Document:

d1266368_ex4-29.htm

 

Exhibit 4.29

 

 

	
Private & Confidential

 

 

 

 

 

 

 

	
LOAN AGREEMENT

for a

Loan of up to US$222,000,000

to

LEWISHAM MARITIME INC.

PULFORD OCEAN INC.

RAYFORD NAVIGATION CORP.

ROSSINGTON MARINE CORP.

and

QUEX SHIPPING INC.

 

provided by

THE BANKS AND FINANCIAL INSTITUTIONS SET OUT IN SCHEDULE 1

 

Arranger

CITIGROUP GLOBAL MARKETS LIMITED

 

Agent, Security Agent and Account Bank

CITIBANK INTERNATIONAL PLC

 

 

	
 

 

 

 

 

 

 

 

 

 

INSERT NORTON ROSE LOGO

 

 

 

  

  

  

Contents

 

Clause                                                                       Page

	
1

	
Purpose and definitions

	
1

 

	
2

	
The Total Commitment and the Advances

	
20

 

	
3

	
Interest and Interest Periods

	
21

 

	
4

	
Repayment and prepayment

	
23

 

	
5

	
Fees and expenses

	
26

 

	
6

	
Payments and taxes; accounts and calculations

	
27

 

	
7

	
Representations and warranties

	
29

 

	
8

	
Undertakings

	
34

 

	
9

	
Conditions

	
41

 

	
10

	
Events of Default

	
42

 

	
11

	
Indemnities

	
46

 

	
12

	
Unlawfulness, increased costs and mitigation

	
47

 

	
13

	
Security, set-off and pro-rata payments

	
50

 

	
14

	
Accounts

	
52

 

	
15

	
Assignment, transfer and lending office

	
54

 

	
16

	
Arranger, Agent, Security Agent and Reference Bank

	
56

 

	
17

	
Notices and other matters

	
65

 

	
18

	
Governing law and jurisdiction

	
68

 

	
Schedule 1 The Banks and their Commitments

	
69

 

	
Schedule 2 Form of Drawdown Notice

	
71

 

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

	
73

 

	
Schedule 4 Form of Transfer Certificate

	
78

 

  

  

  

 

THIS AGREEMENT is dated 26 June 2007 as amended and supplemented and/or restated by a first supplemental agreement dated 16 October 2007, a supplemental letter dated 10 July 2008, a second supplemental agreement dated 30 September 2009, a supplemental letter dated 4 August 2010, a third supplemental agreement dated 23 December 2010, a fourth supplemental agreement dated 31 March 2011 and as further amended and restated by a fifth supplemental agreement dated 7 February 2012 and made BETWEEN:

 

	
(1)

	
LEWISHAM MARITIME INC., PULFORD OCEAN INC., RAYFORD NAVIGATION CORP., ROSSINGTON MARINE CORP. and QUEX SHIPPING INC. as joint and several Borrowers;

 

	
(2)

	
CITIGROUP GLOBAL MARKETS LIMITED as Arranger;

 

	
(3)

	
CITIBANK INTERNATIONAL PLC as Agent, and Account Bank;

 

	
(4)

	
CITIBANK INTERNATIONAL PLC as Security Agent; and

 

	
(5)

	
THE BANKS AND FINANCIAL INSTITUTIONS whose names and addresses are set out in schedule 1 as Banks.

 

IT IS AGREED as follows:

 

	
1

	
Purpose and definitions

 

	
1.1

	
Purpose

 

This Agreement sets out the terms and conditions upon and subject to which the Banks agree, according to their several obligations, to make available to the Borrowers and the Outgoing Borrower, jointly and severally, in six (6) Advances, a loan of up to Two hundred and twenty two million Dollars ($222,000,000) for the purpose of financing part of the acquisition cost of the Ships.

 

	
1.2

	
Definitions

 

In this Agreement, unless the context otherwise requires:

 

"Account Bank" means Citibank International plc of 33 Canada Square, Canary Wharf, London E14 5LB, England, acting for the purposes of this Agreement through its offices at 47-49 Akti Miaouli, 185 36 Piraeus, Greece (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other bank as may be designated by the Agent as the Account Bank for the purposes of this Agreement and includes its successors in title;

 

"Account Pledges" means, together, the Earnings Account Pledges, the BET Account Pledge and the Retention Account Pledge and "Account Pledge" means any of them;

 

"Accounts" means, together, the Earnings Accounts, the BET Account and the Retention Account and "Account" means any of them;

 

"Adjusted Security Requirement" means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers and the Banks) which is one hundred and twenty five per cent (125%) of the Loan as at such time;

