall be of the duration specified by the Borrowers pursuant to clause 3.2 but so that:

 

the first Interest Period in respect of the first Advance to be made hereunder shall start on the Drawdown Date in respect thereof, and each subsequent Interest Period relating to the first Advance shall start the day falling the day after the last day of the previous Interest Period;

 

the first Interest Period in respect of each subsequent Advance to be made hereunder shall commence on its Drawdown Date and terminate simultaneously with the Interest Period which is current for the Loan as at the Drawdown Date in respect of the relevant Advance (from which date such Advance shall be consolidated with the rest of the Loan, which shall be treated as a single Advance for the purposes hereof) and each subsequent Interest Period shall start the day falling the day after the last day of the previous Interest Period;

 

if any Interest Period would otherwise overrun a relevant Reduction Date, then in the case of the last Interest Period, such Interest Period shall end on the Maturity Date, and in the case of any other Interest Period, the Loan shall be divided into parts so that there is one part in the amount which is to be reduced on such Reduction Date and having an Interest Period ending on the relevant Reduction Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3;

 

20

 

 

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

 

Default interest

 

If the Borrowers fail to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents, the Borrowers must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Lender pursuant to this clause 3.4. The period starting on such due date and ending on such date of payment shall be divided into successive periods selected by the Lender each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods. Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Lender and on the day on which all amounts in respect of which interest is being paid under this clause are paid, and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is an amount of principal which became due and payable by reason of a declaration by the Lender under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.5.1, the Lender is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Lender compounded at such intervals as the Lender selects.

 

Market disruption; non-availability

 

Market Disruption Event: If and whenever, at any time prior to the commencement of any Interest Period, the Lender (in its discretion) shall have determined (which determination shall be conclusive in the absence of manifest error) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Lender shall forthwith give notice thereof (a “Determination Notice”) to the Borrowers and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of

 

21

 

 

the Margin; and

 

the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan (or the relevant part thereof) from whatever source it may select.

 

Suspension of drawdown: If the Determination Notice is given before the Commitment (or a part thereof) is advanced, the Lender's obligation to make the Commitment (or a part thereof) available shall be suspended while the circumstances referred to in the Determination Notice continue.

 

Meaning of “Market Disruption Event”: In this Agreement “Market Disruption Event” means:

 

at or about noon on the Quotation Day for the relevant Interest Period no Screen Rate is available for Dollars or Replacement Benchmark; and/or

 

before close of business on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that the cost to it of obtaining matching deposits in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of the Screen Rate or, as the case may be, the Replacement Benchmark for that Interest Period; and/or

 

before close of business on the Quotation Day for the relevant Interest Period, deposits in Dollars are not available to the Lender in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period.

 

Alternative basis of interest or funding

 

If a Market Disruption Event occurs and the Lender or the Borrowers so require, the Lender and the Borrowers shall enter into negotiations (for a period of not more than fifteen (15) days (the “Negotiation Period”)) after the giving of the relevant Determination Notice with a view to agreeing a substitute basis for determining the rate of interest.

 

Any alternative basis agreed pursuant to paragraph (i) above shall be binding on the Lender and all Security Parties.

 

Alternative basis of interest in absence of agreement: If the Lender and the Borrowers will not enter into negotiations as provided in clause 3.5.4(a) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set the following Interest Period and an interest rate representing the cost of funding of the Lender in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period; if the relevant circumstances are continuing at the end of the Interest Period so set by the Lender, the Lender shall continue to set the following Interest Period and an interest rate representing its cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period.

 

22

 

 

Notice of prepayment: If the Borrowers do not agree with an interest rate set by the Lender under clause 3.5.5 (Alternative basis of interest in absence of agreement), the Borrowers may give the Lender not less than 5 Banking Days’ notice of its intention to prepay the Loan at the end of the interest period set by the Lender.

 

Prepayment; termination of Commitment: A notice under clause 3.5.6 (Notice of prepayment) shall be irrevocable; and on the last Banking Day of the interest period set by the Lender the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the balance of all other amounts payable under this Agreement and the other Security Documents or, if the Commitment has not been advanced, the Commitment shall be reduced to zero and the Loan shall not be made to the Borrowers under this Agreement thereafter.

 

Application of prepayment: The provisions of clause 4 (Repayment and Prepayment) shall apply in relation to the prepayment made hereunder.

 

Replacement of Screen Rate

 

If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

 

providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate ; and

 

aligning any provision of any Security Document to the use of that Replacement Benchmark;

 

enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

 

implementing market conventions applicable to that Replacement Benchmark;

 

providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

 

adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party hereto to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

 

may be made with the consent of the Lender and the Borrowers.

 

23

 

 

Interest Rate Swaps

 

The Borrowers may not enter into any interest hedging arrangements without the prior written consent of the Lender.

 

Repayment and prepayment

 

Repayment

 

If at any time the amount of the Loan exceeds the amount of the Loan Facility then the Borrower shall forthwith prepay the amount of such excess, together with any other amount payable in respect of such excess.

 

The Borrowers shall on the Maturity Date also pay to the Lender all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents.

 

Voluntary prepayment

 

Subject to clauses 4.3, 4.4, 4.5 and 4.6, the Borrowers may, subject to having given ten (10) days’ prior written notice thereof to the Lender, prepay any specified amount (such part being in an amount of one hundred thousand Dollars (USD 100,000) or any larger sum which is an integral multiple of such amount) of the Loan on any relevant Interest Payment Date without premium or penalty.

 

Subject as otherwise provided in this Agreement, amounts prepaid in respect of the Loan pursuant to this clause 4.2 may be re-borrowed.

 

Mandatory Prepayment/Reduction on Total Loss

 

On the date falling one hundred and eighty (180) days after that on which a Mortgaged Vessel became a Total Loss or, if earlier, on the date upon which the relevant insurance proceeds are, or Requisition Compensation is, received by the Owner thereof (or the Lender pursuant to the Security Documents) the Loan Facility shall be reduced by an amount equal to the greater of:

 

the Loan Facility on the date on which such reduction is to be made multiplied by the Prepayment Ratio; and

 

such amount as would be required to ensure that, immediately following such reduction, the Security Value of the remaining Mortgaged Vessels will equal or exceed the Required Security Amount,

 

and, if the Loan thereafter exceeds such reduced amount of the Loan Facility, then the Borrowers shall forthwith prepay the amount of such excess.

 

Interpretation

 

For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:

 

24

 

 

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

 

in the case of a constructive total loss of a Mortgaged Vessel, upon the date and at the time notice of abandonment of such Mortgaged Vessel is given to the then insurers of such Mortgaged Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

 

in the case of a compromised or arranged total loss of a Mortgaged Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of such Mortgaged Vessel;

 

in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

 

in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Mortgaged Vessel (other than within the definition of Compulsory Acquisition) by any Government Entity, or by persons allegedly acting or purporting to act on behalf of any Government Entity, which deprives its Owner of the use of that Mortgaged Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant incident occurred.

 

Mandatory prepayment on sale of Mortgaged Vessel

 

On the date of completion of the sale or transfer of ownership of a Mortgaged Vessel the Loan Facility shall be reduced by an amount equal to the greater of:

 

the Loan Facility on the date on which such reduction is to be made multiplied by the Prepayment Ratio; and

 

such amount as would be required to ensure that, immediately following such reduction, the Security Value of the remaining Mortgaged Vessels will equal or exceed the Required Security Amount,

 

and, if the Loan thereafter exceeds such reduced amount of the Loan Facility, then the Borrowers shall forthwith prepay the amount of such excess.

 

Amounts payable on prepayment

 

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

 

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

 

any additional amount payable under clauses 3.5, 6.6 or 12.2; and

 

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all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Security Documents including, without limitation any Break Costs and, if the whole Loan is being prepaid, any accrued commitment commission payable under clause 5.2.

 

Notice of prepayment; reduction Facility

 

Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.

 

Upon reduction of the Loan Facility pursuant to clauses 4.3 and 4.4 the amount of each quarterly reduction of the Loan Facility under clause 2.5 shall be reduced pro rata in an amount equal in aggregate to the reduction of the Loan Facility under clauses 4.3 and 4.4.

 

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

 

Any reduction or cancellation of the Loan Facility under this clause 4 (other than under clause 4.2) shall be permanent and irrevocable.

 

Fees and expenses

 

Arrangement fee

 

The Borrower agrees to pay to the Lender on the Execution Date a non-refundable arrangement fee of USD115,500.

 

Commitment fee

 

The Borrower shall pay to the Lender a fee computed at the rate of 0.50% (zero point five per cent.) per annum on the Available Commitment from time to time during the Drawdown Period.

 

The accrued commitment fee is payable on the last day of each successive period of three Months (beginning on the Execution Date) which ends during the Drawdown Period, on the last day of the Drawdown Period and, if cancelled, on the cancelled amount of the Available Commitment at the time the cancellation is effective,

 

Provided that, for sake of clarification, any commitment fee payable on any part of the Available Commitment representing an amount which was prepaid and became available for re-borrowing pursuant to clause 4.2.2 is payable on (a) the last day of each successive period of three Months (beginning on the date on which such amount was prepaid) which ends during the Drawdown Period and (b) on the earlier of (i) the last day of the Drawdown Period and (ii) in respect any amount prepaid pursuant to clause 4.2.2 which the Borrowers confirm in writing to the Lender that they do not wish to exercise their right to re-borrow, thereby cancelling such part of the Available Commitment, the date such cancellation is effective and no commitment fee shall be payable on the part of the Available Commitment so cancelled.

 

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Expenses

 

The Borrowers agree to reimburse the Lender on a full indemnity basis within ten (10) days of demand all reasonable expenses and/or disbursements whatsoever (including without limitation legal, printing and out of pocket expenses) certified by the Lender as having been incurred by them from time to time:

 

in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any contemplated or actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees) (but excluding any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under the Security Documents);

 

in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Lender’s rights thereunder or any action proposed or taken following the occurrence of a Default or otherwise in respect of the moneys owing under any of the Security Documents; and

 

in connection with obtaining a written report from a maritime insurance consultant or broker acceptable to the Lender in relation to the Insurances of each Mortgaged Vessel (which the Lender may obtain not more than once a year, and at any time when there has been a change of insurer or terms of cover for any Mortgaged Vessel, other than in respect of the insured value of that Mortgaged Vessel),

 

together with interest at the rate referred to in clause 3.4 from the date on which reimbursement of such expenses and/or disbursements were due following demand to the date of payment (as well after as before judgment).

 

Value added tax

 

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

 

Stamp and other duties

 

The Borrowers must pay all stamp, documentary, registration or other like duties or taxes, but excluding any FATCA Deduction (except for any such Taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under any of the Security Documents) (including any duties or taxes payable by the Lender) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loan and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.

 

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Payments and taxes; accounts and calculations

 

No set-off or counterclaim

 

All payments to be made by any Borrower under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am (London time) on the due date in freely available funds to such account at the Lender and in such place as the Lender may from time to time specify for this purpose.

 

Payment by the Lender

 

All sums to be advanced by the Lender to the Borrowers under this Agreement shall be remitted in USD on the Drawdown Date to the account specified in the Drawdown Notice.

 

Non-Banking Days

 

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

 

Calculations

 

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

 

Currency of account

 

If any sum due from a Borrower under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against such Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrowers undertake to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from a Borrower under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

 

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Grossing-up for Taxes - by the Borrowers

 

If at any time a Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or otherwise from any payment due under any of the Security Documents for the account of the Lender or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from such Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrowers must indemnify the Lender against any losses or costs incurred by it by reason of any failure of a Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

 

6.7         Claw back of Tax benefit

 

If, following any such deduction or withholding as is referred to in clause 6.6 from any payment by a Borrower, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, and to the extent that it can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the relevant Borrower with such amount as Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by such Borrower as aforesaid. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the Lender to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this clause 6.7, be entitled to enquire about the Lender’s tax affairs.

 

Loan account

 

The Lender shall maintain, in accordance with its usual practice, an account or accounts (as the Lender may deem necessary) evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Lender shall maintain a control account or accounts (as the Lender may deem necessary) showing the Loan and other sums owing by the Borrowers under the Security Documents and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrowers under the Security Documents.

 

Partial payments

 

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

 

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first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

 

secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

 

thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

 

fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

 

fifthly, in or towards payment to the Lender of any due but unpaid principal in respect of the Loan; and

 

sixthly, in or towards payment to the Lender, on a pro rata basis, of any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid.

 

The order of application set out in clauses 6.9.1 to 6.9.6 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

 

Representations and warranties

 

Continuing representations and warranties

 

Each Borrower represents and warrants to the Lender that:

 

Due incorporation

 

each of the corporate Security Parties is duly incorporated, validly existing and in good standing under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own its respective property and other assets, to which it has unencumbered legal and beneficial title except as disclosed to the Lender, and the shares of the Borrower are in registered form;

 

Corporate power

 

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the Security Documents to which it is a party; all necessary corporate, shareholder (if applicable) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrowers to borrow or any other Security Party to howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loan;

 

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Binding obligations

 

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

 

No conflict with other obligations

 

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party or other member of the Group is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any Security Party or other member of the Group is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any Security Party or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties, it being always understood that the rights of the Lender under the Prior Security Documents will always have preference;

 

No default

 

no Event of Default has occurred;

 

No litigation or judgments

 

no Proceedings are current, pending or threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Security Parties under the Security Documents to which they are a party;

 

No filings required

 

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

 

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Required Authorisations and legal compliance

 

all Required Authorisations have been obtained or effected or waived by the person requiring the same and, to the extent no such waiver exists, are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation (including all such as relate to Money Laundering) to which such Security Party is subject;

 

Choice of law

 

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages and the Earnings Account Pledges), the choice of the law of the Flag State to govern the Mortgages, the choice of Greek law to govern the Earnings Account Pledges and the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

 

No immunity

 

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

 

Financial statements correct and complete

 

the latest audited consolidated accounts of the Corporate Guarantor in respect of the relevant financial year as delivered to the Lender present or will present fairly and accurately the consolidated financial position of the Corporate Guarantor as at the date thereof and the results of the operations of the Corporate Guarantor and, as at such date, the Corporate Guarantor does not have any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

 

Pari passu

 

the obligations of the Borrowers under this Agreement are direct, general and unconditional obligations of the Borrowers and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrowers except for obligations incurred under the Prior Security Documents or obligations which are mandatorily preferred by operation of law and not by contract;

 

Information

 

all information, whatsoever provided by any Security Party to the Lender in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading in any (in the reasonable opinion of the Lender) material respect;

 

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No withholding Taxes

 

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

 

No Default under Underlying Documents

 

except as disclosed in writing by the Borrowers to the Lender, no Security Party is in material default of any of its obligations under any relevant Underlying Document;

 

Use of proceeds

 

the Borrowers shall apply the Advances only for the purposes specified in clause 2.1;

 

Copies true and complete

 

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

 

Ownership of Borrowers

 

all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

 

No Indebtedness

 

no Borrower has incurred any Borrowed Moneys save as envisaged by this Agreement or the Existing Loan Agreement or as otherwise disclosed to the Lender or incurred in the ordinary course of its business of owning, operating and chartering the Vessel owned by it;

 

Tax returns

 

the Borrowers and the Corporate Guarantor have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject;

 

Freedom from Encumbrances

 

none of the Vessels nor their Earnings, Insurances or Requisition Compensation nor the Earnings Accounts nor any Extended Employment Contract in respect of a Vessel nor any shares of and in any Borrower nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

 

33

 

 

Environmental Matters

 

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:

 

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

 

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

 

no Environmental Claim has been made or threatened or pending against any of the Borrowers, the Manager, any other Group Member or, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and

 

there has been no Environmental Incident;

 

ISM and ISPS Code

 

the Owners have complied with and continue to comply with and have procured that the Manager of the Vessels has complied with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to their business and in particular they or the Manager have obtained and maintain a valid DOC, IAPP Certificate, EIAPP Certificate (if applicable) and SMC for the Vessels and that they and the Manager have implemented and continue to implement an ISM SMS;

 

Accounting reference date

 

the Borrowers’ and the Corporate Guarantor’s accounting reference date is 31 December;

 

Office

 

no Borrower has an office in England or the United States of America;

 

Restricted Persons, unlawful activity

 

none of the shares in any Borrower, in (to the best of its knowledge) the Corporate Guarantor, or in any other Security Party or any Vessel are or will be at any time during the Facility Period legally or beneficially owned or controlled by a Restricted Person;

 

no Restricted Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Borrowers, (to the best of its knowledge) the Corporate Guarantor, or any other Security Party or any Vessel;

 

34

 

 

 

Sanctions

 

(to the best of its knowledge only in respect of an agent) no Security Party nor any  director, officer, agent, employee of any Security Party or any person acting on behalf of any Security Party, is a Restricted Person nor acts directly or indirectly on behalf of a Restricted Person;

 

FATCA

 

none of the Security Parties is a FATCA FFI or a US Tax Obligor; and

 

Equal treatment of lenders

 

The financial covenants described in clause 8.1.8 are no less favourable (taken as a whole) to financial covenants granted by the Corporate Guarantor under existing lending facilities extended by banks, financiers or other financial institutions to the Corporate Guarantor and its Subsidiaries on or before 11 October 2021 (PROVIDED THAT, for the avoidance of doubt, for the purpose of this clause any covenant regarding the provision of cash collateral or restricted cash of any sort granted to other banks, financiers or other financial institutions shall not constitute a financial covenant under this clause).

 

Repetition of representations and warranties

 

On each day throughout the Facility Period, the Borrowers shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day and in clause 7.1.11 as if made with reference to the Latest Account at any relevant time.

 

Undertakings

 

General

 

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

 

Notice of Event of Default and Proceedings

 

promptly inform the Lender of (a) any Event of Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents to which it is a party and (b) as soon as the same is commenced or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of any of the Mortgaged Vessels (including, but not limited to any Total Loss of a Vessel or the occurrence of any Environmental Incident) and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing unremedied and unwaived and no such Proceedings have been commenced or threatened;

 

35

 

 

Authorisation

 

to the extent a waiver has not been obtained, obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

 

Corporate Existence

 

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

 

Use of proceeds

 

use the Advances exclusively for the purposes specified in clauses 1.1 and 2.1;

 

Pari passu

 

ensure that its obligations under this Agreement shall, without prejudice to the provisions of clause 8.3, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations incurred under the Prior Security Documents or obligations which are mandatorily preferred by law and not by contract;

 

Financial statements

 

as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) financial statements of each Borrower (commencing with the financial year ending 31 December 2021), together with updated details (in a form acceptable to the Lender) of all off-balance sheet and time-charter hire commitments of the Vessels;

 

Compliance Certificates

 

deliver to the Lender on the date on which the audited consolidated accounts are delivered under clause 8.1.6 a Compliance Certificate together with such supporting information as the Lender may reasonably require;

 

Financial Covenants

 

procure that

 

the Net Worth of the Group will at all times exceed USD15,000,000; and

 

the Total Liabilities divided by the Total Assets (each net of cash balance) shall at all times be no more than 75%;

 

36

 

 

Reimbursement of MII & MAP Policy premiums

 

reimburse the Lender on the Lender’s written demand the amount of the premium payable by the Lender for the inception or, as the case may be, extension and/or continuance of the MII & MAP Policy (including any insurance tax thereon);

 

Provision of further information

 

provide the Lender, and procure that the Corporate Guarantor (including its Subsidiaries), shall provide the Lender with such financial or other information (including, but not limited to, financial standing, Indebtedness, balance sheet, off-balance sheet commitments, repayment schedules, operating expenses, charter arrangements) concerning the Borrowers, the Corporate Guarantor (including its Subsidiaries), the Group and their respective affairs, activities, financial standing, Indebtedness and operations and the performance of the Mortgaged Vessels as the Lender may from time to time reasonably require save for any information which is confidential in relation to arms-length third parties or is not disclosable by law, convention or regulatory requirements;

 

Obligations under Security Documents, etc.