 

"Advance" means each borrowing of a proportion of the Total Commitment by the Original Borrowers or (as the context may require) the principal amount of such borrowing and:

 

	
  

	
(a)

	
in relation to Fighter and/or the Fighter Borrower, it means the Fighter Advance;

 

  

1

  

	
  

	
(b)

	
in relation to Commander and/or the Commander Borrower, it means the Commander Advance;

 

	
  

	
(c)

	
in relation to Intruder and/or the Intruder Borrower, it means the Intruder Advance;

 

	
  

	
(d)

	
in relation to Performer and/or the Outgoing Borrower, it means the Performer Advance;

 

	
  

	
(e)

	
in relation to Prince and/or the Prince Borrower, it means the Prince Advance; or

 

	
  

	
(f)

	
in relation to Scouter and/or the Scouter Borrower, it means the Scouter Advance,

 

and "Advances" means any or all of them;

 

"Agent" means Citibank International plc of 33 Canada Square, Canary Wharf, London E14 5LB, England, acting for the purposes of this Agreement through its office at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, England (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other person as may be appointed as agent by the Banks pursuant to clause 16.13 and includes its successors in title;

 

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

 

"Approved Shipbrokers" means, together, H. Clarkson & Co. Ltd., Simpson Spence & Young Ltd., RS Platou Shipbrokers AS, Galbraith's Ltd., Braemar Seascope Valuations Ltd., Fearnleys A/S and PF Bassoe AS & Co. and any other independent firm of shipbrokers agreed by the Borrowers and the Majority Banks, and includes their respective successors in title and "Approved Shipbroker" means any of them;

 

"Arranger" means Citigroup Global Markets Limited of 33 Canada Square, Canary Wharf, London E14 5LB, England acting for the purposes of this Agreement through its offices at 33 Canada Square, Canary Wharf, London E14 5LB, England (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) and includes its successors in title;

 

"Balloon Instalment" has the meaning ascribed thereto in clause 4.1;

 

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

 

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

 

"BET Account" means the interest bearing Dollar account of the Corporate Guarantor with account number 0/444257/016 opened with the Account Bank and includes any sub-accounts thereof;

 

"BET Account Pledge" means the first priority pledge over the BET Account dated 30 September 2009 executed between the Corporate Guarantor, the Banks, the Agent and the Account Bank;

 

"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

 

  

2

  

(vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

 

"Borrowers" means, together, the Fighter  Borrower, the Commander Borrower, the Intruder Borrower, the Prince Borrower and the Scouter Borrower and:

 

	
  

	
(a)

	
in relation to the Fighter Advance and/or Fighter, it means the Fighter Borrower;

 

	
  

	
(b)

	
in relation to the Commander Advance and/or Commander, it means the Commander Borrower;

 

	
  

	
(c)

	
in relation to the Intruder Advance and/or Intruder, it means the Intruder Borrower;

 

	
  

	
(d)

	
in relation to the Prince Advance and/or Prince, it means the Prince Borrower; or

 

	
  

	
(e)

	
in relation to the Scouter Advance and/or Scouter, it means the Scouter Borrower,

 

and "Borrower" means any of them;

 

"Borrowers' Security Documents" means, at any relevant time, such of the Security Documents as shall have been executed by any of the Borrowers at such time;

 

"Classification" means, in relation to each Ship, the highest class available for a vessel of her type with the relevant Classification Society or such other classification as the Agent shall, at the request of a Borrower, have agreed in writing shall be treated as the Classification in relation to such Borrower's Ship for the purposes of the relevant Ship Security Documents;

 

"Classification Society" means, in relation to each Ship, Bureau Veritas or such other classification society which the Agent shall, at the request of a Borrower, have agreed in writing shall be treated as the Classification Society in relation to such Borrower's Ship for the purposes of the relevant Ship Security Documents;

 

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

 

"Commander" means the, 1991-built, 149,507 dwt motor vessel Bet Commander registered in the ownership of the Commander Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Commander Advance" means an Advance of up to Thirty five million Dollars ($35,000,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Commander by the Commander Borrower pursuant to the Commander Contract;

 

"Commander Borrower" means Quex Shipping Inc. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

"Commander Contract" means the memorandum of agreement dated 19 December 2006 made between the Commander Seller and the Commander Borrower, relating to the sale by the Commander Seller, and the purchase by the Commander Borrower, of Commander;

 

"Commander Contract Price" means the purchase price of Commander under the Commander Contract being $50,000,000 or such other amount determined by the Agent to be the purchase price for Commander under the Commander Contract;