 

duly and punctually perform each of the obligations expressed to be imposed or assumed by them under the Security Documents and any Extended Employment Contact and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and any Extended Employment Contract to which it is a party;

 

Compliance with ISM Code

 

and will procure that any Operator will, comply with and ensure that the Mortgaged Vessels and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Facility Period;

 

Withdrawal of DOC and SMC

 

immediately inform the Lender if there is any actual withdrawal of its or any Operator’s DOC, IAPP Certificate, EIAPP Certificate or the SMC of any Mortgaged Vessel;

 

Issuance of DOC and SMC

 

and will procure that any Operator will promptly inform the Lender of the receipt by any Owner or any Operator of notification that its application for a DOC or any application for an SMC or IAPP Certificate or EIAPP Certificate for any Mortgaged Vessel has been refused;

 

ISPS Code Compliance

 

and will procure that the Manager or any Operator will:

 

maintain at all times a valid and current ISSC in respect of each Mortgaged Vessel;

 

37

 

 

immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or material modification of the ISSC in respect of a Mortgaged Vessel; and

 

procure that each Mortgaged Vessel will comply at all times with the ISPS Code;

 

Compliance with Laws and payment of taxes

 

comply with all relevant Environmental Laws, laws, statutes and regulations applicable to it and pay all taxes for which it is liable as they fall due; and

 

comply in all respects with, and will procure that each Security Party and each other Group Member will comply in all respects with, all Sanctions;

 

Inspection

 

ensure that the Lender, by independent marine surveyors or other persons appointed by it for such purpose, may board each Mortgaged Vessel, once per calendar year or whenever the Lender deems necessary after the occurrence of an Event of Default which is continuing, provided in each case that the Lender shall use reasonable endeavours to ensure that such inspections or surveys shall not interfere with the operation of such Mortgaged Vessel, for the purpose of inspecting or surveying her and will afford all proper facilities for such inspections or survey and for this purpose will give the Lender reasonable advance notice of any intended drydocking of each Mortgaged Vessel (whether for the purpose of classification, survey or otherwise) and will pay the costs in respect of each such inspection or survey effected after the occurrence of an Event of Default which is continuing (otherwise such inspection or survey shall be at the Lender’s expense) and will provide the Lender with or ensure that the Lender receives on request all reports of such inspections, to be in such form as the Lender may approve, and, if a Mortgaged Vessel shall not be in a condition and state which complies with the requirements of this Agreement and the other Security Documents, will effect such repairs as in the opinion of the Lender be desirable to ensure such compliance;

 

The Mortgaged Vessels

 

ensure that throughout the Facility Period, each Mortgaged Vessel will at all times after her delivery (except as the Lender may otherwise permit) be:

 

in the absolute sole, legal and beneficial ownership of the relevant Owner, free of Encumbrances except Permitted Encumbrances, and not held on trust for any third party;

 

registered through the offices of the relevant Registry as a ship under the laws and flag of the relevant Flag State;

 

in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

 

classed with the Classification free of all overdue requirements and recommendations of the Classification Society affecting the Classification;

 

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insured in accordance with the Ship Security Documents relating thereto; and

 

managed by the Manager in accordance with the terms of the Management Agreement, which shall be acceptable to the Lender;

 

Charters

 

deliver to the Lender, a Certified Copy of each Extended Employment Contract upon its execution, forthwith on the Lender’s request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and use reasonable efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer (provided that any failure to procure the acknowledgement shall not constitute an Event of Default) and (c) (if any Mortgaged Vessel is subject to a bareboat charter) procure execution by the relevant Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and will provide evidence acceptable to the Lender that such notice has been given to the relevant charterer and the Borrowers shall pay all legal and other costs incurred by the Lender in connection with any such Charter Assignments and Tripartite Deed, forthwith following the Lender’s demand;

 

Chartering

 

not without the prior written consent of the Lender and, if such consent is given, only subject to such conditions as the Lender may impose (and in the case of (b) only, such consent not to be unreasonably withheld), to let any Vessel:

 

on demise charter for any period; or

 

by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed nine (9) months' duration; or

 

on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance;

 

Sanctions

 

(to the best of its knowledge only in respect of an agent) not be, and shall procure that any Security Party and other Group Member, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person;

 

, and shall procure that each Security Party and each other Group Member shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Lender;

 

procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with the Lender in its name or in the name of any other member of the Group;

 

take, and shall procure that each Security Party and each other Group Member has taken, reasonable measures to ensure compliance with Sanctions;

 

39

 

 

, and shall procure that each Security Party and each other Group Member shall, to the extent permitted by law promptly upon becoming aware of them, supply to the Lender details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority;

 

not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting clause 8.1.21(b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by any Borrower, any other Security Party or any other Group Member in accordance with this Agreement;

 

Ownership

 

ensure that all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

 

Unencumbered liquidity

 

procure that at all times during the Facility Period, the Corporate Guarantor or the Borrowers shall maintain in an account or accounts with the Lender free deposit cash which is (other than the Earnings Account Pledge) free of any Encumbrance in an average aggregate amount of not less than USD100,000 multiplied by the number of Mortgaged Vessels for the preceding twelve-months period, to be tested first on 30 November 2022 and annually thereafter;

 

Listing

 

procure that the Corporate Guarantor shall maintain its listing as a public limited company on NASDAQ or any other stock exchange acceptable to the Lender and comply with all of the listing rules, laws and regulations applicable to public companies listed on NASDAQ or such other acceptable stock exchange and shall take no steps to de-list without the prior consent of the Lender (such consent not to be unreasonably withheld);

 

Shipping activities

 

procure that the Corporate Guarantor shall at all times remain the ultimate holding company of shipowning companies engaged in shipping activities acceptable to the Lender;

 

Executive management

 

procure that at all times throughout the Facility Period:

 

Mr Aristeidis Pittas shall be the Chief Executive Officer or Chairman of the Corporate Guarantor; and

 

the Manager shall be managed and/or controlled by Mr Aristeidis Pittas or any other person acceptable to the Lender.

 

40

 

 

FATCA Information

 

(a)         Subject to paragraph (c) below each party to any Security Document shall, within 10 Banking Days of a reasonable request by the other party to that Security Documents:

 

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

 

(A)                  a FATCA Exempt Party; or

 

(B)                  not a FATCA Exempt Party; and

 

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

 

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

 

if a party to any Security Document confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify the other party reasonably promptly;

 

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

 

any law or regulation;

 

any policy of the Lender;

 

any fiduciary duty; or

 

any duty of confidentiality;

 

paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion cause it to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this paragraph (d);

 

41

 

 

if a party to any Security Document fails to confirm whether or not it is a FATCA Exempt Party, or to supply forms, documentation or other information requested in accordance with paragraph  (a) (i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Security Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as that party provides the requested confirmation, forms, documentation or other information.

 

FATCA Deduction

 

A party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

A party to any Security Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate

 

or the basis of such FATCA Deduction) notify the party to whom it is making the payment and, in addition, shall notify the Borrowers and the Lender.

 

Security value maintenance

 

Security shortfall

 

If at any time throughout the Facility Period the Security Value shall be less than the Required Security Amount, the Lender shall give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers must within 30 days of receipt of the Lender’s said notice, either:

 

prepay such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or

 

constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in accordance with clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date.

 

The provisions of clauses 4.5 and 4.6 shall apply to prepayments under clause 8.2.1(a) provided that the Lender shall apply such prepayments in pro rata reduction of the reduction instalments under clause 2.5 and the amount of the Loan prepaid hereunder shall not be available to be re-borrowed.

 

Valuation of Mortgaged Vessels

 

Each Mortgaged Vessel shall, for the purposes of this Agreement, be valued (at the Borrowers’ expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuations to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant Mortgaged Vessel, at any time as the Lender shall require and at least once a year.

 

42

 

 

The Approved Broker’s valuations for each Mortgaged Vessel on each such occasion shall constitute the Valuation Amount of such Mortgaged Vessel for the purposes of this Agreement until superseded by the next such valuation.

 

Information

 

The Borrowers undertake with the Lender to supply to the Lender and to the Approved Broker such information concerning the relevant Mortgaged Vessel and its condition as such shipbrokers may require for the purpose of determining any Valuation Amount.

 

Costs

 

The Borrowers shall pay all costs in connection with any determination of the Valuation Amount (i) on or prior to each Drawdown Date pursuant to clauses 9.1.2 and 9.1.3, (ii) prior to the occurrence of an Event of Default which is continuing, once a year, and (iii) after the occurrence of an Event of Default which is continuing, at all times.

 

Valuation of additional security

 

For the purposes of this clause 8.2, the market value (i) of any additional security over a ship (other than the Vessels) shall be determined (at the Borrowers’ expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuation to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant ship and (ii) of any other additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

 

Documents and evidence

 

In connection with any additional security provided in accordance with this clause 8.2, the Lender shall be entitled to receive (at the Borrowers’ expense) such evidence and documents of the kind referred to in schedule 2 as may in the Lender’s opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.

 

8.2.7         Release of Security

 

If the Security Value shall at any time exceeds the Required Security Amount, and the Borrowers shall previously have provided further security to the Lender pursuant to clause 8.2.1, the Lender shall, as soon as reasonably practicable after notice from the Borrowers to do so and subject to being indemnified to its reasonable satisfaction against the cost of doing so, release any such further security specified by the Borrowers provided that the Lender is satisfied that, immediately following such release, the Security Value will equal or exceed the Required Security Amount.

 

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Negative undertakings relating to the Borrowers

 

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will procure that, except with the prior written consent of the Lender (and such consent in respect of any change of name of a Vessel or the sale or transfer of ownership of a Vessel not to be unreasonably withheld), it will not:

 

Negative pledge

 

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

 

No merger or transfer

 

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of their shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

 

Disposals

 

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

 

Other business or manager

 

undertake any type of business other than the ownership and operation of the Vessels or (without the prior consent of the Lender) employ anyone other than the Manager as commercial and technical manager of the relevant Vessel;

 

Acquisitions

 

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

 

Other obligations

 

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

 

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No borrowing

 

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents or the Prior Security Documents or incurred in the ordinary course of its business of owning, operating and chartering the Vessel;

 

Repayment of borrowings

 

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

 

Guarantees

 

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

 

Loans

 

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

 

Sureties

 

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

 

Flag, Class etc.

 

permit:

 

any change in the name or flag of a Vessel;

 

any change of Classification or Classification Society in respect of a Vessel;

 

any change of Manager in respect of a Vessel; or

 

any change in the ownership (including ultimate beneficial ownership) or control of a Borrower from that existing as at the date hereof and shall procure that there is no change in the ownership (including ultimate beneficial ownership) or control of the Manager (if other than the Corporate Guarantor) from that existing as at the date hereof (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

 

45

 

 

Underlying Documents

 

terminate or materially amend or vary an Extended Employment Contract or a Management Agreement (and for the avoidance of doubt, material amendments include, but are not limited to, reductions of rate of hire, increase of management fees not already provided for in the Management Agreement and termination rights); or

 

Lay-up

 

de-activate or lay up a Vessel; or

 

Place of business

 

own or operate and will procure that no Security Party shall own or operate a place of business situate in England or the United States of America (save that the Lender acknowledges and agrees that the Corporate Guarantor is listed as a public limited company on NASDAQ); or

 

Share capital and distribution

 

declare or pay any dividends if an Event of Default has occurred and is continuing or would occur as a result of such declaration or payment or distribute any of its present or future assets, undertakings, rights or revenue;

 

Sharing of Earnings

 

permit there to be any agreement or arrangement whereby the Earnings of a Vessel may be shared or pooled howsoever with any other person except for customary profit sharing arrangements under a charterparty;

 

Lawful use

 

permit a Vessel to be employed:

 

in any way or in any activity with a Restricted Person or in any Sanctions Restricted Jurisdiction or which is (i) unlawful under international law or the domestic laws of any relevant country or (ii) contrary to any Sanctions;

 

to the best of its knowledge, in carrying illicit or prohibited goods;

 

in a way which may make that Vessel liable to be condemned by a prize court or destroyed, seized or confiscated;

 

in any part of the world where there are hostilities (whether war has been declared or not), unless such employment has been notified to, and approved by, the relevant insurers of that Vessel; or

 

to the best of its knowledge, in carrying contraband goods,

 

and the Borrowers shall procure that the persons responsible for the operation of such Vessel shall take all necessary and proper precautions to ensure that this does not happen, including participation in industry or other voluntary schemes available to that Vessel and in which leading operators of ships operating under the same flag or engaged in similar trades generally participate at the relevant time;

 

46

 

 

FATCA

 

become a FATCA FFI or a US Tax Obligor and shall procure that no Security Party shall do so;

 

Sale or transfer of ownership of Vessel

 

sell, or otherwise transfer its ownership of, the Vessel owned by it.

 

Conditions

 

Availability of the Advances

 

The obligation of the Lender to make available any Advance is conditional upon:

 

the Lender, or its authorised representative, having received, not later than two (2) Banking Days before the day on which the first Drawdown Notice is given, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Lender; and

 

the Lender, or its authorised representative, having received, on or prior to the first Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Lender; and

 

the Lender, or its authorised representative, having received, on or prior to each subsequent Drawdown Date, the documents and evidence specified in Part 3 of schedule 2 in form and substance satisfactory to the Lender; and

 

the representations and warranties contained in clause 7 being then true and correct as if each was made with respect to the facts and circumstances existing at such time and the same being unaffected by the drawdown of the Loan; and

 

no Default having occurred and being continuing and there being no Default which would result from the lending of the Advances; and

 

nothing having occurred having a Material Adverse Effect in respect of any Borrower and/or the Corporate Guarantor as at the relevant Drawdown Date.

 

9.2         Advance of the Advances

 

9.2.1         the obligation of the Lender to make available an Advance is conditional upon the Lender, or its authorised representative, having received, on or prior to the relevant Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Lender.

 

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9.3         Waiver of conditions precedent

 

The conditions specified in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

 

Further conditions precedent

 

Not later than five (5) Banking Days prior to a Drawdown Date the Lender may request and the Borrowers must, not later than two (2) Banking Days prior to such date, deliver to the Lender (at the Borrowers’ expense) on such request further favourable certificates and/or opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

 

Events of Default

 

Events

 

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

 

Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Lender within three (3) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or

 

Breach of Insurance and certain other obligations: a Borrower or, as the context may require, the Manager or any other person fails to obtain and/or maintain the Insurances for any of the Mortgaged Vessels or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of a Borrower or any other person or a Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 8 or clause 14; or

 

Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within fifteen (15) days of the occurrence thereof; or

 

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

 

48

 

 

Cross-default: any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by a Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of a Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to a Borrower or the Corporate Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned, and such Indebtedness of a Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

 

Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within fifteen (15) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within twenty (20) days; or

 

Insolvency: any Security Party is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or has negative net worth (taking into account contingent liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or

 

Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party unless the Borrowers can demonstrate to the satisfaction of the Lender, by providing an opinion of leading counsel that such corporate action, Proceedings or other steps are frivolous, vexatious or an abuse of the process of the court or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

 

Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or an administration order is made in relation to any Security Party; or

 

Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any material part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of any Security Party; or

 

Compositions: any corporate action, legal proceedings or other procedures or steps are taken or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or a substantial part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors (excluding always negotiations with holders of preferred shares); or

 

49

 

 

Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.11 (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

 

Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior consent of the Lender; or

 

Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity and the same are not returned to the relevant Security Party within 45 days of such seizure, nationalisation, expropriation or compulsory acquisition; or

 

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

 

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

 

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

 

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

 

Arrest: a Mortgaged Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of its Owner and that Owner shall fail to procure the release of such Mortgaged Vessel within a period of fifteen (15) days thereafter; or

 

Registration: the registration of any Mortgaged Vessel under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Lender; or

 

50

 

 

Unrest: the Flag State of a Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Owner of the Vessel registered in such Flag State shall have transferred its Vessel onto a new flag acceptable to the Lender within thirty (30) days of the Lender’s written request to the Borrowers to effect such transfer; or

 

Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Lender be expected to have a Material Adverse Effect (i) on the financial condition of any Security Party or the Group taken as a whole or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

 

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

 

Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents or (iii) the value or nature of the financial condition of any Security Party (other than the Manager); or

 

Required Authorisations: to the extent it has not been waived, any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;

 

Money Laundering: any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat Money Laundering; or

 

Management Agreement: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the prior consent of the Lender; or

 

Change of Ownership: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of a Borrower or the Shareholder from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause); or

 

Sanctions: a Security Party fails to comply with clauses 7.1.26 (Restricted Persons, unlawful activity), 7.1.27 (Sanctions) or 8.1.21 (Sanctions) of this Agreement.

 

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Acceleration

 

The Lender may at any time after the occurrence of an Event of Default, and only while the same is continuing and has not been remedied or waived, by notice to the Borrowers declare that:

 

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

 

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

 

Demand Basis

 

If, under clause 10.2.2, the Lender has declared the Loan to be due and payable on demand, at any time thereafter the Lender shall by written notice to the Borrowers (a) demand repayment of the Loan on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

 

Indemnities

 

General indemnity

 

Each Borrower agrees to indemnify the Lender on demand, without prejudice to any of the Lender's other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs) which the Lender shall certify as sustained by it as a consequence of any Default, any prepayment of the Loan being made under clauses 4.3, 4.4, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; and/or the Loan not being made for any reason (excluding any default by the Lender) after the Drawdown Notice has been given.

 

Environmental indemnity

 

The Borrowers shall indemnify the Lender on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against the Lender which would not have been, or been capable of being, made or asserted against the Lender had it not entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

 

Capital adequacy and reserve requirements indemnity

 

The Borrowers shall promptly indemnify the Lender on demand against any cost incurred or loss suffered by the Lender as a result of its complying with (i) the minimum reserve requirements from time to time of the European Central Bank (ii) any capital adequacy directive of the European Union and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to the Commitment and/or the Loan or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by the Lender under clause 12.2.

 

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Unlawfulness, increased costs and bail-in

 

Unlawfulness

 

If it is or becomes contrary to any law, directive or regulation for the Lender to contribute to the Loan or to maintain its Commitment or fund the Loan, the Lender shall promptly give notice to the Borrowers whereupon (a) the Loan and Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay the Loan either (i) forthwith (without premium or penalty) or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement.

 

Provided that if circumstances arise which would result in a notification under this clause 12.1 then, prior to giving such notice, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office of the Lender not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

 

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

 

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

 

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

 

Increased costs

 

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

 

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

 

53

 

 

increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or

 

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

 

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

 

require the Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or

 

require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes,

 

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

 

the Lender shall notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and

 

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

 

For the purposes of this clause 12.2 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.

 

Exception

 

Nothing in clause 12. shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

 

Contractual recognition of bail-in

 

Notwithstanding any other term of any Security Document or any other agreement, arrangement or understanding between the parties to this Agreement, each such party acknowledges and accepts that any liability of any party to this Agreement to any other party to this Agreement under or in connection with the Security Documents may be subject to any applicable Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

 

54

 

 

any applicable Bail-In Action in relation to any such liability, including (without limitation):

 

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

 

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

 

a cancellation of any such liability; and

 

a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability

 

Application of moneys, set off, pro-rata payments and miscellaneous

 

Application of moneys

 

All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Lender’s discretion, shall be applied in the following manner:

 

first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

 

secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

 

thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

 

fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

 

fifthly, in or towards payment to the Lender of any due but unpaid principal in respect of the Loan;

 

sixthly, in or towards payment to the Lender in application in repayment of the Loan in accordance with clause 4.6.2;

 

seventhly, in or towards payment for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and

 

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

 

55

 

 

The order of application set out in clauses 13.1.1 to 13.1.8 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

 

Set-off

 

Each Borrower irrevocably authorises the Lender (without prejudice to any of the Lender’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing, and without notice to the Borrowers, to apply any credit balance to which any Borrower is then entitled standing upon any account of any Borrower with any branch of the Lender in or towards satisfaction of any sum due and payable from any Borrower to the Lender under any of the Security Documents. For this purpose, the Lender is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

 

The Lender shall not be obliged to exercise any right given to it by this clause 13.2. The Lender shall notify the Borrowers forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto.

 

Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

 

Further assurance

 

Each Borrower undertakes with the Lender that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of the Lender thereunder, are enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary for perfecting the security contemplated or constituted by the Security Documents.

 

Conflicts

 

In the event of any conflict between this Agreement and any of the other Security Documents, the provisions of this Agreement shall prevail.

 

No implied waivers, remedies cumulative

 

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

 

Severability

 

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

 

56

 

 

Force Majeure

 

Regardless of any other provision of this Agreement, the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism or (v) any other circumstances whatsoever outside the Lender’s control.

 

Amendments

 

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

 

Counterparts

 

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

 

English language

 

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied, at the Lender’s request, by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

 

Accounts

 

General

 

Each Borrower undertakes with the Lender that it will ensure that:

 

it will on or before the Drawdown Date, open an Earnings Account in its name; and

 

all moneys payable to any Borrower in respect of the Earnings of its Mortgaged Vessel shall, unless and until the Lender directs to the contrary pursuant to the provisions of the relevant Mortgage, be paid to the Earnings Account in the name of that Borrower, Provided however that if any of the moneys paid to such Earnings Account are payable in a currency other than USD, they shall be paid to a sub-account of that Earnings Account denominated in such currency (except that if the relevant Borrower fails to open such a sub-account, the Lender shall then convert such moneys into USD at the Lender’s spot rate of exchange at the relevant time for the purchase of USD with such currency and the term “spot rate of exchange” shall include any premium and costs of exchange payable in connection with the purchase of USD with such currency).

 

57

 

 

Earnings Account: withdrawals

 

Any sums standing to the credit of an Earnings Account may be applied by the Borrowers from time to time, subject to no Event of Default having occurred which is continuing unremedied and unwaived, in (i) making the payments required under this Agreement, (ii) the supply, crewing, management, maintenance, repair, insurance, operation and trading of the Mortgaged Vessels and (iii) payment of dividends to their shareholders annually.

 

Application of accounts

 

At any time after the occurrence of an Event of Default and while the same is continuing unwaived and unremedied, the Lender may, without prior notice to the Borrowers, apply all moneys then standing to the credit of the Earnings Account (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to Lender under the Security Documents at the time of such applications in the manner specified in clause 13.1. Following such application, the Lender shall give notice thereof to the Borrowers.

 

Assignment, transfer and lending office

 

Benefit and burden

 

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

 

No assignment by Borrowers

 

No Borrower may assign or transfer any of its rights or obligations under this Agreement.

 

Transfer by Lender

 

The Lender may at any time (i) change its office through which the Loan is made available or (ii) cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be transferred or assigned without the consent of the Borrowers to a wholly-owned banking subsidiary or associated company of the Lender or to any third party (in either case a “Transferee Lender”) provided always that any such Transferee Lender, by delivery of such undertaking as the Lender may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, relevant part of the Lender’s obligations under this Agreement the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim.

 

58

 

 

Documenting transfers

 

If the Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, each Borrower undertakes, immediately on being requested to do so by the Lender and at the cost of the Transferee Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferee Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of the Lender’s interest in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests. For the avoidance of doubt there will be no expense for the Borrower in connection with an assignment or transfer, as provided in clauses 15.3 and 15.5

 

Sub-Participation

 

The Lender may sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, or notice to, the Borrowers. Any such sub-participation shall have no effect on the Lender’s rights under the Security Documents and shall not affect the Borrowers at all.

 

Disclosure of information

 

The Lender may disclose to a prospective assignee, transferee or to any other person (a “Prospective Assignee”) who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrowers and/or the other Security Parties as the Lender shall consider appropriate, but only if the Prospective assignee has first undertaken to the Borrowers to keep secret and confidential and, not without the prior written consent of the Borrowers, disclose to any third party, any of the information, reports or documents to be supplied by the Lender.

 

No additional costs

 

If at the time of, or immediately after, any assignment or transfer by the Lender of all or any part of its rights or benefits or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrowers would be obliged to pay to the Lender or, as the case may be, the Transferee Lender under clause 3.5, 6.6 or clause 12.2 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender or the Transferor Lender, as the case may be, under the relevant clause in the absence of such assignment, transfer or change, the Borrowers shall not be obliged to pay that excess.

 

Notices and other matters

 

Notices

 

unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or transmitted electronically;

 

59

 

 

in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

 

Addresses for communications, effective date of notices

 

Subject to clause 16.2.2 and clause 16.2.5 notices to the Borrowers shall be deemed to have been given and shall take effect when received in full legible form by the Borrowers at the address and/or the fax number and/or email address appearing below (or at such other address or fax number or email address as the Borrowers may hereafter specify for such purpose to the Lender by notice in writing);

 

Address:         c/o Euroseas Ltd.

4 Messogiou & Evropis Street

151 24 Maroussi

Greece

 

Fax:                   +30 211 1804097

Attn:                  Anastasios Aslidis

Email:          aha@euroseas.gr

 

notwithstanding the provisions of clause 16.2.1 or clause 16.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrowers shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrowers to the address or fax number or email address referred to in clause 16.2.1;

 

subject to clause 16.2.5, notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the fax number and/or email address appearing below (or at any such other address or fax number or email address as the Lender may hereafter specify for such purpose to the Borrowers in writing);

 

Address:         170 Alexandras Ave.

11521 Athens

Greece

 

Fax No.          +30 210 3739783

Attention:          The Manager

Email:          Shipping@piraeusbank.gr

 

60

 

 

subject to clause 16.2.5, notices to the Lender shall be deemed to be given and shall take effect when received in full legible form by the Lender at its address and/or fax number and/or email address specified in the definition of “Lender” (or at any other address or fax number or email address as the Lender may hereafter specify for such purpose); and

 

if under clause 16.2.1 or clause 16.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

 

Electronic Communication

 

Any communication to be made by and/or between the Lender and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

 

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

 

notify each other of any change to their electronic mail address or any other such information supplied by them.

 

Any electronic communication made by and/or between the Lender and the Security Parties or any of them will be effective only when actually received in readable form.

 

The Lender and the Borrowers further agree that information may be sent via email to (or from) third parties involved in the provision of services. In particular, the Borrowers are aware that:

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

 

Governing law

 

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

 

Jurisdiction

 

Exclusive Jurisdiction

 

For the benefit of the Lender, and subject to clause 18.4 below, each Borrower hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction:

 

to settle any disputes or other matters whatsoever arising under or in connection with this Agreement or any non-contractual obligation arising out of or in connection with this Agreement and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

 

to grant interim remedies or other provisional or protective relief.

 

Submission and service of process

 

Each Borrower accordingly irrevocably and unconditionally submits to the jurisdiction of the English courts. Without prejudice to any other mode of service each Borrower:

 

irrevocably empowers and appoints Messrs Shoreside Agents Ltd at present of 11 The Timber Yard, London N1 6ND, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

 

agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

 

agrees that failure by a process agent to notify the Borrowers of service of process will not invalidate the proceedings concerned;

 

without prejudice to the effectiveness of service of process on its agent under clause 18.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 16.2; and

 

agrees that if the appointment of any person mentioned in clause 18.2.1 ceases to be effective, the Borrowers shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by the Borrowers in those circumstances to appoint such person by notice to the Borrowers.

 

62

 

 

Forum non conveniens and enforcement abroad

 

Each Borrower:

 

waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 18.1; and

 

agrees that a judgment or order of an English court in a dispute or other matter falling within clause 18.1 shall be conclusive and binding on the Borrowers and may be enforced against it in the courts of any other jurisdiction.

 

Right of Lender, but not Borrowers, to bring proceedings in any other jurisdiction

 

Nothing in this clause 18 limits the right of the Lender to bring Proceedings, including third party proceedings, against the Borrowers or any of them, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

 

the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

 

Enforceability despite invalidity of Agreement

 

Without prejudice to the generality of clause 13.6, the jurisdiction agreement contained in this clause 18 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

 

Effect in relation to claims by and against non-parties

 

For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by the Lender pursuant thereto or which would, if brought by the Borrowers or any of them against the Lender, have been required to be brought in the English courts.

 

No Borrower shall bring or pursue any Foreign Proceedings against the Lender and each Borrower shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against the Lender.

 

63

 

 

If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party (including but not limited to any shareholder of any Borrower) brings or pursues against the Lender any Foreign Proceedings, the Borrowers shall indemnify the Lender on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which the Lender certifies as having been incurred by it.

 

The Lender and the Borrowers hereby agree and declare that the benefit of this clause 18 shall extend to and may be enforced by any officer, employee, agent or business associate of the Lender against whom any Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of the Lender pursuant thereto or which, if it were brought against the Lender, would fall within the material scope of clause 18.1. In those circumstances this clause 18 shall be read and construed as if references to the Lender were references to such officer, employee, agent or business associate, as the case may be.

 

Borrowers’ obligations

 

Joint and several

 

Regardless of any other provision in any of the Security Documents, all obligations and liabilities whatsoever of the Borrowers herein contained are joint and several and shall be construed accordingly. Each of the Borrowers agrees and consents to be bound by the Security Documents to which it becomes a party notwithstanding that the other Borrowers may not do so or be effectually bound and notwithstanding that any of the Security Documents may be invalid or unenforceable against the other Borrowers, whether or not the deficiency is known to the Lender.

 

Borrowers as principal debtors

 

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

 

Indemnity

 

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

 

64

 

 

Liability unconditional

 

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

 

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

 

the Lender granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, any Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting, varying any compromise, arrangement or settlement or omitting to claim or enforce payment from any Borrower or any other person liable; or

 

anything done or omitted which but for this provision might operate to exonerate the Borrowers or any of them.

 

Recourse to other security

 

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

 

Waiver of Borrowers' rights

 

Each Borrower agrees with the Lender that, throughout the Facility Period, it will not, without the prior written consent of the Lender:

 

exercise any right of subrogation, reimbursement and indemnity against the other Borrowers or any other person liable under the Security Documents;

 

65

 

 

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

 

take any steps to enforce any right against the other Borrowers or any other person liable in respect of any such moneys; or

 

claim any set-off or counterclaim against the other Borrowers or any other person liable or claim or prove in competition with the Lender in the liquidation of the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the other Borrowers or any other person liable or any security granted under any Security Document now or hereafter held by the Lender for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Lender, it will prove for the whole or any part of its claim in the liquidation of the other Borrowers or other person liable on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Lender and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Lender shall require.

 

 

 

 

 

 

 

 

 

66

 

 

Schedule 1

Form of Drawdown Notice

 

To:         Piraeus Bank S.A.

170 Alexandras Ave.

11521 Athens

Greece

 

[●] November 2021

 

Dear Sirs

 

Re:         Facility agreement dated [        ] November 2021 in respect of a loan of up to USD16,500,000 (the “Loan Agreement”) made between (1) Antwerp Shipping Ltd, Busan Shipping Ltd, Keelung Shipping Ltd and Oakland Shipping Ltd as Borrowers and (2) Piraeus Bank S.A. as Lender

 

We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.

 

We hereby give you notice that we wish to draw the sum of USD[         ] on [      ] November 2021 in respect of the Loan Facility and select a first Interest Period in respect of such drawing of [●] months. The funds should be credited to the account of [     ] and numbered [       ] with [        ] of [        ].

 

We confirm that:

 

(a)         no Default has occurred and is continuing;

 

(b)         the representations and warranties contained in clause 7 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;

 

(c)         the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

 

(d)         there has been no material adverse change in our financial position or in the consolidated financial position of the Borrowers or the Corporate Guarantor from that described by us to the Lender in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Lender in connection therewith;

 

(e)         there are no Required Authorisations;

 

(f)         there has occurred nothing which would have a Material Adverse Effect; and

 

67

 

 

(g)          no part of the proceeds of the Loan shall be used for the purpose of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (τίτλους υβριδικών κεφαλαίων) of the Lender or other banks and/or financial institutions.

 

By         ......................................

 

 

Authorised Signatory

 

ANTWERP SHIPPING LTD

 

BUSAN SHIPPING LTD

 

KEELUNG SHIPPING LTD

 

OAKLAND SHIPPING LTD

 

 

 

 

 

 

 

68

 

 

Schedule 2

Conditions precedent

 

Part 1

 

(referred to in clause 9.1)

 

 

Corporate documents

 

Certified Copies of all documents which evidence or relate to the constitution of each Security Party and its current corporate existence;

 

Corporate authorities

 

Certified Copies of resolutions of the directors of each Security Party and shareholders of each Borrower approving such of the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party’s obligations thereunder, additionally certified by an officer of such Security Party, as having been duly adopted by the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and

 

an original of any power of attorney issued by each Security Party pursuant to such resolutions;

 

Required Authorisations

 

a certificate (dated no earlier than 5 Banking Days prior to the Drawdown Date) that there are no Required Authorisations or that there are no Required Authorisations except those described in such certificate and Certified Copies of which as duly executed (including any conditions and/or documents ancillary thereto) are appended thereto.

 

Certificate of incumbency

 

a list of directors, shareholders and officers of each Security Party specifying the names and positions of such persons, certified by an officer of the relevant Security Party to be true, complete and up to date;

 

Shareholders

 

evidence acceptable to the Lender that all of the issued shares of and in each Borrower are issued in registered form and legally owned by the Shareholder and ultimately beneficially owned and controlled by the Corporate Guarantor;

 

Security Documents

 

the Corporate Guarantee, the Earnings Account Pledges and the Shares Pledges duly executed and delivered, and all documents to be executed and delivered thereunder;

 

69

 

 

Declaration of compliance / “know your customer”

 

written confirmation (in a form acceptable to the Lender) that:

 

each Borrower has complied at all times and in all respects with (i) any relevant employment legislation and employment regulations applicable to it, (ii) all documentation required by the Lender in relation to the Lender’s “know your customer” requirements and (iii) all documentation required by the Lender for the opening of its Earnings Account with the Lender; and

 

the Guarantor and the Shareholder have complied at all times and in all respects with all documentation required by the Lender in relation to the Lender’s “know your customer” requirements; and

 

Bank accounts

 

evidence that:

 

(i)          the Earnings Accounts have been opened by Antwerp, Busan, Keelung and Oakland respectively and duly completed mandates in relation thereto have been delivered to the Lender;

 

(ii)         the Safekeeping Securities Account has been opened by the Shareholder, and duly completed mandates in relation thereto have been delivered to the Lender; and

 

(iii)        all mandate forms and other legal documents required for the opening of an account under any applicable law, such as the account for the securitization of the Shares Pledge as well as signature cards and properly adopted authorizations have been duly delivered to and have been accepted by the compliance department of the Lender;

 

process agent

 

a letter from the agent for receipt of service of proceedings referred to in clause 18.2.1 accepting its appointment under the said clause and under each of the other Security Documents in which it is or is to be appointed as the agent for any Security Party.

 

 

Part 2

 

 

Copies of Underlying Documents

 

a Certified Copy of the Management Agreement, any Extended Employment Contract and all ISM Code Documentation for the relevant Vessel;

 

Evidence satisfactory to the Lender that the relevant Vessel:

 

70

 

 

Registration and Encumbrances

 

is registered in the name of the relevant Owner through the relevant Registry and that such Vessel, her Earnings, Insurances and Requisition Compensation are free of Encumbrances except Permitted Encumbrances (such evidence to include relevant certificates issued by the relevant Flag State and results of searches carried out against the said Registry by the Lender or its lawyers);

 

Classification

 

maintains the Classification free of all overdue recommendations and requirements of the Classification Society affecting the Classification;

 

Insurance

 

is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, receipt by the Lender of customary brokers’ letters of undertaking regarding the placing of hull and machinery and war risks cover and confirmation from the protection and indemnity association or other insurer with which such Vessel is, or is to be, entered for insurance or insured against protection and indemnity risks, that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to such Vessel ); and

 

Management

 

is managed by the Manager on terms in all material respects acceptable to the Lender;

 

Security Documents

 

the Mortgage, the General Assignment, any Charter Assignment in respect of any existing Extended Employment Contract and the Manager’s Undertaking in respect of the relevant Vessel duly executed and delivered;

 

Notices of assignment and acknowledgements

 

counterpart originals of duly executed notices of assignment and acknowledgments (where relevant) required by the terms of the Security Documents referred to in (c) above in the forms prescribed by those Security Documents and any other documents required to be delivered pursuant thereto;

 

Mortgage registration

 

evidence that the relevant Mortgage has been duly registered against the relevant Vessel in accordance with the laws of the relevant Registry;

 

Laws of Liberia: opinion

 

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Liberia;

 

71

 

 

Laws of Marshall Islands: opinion

 

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Marshall Islands;

 

Laws of Cyprus: opinion

 

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Cyprus;

 

ISPS Code

 

evidence satisfactory to the Lender that each Vessel is subject to a ship security plan which complies with the ISPS Code and a copy of the ISSC for each Vessel;

 

DOC and Application for SMC

 

Certified Copies of the DOC, ISSC, (if applicable) IAPP and EIAPP Certificates in respect of each Vessel and a Certified Copy of the SMC therefor and evidence that each Vessel and the Manager are in compliance with the ISM Code;

 

Additional Vessels’ Certificates

 

 

Certified Copies of Classification Certificate, Safety Radio Equipment Certificate, Safety Equipment Certificate, International Oil Pollution Certificate, International Loadline Certificate, Safety Construction Certificate, International Tonnage Certificate, Minimum Safety Manning Certificate and Continuous Synopsis Record for the relevant Vessel;

 

Lightweight

 

evidence satisfactory to the Lender of the Lightweight tonnage of the relevant Vessel;

 

Manager’s confirmation

 

written confirmation addressed by the Manager to the Lender that the representations and warranties set out in clause 7.1.22 (Environmental Matters) and clause 7.1.23 (ISM Code) are true and correct;

 

Insurance Report

 

a written report from a maritime insurance consultant or broker acceptable to the Lender in a form and content acceptable to the Lender (at the cost of the Borrowers) in respect of the insurances on each Vessel which report shall certify that such insurances are placed through or with insurance brokers and clubs, in amounts, covering risks and on terms acceptable to the Lender and that the same are in accordance with the terms of the relevant Mortgage in respect of the relevant Vessel;

 

Valuation

 

a satisfactory, in the opinion of the Lender, Valuation (at the cost of the Borrowers) of the Vessels addressed to the Lender from an Approved Broker dated no more than 20 days before the Drawdown Date;

 

72

 

 

Fees

 

evidence that all fees due and payable have been paid in full;

 

Material Adverse Effect

 

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

 

MII and MAP Policy premium

 

evidence that the Borrowers have reimbursed the Lender in the amount of the first annual premium or, as the case may be, any additional premium for the MII and MAP Policy;

 

Prepayment of Existing Loan

 

evidence satisfactory to the Lender that the Borrowers have prepaid part of the Existing Loan in the amount of USD1,500,000, to be applied in accordance with the terms of the Existing Loan Agreement to cancel any cash sweep obligations existing under the Existing Loan Agreement; and

 

Further conditions precedent

 

such further evidence or opinions as may reasonably be required by the Lender.

 

Part 3

 

 

Valuation

 

a satisfactory, in the opinion of the Lender, Valuation (at the cost of the Borrowers) of the Vessels addressed to the Lender from an Approved Broker dated no more than 20 days before the Drawdown Date;

 

Fees

 

evidence that all fees due and payable have been paid in full;

 

Material Adverse Effect

 

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

 

Further conditions precedent

 

such further evidence or opinions as may reasonably be required by the Lender.

 

73

 

 

Schedule 3

Form of Compliance Certificate

 

To:         Piraeus Bank S.A.

 

From:     Euroseas Ltd.

 

                                                                                 Date [                  ]

200 [          ]

 

Dear Sirs

 

Facility agreement dated [      ] November 2021 in respect of a loan of up to USD16,500,000 (the “Loan Agreement”) made between (1) Antwerp Shipping Ltd, Busan Shipping Ltd, Keelung Shipping Ltd and Oakland Shipping Ltd as joint and several Borrowers and (2) Piraeus Bank S.A. as Lender

 

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan Agreement shall have the same meanings when used herein.

 

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge and belief after due inquiry:-

 

1.         all the Borrowers’ financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us:

 

the Net Worth of the Group is USD [        ];

 

the Total Liabilities are USD [         ] and the Total Assets (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) are USD [         ]; and

 

the Total Liabilities divided by the Total Assets (each net of cash balance) (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) is [         ]%;

 

2.         no Default has occurred which is continuing;

 

3.         the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect.

 

[State any exceptions/qualifications to the above statements]

 

Yours faithfully

 

Euroseas Ltd.

 

74

 

 

 

By________________________                           

 

 

Chief Financial Officer: Euroseas Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

Execution Page

 

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

 

	SIGNED by	Stefania Karmiri	)
	attorney-in-fact for and on behalf of	 	)
	ANTWERP SHIPPING LTD   	 	)
	pursuant to a Power of Attorney	 	)         .../s/ Stefania Karmiri..............
	dated    	November 2021   	)         Attorney-in-fact

 

	SIGNED by	Stefania Karmiri 	)
	attorney-in-fact for and on behalf of  	 	)
	BUSAN SHIPPING LTD	 	)
	pursuant to a Power of Attorney	 	)         ... .../s/ Stefania Karmiri.............
	dated	November 2021 	)         Attorney-in-fact

 

	SIGNED by	Stefania Karmiri	)
	attorney-in-fact for and on behalf of	 	)
	KEELUNG SHIPPING LTD	 	)
	pursuant to a Power of Attorney	 	)         .../s/ Stefania Karmiri..............
	dated    	November 2021   	)         Attorney-in-fact

 

 

 

76

 

 

	SIGNED by	Stefania Karmiri	)
	attorney-in-fact for and on behalf of	 	)
	OAKLAND SHIPPING LTD  	 	)
	pursuant to a Power of Attorney	 	)         .../s/ Stefania Karmiri..............
	dated    	November 2021   	)         Attorney-in-fact

 

	SIGNED by	Athanasios Doudoulas	)        .../s/ Athanasios Doudoulas.............
	and by Konstantinos Kontopoulos 	 	)        .../s/ Konstantinos Kontopoulos......
	for and on behalf of	 	)
	PIRAEUS BANK S.A.        	 	)        ............................
	 	 	         Authorised signatories

 

 

 

Witness to all the above signatures         )

 

Name:Foteini Apalaki         ) /s/ Foteini Apalaki

 

Address:          )

 

 

 

 

77ex_361793.htm

Exhibit 4.31

 

 

THIS AGREEMENT is made on the 14th day of December 2021

 

BETWEEN:

 

(1)         MARCOS SHIPPING LTD, a corporation incorporated in accordance with the laws of the Republic of the Marshall Islands whose registered office is situated at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 as borrower (the “Borrower”);

 

(2)         THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “Lenders”);

 

(3)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as arranger through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Arranger”);

 

(4)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as account bank through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Account Bank”);

 

(5)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as agent through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Agent”); and

 

(6)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as security trustee through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Security Trustee”).

 

AND IT IS HEREBY AGREED as follows:

 

1.         PURPOSE, DEFINITIONS AND INTERPRETATION

 

1.1       Purpose

 

This Agreement sets out the terms and conditions upon and subject to which it is agreed that the Lenders will make available to the Borrower a secured term loan of up to the lesser of (a) $34,000,000 and (b) 52% of the charter-free market value of the Ship, by way of one (1) advance for the purpose of:

 

(a)         financing part of the acquisition cost of the Ship; or

 

(b)         refinancing part of the Borrower’s equity for the acquisition cost of the Ship, in case the Borrower has paid the Purchase Price of the Ship with its own funds.