 

  

3

  

"Commander Deed of Covenant" means the deed of covenant collateral to the Commander Mortgage dated 17 December 2007 executed by the Commander Borrower in favour of the Security Agent;

 

"Commander Earnings Account" means each of the interest bearing Dollar accounts of the Commander Borrower opened with the Account Bank with account numbers 0/444312/017 and 0/444312/009 and includes any sub-accounts thereof and "Commander Earnings Accounts" means both of them;

 

"Commander Earnings Account Pledge" means each of:

 

	
  

	
(a)

	
the first priority pledge over the relevant Commander Earnings Account dated 17 December 2007 executed between the Commander Borrower, the Banks, the Agent and the Account Bank; and

 

	
  

	
(b)

	
the first priority pledge over the relevant Commander Earnings Account executed or (as the context may require) to be executed between the Commander Borrower, the Banks, the Agent and the Account Bank in such form as the Agent may require,

 

and "Commander Earnings Account Pledges" means both of them;

 

"Commander Management Agreement" means each agreement made or (as the context may require) to be made between the Commander Borrower (or the Corporate Guarantor on its behalf) and a Manager or any other agreement made between them in a form previously approved in writing by the Agent providing (inter alia) for that Manager to manage Commander;

 

"Commander Mortgage" means the first priority statutory Isle of Man mortgage of Commander dated 17 December 2007 executed by the Commander Borrower in favour of the Security Agent;

 

"Commander Seller" means Corfield Financial Holdings Inc. of the British Virgin Islands and includes its successors in title;

 

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

 

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

 

"Contract" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Contract;

 

	
  

	
(b)

	
in relation to Commander, the Commander Contract;

 

	
  

	
(c)

	
in relation to Intruder , the Intruder Contract;

 

	
  

	
(d)

	
in relation to Performer , the Performer Contract;

 

	
  

	
(e)

	
in relation to Prince, the Prince Contract; or

 

	
  

	
(f)

	
in relation to Scouter, the Scouter Contract,

 

and "Contracts" means any or all of them;

 

  

4

  

"Contract Price" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Contract Price;

 

	
  

	
(b)

	
in relation to Commander, the Commander Contract Price;

 

	
  

	
(c)

	
in relation to Intruder, the Intruder Contract Price;

 

	
  

	
(d)

	
in relation to Performer, the Performer Contract Price;

 

	
  

	
(e)

	
in relation to Prince, the Prince Contract Price; or

 

	
  

	
(f)

	
in relation to Scouter, the Scouter Contract Price,

 

and "Contract Prices" means any or all of them;

 

"Contribution" means, in relation to each Bank, the principal amount owing to such Bank at any relevant time;

 

"Corporate Guarantee" means the corporate guarantee dated 26 June 2007 as amended and supplemented from time to time (including by the Supplemental Agreements) executed by the Corporate Guarantor in favour of the Security Agent;

 

"Corporate Guarantor" means Bulk Energy Transport (Holdings) Limited of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;

 

"Creditors" means, together, the Arranger, the Agent, the Account Bank, the Security Agent and the Banks and "Creditor" means any of them;

 

"Deed of Covenant" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Deed of Covenant;

 

	
  

	
(b)

	
in relation to Commander, the Commander Deed of Covenant;

 

	
  

	
(c)

	
in relation to Intruder, the Intruder Deed of Covenant;

 

	
  

	
(d)

	
in relation to Prince, the Prince Deed of Covenant; or

 

	
  

	
(e)

	
in relation to Scouter, the Scouter Deed of Covenant,

 

and "Deeds of Covenant" means any or all of them;

 

"Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time (or any combination thereof) would constitute an Event of Default;

 

"Delivery" means, in relation to each Ship, the delivery of such Ship from the relevant Seller to the relevant Original Borrower pursuant to the relevant Contract;

 

"Delivery Date" means, in relation to each Ship, the date on which the Delivery of such Ship occurs;

 

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

 

"Dollars" and "$" mean the lawful currency of the United States of America and in respect of all payments to be made under any of the Security Documents mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar

 

  

5

  

funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars);

 

"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 2 in respect of such Advance;

 

"Drawdown Period" means the period commencing on the date of this Agreement and ending on the earlier of (a) the Termination Date, (b) the date (if any) on which the aggregate amount of the Advances is equal to the Total Commitment or (c) the date on which the Total Commitment is reduced to zero pursuant to clauses 4.3, 10.2 or 12.1;

 

"Earnings Account" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Earnings Accounts;

 

	
  