 

 

1

 

 

1.2         Definitions.

 

In this Agreement, unless the context otherwise requires each term or expression defined in the recital of the parties and in this Clause shall have the meaning given to it in the recital of the parties, in this Clause:

 

“Account” means (a) each of the Earnings Account(s) and the Retention Account and (b) any other account opened, made or established for the purposes of this Agreement;

 

“Account Bank” means, in relation to any of the Earnings Account(s) or the Retention Account, Eurobank S.A., acting through its Shipping Division at 83, Akti Miaouli, 185 38 Piraeus, Greece, or any other branch or financial institution designated by the Agent from time to time at its sole discretion;

 

“Accounting Information” means the annual audited accounts for the Guarantor to be provided to the Agent in accordance with Clause 11.6 (a) of this Agreement (as the context may require);

 

“Accounts Pledges” means, together, the deed or deeds of pledge creating security over the Earnings Account and the Retention Account, to be executed by the Borrower in favour of the Lenders and/or Security Trustee and/or the Account Bank, in such form as the Agent may approve or require in compliance always with the laws governing same;

 

“Affected Lender” has the meaning given in Clause 5.5;

 

“Affiliate” means a subsidiary of that person or a parent company of that person or any other subsidiary of that parent company;

 

“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrower, the Lenders, the Arranger, the Account Bank, the Agent and the Security Trustee, in such form as the Agent may approve or require, as the same may from time to time be amended and/or supplemented;

 

“Agent” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;

 

"Approved Existing Charter" means, in relation to the Ship, the time charter dated 9 September 2021 and entered into by and between the Borrower and the Approved Existing Charterer;

 

“Approved Existing Charterer” means Maersk A/S of Esplanaden 50, 1263 Copenhagen K, Denmark;

 

“Approved Flag” means the flag of the Republic of Panama or such other flag as the Agent may, in its sole and absolute discretion, approve as the flag on which the Ship shall be registered;

 

2

 

 

“Approved Flag State” means the Republic of Panama or any other country in which the Agent may, in its sole and absolute discretion, approve that the Ship be registered;

 

“Approved Manager” means for the time being EUROBULK LTD, a company lawfully incorporated in, and validly existing under the laws of, the Republic of Liberia, whose registered office is at 80, Broad Street, Monrovia, Liberia and having an office established in Greece (at 4, Messogiou & Evropis Street, 151 24, Maroussi, Greece) pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) or any other company appointed by the Borrower with the prior written consent of the Agent (such consent not to be unreasonably withheld) from time to time as the commercial, technical and operational manager of the Ship;

 

“Approved Manager’s Undertaking-Assignment” means, in relation to the Ship, a letter of undertaking executed or (as the context may require) to be executed by the Approved Manager in favour of the Security Trustee for the Ship in the terms reasonably required by the Security Trustee, agreeing certain matters in relation to the Approved Manager and subordinating the rights of the Approved Manager against the Ship and the Borrower to the rights of the Creditor Parties under the Finance Documents and incorporating also a first priority assignment of all the rights which the Approved Manager may have in the Insurances relating to the Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule), in such form as the Agent, acting on the instructions of the Majority Lenders, may approve or require, as the same may from time to time be amended and/or supplemented;

 

“Arranger” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece;

 

“Asset Cover Ratio” means one hundred and twenty per cent (120%) of any outstanding balance of the Loan;

 

         “Availability Period” means the period commencing on the date of this Agreement and ending on:

 

the Latest Permissible Drawdown Date or such later date as the Lenders may agree with the Borrower; or

 

if earlier, the date on which the Commitment is fully borrowed, cancelled or terminated;

 

“Bail-In Action” means the exercise of any Write-down and Conversion Powers;

 

“Bail-In Legislation” means:

 

(a)         in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

 

3

 

 

(b)         in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation;

 

   “Basel II” means:

 

(a)         the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel II: International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 as amended, supplemented or restated; and

 

(b)         any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel II";

 

   “Basel III” means:

 

(a)          the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

 

(b)          the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

(c)          any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III";

 

   “Borrower” means the Borrower as specified in the beginning of this Agreement;

 

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

 

“Charged Property” means all of the assets of the Borrower or any other Security Party which from time to time are, or are expressed or intended to be, the subject of the Finance Documents.

 

4

 

 

“Charter” means any charter or other contract of employment whether already in existence, like the Existing Approved Charter, or not, of more than twelve months’ duration in respect of the employment of the Ship acceptable to the Agent.

 

“Charter Assignment” means the first priority assignment of any rights granted by the Borrower in favour of the Security Trustee, in such form as the Agent, acting on the instructions of the Majority Lenders, may approve or require, as the same may from time to time be amended and/or supplemented and respective notices of assignment and acknowledgements thereof.

 

"Charterer" in respect of any Charter, means the Approved Existing Charterer or any other first class charterer in the opinion of the Agent and acceptable to the Agent in its discretion, the Agent’s approval not to be unreasonably withheld;

 

“Classification Society” means in respect of the Ship, NKK or such other classification society which the Agent shall, at the request of the Borrower, have agreed in writing and shall be treated as the Classification Society of the Ship for the purpose of the Finance Documents;

 

“Code” means the United States Internal Revenue Code of 1986 (as amended);

 

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

 

“Commitment Fee” means the fee to be paid by the Borrower to the Agent pursuant to Clause 20.1 (b);

 

“Commitment Letter” means the commitment letter dated 1st December 2021 addressed by the Agent to the Guarantor duly accepted by the Borrower and the Guarantor on the same day;

 

 “Compliance Certificate” means a certificate referring to a compliance date in the form set out in Schedule 5 (or in any other form which the Agent approves) to be provided together with the financial accounts provided in accordance with Clauses 11.6 and 12.8;

 

“Compliance Date” means 31 December of each calendar year (or such other dates as the Agent may agree pursuant to Clause 12.8);

 

“Contractual Currency” has the meaning given in Clause 21.5;

 

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

 

"CRD IV" means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC;

 

“Creditor Party” means the Agent, the Security Trustee, the Arranger, the Account Bank and any Lender, whether as at the date of this Agreement or at any later time;

 

“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.

 

5

 

 

“Default Rate” means that rate of interest per annum which is determined in accordance with the provisions of Clause 7.2;

 

“Delivery” means the delivery of the Ship from the Seller thereof to, and the acceptance of the Ship by, the Borrower pursuant to the MOA;

 

“Delivery Date” means the date upon which the Delivery of the Ship occurs;

 

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

 

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

 

“Drawdown Date” means the date, being a Business Day falling not later than the Latest Permissible Drawdown Date on which the Loan is or, as the context may require, shall be advanced to the Borrower;

 

“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

 

“Earnings” means, in relation to the Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or (as the case may be) to the Security Trustee pursuant to the General Assignment or the Charter Assignment and which arise out of the use or operation of the Ship, including (but not limited to):

 

all freight, hire and passage moneys, compensation payable to the Borrower or (as the case may be) to the Security Trustee pursuant to the General Assignment in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

 

all moneys which are at any time payable under Insurances in respect of loss of earnings;

 

contributions of any nature whatsoever in respect of general average; and

 

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

 

“Earnings Account” means, in relation to the Ship, the Account opened or to be opened in the name of the Borrower with the Account Bank, which is designated by the Agent, as an Earnings Account for the Ship for the purposes of this Agreement;

 

"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway;

 

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

 

6

 

 

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

 

“Environmental Laws” means all national, international and state laws, rules, regulations, treaties and conventions applicable to any vessel owned, managed or crewed by or chartered to any Relevant Party pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern from the Ship;

 

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

 

“Evaluation Costs and Expenses” means the amounts to be paid by the Borrower under Clause 20.1 (a) hereof;

 

“Event of Default” means any of the events or circumstances described in Clause 19.1;

 

“FATCA” means:

 

sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

 

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

 

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

 

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

 

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

 

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

 

7

 

 

“Final Maturity Date” means the date falling on the earlier of (a) the fourth anniversary of the Drawdown Date and (b) 31 January 2026;

 

“Finance Documents” means:

 

this Agreement;

 

the Agency and Trust Deed;

 

the Guarantee;

 

the Accounts Pledges;

 

the Mortgage;

 

the General Assignment;

 

the Charter Assignment in connection with the Approved Existing Charter and any other future Charter Assignment;

 

the Approved Manager’s Undertaking;

 

the Guarantor’s Undertaking-Assignment; and

 

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

 

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

 

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

 

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

 

under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

 

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

 

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

 

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

 

8

 

 

“Financial Year” means, in relation to the Borrower, each period of 1 year commencing on 1 January thereof in respect of which its accounts are or ought to be prepared;

 

“GAAP” means generally accepted accounting principles as from time to time in effect in the United States of America;

 

“General Assignment” means, in relation to the Ship, a first priority deed of assignment collateral to the Mortgage registered or to be registered thereon, executed or (as the context may require) to be executed by the Borrower in favour of the Security Trustee, whereby the Borrower shall assign to the Security Trustee the Insurances, the Earnings and any Requisition Compensation of the Ship, in such form as the Agent (acting on the instructions of the Majority Lenders) may approve or require, as the same may from time to time be amended and/or supplemented and respective notices of assignment and acknowledgements thereof;

 

“Group” means the Guarantor and its subsidiaries (including the Borrower);

 

"Guarantee" means the guarantee and indemnity given or, as the context may require, to be given by the Guarantor in favour of the Security Trustee in form and substance satisfactory to the Agent, as security for the Secured Liabilities and any and all obligations of the Borrower under this Agreement;

 

“Guarantor” means EUROSEAS LTD. being a company incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other legal entity nominated by the Borrower and accepted by the Agent which have, or as the context may require, shall or may at any time guarantee the obligations of the Borrower under this Agreement and/or those of the other Security Parties to the Lenders and/or any other Creditor Party;

 

“Guarantor’s Undertaking-Assignment” means, in relation to the Ship, an undertaking to the Security Trustee in respect of the Ship executed or (as the context may require) to be executed by the Guarantor, being nominated as co-assured in the insurance policies for the Ship whereby the Guarantor would undertake throughout the Security Period, to subordinate any and all claims it may have against the Borrower and/or the Ship to the claims of the Lenders under the Loan Agreement and the Finance Documents and would incorporate also a first priority assignment of all the rights which the Guarantor may have in the Insurances relating to the Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule);

 

“IACS” means the International Association of Classification Societies;

 

“Insurances” means, in relation to the Ship:

 

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

 

9

 

 

all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

 

“Interbank Market” means the London interbank market;

 

“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which a separate Interest Period is fixed the last day of the relevant Interest Period and in case of any Interest Period longer than three (3) months the date(s) falling at successive three (3) monthly intervals during such longer Interest Period and the last day of such Interest Period;

 

“Interest Period” means in relation to the Loan or any part thereof, each period for the calculation of interest in respect of the Loan ascertained in accordance with Clause 6.;

 

“Interpolated Screen Rate” means in relation to LIBOR for the Loan (or any part of it), the rate which results from interpolating on a linear basis between:

 

(a)         the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period for the Loan (or the relevant part of it); and

 

(b)         the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period for the Loan (or the relevant part of it),

 

each as of 11:00 am (London time) on the relevant Quotation Day;

 

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) (as amended by MSC 104 (73)) and A.913(22) (superseding Resolution A.788(19)), as the same may be amended, supplemented or superseded from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

 

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

 

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

 

“Latest Permissible Drawdown Date” means the 31st January 2022, being the latest date for drawdown of the Loan pursuant to Clause 2 hereof;

 

“Lender” means, subject to Clause 26.6:

 

a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14), its successor or assign, unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

 

10

 

 

the holder for the time being of a valid Transfer Certificate;

 

“LIBOR” means, for an Interest Period:

 

(a)         the applicable Screen Rate; or

 

(b)         if no Screen Rate is available for the relevant Interest Period, the Interpolated Screen Rate for the Loan (or the relevant part of it); or

 

(c)         if:

 

   (i)         no Screen Rate is available for the currency of the Loan; or

 

   (ii)         no Screen Rate is available for the relevant Interest Period and it is not possible to calculate an Interpolated Screen Rate for the Loan (or the relevant part of it),

 

the Reference Bank Rate, as of 11:00 a.m. (London time) on the Quotation Day for the offering of deposits in dollars for a period comparable to the Interest Period for the Loan or relevant part of it, and if (in any of the above cases) that rate is less than zero (0), then LIBOR shall be deemed to be zero (0);

 

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

 

“Majority Lenders” means:

 

before the Loan has been made, Lenders whose Commitments are equal to or greater than 66 2⁄3 per cent. of the Total Commitments; and

 

after the Loan has been made, Lenders whose Contributions are equal to or greater than 66 2⁄3 per cent. of the Loan;

 

“Management Agreement” means the agreement made between the Borrower and the Manager providing (inter alia) for the Manager to manage the Ship);

 

“Mandatory Costs” shall have the meaning given to it in Clause 21.8;

 

“Margin” means two point eighty per cent (2.80%) per annum;

 

“Market Value” means, in relation to the Ship, the market value of the Ship determined not earlier than one month prior to the Drawdown Date and at least once a year thereafter by one separate, independent and reputable first class sale and purchase broker, appointed by and reporting to the Agent certifying the market value of the Ship on the basis set out in Clause 15.4 at the expense of the Borrower in accordance with Clause 15.4 and 15.9 hereof;

 

“Material Adverse Change” means any event or series of events which, in the reasonable opinion of the Majority Lenders, has or will have a Material Adverse Effect;

 

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“Material Adverse Effect” means, in the reasonable opinion of the Majority Lenders, a material adverse effect on:

 

the business, operations, property, condition (financial or otherwise) or prospects of the Borrower or any other Security Party (other than the Approved Manager); or

 

the ability of the Borrower or any other Security Party (other than the Approved Manager) to perform its respective obligations under the Finance Documents to which it is a party; or

 

the validity or enforceability of, or the effectiveness or ranking of, any Security Interest granted pursuant to any of the Finance Documents or the rights or remedies of any Creditor Party under any of the Finance Documents;

 

“Maximum Facility Amount” means an amount equal to the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship;

 

“Minimum Liquidity” means, at any time, free and unencumbered (other than in favour of the Lenders or the Agent or the Account Bank) minimum liquidity balances in aggregate of at least One million Dollars ($1,000,000) which is to be held during the Security Period in an account or accounts opened or to be opened with the Lenders or the Agent or the Account Bank in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent to be assessed on an annual average basis;

 

“MOA” means the memorandum of agreement dated 17 September 2021 together with a nomination letter dated 2 November 2021, as amended by Addendum No 1 thereto dated 22 November 2021 entered into between the Sellers, as sellers, and the Borrower as buyers, in respect of the sale by such Sellers and the purchase by the Borrower of the Ship and any and all further Addenda thereto;

 

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

 

“Mortgage” means, in relation to the Ship, the first priority or first preferred ship mortgage (as the case may be) on the Ship executed or to be executed by the Borrower in favour of the Security Trustee under an Approved Flag (and Deed of Covenant collateral thereto if applicable), in such form as the Security Trustee may approve or require, as the same may from time to time be amended and/or supplemented;

 

“Negotiation Period” has the meaning given in Clause 5.8;

 

“Net Worth” means the value of the total assets of the Guarantor minus total liabilities, as expressed in its financial statements;

 

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“Notifying Lender” has the meaning given in Clause 23.1;

 

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

 

“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union;

 

“Party” means a party to this Agreement or a Finance Document (together the “Parties”).

 

“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199);

 

“Payment Currency” has the meaning given in Clause 21.5;

 

“Permitted Security Interests” means:

 

Security Interests created by the Finance Documents;

 

liens for unpaid crew’s wages in accordance with usual maritime practice;

 

liens for salvage;

 

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

 

liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(h);

 

any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Borrower is prosecuting or defending such action in good faith by appropriate steps; and

 

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

 

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

 

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“Purchase Price” means in relation to the Ship, the price to be paid by the Borrower to the Sellers pursuant to the terms of the MOA or such other sum as is determined in accordance with the terms and conditions of the MOA;

 

“Quotation Day” means, in relation to any Interest Period for which an interest rate is to be determined, two London Business Days before the first day of that period unless market practice differs in the Interbank Market for a currency, in which case the Quotation Day for that currency shall be determined by the Agent in accordance with market practice in the Interbank Market (and if quotations would normally be given by leading banks in the Interbank Market on more than one (1) day, the Quotation Day will be the last of those days);

 

“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by each Reference Bank as the rate at which the relevant Reference Bank could borrow funds in the Interbank Market, in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period;

 

“Reference Banks” means, in respect of LIBOR, such banks as may be appointed by the Agent in consultation with the Borrower;

 

“Relevant Jurisdiction” means, in relation to the Borrower or any other Security Party:

 

(a)       its jurisdiction of incorporation;

 

(b)       any jurisdiction where any Charged Property owned by it is situated;

 

(c)       any jurisdiction where it conducts its business; and

 

(d)       any jurisdiction whose laws govern the perfection of any of the Finance Documents entered into by it.

 

“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them.

 

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

 

“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by the Borrower on a Repayment Date pursuant to Clause 8;

 

"Replacement Benchmark" means a benchmark rate which is:

 

(a)      formally designated, nominated or recommended as the replacement for the Screen Rate by:

 

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   (i)         the administrator of the Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by the Screen Rate); or

 

   (ii)        any Relevant Nominating Body,

 

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Benchmark" will be the replacement under paragraph (ii) above; and

 

(b)         in the opinion of the Majority Lenders and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to the Screen Rate; or

 

(c)         in the opinion of the Majority Lenders and the Borrower, an appropriate successor to the Screen Rate.

 

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

 

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;         

 

“Restricted Party” means a person that is:

 

(a)         listed on, owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; or

 

(b)         located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organised under the laws of a Sanctioned Country; or

 

(c)         otherwise a target of Sanctions ("target of Sanctions" signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities or against whom Sanctions are otherwise directed);

 

“Retention Account” means an interest bearing account in the name of the Borrower with the Lenders and/or the Account Bank, or any other account which is designated by the Agent as the Retention Account at its discretion for the purposes of this Agreement;

 

“Sanctioned Country” means a country or territory that is, or whose government is, the target of Sanctions broadly prohibiting dealings with such government, country or territory (currently including, without limitation, Cuba, Iran, North Korea Crimea, and Syria).

 

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or other restrictive measures adopted, administered, enacted or enforced by any Sanctions Authority, or otherwise imposed by any law or regulation to which the Borrower, any other Security Party and the Lenders are subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America);

 

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“Sanctions Authorities” means together:

 

(a)       the United States government;

 

(b)       the United Nations;

 

(c)       the European Union;

 

(d)       the United Kingdom; or

 

(e)       the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury (OFAC), the United States Department of State, and Her Majesty's Treasury (HMT);

 

“Sanctions List” means the "Specially Designated Nationals and Blocked Persons" list maintained by OFAC, any list maintained by OFAC within its “the Consolidated Sanctions List”, the Consolidated List of Financial Sanctions Targets maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities;

 

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars and the relevant period displayed (before any correction, recalculation or republication by the administrator) on pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate), or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower;

 

“Screen Rate Replacement Event" means, in relation to a Screen Rate:

 

(a)          the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Majority Lenders and the Borrower, materially changed; or

 

(b)         any of the following applies:

 

    (i)         either:

 

(aa)        the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

 

(bb)        information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

 

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provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate; or

 

    (ii)          the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

    (iii)         the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

 

    (iv)         the administrator of the Screen Rate or its supervisor announces that the Screen Rate may no longer be used; or

 

(c)         the administrator of the Screen Rate determines that the Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:

 

(i)         the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Majority Lenders and the Borrower temporary; or

 

(ii)        that Screen Rate is calculated in accordance with any such policy or arrangements for a period no less that ten Business Days; or

 

(d)        in the opinion of the Majority Lenders and the Borrower, the Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

 

“Secured Liabilities” means all liabilities which any Security Party, at the date of this Agreement or at any later time or times, has under or by virtue of any Finance Document and in the case of the Approved Manager under or by virtue of the Approved Manager’s Undertaking-Assignment or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

 

“Security Interest” means:

 

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

 

(b)       the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and

 

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

 

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“Security Party” means the Borrower, the Guarantor, the Approved Manager, and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within paragraph (j) of the definition of “Finance Documents”;

 

“Security Period” means the period commencing on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Finance Documents whensoever arising have been irrevocably paid, performed and/or complied with;

 

“Security Trustee” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;         

 

“Sellers” means the entity specified as “Sellers” in the MOA;

 

“Ship” means m.v “Leo Paramount” a bulk carrier of 71,892 gross tons, built in 2005 in Japan, with IMO 9307059, currently registered under the Panama flag in the ownership of the Sellers, which upon acquisition by the Borrower shall be registered in its ownership under the laws and flag of the Republic of Panama under the name “MARCOS V”;

 

“Total Loss” means:

 

actual, constructive, compromised, agreed or arranged total loss of the Ship;

 

any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire unless she is within 40 days redelivered to the full control of the Ship’s owner;

 

any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 40 days redelivered to the full control of the Ship’s owner;

 

“Total Loss Date” means:

 

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

 

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

 

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

 

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

 

18

 

 

(c)         in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred, provided that the Agent shall notify the Borrower of such date as soon as practicable;

 

   “Transfer Certificate” has the meaning given in Clause 26.2;

 

   “Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed; and         

 

“UK Bail-In Legislation” means (to the extent that the United Kingdom is not an EEA Member Country which has implemented, or implements, Article 55 BRRD) Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their Affiliates (otherwise than through liquidation, administration or other insolvency proceedings);

 

“US Tax Obligor” means:

 

(a)         the Borrower which is resident for tax purposes in the United States of America; or

 

(b)         a Security Party some or all of whose payments under the Finance Documents are from sources within the United States for US Federal income tax purposes.

 

“Write-down and Conversion Powers” means:

 

(a)         in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;

 

(b)         in relation to any other applicable Bail-In Legislation:

 

(i)         any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

 

(ii)         any similar or analogous powers under that Bail-In Legislation; and

 

(c)                  in relation to any UK Bail-In Legislation:

 

(i)         any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers; and

 

19

 

 

(ii)         any similar or analogous powers under that UK Bail-In Legislation.

 

1.3         Construction of certain terms. In this Agreement:

 

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

 

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

 

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

 

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

 

   “document” includes a deed; also a letter, fax or electronic mail;

 

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

 

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

 

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

 

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

 

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

 

   “months” shall be construed in accordance with Clause 1.4;

 

   “obligatory insurances” means all insurances effected, or which the Borrower is obliged to effect, under Clause 13 below or any other provision of this Agreement or another Finance Document;

 

   “parent company” has the meaning given in Clause 1.5;

 

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

 

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

 

   “protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision in the Norwegian Marine Insurance Plan;

 

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

 

   “subsidiary” has the meaning given in Clause 1.5;

 

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

 

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

 

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

 

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

 

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

 

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

 

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

 

1.5     Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

 

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

 

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

 

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

 

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

 

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

 

1.6     General Interpretation.

 

(a)     In this Agreement:

 

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

 

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

 

words denoting the singular number shall include the plural and vice versa.

 

(b)         Clauses 1.1 to 1.5 and paragraph (a) of this Clause 1.6 apply unless the contrary intention appears.

 

(c)         References in Clause 1.2 to a document being in the form of a particular Schedule or Appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires.

 

(d)         The clause headings shall not affect the interpretation of this Agreement.

 

(e)         This Agreement contains the entire agreement of the parties and its provisions supersede the provisions of the Commitment Letter any and all other prior correspondence and oral negotiation by the parties in respect of the matters regulated by this Agreement.

 

1.7         Event of Default. A Potential Event of Default and/or an Event of Default are “continuing” if either of them has not been remedied or waived.

 

2.           LOAN

 

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2.1         Amount of loan. Subject to the satisfaction of all conditions precedent and in reliance on the representations and warranties made in or in accordance with them and furthermore subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower in one (1) advance a principal amount being the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship.

 

2.2         Lenders' participations in Loan. Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

 

2.3         Purpose of Loan. The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in Clause 1.1 to this Agreement.

 

2.4         Application of Proceeds. The Lenders shall have no responsibility for the application of the proceeds of the Loan (or any part thereof) by the Borrower.

 

2.5         Duration of Lenders’ commitment. The Lenders will be under no liability to advance their respective Commitments or any part of them after the date of the expiry of the Availability Period, whereas any part of the Commitment undrawn and not cancelled at close of business on the date of expiry of the Availability Period shall automatically be cancelled.

 

2.6          Borrower’s right of cancellation

 

2.6.1       The Borrower shall be entitled to cancel the Loan under this Agreement upon giving the Lender not less than ten (10) days’ notice in writing to that effect.

 

2.6.2       Any notice of cancellation once given by the Borrower shall be irrevocable whereas any amount cancelled may not be drawn.

 

2.6.3       Notwithstanding any cancellation pursuant to sub-clause 2.6.1, the Borrower shall continue to be liable for any and all amounts due to the Lenders under this Agreement, including without limitation any amounts due under Clause 24 (Increased Costs).

 

3.           POSITION OF THE LENDERS

 

3.1         Interests of Lenders several. The rights of the Lenders under this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) are several; accordingly each Lender shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender and/or any other Creditor Party to be joined as an additional party in any proceedings for this purpose.

 

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

 

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3.3         Obligations of Lenders several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement to which it is a party shall not result in:

 

(a)         the obligations of the other Lenders being increased; nor

 

(b)         the Borrower, any Security Party, any other Lender being discharged (in whole or in part) from its obligations under any Finance Document,

 

    and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

 

3.4         Parties bound by certain actions of Majority Lenders. Every Lender and any other Creditor Party, the Borrower and each Security Party shall be bound by:

 

(a)         any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

 

(b)         any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document;

 

(c)         any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

 

3.5         Reliance on action of Agent. The Borrower and each Security Party shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take.

 

3.6         Construction. In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

 

4.           DRAWDOWN

 

4.1         Request for Loan. Subject to the following conditions, the Borrower may request the Loan to be advanced by ensuring that the Agent receives the Drawdown Notice not later than 11.00 a.m. (London time) two (2) Business Days prior to the intended Drawdown Date.

 

4.2         Availability. The conditions referred to in Clause 4.1 are that:

 

(a)         the Drawdown Date has to be a Business Day up to and including the Latest Permissible Drawdown Date; and

 

(b)         the amount of the Loan shall not exceed the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship as determined up to thirty days prior to the Drawdown Date; and

 

(c)         the Borrower has complied with the provisions of Clause 9.1 with respect to the Loan.

 

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4.3         Notification to Lenders of receipt of the Drawdown Notice. The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of:

 

(a)         the amount of the Loan drawn down and the Drawdown Date;

 

(b)         the amount of that Lender's participation in the Loan; and

 

(c)         the duration of the first Interest Period.

 

4.4         Drawdown Notice irrevocable. The Drawdown Notice shall specify the amount of the Loan and Business Day upon which same is required to be advanced as well as the proposed duration of the first Interest Period, shall give full details of the place and account to which the proceeds of the Loan are to be paid, which must both be acceptable to the Lenders and shall be signed by a director or an authorised attorney-in-fact of the Borrower, and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

 

4.5         Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on the Drawdown Date under Clause 2.2.

 

4.6         Disbursement of Loan.

 

4.6.1      Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrower shall be made          to the account which the Borrower specifies in the Drawdown Notice and in the same funds as the Agent received the payments from the Lenders.

 

4.6.2      In the event that the Loan is required to be drawn down prior to the satisfaction of the conditions precedent set out in Clause 9.1 and be remitted to the Sellers’ bank or any other bank (the “Relevant Bank”), the Agent may in its absolute discretion agree to remit such amount to the Relevant Bank prior to satisfaction of the requirements of Clause 9.1, on the condition that:

 

(a)         the amount remitted shall be held by the Relevant Bank in an account of any type whatsoever in the Agent’s name and to the order of the Agent;

 

(b)         such amount will only be released to the Sellers upon receipt by the Relevant Bank of (i) a copy of the protocol of delivery and acceptance for the Ship in the form agreed between the Sellers and the Borrower, duly signed on behalf of the Sellers and the Borrower and/or (as the case may be), countersigned on behalf of the Agent by a person named in the Agent’s remittance instructions, and (ii) written instructions in a form approved by the Relevant Bank, specifying the amount to be released, signed on behalf of the Agent by a person named in the Agent’s remittance instructions;

 

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(c)         such amount so released may be used only for payment in satisfaction of the balance of the Purchase Price and any other amount payable to the Sellers in respect of the acquisition of the Ship;

 

(d)         in the event the amount so remitted is not released to the Sellers in accordance with the Agent’s instructions or any part thereof is not so released by the time set out in the swift payment instructions to the Relevant Bank, the money held by the Relevant Bank is returned to the account specified in the Agent’s remittance instructions, in accordance with the swift payment instructions to the Relevant Bank; and

 

(e)         the requirements of Clause 9.1 shall be satisfied simultaneously with any release to the Sellers pursuant to sub paragraph (b) above.

 

4.7         Satisfaction of Conditions Precedent. Notwithstanding the giving of the Drawdown Notice pursuant to Clause 4.1, the Lenders shall not be obliged to disburse any funds until all the conditions precedent set out in Clause 9.1 have been satisfied, save as provided in Clause 9.2.

 

4.8         Deemed Indebtedness. The relevant payment by the Agent under Clause 4.6 shall constitute the advancement of the Loan and the Borrower shall thereupon become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's Contribution.

 

5.           INTEREST

 

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

 

5.2         Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the Margin and LIBOR for that Interest Period.

 

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

 

5.4         Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

 

(a)         each rate of interest; and

 

(b)         the duration of each Interest Period;

 

    as soon as reasonably practicable after each is determined.

 

5.5         Market disruption. The following provisions of this Clause 5.5 apply if:

 

(a)         at least one Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 40 per cent. of the Loan (or, if the Loan or part thereof has not been advanced, Commitments amounting to more than 40 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period (provided always that any such notifications by any such Lenders shall be duly substantiated); or

 

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(b)         at least one Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

 

5.6         Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.5 which have caused its notice to be given.

 

5.7         Suspension of drawdown. If the Agent's notice under Clause 5.6 is served before the Loan is advanced:

 

(a)         in a case falling within paragraph (a) of Clause 5.5, the Lenders' obligations to advance the Loan;

 

(b)         in a case falling within paragraph (b) of Clause 5.5, the Affected Lender's obligation to participate in the Loan;

 

    shall be suspended while the circumstances referred to in the Agent's notice continue.

 

5.8         Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.6 is served after the Loan is advanced, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within 30 Business Days after the date on which the Agent serves its notice under Clause 5.6 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

 

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

 

5.10       Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin; and the procedure provided for by this Clause 5.10 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

 

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5.11        Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.10, the Borrower may give the Agent not less than 15 Business Days' notice of their intention to prepay the Loan or, as the case may be, the Affected Lender's Contribution at the end of the interest period set by the Agent.

 

5.12        Prepayment; termination of Commitments. A notice under Clause 5.11 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

 

(a)          on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the relevant Contribution of the Affected Lender shall be cancelled; and

 

(b)         on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

5.13       Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

 

6.           INTEREST PERIODS

 

6.1         Commencement of Interest Periods. The initial Interest Period in respect of the Loan shall commence on the date on which the Commitment is advanced and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period;

 

6.2         Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

 

(a)         3 or 6 months as notified by the Borrower to the Agent not later than 11.00 am (London time) 2 (two) Business Days before the commencement of the initial Interest Period or, at the sole discretion of the Lenders of longer than 6 months at the Borrower’s request; or

 

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

 

(c)         such other period longer that 6 months as the Agent may, with the Majority Lenders' authority, agree with the Borrower.

 

6.3         Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date. No Interest Period shall extend beyond the final Repayment Date.

 

6.4         Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed to an Interest Period, any Lender notifies the Agent by 11:00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, then that Interest Period shall have such duration as the Agent after having consulted with the Borrower may determine.

 

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7.           DEFAULT INTEREST

 

7.1         Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or any other Creditor Party does not receive on or before the relevant due date for payment thereunder, that is:

 

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

 

(b)         if a Finance Document provides that such amount is payable on demand, three (3) days following the date on which the demand is served; or

 

(c)         if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

 

7.2         Default rate of interest and its calculation. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be two point fifty per cent (2.50%) per annum above the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

 

(i)          LIBOR; or

 

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

 

7.3         Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.2 and of each period selected by the Agent for the purposes of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent's notification.

 

7.4         Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

 

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7.5         Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

 

8.           REPAYMENT AND PREPAYMENT

 

8.1         Amount of repayment instalments. The Borrower shall repay the Maximum Facility Amount by sixteen (16) consecutive equal quarterly instalments, the first twelve (12) instalments in the amount of two million Dollars ($2,000,000) each, followed by four (4) instalments in the amount of seven hundred fifty thousand Dollars($750,000) each and by a balloon payment of seven million Dollars ($7,000,000) (the “Balloon Instalment”).

 

8.2         Repayment Dates. The first instalment of the Loan shall be repaid on the date falling three (3) months after the Drawdown Date and each subsequent instalment shall be repaid at three monthly intervals thereafter and the Balloon Instalment shall be repaid concurrently with the sixteenth (16th) and final repayment instalment, which shall be repaid on the final Repayment Date being the date falling on the Final Maturity Date,

 

Provided always that if the amount of the Loan drawn down hereunder is less than $34,000,000 then the amount of the repayment instalments and of the Balloon Instalment shall be reduced on a pro rata basis.

 

8.3         Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to the Lenders all other sums then accrued or owing under any Finance Document.

 

8.4         Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or part of the Loan on the last day of an Interest Period.

 

8.5         Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

 

(a)         a partial prepayment shall be in the minimum amount of Dollars Five Hundred Thousand ($500,000) or a multiple thereof;

 

(b)         the Agent has received from the Borrower at least ten (10) Business Days prior written confirmative and irrevocable notice specifying the amount to be prepaid in connection with the Loan and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

 

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

 

8.6         Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

 

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8.7         Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

 

8.8         Mandatory prepayment. The Borrower shall be obliged to prepay the Loan in full together with accrued interest to the date of prepayment and all other sums payable by the Borrower to the Lenders pursuant to this Agreement and the other Finance Documents (and if the Commitment or any portion thereof has not been drawn yet, it shall be reduced to zero) if the Ship is sold (provided that no Event of Default has occurred and is continuing and then, subject to the prior written consent of the Agent, not to be unreasonably withheld), refinanced by another bank or financial institution or becomes a Total Loss:

 

(a)         in the case of a sale of the Ship (whether for further trading or scrapping), on the earlier of (i) the date on which the sale is completed by delivery of the Ship to the buyer and (ii) the date of receipt by the Borrower of the sale proceeds; or

 

(b)         in the case of a refinancing of the Ship, on or before the date on which the refinancing takes place; or

 

(c)         in the case of a Total Loss of the Ship, on the earlier of (i) the date falling one hundred eighty (180) days after the Total Loss Date and (ii) the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

 

8.9         Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the Loan and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 21.2 but without premium or penalty).

 

8.10       Application of partial prepayment. Each partial prepayment shall be applied against the repayment instalments of the Loan specified in Clause 8.1 (including the Balloon Instalment) on a pro rata basis.

 

8.11       No reborrowing. No amount prepaid or repaid may be re-borrowed.

 

9.           CONDITIONS PRECEDENT

 

9.1         Documents, fees and no default. Each Lender's obligation to contribute to the Loan is subject to the following conditions precedent:

 

(a)         that, on or before the date of signing of this Agreement, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

 

(b)         that, on or before the date of drawdown of the Loan, the Lender receives the documents described in Part B in Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

 

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(c)         that, on or before the service of the Drawdown Notice, the Agent receives the fees payable pursuant to Clause 20.(a) (i) and has received payment of the expenses referred to in Clause 20.2;

 

(d)         that at the date of the Drawdown Notice, at the Drawdown Date and on the first day of each Interest Period and on the date of each Compliance Certificate:

 

(i)          no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

 

(ii)         the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading in any material respect if repeated on each of those dates with reference to the circumstances then existing;

 

(iii)        none of the circumstances contemplated by Clause 5.5 has occurred and is continuing;

 

(iv)        there has not been a Material Adverse Change in the financial position or state of affairs of the Borrower and/or the Group from that disclosed to the Agent prior to the date of this Agreement;

 

(e)         that, if the ratio set out in Clause 15.1 were applied immediately following the advancement of the Loan, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

 

(f)          that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent (acting reasonably) may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

 

9.2         Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Loan to be advanced before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).

 

10.           REPRESENTATIONS AND WARRANTIES

 

10.1         General. The Borrower represents and warrants to each Creditor Party as follows:

 

10.2         Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands and in compliance with the Republic of the Marshall Islands Economic Substance Regulation 2018 in accordance with its terms and time frame once the same becomes applicable; neither the Borrower nor any Security Party is a FATCA FFI or a US Tax Obligor.

 

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10.3         Share capital and ownership. The Borrower has an authorised share capital divided into 500 registered shares and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim by the Guarantor.

 

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

 

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

 

(b)            to borrow under this Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which the Borrower is a Party.

 

10.5         Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

 

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

 

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

 

(b)           create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate, subject to any relevant insolvency laws affecting creditors' rights generally.

 

10.7         No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

 

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

 

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

 

10.8         No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

 

(a)           any law or regulation in any Relevant Jurisdiction; or

 

(b)           the constitutional documents of the Borrower; or

 

(c)           any contractual or other obligation or restriction which is binding on the Borrower or any of its assets, and will not have a Material Adverse Effect.

 

10.9        No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Relevant Jurisdiction.

 

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

 

10.11         Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.6; all audited and consolidated accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no Material Adverse Change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts which constitutes a Material Adverse Effect.

 

10.12         No litigation. No legal or administrative action involving the Borrower or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case and if determined adversely, would be likely to have a Material Adverse Effect.

 

10.13         Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.5, 11.9, 11.11 and 11.17.

 

10.14         Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to it and its business.

 

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

 

10.16         No Money Laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of their obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that (i) it is acting for its own account, (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement and (iii) that the foregoing will not involve or lead to contravention of any law, official requirements or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

 

10.17         Patriot Act. To the extent applicable to the Borrower, the Borrower is in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government 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.

 

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10.18         Social law matters. The Borrower is in compliance in all material respects with any employment law or relevant regulation applicable to it.

 

10.19         MOA valid. the copy of the MOA and any document related to the Ship’s acquisition to be delivered to the Agent shall be a true and complete copy of such document constituting valid and binding obligations of the parties thereto enforceable in accordance with its terms and no amendments thereto or variations thereof shall have been (or will be) agreed nor shall any action been taken by the parties thereto which would in any way render such document inoperative or unenforceable.

 

10.20         The Ship. The Ship will upon her delivery to the Borrower and at any time thereafter be:

 

(a)             in the absolute and unencumbered (other than in favour of the Lenders or any other Creditor Party) ownership of the Borrower who will on and after the Ship’s delivery be the sole, legal and beneficial owner of the Ship;

 

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

 

(c)            operationally seaworthy and in every way fit for service, provided that the Borrower will not be in violation of this sub-clause 10.20 (c) in cases of (i) small off hire incidents occurring during the normal course of trading of the Ship or (ii) in cases of normal maintenance/repairs or (iii) in cases of damage to the Ship by causes for which it is insured under the Ship’s Insurances and all necessary steps have been taken to repair such damage to the satisfaction of any requirements set by the Ship’s Classification;

 

(d)            classed with the relevant Classification free of all qualifications and overdue recommendations of the relevant Classification Society affecting class;

 

10.21 Ship’s employment. The Ship is not subject to any Charter other than the Approved Existing Charter and will not be subject to any other charter or contract of employment or to any other agreement to enter into any charter or contract which, if entered into after the date of the Mortgage/General Assignment would have required the consent of any Creditor Party and on the date of her delivery to the Borrower and any time thereafter there will not be any agreement or arrangement whereby the Earnings (as defined in the Mortgage/General Assignment) of the Ship may be shared with any other person.

 

10.22         No Security Interests. Neither the Ship, nor her Earnings, Insurances or Requisition Compensation (each as defined in the Mortgage/General Assignment) nor the Accounts or any of them nor any other properties or rights which are, or are to be, the subject of any of the Finance Documents will be, on the date the Ship will be delivered to the Borrower subject to any Security Interest other than Permitted Security Interests.

 

10.23         No immunity. Neither the Borrower nor any of its respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement).

 

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10.24        Valid choice of Law. The choice of law agreed to govern this agreement and/or any other finance document and the submission to the jurisdiction of the courts agreed in each of the finance documents are or will be, on execution of the respective finance documents, valid and binding on the Borrower and any other security party which is or is to be a party thereto.

 

11.            GENERAL UNDERTAKINGS

 

11.1          General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

 

11.2          Title; negative pledge; pari passu. The Borrower will:

 

(a)            ensure that the Ship upon her delivery to the Borrower will maintain its ownership, management, control and ultimate beneficial ownership and the Borrower will hold the legal title to, and own the entire beneficial interest in the Ship’s Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and except for Permitted Security Interests. For the avoidance of doubt the Lenders consent and agree to any changes relating to the shareholders of the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement;

 

(b)           not create or permit to arise any Security Interest (except for Permitted Security Interests) over any of its asset, present or future; and

 

(c)           procure that its liabilities under the Finance Documents to which it is a party to will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

 

11.3        No disposal of assets. The Borrower will not (without the prior written consent of the Agent, acting with authority from the Majority Lenders) transfer, lease or otherwise dispose of:

 

(a)          all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

 

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

 

11.4       No other liabilities or obligations to be incurred. The Borrower will not incur any liability or obligation except (i) liabilities and obligations under the Finance Documents to which it is a party and (ii) liabilities or obligations incurred in the ordinary course of their business of operating and chartering the Ship.

 

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

 

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Provision of financial statements. The Borrower will:

 

(a)         procure that the Guarantor furnishes the Agent, with annual, audited and consolidated financial statements of the Guarantor within 180 days after the end of the financial year concerned, and prepared in accordance with GAAP consistently applied, such obligation commencing from the 1st January 2022;

 

(b)         send to the Agent, together with the Accounting Information referred to in paragraph (a) above, a Compliance Certificate; and

 

(c)         provide the Agent from time to time as the Agent may reasonably request and in form and substance satisfactory to the Agent with any information on the financial condition, commitments, business and operations of the Borrower and any other Security Party.

 

11.7       Form of financial statements. All financial statements delivered under Clause 11.6 will:

 

(a)         give a true and fair view of the state of affairs of the Guarantor, or as the case may be, of the Borrower at the date of those accounts and of the profit for the period to which those accounts relate; and

 

(b)         fully disclose or provide for all significant liabilities of the Guarantor, or as the case may be, of the Borrower for the period to which those accounts relate,

 

to the Agent’s satisfaction.

 

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

 

(a)         for the Borrower and any Security Party to perform their respective obligations under each of the Finance Documents to which each of them is a party;

 

(b)         for the validity or enforceability of any Finance Document to which each of the Borrower and any Security Party is party,

 

and the Borrower will comply (and will ensure that each Security Party will comply) with the terms of all such consents.

 

11.9       Maintenance of Security Interests. The Borrower will:

 

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

 

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

 

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11.10         Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, the Approved Manager and any other Security Party or the Ship, its Earnings or its Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered as having a Material Adverse Effect on the business, assets or financial condition of them or as affecting the validity or enforceability of any Finance Document.

 

11.11         Principal place of business. The Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

 

11.12         Confirmation of no default. The Borrower will, not more than once per quarter and within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by at least one (1) director of the Borrower and which:

 

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

 

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

 

11.13         Notification of default. The Borrower will notify the Agent as soon as the Borrower becomes aware of:

 

(a)             the occurrence of an Event of Default or a Potential Event of Default which is continuing; or

 

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

 

and will thereafter keep the Agent fully up‐to‐date with all developments.