	
(b)

	
in relation to Commander, the Commander Earnings Accounts;

 

	
  

	
(c)

	
in relation to Intruder, the Intruder Earnings Accounts;

 

	
  

	
(d)

	
in relation to Prince, the Prince Earnings Accounts, or

 

	
  

	
(e)

	
in relation to Scouter, the Scouter Earnings Accounts,

 

and "Earnings Accounts" means any or all of them;

 

"Earnings Account Pledge" means:

 

	
  

	
(a)

	
in relation to the Fighter Earnings Account, the Fighter Earnings Account Pledges;

 

	
  

	
(b)

	
in relation to the Commander Earnings Account, the Commander Earnings Account Pledges;

 

	
  

	
(c)

	
in relation to the Intruder Earnings Account, the Intruder Earnings Account Pledges;

 

	
  

	
(d)

	
in relation to the Prince Earnings Account, the Prince Earnings Account Pledges; or

 

	
  

	
(e)

	
in relation to the Scouter Earnings Account, the Scouter Earnings Account Pledges,

 

and "Earnings Account Pledges" means any or all of them;

 

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

 

"Environmental Affiliate" means any agent or employee of any Borrower or any person having a contractual relationship with any Borrower in connection with any Ship or its operation or the carriage of cargo thereon;

 

"Environmental Claim" means:

 

	
  

	
(a)

	
any and all enforcement, clean-up, removal or other governmental or regulatory action or order or claim instituted or made pursuant to any Environmental Law resulting from a Spill from any Ship; and/or

 

  

6

  

	
  

	
(b)

	
any claim made by any other person relating to a Spill from any Ship in excess of One million five hundred thousand Dollars ($1,500,000);

 

"Environmental Incident" means any Spill:

 

	
  

	
(a)

	
from any Ship; or

 

	
  

	
(b)

	
from any other vessel in circumstances where:

 

	
  

	
(i)

	
any Ship or its owner, operator or manager may be liable for Environmental Claims arising from that Spill (other than Environmental Claims arising and fully satisfied before the date of this Agreement); and/or

 

	
  

	
(ii)

	
any Ship may be arrested or attached in connection with any such Environmental Claims;

 

"Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Ship pertaining to the pollution or protection of human health or the environment;

 

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

 

"Excess Cash" means, as at each Excess Cash Date:

 

	
  

	
(a)

	
the aggregate of all amounts standing to the credit of all the Earnings Accounts as at such Excess Cash Date,

 

less

 

	
  

	
(b)

	
any amounts due and payable by the Security Parties to the Creditors under the Security Documents during the calendar month ending on such Excess Cash Date, but only if and to the extent that such amounts remain unpaid as at such Excess Cash Date,

 

less

 

	
  

	
(c)

	
the amount of $400,000 per Mortgaged Ship (representing a working capital buffer for the operational needs of the Ships during subsequent months);

 

"Excess Cash Date" means the last Banking Date of each March, June, September and December of each calendar year;

 

"Fees Letter" means the letter executed on the same date as this Agreement and made between the Borrowers and the Agent in relation to certain of the fees referred to in clause 5.1;

 

"Fifth Supplemental Agreement" means the agreement dated 7 February 2012 made between (inter alios) the Borrowers, the Corporate Guarantor and the Creditors supplemental to this Agreement;

 

"Fighter" means the 1992-built, 173,149 dwt motor vessel Bet Fighter registered in the ownership of the Fighter Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Fighter Advance" means an Advance of up to Thirty million one hundred thousand Dollars ($30,100,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Fighter by the Fighter Borrower pursuant to the Fighter Contract;

 

"Fighter Borrower" means Lewisham Maritime Inc. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

  

7

  

"Fighter Contract" means the memorandum of agreement dated 19 December 2006 made between the Fighter Seller and the Fighter Borrower, relating to the sale by the Fighter Seller, and the purchase by the Fighter Borrower, of Fighter;

 

"Fighter Contract Price" means the purchase price of Fighter under the Fighter Contract, being $43,000,000 or such other amount determined by the Agent to be the purchase price for Fighter under the Fighter Contract;

 

"Fighter Deed of Covenant" means the deed of covenant collateral to the Fighter Mortgage dated 16 October 2007 executed by the Fighter Borrower in favour of the Security Agent;

 

"Fighter Earnings Account" means each of the interest bearing Dollar accounts of the Fighter Borrower opened with the Account Bank with account numbers 0/444310/014 and 0/444310/006 respectively and includes any sub-accounts thereof and "Fighter Earnings Accounts" means both of them;

 

"Fighter Earnings Account Pledge" means each of:

 

	
  

	
(a)

	
the first priority pledge over the relevant Fighter Earnings Account dated 29 August 2007 executed between the Fighter Borrower, the Banks, the Agent and the Account Bank; and

 

	
  

	
(b)

	
the first priority pledge over the relevant Fighter Earnings Account executed or (as the case may be) to be executed between the Fighter Borrower, the Banks, the Agent and the Account Bank in such form as the Agent may require,

 

and "Fighter Earnings Account Pledges" means both of them;

 

"Fighter Management Agreement" means each agreement made or (as the context may require) to be made between the Fighter Borrower (or the Corporate Guarantor on its behalf) and a Manager or any other agreement made between them in a form previously approved in writing by the Agent providing (inter alia) for that Manager to manage Fighter;

 

"Fighter Mortgage" means the first priority statutory Isle of Man mortgage of Fighter dated 16 October 2007 executed by the Fighter Borrower in favour of the Security Agent;

 

"Fighter Seller" means Ultima Navigation Inc. of the Republic of the Marshall Islands and includes its successors in title;

 

"First Repayment Date" means 28 December 2007;

 

"First Supplemental Agreement" means the agreement dated 16 October 2007 supplemental to this Agreement made between (inter alios) the Original Borrowers, the Corporate Guarantor and the Creditors;

 

"Flag State" means, in relation to each Ship, the Isle of Man or such other state or territory designated in writing by the relevant Borrower (in its sole discretion), as being the "Flag State" of such Borrower's Ship for the purposes of the relevant Security Documents with the prior written consent of the Banks (such consent and instructions not to be unreasonably withheld);

 

"Fourth Supplemental Agreement" means the agreement dated 31 March 2011 made between (inter alios) the Borrowers and the Creditors supplemental to this Agreement;

 

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

 

  

8

  

"Group" means, together, the Corporate Guarantor and its Subsidiaries from time to time (including, for the avoidance of doubt, the Borrowers) and "member of the Group" shall be construed accordingly;

 

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

 

"Interest Payment Date" means the last day of an Interest Period;

 

"Interest Period" means, in relation to each Advance or (as the case may be) the Loan, each period for the calculation of interest in respect of such Advance or (as the case may be) the Loan ascertained in accordance with clauses 3.2 and 3.3;

 

"Intruder" means the 1993-built, 69,235 dwt motor vessel Bet Intruder registered in the ownership of the Intruder Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Intruder Advance" means an Advance of up to Twenty four million five hundred thousand Dollars ($24,500,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Intruder by the Intruder Borrower pursuant to the Intruder Contract;

 

"Intruder Borrower" means Rossington Marine Corp. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

"Intruder Contract" means the memorandum of agreement dated 19 December 2006 made between the Intruder Seller and the Intruder Borrower, relating to the sale by the Intruder Seller, and the purchase by the Intruder Borrower, of Intruder;

 

"Intruder Contract Price" means the purchase price of Intruder under the Intruder Contract being $35,000,000 or such other amount determined by the Agent to be the purchase price for Intruder under the Intruder Contract;

 

"Intruder Deed of Covenant" means the deed of covenant dated 20 March 2008 collateral to the Intruder Mortgage executed (or as the context may require) to be executed by the Intruder Borrower in favour of the Security Agent;

 

"Intruder Earnings Account" means each of the interest bearing Dollar accounts of the Intruder Borrower opened with the Account Bank with account numbers 0/444314/028 and 0/444314/001 respectively and includes any sub-accounts thereof and "Intruder Earnings Accounts" means both of them;

 

"Intruder Earnings Account Pledge" means each of:

 

	
  

	
(a)

	
the first priority pledge over the relevant Intruder Earnings Account dated 20 March 2008 executed between the Intruder Borrower, the Banks, the Agent and the Account Bank; and

 

	
  

	
(b)

	
the first priority pledge over the relevant Intruder Earnings Account executed or (as the context may require) to be executed between the Intruder Borrower, the Banks, the Agent and the Account Bank in such form as the Agent may require,

 

and "Intruder Earnings Account Pledges" means both of them;

 

"Intruder Management Agreement" means each agreement made or (as the context may require) to be made between the Intruder Borrower (or the Corporate Guarantor on its behalf) and a Manager or any other agreement made between them in a form previously approved in writing by the Agent providing (inter alia) for that Manager to manage Intruder;

 

  

9

  

"Intruder Mortgage" means the first priority statutory Isle of Man mortgage of Intruder dated 20 March 2008 executed by the Intruder Borrower in favour of the Security Agent;