 

11.14        Provision of further information. The Borrower will inform the Agent of all major financial developments in the Group such as new loans, refinancing/restructuring of existing loans, new acquisitions and sales, contracts for term employment of the Ship and furthermore will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

 

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

 

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

 

which may be requested by any Creditor Party at any time.

 

11.15        Provision of customer information. The Borrower will produce such documents and evidence as the Lenders shall from time to time require, based on applicable laws and regulations from time to time and the Lenders’ own internal guidelines from time to time, relating to the Lenders’ knowledge of its customers.

 

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11.16        Ownership. The Borrower or, as the case may be, any other corporate Security Party shall ensure that, throughout the Security Period without the prior written consent of the Agent, which shall not be unreasonably withheld, there shall be no change in the Directors and Officers in the Borrower and in the Chief Executive Officer(s) of the Guarantor and moreover the Borrower shall ensure that no change shall be made directly or indirectly in the ownership of the Borrower, the beneficial ownership of the Guarantor, or the control of the Borrower, as disclosed to the Agent prior to the date of this Agreement, without the prior written consent of the Agent, which shall not be unreasonably withheld. For the avoidance of doubt the Lenders consent and agree to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement.

 

11.17       Sanctions         

 

(a)           The Borrower undertakes to comply (and shall procure that each other Security Party shall comply) in all respects with all Sanctions.

 

(b)           The Borrower undertakes not to use (and shall procure that no other Security Party shall use) any revenue or benefit derived from any activity or dealing with a Restricted Party in discharging any obligation due or owing to the Creditor Parties.

 

(c)           The Borrower undertakes to ensure (and shall procure that each other Security Party shall ensure) that no proceeds to the best of its knowledge (after reasonable enquiry) from any activity or dealing with a Restricted Party are credited to any bank account held with any Creditor Party in its name.

 

(d)          The Borrower undertakes (and shall procure that each other Security Party shall), to the extent permitted by law, promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority.

 

11.18       Use of proceeds. The Borrower shall not (and shall procure that no other Security Party and no Affiliate of any of them shall) permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Party; or (ii) in any other manner that could result in the Borrower or any other Security Party or any Creditor Party being in breach of any Sanctions or becoming a Restricted Party.

 

11.19       Anti-Corruption.

 

(a)           The Borrower shall not (and shall procure that no other Security Party r will) directly or indirectly use the proceeds of the Loan for any purpose which would breach or might breach applicable anti-corruption laws, including but not limited to the UK Bribery Act of 2010 and the United States Foreign Corrupt Practices Act of 1977, each as amended.

 

(b)          The Borrower shall (and shall procure that each other Security Party will):

 

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(i)           conduct its business in compliance with applicable anti-corruption laws and regulations; and

 

(ii)          maintain effective policies and procedures designed to promote and achieve compliance with such laws and regulations.

 

11.20      Social law matters. The Borrower shall (and shall procure that each other Security Party shall) comply in all respects with with any employment law or relevant regulation applicable to it.

 

11.21      Compliance with other laws. The Borrower shall (and shall procure that each other Security Party shall) comply in all respects with          all laws and regulations to which it may be subject including without limitation (i) the Trading with the Enemy Act and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) and any other enabling legislation or executive order thereto) and (ii) the PATRIOT Act; and

 

11.22      Marshall Islands Economic Substance Regulations 2018. The Borrower shall (and shall procure that each other Security Party incorporated in the Republic of the Marshall Islands shall) comply in all respects with the Republic of the Marshall Islands Economic Substance Regulations 2018 (including submission to the Agent of documentary evidence of such compliance) always in accordance with its terms and time frame once the same becomes applicable.

 

11.23      ANNEX VI. The Borrower shall, upon the request of any Lender and at the cost of the Borrower, on or before 31st July in each calendar year, supply or procure the supply to the Agent, of all ship fuel oil consumption data required to be collected and reported by the Borrower in accordance with Regulation 22A of Annex VI and any Statement of Compliance, together with a Carbon Intensity and Climate Alignment Certificate (if the same becomes mandatory), in each case relating to the Ship for the preceding calendar year and in accordance with the terms and time frame relevant applicable regulations of Annex VI may from time to time come in force and effect; and

 

For the purposes of this Clause 11.23:

 

"Annex VI" means Annex VI of the Protocol of 1997 (as subsequently amended from time to time) to amend the International Convention for the Prevention of Pollution from Ships 1973 ("MARPOL"), as modified by the Protocol of 1978 relating thereto;

 

"Carbon Intensity and Climate Alignment Certificate" means a certificate from a Recognised Organisation relating to the Ship and a calendar year setting out:

 

(a)         the average efficiency ratio of the Ship for all voyages performed by it over that calendar year using ship fuel oil consumption data required to be collected and reported in accordance with regulation 22A of Annex VI in respect of that calendar year; and

 

(b)         the climate alignment of the Ship for such calendar year,

 

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"Recognised Organisation" means, in respect of the Ship, the Ship’s flag state or an organisation which is likely to be RINA representing the Ship’s flag state and duly authorised to determine whether the Borrower has complied with regulation 22A of Annex VI.

 

"Statement of Compliance" means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.

 

11.25     Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide one (1) copy for each Creditor Party.

 

12.         CORPORATE UNDERTAKINGS

 

12.1       General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

 

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

 

12.3       Negative undertakings. The Borrower will not:

 

(a)         carry on any type of business other than the ownership, chartering and operation of the Ship in accordance with its constitutional documents;

 

(b)         make any form of distribution (other than payment of a dividend pursuant to Clause 12.4) or effect any form of redemption, purchase, reduction or return of share capital or issue, allot or grant any person a right to any shares in its capital; or

 

(c)         without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any debt or provide any form of credit or issue any guarantee to any person, except in the ordinary course of business; or

 

(d)         without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), open or maintain any account with any bank or financial institution except accounts with the Account Bank for the purposes of the Finance Documents and accounts notified to the Agent prior to the date of this Agreement; or

 

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

 

(f)         enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation, or change its name; or

 

(g)         purchase any further assets (other than the Ship), either directly or indirectly (through subsidiaries); or

 

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(h)           without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any other Financial Indebtedness. Any shareholder loans, inter company loans, affiliate loans and third party loans to the Borrower shall be fully subordinated to the rights of the Creditor Parties under the Loan Agreement and the Finance Documents, on terms satisfactory to the Agent in its sole discretion.

 

12.4         Dividends. The Borrower may declare or pay any dividends or other distribution as long as no Event of Default has occurred which is continuing and such declaration of payment would not result to an Event of Default.

 

12.5         Liquidity. The Borrower will ensure that throughout the Security Period the Borrower or the Guarantor or any other entity acceptable to the Lender maintain with the Lenders or the Agent or the Account Bank the Minimum Liquidity.

 

12.6         Debt to equity ratio. The Borrower will ensure that the Guarantor’s total debt net of cash will not exceed 75% of the total market value of its assets.

 

12.7         Minimum Net Worth. The Borrower will ensure that the Guarantor’s minimum Net Worth listed in Nasdaq will be at least Dollars fifteen million ($15,000,000).

 

12.8         Compliance Check. On each Compliance Date, compliance with the undertakings contained in Clause 15.1 shall be determined by reference to the Accounting Information for the twelve month period in each Financial Year of the Borrower (commencing with the twelve month period commencing on 1 January 2022) delivered to the Agent pursuant to the Agreement. At the same time as they deliver that Accounting Information, the Borrower shall deliver to the Agent a Compliance Certificate signed by a director of the Borrower. If, prior to the delivery of a Compliance Certificate, the Borrower become aware that such undertakings will not be complied with, the Borrower shall immediately notify the Agent thereof.

 

12.9         Application of FATCA The Borrower shall not become (and shall procure that no Security Party shall become) a FATCA FFI or a US Tax Obligor, without the prior written consent of the Lenders.

 

12.10 Republic of the Marshall Islands Economic Substance Regulations 2018. The Borrower will ensure that each of the Security Parties incorporated in the Republic of the Marshall Islands shall comply in all respects and remain in compliance with the Republic of the Marshall Islands Economic Substance Regulations 2018 in accordance with its terms and time frame once the same becomes applicable.

 

13.           INSURANCE

 

13.1         General. The Borrower undertakes with each Creditor Party to comply (and to the extent applicable to procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will comply) with the following provisions of this Clause 13 at all times during the Security Period, except as the Agent may (with the authority of the Majority Lenders), otherwise permit.

 

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13.2       Maintenance of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) keep the Ship insured at its or at the relevant Security Party’s expense against:

 

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

 

(b)         war risks (including war protection and indemnity liabilities, terrorism, piracy and confiscation); and

 

(c)         protection and indemnity risks (including cover for oil pollution liability risks); and

 

(d)         any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for the Borrower and/or the relevant Security Party to insure and which are specified by the Security Trustee by notice to the Borrower.

 

13.3       Terms of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each Security Party other entity if named as co-assured in the insurance policies will) effect such insurances:

 

(a)         in Dollars;

 

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

 

(c)         in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

 

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

 

(e)         on approved terms; and

 

(f)         through approved brokers and with approved insurance companies and/or underwriters and/or war risks associations, and protection and indemnity risks shall be placed with a member of the International Group of P&I Clubs.

 

13.4      Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrower will:

 

(a)         procure that the obligatory insurances shall be in the name of the Borrower and/or any other entity named as co-assured in the insurance policies of the Ship or whenever the Security Trustee so requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

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(b)         procure that the insurers shall note the Security Trustee’s interest and endorse the relevant notices of assignment and loss payable clause on the relevant certificates of entry or policies and shall furnish the Security Trustee with a copy of such certificates of entry or policies;

 

(c)         use its best endeavors to provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set‐off, counterclaim or deductions or condition whatsoever;

 

(d)         provide that following an Event of Default which is continuing the Security Trustee may make proof of loss if the Borrower fails to do so.

 

13.5       Renewal of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will):

 

(a)         at least 21 days before the expiry of any obligatory insurance:

 

(i)          notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that insurance and of the proposed terms of renewal; and

 

(ii)         in case of any material change in insurance cover, obtain the Majority Lenders' approval to the matters referred to in paragraph (i) above;

 

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

 

(c)         procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall before the expiry of the current insurances notify the Security Trustee in writing of the terms and conditions of the renewal.

 

13.6      Copies of policies; letters of undertaking. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

 

(a)         they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

 

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

 

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

 

(d)         they will notify the Security Trustee, not less than 7 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

 

(e)         if the insurances form part of a fleet cover, they will not set off any claims on the Ship against premiums due for other vessels under the fleet cover not mortgaged to the Agent or against premiums due for other insurances; neither will they cancel the insurance cover of the Ship for reason of non-payment of such premiums; and they will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

 

13.7      Copies of certificates of entry. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will)ensure that, from any protection and indemnity and/or war risks associations in which the Ship is entered, the Security Trustee is provided with:

 

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

 

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

 

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

 

13.8        Deposit of original policies. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

 

13.9        Payment of premiums. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party if named as co-assured in the insurance policies will) punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

 

13.10      Guarantees. The Borrower shall (and to the extent applicable shall procure that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

13.11      Restrictions on employment. The Borrower shall not employ the Ship, nor permit same to be employed, outside the cover provided by any obligatory insurances.

 

13.12      Compliance with terms of insurances. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

 

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(a)         the Borrower shall (and shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

 

(b)         the Borrower shall not (and shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances; and

 

(c)         the Borrower shall not (and shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) employ any, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

13.13         Alteration to terms of insurances. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) make or agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee (not to be unreasonably withheld).

 

13.14         Settlement of claims. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without the prior written consent of the Security Trustee (which consent will not be unreasonably withheld),, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances in accordance with the Finance Documents.

 

13.15         Provision of copies of communications. The Borrower shall (and to the extent applicable shall procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will), if required by the Security Trustee, provide the Security Trustee, at the time of each such communication, copies of all material written communications between the Borrower and:

 

(a)         the approved brokers; and

 

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

 

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

 

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

 

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

 

13.16    Provision of information. In addition, the Borrower shall (and to the extent applicable shall procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will) promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably requests for the purpose of:

 

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

 

(b)         effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances,

 

and the Borrower and/or (as the case may be) any other Security Party or other entity, in all cases if named as co-assured in the insurance policies shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above (it being understood however that prior to the occurrence of an Event of Default which is continuing the Borrower will only bear the costs of such insurance reports once per year).

 

13.17         Mortgagees’ interest. The Agent shall be entitled from time to time to effect, maintain and renew a mortgagees’ interest insurance in an amount equal to 110% of the Loan and otherwise on such terms, through such insurers and generally in such manner as the Lenders may from time to time consider appropriate and the Borrower shall upon demand against appropriate vouchers/invoices fully indemnify the Lenders in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

13.18         Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the reasonable opinion of the Majority Lenders, significant and capable of affecting the Borrower and/or to the extent applicable any other Security Party or other entity in all cases if named as co-assured in the insurance policies or the Ship and her insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower and/or (as the case may be) any other Security Party or other entity in all cases if named as co-assured in the insurance policies may be subject), and, prior to the occurrence of an Event of Default which is continuing, may appoint insurance consultants in relation to this review at the cost of the Borrower and/or any other Security Party or other entity in all cases if named as co-assured in the insurance policies, subject to such appointment taking place once per year.

 

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13.19         Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders (acting reasonably) consider appropriate in the circumstances.

 

13.20         Compliance with instructions. The Security Trustee shall be entitled but will not be bound to (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to effect the insurances of the Ship in the amount and in terms acceptable to the Security Trustee from time to time at the cost and on behalf of the Borrower and/ to the extent applicable or any other Security Party or other entity in all cases if named as co-assured in the insurance policies.

 

14.         SHIP’S COVENANTS

 

14.1         General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period, except as the Agent (with the authority of the Majority Lenders) may otherwise permit.

 

14.2         Ship's name and registration. The Borrower shall keep the Ship registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry or flag of the Ship without the prior written consent of the Agent (acting on the authority of the Majority Lenders), such consent not to be unreasonably withheld.

 

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

 

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

 

(b)         so as to maintain the Ship with the highest classification available for vessels of the same age, type and specification as the Ship with Lloyd’s Register of Shipping (or such other first class classification society being a member of IACS and as may be approved by the Security Trustee), free of overdue recommendations and conditions affecting the Ship’s class; and

 

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

 

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

 

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14.5         Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lenders and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the Mortgage Provided that the Borrower may install leased equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

 

14.6         Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes, at the cost and expense of the Borrower. The Agent shall have the right to request one or more technical survey reports of the Ship by surveyors appointed to by the Agent at the cost of the Borrower, provided that the frequency of such reports shall be limited to one per year (unless an Event of Default shall have occurred and is continuing).

 

14.7         Inspection. The Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times, but without interference to the Ship’s trading and operations, to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. Provided that the Ship is found to be in satisfactory condition, the cost of such inspections shall be borne by the Borrower not more than once per year.

 

14.8         Prevention of and release from arrest. Unless contested in good faith by appropriate proceedings, the Borrower shall promptly discharge:

 

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

 

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

 

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

 

14.9         Compliance with laws etc. The Borrower shall:

 

(a)         comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of the Borrower (including, without limitation, the obtaining of all relevant certificates of financial responsibility and any other matters required for entering United States territorial waters or calling at any United States Port);

 

(b)         comply (and procure that each Security Party and each Affiliate of any of them shall comply) in all aspects with all Sanctions;

 

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(c)         not employ the Ship nor allow her employment in any manner contrary to any Sanctions;

 

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

 

14.10         Provision of information. The Borrower shall promptly provide the Security Trustee with any information which the Majority Lenders reasonably request regarding:

 

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

 

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

 

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

 

(d)         any towages and salvages;

 

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

 

and, upon the Security Trustee's request, provide copies of any current charter relating to the Ship and of any current charter guarantee, and copies of the ISM Code and ISPS Code documentation.

 

14.11         Notification of certain events. The Borrower shall immediately notify the Security Trustee by letter of:

 

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

 

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

 

(c)         any requirement or recommendation made by any insurer or classification society (or any withdrawal of class) or by any competent authority which is not complied with in accordance with its terms;

 

(d)         any arrest or detention of the Ship which is not lifted within forth eight (48) hours, any exercise or purported exercise of any lien on the Ship or her Earnings or any requisition of the Ship for hire;

 

(e)         any intended dry docking of the Ship;

 

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

 

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

 

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

 

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

 

14.12         Restrictions on chartering, appointment of managers, etc. The Borrower shall not without the prior written consent of the Agent (acting on the authority of the Majority Lenders):

 

(a)         let the Ship on demise charter for any period;

 

(b)         except for the Existing Approved Charter, enter into any time charter or bareboat charter or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

 

(c)         enter into any charter in relation to the Ship under which more than 2 months' hire (or the equivalent) is payable in advance;

 

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

 

(e)         appoint a commercial, technical or operational manager of the Ship (other than the Approved Manager) or agree to any material alteration to the terms of the Approved Manager's appointment (and in respect of which, the consent of the Agent shall not be unreasonably withheld);

 

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

 

(g)         change the legal ownership of the shares in the Ship;

 

(h)         put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed Seven Hundred Fifty Thousand Dollars ($750,000) (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or her Earnings for the cost of such work or otherwise; or

 

(i)         change the classification society with which the Ship is classed (and in respect of which, the consent of the Agent and the authority of the Majority Lenders shall not be unreasonably withheld).

 

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

 

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14.14         Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings other than a profit sharing agreed at arm’s length under a charter party provided that it is not a part of any pool arrangement, in which case the Agent’s prior written consent will be required (such consent not to be unreasonably withheld).

 

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

 

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

 

(b)         maintain for the Ship an ISSC; and

 

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

 

14.16         Charter Assignment. in the case of the Existing Approved Charter and/or if the Borrower enters into any other time charter or contract of affreightment in respect of the Ship which is of twelve (12) months or more in duration, or is capable of exceeding twelve (12) months in duration, the Borrower shall execute in favour of the Security Trustee a Charter Assignment and notice of assignment (and shall use its best endeavours to obtain an acknowledgement of the same from the relevant charterer or counterparty) of such time charter or contract of affreightment in such form and on such terms as the Agent may reasonably require, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 2, 3, 4 and 5 of Schedule 3, Part A hereof as the Agent may reasonably require.

 

15.         ASSET COVER RATIO SHORTFALL - ship’s valuation

 

15.1         Minimum Security Cover; Provision of additional security cover; prepayment of Loan. In the event the Agent (acting on the instructions of the Majority Lenders) notifies the Borrower that:

 

(a)         the Market Value (determined as provided below) of the Ship; plus

 

(b)         the net realisable value of any additional security previously provided under this Clause 15 (but always excluding any amounts standing to the credit of the Earnings Account and the Retention Account),

 

is during the Security Period below the Asset Cover Ratio, the Borrower undertakes that it will, within thirty (30) days after the date on which the Agent's notice is served, either:

 

(i)         provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which consists of either (aa) cash pledged to the Security Trustee or any other Creditor Party which when in the form of cash in Dollars, will be valued on a Dollar for Dollar basis or (bb) a Security Interest (including, but not limited to, a first priority mortgage over another vessel), covering such asset or assets and documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require; or

 

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(ii)         prepay in accordance with Clause 8 such part of the Loan as will eliminate the shortfall, such prepayment to be applied against repayment instalments of the Loan (including the payment of the Balloon Instalment) on a pro rata basis.

 

15.2         Meaning of additional security. In Clause 15.1 “security” means a Security Interest over an asset or assets (whether securing the Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower’s liabilities under the Finance Documents, in each case in a form and substance acceptable to the Agent in its sole discretion.

 

15.3         Requirement for additional documents. The Borrower shall not be deemed to have complied with Clause 15.1(i) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 2, 3, 4 and 5 of Schedule 3 (Part A) and such legal opinions in terms acceptable to lawyers selected by the Agent in its sole discretion.

 

15.4         Valuation of Ship. Subject to the following provisions of this Clause 15.4, the Market Value of the Ship shall be determined:

 

(a)         in Dollars, as at the date of (or no earlier than 30 days prior to) such valuation;

 

(b)         by an independent shipbroker selected by or acceptable to the Agent and reporting to the Agent;

 

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

 

(d)         on the basis of a sale for prompt delivery for cash, charter adjusted or free of charter at the Lender’s reasonable option and free of encumbrances on normal arm's length commercial form as between a willing seller and a willing buyer.

 

15.5         Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.1 (i) and which consists of a Security Interest over a vessel other than the Ship shall be that shown by way of a valuation complying with the requirements of Clause 15.4.

 

15.6         Valuations binding and conclusive. Any valuation under Clause 15.1(i), 15.4 or 15.5 shall be binding and conclusive evidence of the Market Value of the Ship or of the other assets it refers to at the date of such valuation.

 

15.7         Provision of information. The Borrower shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.4 or Clause 15.5 with any information which the Agent or the shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent.

 

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15.8         Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, subject to the provisions of Clause 15.9, on demand, pay the Agent the amount of the fees and expenses of any shipbrokers or experts instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.

 

15.9         Frequency of valuations. The Agent shall be entitled to obtain written valuations of the Ship prior to the drawdown of the Loan and any time during the Security Period, provided that after drawdown of the Loan the costs and expenses of such shall only be borne by the Borrower once per year (unless an Event of Default has occurred and is continuing, in which case the Agent shall be entitled to obtain a valuation at any time, at the cost and expense of the Borrower).