 

"Intruder Seller" means Langroyd Navigation Inc. of the British Virgin Islands and includes its successors in title;

 

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

 

"ISSC" means, in relation to a Ship, the International Ship Security Certificate issued in respect of such Ship pursuant to the ISPS Code;

 

"LIBOR" means in relation to a particular period:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
provided that if on such date no such rate is displayed, LIBOR for such period shall be the arithmetic mean of the rates quoted to the Agent by the Reference Banks at the request of the Agent as each Reference Bank's offered rate for deposits of the relevant currency in an amount equal or approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period,

 

and if any of the above rates is below zero (0), LIBOR shall be deemed to be zero (0);

 

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

 

	
  

	
"Majority Banks" means at any relevant time Banks (i) the aggregate of whose Contributions exceeds sixty six point six six per cent (66.66%) of the Loan or (ii) (if no principal amounts are outstanding under this Agreement) the aggregate of whose Commitments exceeds sixty six point six six per cent (66.66%) of the Total Commitment;

 

"Management Agreement" means:

 

	
  

	
(a)

	
in relation to Fighter, each Fighter Management Agreement;

 

	
  

	
(b)

	
in relation to Commander, each Commander Management Agreement;

 

	
  

	
(c)

	
in relation to Intruder, each Intruder Management Agreement;

 

	
  

	
(d)

	
in relation to Prince, each Prince Management Agreement; or

 

	
  

	
(e)

	
in relation to Scouter, each Scouter Management Agreement,

 

and "Management Agreements" means any or all of them;

 

  

10

  

"Manager" means each of:

 

	
  

	
(a)

	
Enterprises Shipping and Trading SA of 80 Broad Street, Monrovia, Republic of Liberia (which has established a branch office in Greece under Greek Law 89/1967 as amended from time to time) or any other person appointed from time to time by a Borrower, with the prior written consent of the Agent (such consent not to be unreasonably withheld), as the technical manager of such Borrower's Ship; and

 

	
  

	
(b)

	
Safbulk Maritime S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 or any other person appointed from time to time by a Borrower, with the prior written consent of the Agent (such consent not to be unreasonably withheld), as the commercial manager of such Borrower's Ship,

 

and "Managers" means all of them and includes their respective successors in title;

 

"Manager's Undertakings" means, collectively, each of the manager's undertakings executed or (as the context may require) to be executed by each Manager of the Ships in favour of the Security Agent in respect of each of the Ships, each in the form set out in the Second Supplemental Agreement and, singly, each a "Manager's Undertaking";

 

"Margin" means:

 

	
  

	
(a)

	
for the period commencing on the first Drawdown Date and ending on 30 June 2009, zero point seven five per cent (0.75%) per annum;

 

	
  

	
(b)

	
for the period commencing on 1 July 2009 and ending on 30 June 2010, two per cent (2%) per annum;

 

	
  

	
(c)

	
for the period commencing on 1 July 2010 and ending on 24 September 2010, zero point seven five per cent (0.75%) per annum;

 

	
  

	
(d)

	
for the period commencing on 25 September 2010 and ending on 31 December 2010, one point seven five per cent (1.75%) per annum;

 

	
  

	
(e)

	
for the period commencing on 1 January 2011 and ending on 22 December 2011, two per cent (2%) per annum; and

 

	
  

	
(f)

	
from 23 December 2011 and at all times thereafter, three per cent (3%) per annum;

 

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

 

"Mortgage" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Mortgage;

 

	
  

	
(b)

	
in relation to Commander, the Commander Mortgage;

 

	
  

	
(c)

	
in relation to Intruder, the Intruder Mortgage;

 

	
  

	
(d)

	
in relation to Prince, the Prince Mortgage; or

 

  

11

  

	
  

	
(e)

	
in relation to Scouter, the Scouter Mortgage,

 

and "Mortgages" means any or all of them;

 

"Mortgaged Ship" means, at any relevant time, any Ship which is at such time subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation (as each such term is defined in the relevant Ship Security Documents) of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Ship shall, for the purposes of this Agreement, be deemed to be a Mortgaged Ship as from whichever shall be the earlier of (a) the Drawdown Date of the Advance for that Ship and (b) the date that the Mortgage of that Ship shall have been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required to be paid by the Agent pursuant to clause 4.3 following the sale or Total Loss of such Ship and (ii) the last day of the Security Period;

 

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

 

"Original Borrowers" means, together, the Borrowers and the Outgoing Borrower and each an "Original Borrower";

 

"Outgoing Borrower" means Creighton Development Inc. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

"Performer" means the 1997-built, 172,091 dwt motor vessel Bet Performer registered in the ownership of the Outgoing Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Performer Advance" means an Advance of up to Fifty million five hundred thousand  Dollars ($50,500,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Performer by the Outgoing Borrower pursuant to the Performer Contract;

 

"Performer Contract" means the memorandum of agreement dated 19 December 2006 made between the Performer Seller and the Outgoing Borrower, relating to the sale by the Performer Seller, and the purchase by the Outgoing Borrower, of Performer;

 

"Performer Contract Price" means the purchase price of Performer under the Performer Contract, being $72,000,000 or such other amount determined by the Agent to be the purchase price for Performer under the Performer Contract;

 

"Performer Seller" means Dartford United Inc. of the British Virgin Islands and includes its successors in title;

 

"Permitted Encumbrance" means any Encumbrance in favour of the Creditors or any of them  created pursuant to the Security Documents and Permitted Liens;

 

"Permitted Liens" means, in relation to each Ship:

 

	
  

	
(a)

	
any lien on that Ship for master's, officer's or crew's wages outstanding in the ordinary course of trading;

 

	
  

	
(b)

	
any lien for salvage over that Ship;

 

	
  

	
(c)

	
liens on that Ship arising by operation of law for not more than two (2) months' prepaid hire under any charter in relation to that Ship not prohibited by this Agreement or any other Security Documents;

 

  

12

  

	
  

	
(d)

	
liens on that Ship 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 that Ship, provided such liens do not secure amounts more than sixty (60) days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens over that Ship for repair or maintenance, to clause 5.1.17 of the relevant Deed of Covenant;

 

	
  

	
(e)

	
any Encumbrance over that Ship created in favour of a plaintiff or defendant in any action of the court or tribunal before which such action is brought as security for costs and expenses where the relevant Borrower is prosecuting or defending such action in good faith by appropriate steps and in respect of which appropriate reserves have been made;

 

	
  

	
(f)

	
Encumbrances created on that Ship by the Security Documents; and

 

	
  

	
(g)

	
broker's liens on policies of insurances in respect of that Ship;

 

"Pollutant" means and includes oil and its products, any other polluting, toxic or hazardous substance and any other substance whose release into the environment is regulated or penalised by Environmental Laws;

 

"Prince" means the 1995-built, 163,554 dwt motor vessel Bet Prince registered in the ownership of the Prince Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Prince Advance" means an Advance of up to Forty nine million Dollars ($49,000,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Prince by the Prince Borrower pursuant to the Prince Contract;

 

"Prince Borrower" means Rayford Navigation Corp. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

"Prince Contract" means the memorandum of agreement dated 19 December 2006 made between the Prince Seller and the Prince Borrower, relating to the sale by the Prince Seller, and the purchase by the Prince Borrower, of Prince;

 

"Prince Contract Price" means the purchase price of Prince under the Prince Contract, being $70,000,000 or such other amount determined by the Agent to the purchase price for Prince under the Prince Contract;

 

"Prince Deed of Covenant" means the deed of covenant collateral to the Prince Mortgage dated 7 January 2008 executed by the Prince Borrower in favour of the Security Agent;

 

"Prince Earnings Account" means each of the interest bearing Dollar accounts of the Prince Borrower opened with the Account Bank with account numbers 0/444315/016 and 0/444315/008 respectively and includes any sub-accounts thereof and "Prince Earnings Accounts" means both of them;

 

"Prince Earnings Account Pledge" means each of:

 

	
  

	
(a)

	
the first priority pledge over the relevant Prince Earnings Account dated 7 January 2008 executed between the Prince Borrower, the Banks, the Agent and the Account Bank; and

 

	
  

	
(b)

	
the first priority pledge over the relevant Prince Earnings Account executed or (as the context may require) to be executed between the Prince Borrower, the Banks, the Agent and the Account Bank in such form as the Agent may require;

 

 and "Prince Earnings Account Pledges" means both of them;

 

"Prince Management Agreement" means each agreement made or (as the context may require) to be made between the Prince Borrower (or the Corporate Guarantor on its behalf) and

 

  

13

  

a Manager or any other agreement made between them in a form previously approved in writing by the Agent providing (inter alia) for that Manager to manage Prince;

 

"Prince Mortgage" means the first priority statutory Isle of Man mortgage of Prince dated 7 January 2008 executed by the Prince Borrower in favour of the Security Agent;

 

"Prince Seller" means Societe Directe D' Investissements S.A. of the British Virgin Islands and includes its successors in title;