 

16.         PAYMENTS AND CALCULATIONS

 

16.1         Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

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

 

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

 

(iii)         if in Dollars, to the account of the Agent with such corresponding bank in New York as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

 

(iv)         in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

 

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

 

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

 

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

 

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

 

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

 

16.4         Distribution of payments to Creditor Parties. Subject to Clauses 16.5, 16.6 and 16.7:

 

(a)         any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, or the Security Trustee shall be made available by the Agent to that Lender, or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such Account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

 

(b)         amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

 

16.5         Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

 

16.6         Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.

 

16.7         Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender, without first having received that sum, the Borrower or (as the case may be) the Lender concerned shall, on demand:

 

(a)         refund the sum in full to the Agent; and

 

(b)         pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

 

16.8         Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

 

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

 

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16.10         Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

16.11         Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that that amount is owing to that Creditor Party.

 

17.         APPLICATION OF RECEIPTS

 

17.1         Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:‐

 

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

 

(i)         first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

 

(ii)         secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents but shall have failed to pay or deliver to the Creditor Parties at the time of application or distribution under this Clause 17); and

 

(iii)         thirdly, in or towards satisfaction pro rata of the Loan;

 

(b)         SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its reasonable opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and

 

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

 

17.2         Variation of order of application. The Agent may, following the occurrence of an Event of Default or a Potential Event of Default which is continuing, with the authorisation of the Majority Lenders by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

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17.3         Appropriation rights overriden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

 

18.         APPLICATION OF EARNINGS

 

18.1         Payment and application of Earnings. The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignment), as long as no Event of Default has occurred which is continuing, all the Earnings of the Ship are credited to the Earnings Account and shall be applied as follows:

 

(a)         first, towards payment of all sums other than principal and interest due to the Lenders under this Agreement and the other Finance Documents;

 

(b)         secondly, towards payment of the next instalment of principal and the next payment of interest due to the Lenders in accordance with the provisions of Clause 18.2; and

 

(c)         thirdly, any surplus shall (subject always to the other provisions of this Clause 18 and provided no Event of Default is continuing) be available to the Borrower, and

 

it is expressly agreed that so long as no Event of Default shall have occurred and is continuing, the Borrower shall be entitled to withdraw from the Earnings Account any amount provided, however, that if in the opinion of the Agent or the Security Trustee (as the case may be) there will be insufficient sums standing to the credit of the Earnings Account to meet payments under (a) and (b) above, the Agent or the Security Trustee (as the case may be) shall be entitled to refuse any withdrawal from the Earnings Account.

 

18.2         Monthly retentions. The Borrower undertakes with each Creditor Party to ensure that, in each calendar month of the Security Period commencing one month after the Drawdown Date, on such dates as the Agent may from time to time specify, there is transferred to the Retention Account out of the Earnings received in the Earnings Account during the preceding calendar month:

 

(a)         one‐third of the amount of the repayment instalment falling due under Clause 8 on the next Repayment Date; and

 

(b)         the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement.

 

The “relevant fraction” is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or, if the period is shorter, the number of months from the later of the commencement of the current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).

 

18.3         Shortfall in Earnings. If the aggregate Earnings received in the Earnings Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrower shall make up the amount of the insufficiency on demand from the Agent; but, without thereby prejudicing the Agent’s right to make such demand at any time, the Agent may permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 18.2 from the Earnings received in the next or subsequent months.

 

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18.4         Application of retentions. Until an Event of Default occurs, the Lenders shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with the payment details set out in Clause 16.1 so much of the balance on the Retention Account as equals:

 

(a)         the repayment instalment due on that Repayment Date; or

 

(b)         the amount of interest payable on that interest payment date;

 

in discharge of the Borrower’s liability for that repayment instalment or that interest.

 

18.5         Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Account Bank to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balance appears to the Account Bank likely to remain on the Retention Account.

 

18.6         Location of accounts. The Borrower and each other holder of an Account shall maintain the Accounts with the Account Bank, free of Security Interest and rights of set-off (other than as created under the Accounts Pledges), until no amount remains outstanding under this Agreement or any other Finance Documents and shall procure that transfers are made from each Account (and irrevocably authorises the Agent following the occurrence of an Event of Default which is continuing to instruct the Account Bank to transfer from each Account) in order to facilitate the payment of amounts required and/or contemplated by this Agreement and the other Finance Documents and shall promptly:

 

(a)         comply with any requirement of the Agent as to the location or re‐location of any of the Accounts;

 

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

 

18.7         Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account with prior notice to the Borrower in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which a Creditor Party has become entitled to demand under Clause 20 or 21.

 

18.8         Borrower’s obligations unaffected. The provisions of this Clause 18 do not affect:

 

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

 

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

 

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19.         EVENTS OF DEFAULT

 

19.1         Events of Default. An Event of Default occurs if:

 

(a)         the Borrower or any Security Party fail to pay when due or (if payable on demand) three (3) days following the date on which the written demand is served any sum payable under a Finance Document or under any document relating to a Finance Document, unless such failure to pay is caused by an administrative or technical error or any disruption event in the payment/communication system which is beyond the control of the Borrower, in which case the Borrower shall rectify such error within three (3) Business Days; or

 

(b)         any breach occurs of Clauses 9.2, 10.12, 11.2, 11.11, 11.17, 12.2, 12.3, 13 or 15.1, and in case any such breach (other than those referred to in Clauses 9.2. 13 and 15.1 hereinabove to which other grace periods are applicable, as therein provided) is in the opinion of the Security Trustee, capable of remedy, if it will continue un-remedied for seven (7) Business Days after its occurrence; or

 

(c)         any breach of the obligations set out in Clause 11.20 occurs which in the reasonable opinion of the Majority Lenders could have a Material Adverse Effect.

 

(d)         any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues un-remedied ten (10) days after written notice from the Agent requesting action to remedy the same; or

 

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

 

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

 

(g)         any of the following occurs in relation to any Financial Indebtedness of the Borrower:

 

(i)         any Financial Indebtedness of the Borrower is not paid when due or, if payable on demand, three (3) days following the date on which the written demand is served; or

 

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

 

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

 

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

 

(v)         any Security Interest securing any Financial Indebtedness of the Borrower becomes enforceable; or

 

(h)         any of the following occurs in relation to the Borrower:

 

(i)         the Borrower becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

 

(ii)         any assets of the Borrower are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency unless such execution, attachment, arrest, sequestration or distress is being contested in good faith and on substantial grounds and is discussed or withdrawn within thirty (30) days of the occurrence thereof; or

 

(iii)         any administrative or other receiver is appointed over any asset of the Borrower; or

 

(iv)         the Borrower makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to the Borrower, or the members or directors of the Borrower pass a resolution to the effect that it should be wound up, placed in administration; or

 

(v)         a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of the Borrower unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

 

(vi)         the Borrower petitions a court, or present any proposal for, any form of judicial or non‐judicial suspension or deferral of payments, reorganisation of its debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

 

(vii)         any meeting of the members or directors of the Borrower is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

 

(viii)         in a Relevant Jurisdiction other than England, any event occurs or any procedure is commenced which, in the reasonable opinion of the Majority Lenders, is similar to any of the foregoing; or

 

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

 

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

 

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

 

(ii)         for the Agent, the Security Trustee, the Account Bank or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

 

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

 

(l)         it appears to the Majority Lenders that, without their prior consent, a change has occurred after the date of this Agreement in the beneficial ownership of the shares in the Borrower as declared to the Agent prior to the execution of this Agreement. For the avoidance of doubt the Agent consents and agrees to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement; or

 

(m)         any provision which the Majority Lenders (acting reasonably) consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another third party claim or interest; or

 

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

 

(o)         If any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) is not paid when due or any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) becomes due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party of a voluntary right of prepayment), or any creditor of any Security Party becomes entitled to declare its claim (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) due and payable, or any facility or commitment available to any Security Party is withdrawn, suspended or cancelled by reason of any default (however described) of such Security Party, and such debt is not discharged within seven (7) Business Days; or

 

(p)         any of the following occurs in relation to the Ship:

 

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(i)         the Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Ship within a period of forty (40) days thereafter; or

 

(ii)         the registration of the Ship under the laws and flag of the Approved Flag State is cancelled or terminated without the prior written consent of the Agent or, if the Ship is only provisionally registered on the Drawdown Date of the Loan and is not permanently registered under the laws and flag of Approved Flag State at least five (5) days prior to the deadline for completing such permanent registration; or

 

(iii)         an Approved Flag State, becomes involved in hostilities or civil war or there is a seizure of power in the relevant Approved Flag State by unconstitutional means if, in any such case, such event could in the opinion of the Majority Lenders reasonably be expected to have a Material Adverse Effect on the security constituted by any of the Finance Documents and the Borrower fails to register the Ship under another Approved Flag State as and when requested by the Majority lenders or do such other action as the Agent may reasonably require to ensure that such event or circumstance will not have a Material Adverse Effect within 30 days of notice from the Agent or such longer period as the Agent may in its discretion agrees; or

 

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

 

(i)         a Material Adverse Effect; or

 

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

 

in the light of which the Majority Lenders (acting reasonably) consider that there is a significant risk that the Borrower is, or will later become, unable to discharge their liabilities under the Finance Documents as they fall due.

 

19.2         Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default which is continuing:

 

(a)         the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

 

(i)         serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

 

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

 

(iii)       take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

 

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(b)         the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law.

 

19.3         Termination of Commitments. On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

 

19.4         Acceleration of Loan. On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

 

19.5         Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

19.6         Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, the Account Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

 

19.7         Creditor Parties’ rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 and Clause 3.2.

 

19.8         Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

 

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

 

(b)         as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset; except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.

 

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19.9         Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

 

20.         FEES AND EXPENSES

 

20.1         Evaluation Costs and Expenses – Commitment Fee

 

(a)         The Borrower shall irrevocably and unconditionally pay to the original Lender specified in Schedule 1 (The lenders and their Commitments) of this Agreement, a non-refundable amount equal to three hundred thousand Dollars ($300,000) on the Drawdown Date of the Loan representing the cost and expenses for the evaluation of the Commitment and the terms on which it shall be made available (as outlined in this Agreement) and the arrangement of the drawdown of the Loan, whether in whole or in part.

 

(b)         The Borrower shall pay to the Agent a commitment fee at the rate of zero point fifty per cent (0.50%) per annum on the Maximum Facility Amount, such fee accruing from the date hereof and being payable quarterly in arrears to the Agent on account of the Lenders on the earliest of:

 

(i)         the date upon which the Loan is drawn by the Borrower;         or

 

(ii)         the date upon which the Borrower shall have given written notification to the Agent as to its intention not to make use of the Loan.

 

(c)         The Evaluation Costs and Expenses and Commitment Fee referred to in this Clause 20.1 shall not be refundable.

 

20.2         Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses (including, but not limited to, all legal expenses and VAT, if applicable) incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, other than any syndication costs/expenses.

 

20.3         Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent's demand, the amount of all expenses incurred by a Lender in connection with:

 

(a)         any amendment or supplement to a Finance Document;

 

(b)         any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document;

 

(c)         the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

 

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

 

20.4         Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

 

20.5         Certification of amounts. A notice which is signed by at least one officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

 

21.         INDEMNITIES

 

21.1         Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent's written demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

(a)         the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

 

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

 

(c)         any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if payable on demand, three (3) days following the date on which the written demand is served (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

 

(d)         the occurrence and/or continuance of an Event of Default or a Potential Event of Default (including, but not limited to, a breach of Clauses 11.17 or 11.18) and/or the acceleration of Loan under Clause 19.4;

 

and in respect of any tax (other than tax on its overall net income or which relates to a FACTA Deduction) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

 

21.2         Breakage costs. Without limiting its generality, Clause 21.1 covers any liability, expense or loss, incurred by a Lender:

 

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

 

(b)         in terminating, or reversing or otherwise in connection with, any open position arising under this Agreement.

 

21.3         Miscellaneous indemnities. The Borrower shall fully indemnify the Agent and the Security Trustee severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, the Agent or the Security Trustee, in any country, in relation to:

 

(a)         any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

 

(b)         any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document;

 

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the Agent's or (as the case may be) the Security Trustee's own officers or employees.

 

Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

 

21.4         Extension of indemnities; environmental indemnity. Without prejudice to its generality, Clause 21.3 covers:

 

(a)         any matter which would be covered by Clause 21.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

 

(b)         any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment if such liability items would not have arise or asserted against the Lender or Agent or the Security Trustee (as the case may be) if any of them had not entered into any of the Finance Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Finance Documents.

 

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

 

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

 

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

 

(c)         enforcing any such order or judgment;

 

the Borrower or such other Security Party shall indemnify the Creditor Party concerned against any loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

 

In this Clause 21.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

 

This Clause 21.5 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

21.6         Certification of amounts. A notice which is signed by 1 officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

 

21.7         Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

 

21.8         Mandatory Costs. The Borrower shall, on demand by the Agent, pay to the Agent for the account of a Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with:

 

(a)         in the case of a Lender lending from a lending office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that lending office; and

 

(b)         in the case of any Lender lending from a lending office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions), which, in each case, is referable to that Lender's participation in the Loan.

 

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22.         NO SET-OFF OR TAX DEDUCTION

 

22.1         No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

 

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

 

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

 

22.2         Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

 

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

 

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

 

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

 

22.3         Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

 

22.4         Exclusion of tax on overall net income. In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party's overall net income.

 

FATCA Information.

 

(a)         Subject to paragraph (c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

 

(i)         confirm to that other Party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party;

 

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

 

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

 

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

 

(c)         Paragraph (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such party for purposes of this paragraph (c).

 

(d)         If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

22.6         FATCA Deduction

 

(a)         Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

(b)         Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notify the other Creditor Parties.

 

22.7         Contractual recognition of Bail-In.

 

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

 

any Bail-In Action in relation to any such liability applicable to such Party, including (without limitation):

 

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

 

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

 

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a cancellation of any such liability; and

 

(b)         a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability applicable to such Party.

 

23.         ILLEGALITY, ETC

 

23.1         Illegality. This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

 

(a)         unlawful or prohibited (including, without limitation, due to a breach of Clauses 11.17 or 11.18) as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

 

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

 

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

 

23.2         Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

 

23.3         Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender's Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender's Contribution in accordance with Clause 8.

 

23.4         Mitigation. If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

 

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

 

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

 

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

 

24.         INCREASED COSTS

 

24.1         Increased costs. This Clause 24 applies if the Notifying Lender notifies the Agent that as a result of:

 

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

 

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(b)         complying with any regulation (including any regulation which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement (including, but not limited to, Basel II, Basel III, CRD IV and CRR),

 

the Notifying Lender considers that it (or any of its Affiliates) has incurred or will incur an “increased cost”, that is to say:

 

(i)         an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or any Finance Document or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or

 

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

 

(iii)         an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender's Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

 

a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender (or any of its Affiliates) under this Agreement or any Finance Document,

 

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or any of its Affiliates) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or which is attributable to a FATCA Deduction.

 

For the purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

 

24.2         Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

 

24.3         Payment of increased costs. The Borrower shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

 

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24.4         Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrower may give the Agent not less than 14 days' notice of its intention to prepay the Notifying Lender's Contribution at the end of an Interest Period.

 

24.5         Prepayment; termination of Commitment. A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

 

(a)         on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

 

(b)         on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

24.6         Application of prepayment. Clause 8 shall apply in relation to the prepayment.

 

25.         SET‐OFF

 

25.1         Application of credit balances. Each Creditor Party may without prior notice at any time after the occurrence of an Event of Default which is continuing:

 

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

 

(b)         for that purpose:

 

(i)         break, or alter the maturity of, all or any part of a deposit of the Borrower and/or the Guarantor;

 

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

 

(iii)         enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

 

25.2         Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set‐off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

 

25.3         Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrower and/or the Guarantor to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

 

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25.4         No Security Interest. This Clause 25 gives the Lenders a contractual right of set off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower and/or the Guarantor.

 

25.5         No Borrower’s/Guarantor’s set off. The Borrower and/or the Guarantor shall not have a right of set off in relation to sums that may be due from any Creditor Party under this Agreement or any of the other Finance Documents.

 

26.         TRANSFERS AND CHANGES IN LENDING OFFICES

 

26.1         Transfer by the Borrower. The Borrower may not:

 

(a)         without the prior written consent of the Agent (given on the instructions of all of the Lenders), transfer any of its rights or obligations under any Finance Document;

 

(b)         without the prior written consent of the Agent (given on the instructions of all the Lenders), enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

 

26.2         Transfer by a Lender. Subject to Clause 26.4, a Lender (the “Transferor Lender”) may, at its sole discretion and at its own expense, without the consent of and/or the prior consultation with the Borrower (but with notice to the Borrower) and/or any Security Party, at any time assign or transfer by novation (as applicable):

 

(a)         its rights in respect of all or part of its Contribution; or

 

(b)         its obligations in respect of all or part of its Commitment; or

 

(c)         a combination of (a) and (b);

 

to be (in the case of its rights) assigned or transferred to, or (in the case of its obligations) assumed by and novated to, another bank or financial institution, or by a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender and should the Transfer Certificate alone be not sufficient in the Transferor Lender’s or Transferee Lender's jurisdiction for a Transferor Lender to transfer all or a proportionate share of the Transferor Lender's interest in the security constituted by the Finance Documents, the Borrower hereby undertakes, immediately on being requested to do so by the Agent and at the cost of the Transferor Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferor Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of such Lender’s interest in the Finance Documents and all relevant references in this Agreement to such Lender shall thereafter be construed as a reference to the Transferor Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests.

 

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However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee shall be dealt with separately in accordance with the Agency and Trust Deed.

 

26.3         Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

 

(a)         sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee, the Arranger, the Account Bank and each of the Lenders;

 

(b)         on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes or electronic mail notifying them of the Transfer Certificate and attaching a copy of it;

 

(c)         send to the Transferee Lender copies of the letters or faxes or electronic mail sent under paragraph (b) above.

 

26.4         Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

 

26.5         No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

 

26.6         Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender. In addition, where security rights (such as pledge and mortgage rights) created in the interest of the Lender concerned were transferred to the successor as a result of such a merger, de-merger or other reorganisation, then such rights will serve as if they were created in the interest of the successor.

 

26.7         Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

 

(a)         to the extent specified in the Transfer Certificate, all rights, interests and/or obligations (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned and/or transferred by novation (as applicable) to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

 

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

 

(c)         the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

 

(d)         the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro‐rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

 

(e)         any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

 

(f)         the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 21, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

 

(g)         in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

 

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross‐claim.

 

26.8         Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice.

 

26.9         Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

 

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26.10         Authorisation of Agent to sign Transfer Certificates. The Borrower, the Arranger, the Account Bank, the Security Trustee, each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

 

26.11         Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender. Such fees will not burden any of the Security Parties under any circumstances.

 

26.12         Sub-participation; subrogation assignment. A Lender may sub‐participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

 

26.13         Disclosure of information to a Transferee Lender. A Lender may disclose to a potential Transferee Lender or sub‐participant any information necessary to effect the relevant transaction which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, provided that the Lender shall ensure that such person shall have entered into an undertaking of confidentiality with the Lender.

 

26.14         Change of lending office. A Lender may change its lending office without consultation with the Borrower by giving notice to the Agent and the change shall become effective on the later of:

 

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

 

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

 

26.15         Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

 

26.16 Security over Lenders’ rights. In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from, the Borrower or any other Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

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

 

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

 

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

 

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

 

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

 

26.17         Disclosure of information to a service provider. Further to Clause 26.13 and without limiting the foregoing, the Borrower authorises any of the Lenders to disclose all information related or connected to:

 

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

 

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

 

(c)         the Loan; or

 

(d)         any Security Party,

 

to any service provider (included but not limited to professional advisers, auditors, lawyers, accountants, surveyors, valuers, insurers, insurance advisers and brokers) which any of the Lenders may in its discretion deem necessary or desirable in connection with this Agreement or any other Finance Documents and/or the protection or enforcement of its rights thereunder, provided that the recipient has agreed to treat the information as confidential.

 

27.         VARIATIONS AND WAIVERS

 

27.1         Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax or electronic mail, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

 

27.2         Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

 

(a)         a reduction in the Margin or in the definition of LIBOR;

 

(b)         a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees, or other sums payable under this Agreement;

 

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(c)         an increase in any Lender's Commitment;

 

(d)         an extension of the Availability Period;

 

(e)         a change to the definition of “Majority Lenders”, “Finance Documents”, “Restricted Party”, “Sanctions”, “Sanctions Authority” or “Sanctions List”;

 

(f)         a change to the preamble or to Clause 2, 3, 4, 5.1, 11.17, 11.18, 17, 19 or 30;

 

(g)         a change to Clause 3 or this Clause 27;

 

(h)         any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

 

(i)         any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.

 

27.3         Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

 

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

 

(b)         an Event of Default; or

 

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

 

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

 

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

 

27.4         Notification of Variation or Waiver. No variation or waiver may be made before the date falling ten (10) Business Days after the terms of that variation or waiver have been notified by the Agent to the Lenders. The Agent shall notify the Lenders reasonably promptly of any variations or waivers proposed by the Borrower.

 

27.5         Variation or Waiver: FATCA.

 

Notwithstanding the foregoing, if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrower and the Agent accordingly, that amendment or waiver may, subject to paragraph (b) below, not be effected without the consent of the Agent or that Lender (as the case may be).

 

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27.6         Replacement of Screen Rate.

 

27.6.1         If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

 

(a)         providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate; and

 

(b)         all or any of the following:

 

(i)         aligning any provision of any Finance Document to the use of that Replacement Benchmark;

 

(ii)         enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

 

(iii)         implementing market conventions applicable to that Replacement Benchmark;

 

(iv)         providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

 

(v)         adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

 

may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrower.

 

27.6.2         If any Lender fails to respond to a request for an amendment or waiver described in, or for any other vote of Lenders in relation to, Clause 27.6.1 within ten Business Days (or such longer period in relation to any request which the Borrower and the Agent may agree) of that request being made:

 

(a)         its Commitment(s) shall not be included for the purpose of calculating the Total Commitments under the Loan when ascertaining whether any relevant percentage of Total Commitments has been obtained to approve that request; and

 

(b)         its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

 

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28.         NOTICES

 

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

 

Addresses for communications. A notice shall be sent:

 

(a)         to the Borrower: c/o Euroseas Ltd

4, Messogiou & Evropis Street

151 24, Maroussi

Athens, Greece

 

Fax No: +30 2111 804097

Email: aha@euroseas.gr

Attn: Mr. Tassos Aslidis/Simos Pariaros

 

(b)         to a Lender:  At the address below its name in

 

Schedule 1 or (as the case may require) in the relevant Transfer Certificate;

 

 

(c)         to the Arranger, Account Bank and EUROBANK S.A.

 

Security Trustee: 83 Akti Miaouli & 1, Flessa Street

185 38 Piraeus

Greece

 

Fax No: +30 210 4587877;

 

(d)         to the Agent: EUROBANK S.A.

83 Akti Miaouli & 1, Flessa Street

185 38 Piraeus

Greece

Fax: +30 210 4587877

Email: ShippingLoansAdministration@eurobank.gr                                                      

 

 

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or to such other person, address or fax number as is notified by the Borrower or any Security Party or the Agent, the Security Trustee or a Lender (as the case may be) to the other parties to this Agreement in writing and, in the case of any such change of address or fax number notified to the Agent, the Security Trustee or a Lender, the same shall not become effective until notice of such change is actually received by the Agent, the Security Trustee or such Lender..

 

28.3         Effective date of notices. Subject to Clauses 28.4 and 28.5:

 

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

 

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

 

(c)         a notice which is sent by e-mail shall be deemed to be effective in accordance with paragraphs (c) and (d) of Clause 28.7.

 

28.4         Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

 

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

 

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

 

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

28.5         Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

 

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

 

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

 

28.7         Electronic communication.

 

(a)         Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website), if those two Parties:

 

(i)         notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and

 

81

 

 

(ii)         notify each other of any change to their respective addresses or any other such information supplied to them by not less than five (5) Business Day’s notice .

 

(b)         Any such electronic communication as specified in paragraph (a) above to be made between a Security Party and the Agent or any other Creditor Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.

 

(c)         Any such electronic communication as specified in paragraph (a) above made between any two Parties will be effective only when actually received (or made available) in readable form and, in the case of any electronic communication made by a Party to the Agent or any other Creditor Party, only if it is addressed in such a manner as the Agent or such other Creditor Party shall specify for this purpose.

 

(d)                  Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day.

 

(e)         Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 28.7.

 

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

 

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

 

29.         SUPPLEMENTAL

 

29.1         Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

 

(a)         cumulative;

 

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

 

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

 

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

 

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

 

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

 

29.5         PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies the Borrower and each Security Party, which information includes the name and address of the Borrower and each Security Party and such other information that will allow the Agent and each of the Lenders to identify the Borrower and each Security Party in accordance with the PATRIOT Act.

 

30.         Governing LAW AND JURISDICTION

 

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

 

30.2         Jurisdiction.

 

(a)         The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement) (a "Dispute").

 

(b)         The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

 

(c)         This Clause 30.2 is for the benefit of the Creditor Parties only. As a result, no Creditor Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Creditor Parties may take concurrent proceedings in any number of jurisdictions.

 

30.3         Service of process.

 

(a)         Without prejudice to any other mode of service allowed under any relevant law, the Borrower (and the Borrower shall procure that each other Security Party, other than a Security Party incorporated in England and Wales):

 

(i)         irrevocably appoint Shoreside Agents Ltd at11 The Timber Yard, Drysdale Street, London, N1 6ND, England (Tel.: +44 (0)203771 8869, fax: +44 (0)203771 8870, attention of: Mr. Andrew Johnson) as its agent for service of process in relation to proceedings of any kind, including an application for a provisional or protective measure (“proceedings”) before the English courts in connection with this Agreement and any other Finance Document; and

 

(ii)         agrees that (on the understanding that process has first duly been served upon the process agent) failure by a process agent to notify the Borrower or the relevant Security Party of the process will not invalidate the proceedings concerned.

 

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(b)         If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the Borrower must immediately (and in any event within seven (7) days of such event taking place) appoint another agent on terms reasonably acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose and will duly notify the Borrower on the contact details of the same.

 

30.5         Creditor Parties’ rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the settlement of any Dispute, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

 

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

 

 

 

 

 

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SCHEDULE 1

THE LENDERS AND THEIR COMMITMENTS

 

 

	
			Name of Lender

				
			Lending Office

			and

			contact details

				
			Total Commitments ($)

			
	
			Eurobank S.A.

				
			Lending office

			83 Akti Miaouli & 1, Flessa Street,185 38 Piraeus, Greece

			Contact details

			83 Akti Miaouli & 1, Flessa Street,185 38 Piraeus, Greece

			Fax No: +30 210 4587877

			Attn: Loans Administration

				
			34,000,000

			

 

 

 

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SCHEDULE 2

DRAWDOWN NOTICE

 

To: EUROBANK S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

 

Attention: [Loans Administration]                                             [●] 2021

 

We refer to the loan agreement (the “Loan Agreement”) dated [●] December 2021 and made between (1) ourselves as Borrower, (2) the Lenders referred to therein and (3) yourselves as Arranger, Account Bank, Agent and as Security Trustee in connection with a secured term loan of up to $34,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

 

We request to draw the Loan as follows:

 

Amount: $ [●];

 

Drawdown Date: [●] 2021;

 

Duration of the first Interest Period shall be [●] months;

 

Payment instructions: Please credit account of [●] and numbered [●] held in our name with the Shipping Branch EUROBANK S.A. with the amount of [●], for onward remittance [along with Borrower’s equity funds plus extra funds for lubs/oils/expenses etc, under separate instructions value [●] to [●] swift code [●], to be released as per MT 199 swift message, attached to this Drawdown Notice as Appendix 1].We represent and warrant that:

 

the representations and warranties in Clause 10 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at this date;

 

there has been no Material Adverse Change since the date of the accounts referred to in Clause 11.6 of the Loan Agreement;

 

the said Loan will be used for our own benefit and under our full responsibility and exclusively for the purposes specified in the preamble of the Loan Agreement; and

 

no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the said Loan.

 

This notice cannot be revoked without the prior consent of the Majority Lenders.

 

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This notice is governed by English law.

 

Yours faithfully

 

--------------------------------------

 

[●]

 

authorised signatory for

 

MARCOS SHIPPING LTD         

 

 

 

 

 

 

 

 

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SCHEDULE 3

CONDITION PRECEDENT DOCUMENTS

 

PART A

 

The following are the documents referred to in Clause 9.1(a):

 

A duly executed original of this Agreement, the Agency and Trust Deed, the Guarantee and the Accounts Pledge.

 

Copies of the certificate of incorporation and constitutional documents of the Borrower, the Guarantor and the Approved Manager, together with up to date evidence of the good standing.

 

Originals of resolutions of the directors and shareholders of the Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents referred to at 1 above to which the Borrower and/or any other Security Party is a party and authorising named officers of the Borrower to give the Drawdown Notice and other notices under this Agreement.

 

The original of any power of attorney under which any Finance Document referred to at 1 above is executed on behalf of the Borrower, the Guarantor and the Approved Manager.

 

Copies of all consents which the Borrower or any other Security Party requires to enter into, or make any payment under, any Finance Document.

 

All documentation required by the Agent in respect of the Borrower and any other Security Party pursuant to any Lender’s “Know your customer” requirements based on applicable laws and regulations from time to time and the Agent’s own internal guidelines from time to time, together with such other documents or evidence as such Lender may reasonably require with respect to money laundering regulations.

 

A copy of the Approved Existing Charter (and all addenda thereto), together with evidence of authorisation with respect to the execution thereof by the Borrower and by the Approved Existing Charterer.

 

Documentary evidence that the agent for service of process named in Clause 30 of this Agreement has accepted its appointment.

 

Favourable legal opinions from lawyers appointed by the Agent on such matters concerning English law or the laws of Panama and/or Liberia and/or the Marshall Islands and such other Relevant Jurisdictions as the Agent may require.

 

A certificate in a form and substance satisfactory to the Lenders confirming the legal ownership and the beneficial ownership of the shares in the Borrower, in a form and substance satisfactory to the Agent in its sole discretion.

 

88

 

 

The originals of any mandates or other documents required in connection with the opening and operation of the Earnings Account and the Retention Account.

 

If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

 

PART B

 

The following are the documents referred to in Clause 9.1(b):

 

The following delivery documents in respect of the Ship:

 

(a)         evidence that the twenty per cent (20%) deposit in respect of the Ship has been duly paid and all other sums of money (other than the Loan where applicable) required to be paid by the Borrower to the Seller pursuant to the MOA have been duly paid on the Delivery Date;

 

(b)         evidence proving the Sellers’ title to the Ship free of any Security Interests, debts or claims of any nature whatsoever;

 

(c)         copies of the corporate documentation of the Seller proving the legal existence of the Seller and the due authorization of the sale of the Ship;

 

(d)         the Bill of Sale;

 

(e)         the Protocol of Delivery and Acceptance;

 

each duly executed and delivered;

 

On the Delivery Date and/or (as the case may be) immediately prior to the Drawdown Date, a duly executed original of:

 

the Mortgage;

 

the General Assignment;

 

the Approved Manager’s Undertaking-Assignment;

 

the Guarantor’s Undertaking-Assignment;

 

the Charter Assignment in connection with the Approved Existing Charter,

 

together with (if not already delivered pursuant to Schedule 3, Part A, paragraph 3) up to date evidence of the good standing, originals resolutions of the directors and shareholders of the Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents with respect to the execution of such Finance Documents, and all other documents required by any of such Finance Documents, including, without limitation, all notices of assignment and/or charge;

 

Documentary evidence that as from the Delivery Date and/or (where applicable) as from the Drawdown Date:

 

89

 

 

the Ship is provisionally registered in the name of the Borrower under the Approved Flag;

 

the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents related to the Ship;

 

the Ship is classed with the highest available class with NKK or such any other first class classification society which is a member of IACS acceptable to the Agent, free of all overdue recommendations and conditions of such classification society affecting Class;

 

the Mortgage in respect of the Ship has been duly registered against the Ship as a valid first priority ship mortgage in accordance with the laws of the Approved Flag State; and

 

the Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances shall have been complied with; and

 

a signed copy of the Approved Existing Charter and evidence of the due execution thereof by the parties thereto and acceptance of the Ship thereunder and/or a copy of the recap agreement containing the terms of the relevant fixture;

 

Documents establishing that the Ship is, as from the Drawdown Date, managed by the Approved Manager on terms acceptable to the Agent, together with:

 

a copy of the ship management agreement for the Ship;

 

copies of the Document of Compliance and Safety Management Certificate and ISSC;

 

copies of such other ISM Code or ISPS Code documentation as the Agent may by written notice to the Borrower have requested not later than 2 days before the Drawdown Date, certified as true and complete in all material respects by the Borrower and the Approved Manager;

 

Subordination letters from any other co-assureds named in the insurance policies for the Ship (other than the Borrower and the relevant Approved Manager), in the form required by the Agent;

 

A valuation of the Ship addressed to the Agent (at the Borrower’s expense) prepared in accordance with Clause 15.4 of this Agreement and not older than thirty (30) days prior to the Drawdown Date of the Loan, in a form satisfactory to the Agent;

 

Evidence that an aggregate sum of $1,000,000 is standing to the credit of the Earnings Account in Greece or any other account or accounts held with the Account Bank in Greece in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent by way of required minimum liquidity pursuant to the provisions of Clause 12.5 of this Agreement;

 

A favourable opinion from an independent insurance consultant appointed by the Agent on such matters relating to the insurances for the Ship as the Agent may require, and at the cost and expense of the Borrower;

 

90

 

 

Favourable legal opinions from lawyers appointed by the Lenders on such matters concerning the laws of England, the laws of Liberia, the laws of the Marshall Islands, the laws of the Approved Flag State (if different) and such other Relevant Jurisdiction as the Agent may require;

 

Receipt by the original Lender specified in Schedule 1 (The lenders and their Commitments) of this Agreement of the amount of three hundred thousand Dollars ($300,000) referred to in Clause 20.1 (a) (i) representing the Evaluation Costs and Expenses and of any other fees, costs and expenses due under Clause 20 of this Agreement;

 

On the Delivery Date or as soon as practicable thereafter an extract of the trim and stability booklet certifying the lightweight of the Ship;

 

A signed confirmation in writing from the Borrower, confirming that all trading certificates for the Ship are up to date and in full force.

 

PART C

 

Conditions Subsequent

 

Letters of undertaking. Letters of undertaking in respect of the Insurances as required by the Finance Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Creditor Parties.

 

Service of notices and acknowledgements of notices to the Approved Existing Charterer. Service of all notices of assignment and/or charge given pursuant to any Finance Documents by the Agent pursuant to Part A or Part B of this Schedule 3 and (on an effort basis) an acknowledgement by the Approved Existing Charterer of any notice of assignment executed in connection with the relevant Charter Assignment, in any case provision of same is not delayed or denied by the Approved Existing Charterer.

 

Legal opinions. Such of the legal opinions specified in Part B of this Schedule 3 as have not already been provided to the Agent.

 

 

91

 

 

SCHEDULE 4

 

TRANSFER CERTIFICATE

 

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

 

To:         EUROBANK S.A. for itself and for and on behalf of the Borrower, each other Security Party, the Arranger, the Account Bank, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below.                                                                                                                                                                                             [●]

 

This Certificate relates to the loan agreement dated [●] December 2021 (the “Loan Agreement”) and made between (1) MARCOS SHIPPING LTD as borrower (the “Borrower”), (2) the banks and financial institutions named therein as Lenders, (3) EUROBANK S.A. as Arranger, Account Bank, Agent and Security Trustee, for a secured term loan of up to $34,000,000.

 

In this Certificate:

 

“the Relevant Parties” means the Agent, the Borrower, each other Security Party, the Security Trustee, the Arranger, the Account Bank and each Lender;

 

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

 

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

 

Terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate.

 

3.         The effective date of this Certificate is [●] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

 

4.         The Transferor [transfers by novation to the Transferee all rights, interests and obligations] or upon transfer of rights only [assigns to the Transferee absolutely all rights and interests] (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [●] per cent of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below:

 

	
			Contribution

				
			Amount transferred

			

 

5.         By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[●]] [from [●] per cent. of its Commitment, which percentage represents $[●]] and the Transferee acquires a Commitment of $[●].

 

92

 

 

6.         The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect. [For the avoidance of doubt the Transferor shall remain as [●] under the Loan Agreement and the Finance Documents].

 

7.         The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

 

8.         The Transferor:

 

warrants to the Transferee and each Relevant Party:

 

that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

 

that this Certificate is valid and binding as regards the Transferor;

 

warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the [transfer] [assignment] in paragraph 4 above;

 

undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any Relevant Jurisdiction the Transferee's title under this Certificate or for a similar purpose.

 

9.         The Transferee:

 

confirms that it has received a copy of the Loan Agreement and each other Finance Document;

 

agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Arranger, the Account Bank, the Security Trustee or any Lender in the event that:

 

the Finance Documents prove to be invalid or ineffective,

 

the Borrower or any other Security Party fails to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents;

 

it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or any other Security Party under the Finance Documents;

 

agrees that it will have no rights of recourse on any ground against the Agent, the Arranger, the Account Bank, the Security Trustee or any Lender in the event that this Certificate proves to be invalid or ineffective;

 

93

 

 

warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and

 

confirms the accuracy of the administrative details set out below regarding the Transferee; and

 

agrees to be responsible for all legal and other costs (including without limitation, notarial fees, breakage costs and, if applicable, VAT) incurred by the Transferor with respect to documenting the transfer and perfecting any security.

 

10.         The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross negligence or dishonesty of the Agent's or the Security Trustee's own officers or employees.

 

11.         The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it.

 

12.         This Certificate (and any non-contractual obligations connected with it) shall be governed by and construed in accordance with English law, and may be executed in any number of counterparts, each of which shall be deemed an original).

 

	
			[Name of Transferor]

			 

			By: [●]

			 

			Date: [●] 

				
			[Name of Transferee]

			 

			By: [●]

			 

			 Date: [●]

			

                                     

 

94

 

 

Agent

 

 

Signed for itself and for and on behalf of itself

 

as Agent and for every other Relevant Party

 

 

Eurobank S.A.

 

 

By: [●]

 

Date: [●]

 

 

 

 

 

 

95

 

 

 

Administrative Details of Transferee

 

Name of Transferee:

 

Lending Office:

 

Contact Person:

 

(Loan Administration Department):

 

Telephone:

 

Fax:

 

Email:

 

Contact Person

 

(Credit Administration Department):

 

Telephone:

 

Fax:

 

Email:

 

Account for payments:

 

 

Note:         This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

 

96

 

 

SCHEDULE 5

FORM OF COMPLIANCE CERTIFICATE

 

To: EUROBANK S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

 

Attn:         Loans Administration                                                               [date]

 

 

Dear Sirs

 

Loan Agreement dated [●] December 2021 (the “Loan Agreement”) made between (i) the Borrower referred to therein, (ii) the Lenders referred to therein and (iii) EUROBANK S.A. as Arranger, Account Bank, Agent and Security Trustee in connection with a loan facility of up to $34,000,000.

 

Terms defined in the Loan Agreement have their defined meanings when used in this Compliance Certificate.

 

We enclose with this certificate a copy of the annual audited consolidated financial statements of the Guarantor referred to in the Loan Agreement (the “Guarantor”) for the financial year commencing on the 1st January 2022. The accounts (i) have been prepared in accordance with all applicable laws and GAAP consistently applied, (ii) give a true and fair view of the state of affairs of the Borrower and the Guarantor at the date of the accounts and of its profit for the period to which the accounts relate and (iii) fully disclose or provide for all significant liabilities of the Borrower and the Guarantor.

 

We also enclose copies of the valuation of the Ship which is used in calculating the asset cover ratio under Clause 15.1 of the Loan Agreement as at [●].

 

The Borrower represents that no Event of Default has occurred as at the date of this certificate [(except for the following matter or event [set out all material details of mater or event]).]

 

We now certify that, as at [●].

 

(a)         minimum liquidity balances in aggregate of $1,000,000 have been maintained on an annual average basis in an Account or Accounts held with the Lenders or the Agent or the Account Bank in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent;

 

(b)         the asset cover ratio under Clause 15.1 of the Loan Agreement is [●]%.

 

97

 

 

We hereby repeat the representations and warranties set out in Clause 10 of the Loan Agreement and confirm that they remain true and correct by reference to the facts and circumstances existing on the date of this Compliance Certificate.

 

This certificate shall be governed by, and construed in accordance with, English law.

 

Signed

 

____________________

 

authorised signatory for

 

MARCOS SHIPPING LTD         

 

 

 

 

 

 

 

 

 

 

98

 

 

 

EXECUTION PAGES

 

 

THE BORROWER

 

	
			Signed by  

			Stefania Karmiri   

			for and on behalf of 

			MARCOS SHIPPING LTD

				
			)

			) /s/ Stefania Karmiri

			) 

			)

			

 

in the presence of                           

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

 

99

 

 

THE LENDERS

 

 

	
			Signed by  

			Stavros Yagos  

			And Nikoletta Mitropoulou 

			for and on behalf of 

			EUROBANK S.A.

				
			)

			) /s/ Stavros Yagos

			) /s/ Nikoletta Mitropoulou

			)

			)

			

 

in the presence of          

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

 

 

100

 

 

THE ARRANGER

 

	
			Signed by  

			Stavros Yagos  

			And Nikoletta Mitropoulou 

			for and on behalf of 

			EUROBANK S.A.

				
			)

			) /s/ Stavros Yagos

			) /s/ Nikoletta Mitropoulou

			)

			)

			

 

in the presence of 

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

THE ACCOUNT BANK

 

	
			Signed by  

			Stavros Yagos  

			And Nikoletta Mitropoulou 

			for and on behalf of 

			EUROBANK S.A.

				
			)

			) /s/ Stavros Yagos

			) /s/ Nikoletta Mitropoulou

			)

			)

			

 

in the presence of 

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

101

 

 

THE AGENT

 

	
			Signed by  

			Stavros Yagos  

			And Nikoletta Mitropoulou 

			for and on behalf of 

			EUROBANK S.A.

				
			)

			) /s/ Stavros Yagos

			) /s/ Nikoletta Mitropoulou

			)

			)

			

 

in the presence of 

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

 

102

 

 

THE SECURITY TRUSTEE

 

	
			Signed by  

			Stavros Yagos  

			And Nikoletta Mitropoulou 

			for and on behalf of 

			EUROBANK S.A.

				
			)

			) /s/ Stavros Yagos

			) /s/ Nikoletta Mitropoulou

			)

			)

			

 

in the presence of 

 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

 

 

 

 

 

103

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