 

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

 

"Reference Banks" means the Agent and any other bank or financial institution appointed as a Reference Bank by the Agent from time to time in its discretion;

 

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

 

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

 

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

 

"Repayment Dates" means, subject to clause 6.3, the First Repayment Date and each of the dates falling at six (6) monthly intervals after the First Repayment Date up to and including the date falling ninety (90) months after the First Repayment Date;

 

"Retention Account" means an interest bearing Dollar account of the Borrowers and the Corporate Guarantor opened jointly by the Borrowers and the Corporate Guarantor with the Account Bank with account number 0/444321/008 and includes any sub-accounts thereof;

 

"Retention Account Pledge" means the first priority pledge dated 23 July 2007 executed between the Borrowers, the Corporate Guarantor, the Banks, the Agent and the Account Bank in respect of the Retention Account;

 

"Retention Amount" means, in relation to any Retention Date, such sum as shall be the aggregate of:

 

	
  

	
(a)

	
one-sixth (1/6th) of the repayment instalment falling due for payment pursuant to clause 4.1 (as the same may have been reduced by any prepayment) on the next Repayment Date after the relevant Retention Date; and

 

	
  

	
(b)

	
the applicable fraction (as hereinafter defined) of the aggregate amount of interest falling due for payment in respect of each part of the Loan during and at the end of each Interest Period current at the relevant Retention Date and, for this purpose, the expression "applicable fraction" in relation to each Interest Period shall mean a fraction having a numerator of one and a denominator equal to the number of Retention Dates falling within the relevant Interest Period;

 

"Retention Dates" means the date falling thirty (30) days after the earlier of (a) the Termination Date and (b) the Drawdown Date of the last Advance to be drawn down, and each of the dates falling at monthly intervals after the earlier of such dates and prior to the final Repayment Date;

 

  

14

  

"Scouter" means the 1995-built, 171,175 dwt motor vessel Bet Scouter registered in the ownership of the Scouter Borrower through the relevant Registry under the laws and flag of the relevant Flag State;

 

"Scouter Advance" means an Advance of up to Thirty two million nine hundred thousand Dollars ($32,900,000) made available to the Original Borrowers for the purpose of financing part of the acquisition cost of Scouter by the Scouter Borrower pursuant to the Scouter Contract;

 

"Scouter Borrower" means Pulford Ocean Inc. of P.O. Box 3174, Road Town, Tortola, British Virgin Islands and includes its successors in title;

 

"Scouter Contract" means the memorandum of agreement dated 19 December 2006 made between the Scouter Seller and the Scouter Borrower, relating to the sale by the Scouter Seller, and the purchase by the Scouter Borrower, of Scouter;

 

"Scouter Contract Price" means the purchase price of Scouter under the Scouter Contract, being $47,000,000 or such other amount determined by the Agent to be the purchase price for Scouter under the Scouter Contract;

 

"Scouter Deed of Covenant" means the deed of covenant collateral to the Scouter Mortgage dated 23 July 2007 executed by the Scouter Borrower in favour of the Security Agent;

 

"Scouter Earnings Account" means each of the interest bearing Dollar accounts of the Scouter Borrower opened with the Account Bank with account numbers 0/444313/013 and 0/444313/005 respectively and includes any sub-accounts thereof and "Scouter Earnings Accounts" means both of them;

 

"Scouter Earnings Account Pledge" means each of:

 

	
  

	
(a)

	
the first priority pledge over the relevant Scouter Earnings Account dated 23 July 2007 executed between the Scouter Borrower, the Banks, the Agent and the Account Bank; and

 

	
  

	
(b)

	
the first priority pledge over the relevant Scouter Earnings Account executed or (as the context may require) to be executed between the Scouter Borrower, the Banks, the Agent and the  Account Bank in such form as the Agent may require,

 

and "Scouter Earnings Account Pledges" means both of them;

 

"Scouter Management Agreement" means each agreement made or (as the context may require) to be made between the Scouter Borrower (or the Corporate Guarantor on its behalf) and a Manager or any other agreement made between them in a form previously approved in writing by the Agent providing (inter alia) for that Manager to manage Scouter;

 

"Scouter Mortgage" means the first priority statutory Isle of Man mortgage of Scouter dated 23 July 2007 executed by the Scouter Borrower in favour of the Security Agent;

 

"Scouter Seller" means Azaria Shipping Limited of the Cayman Islands and includes its successors in title;

 

"Second Supplemental Agreement" means the agreement dated 30 September 2009 supplemental to this Agreement and the Corporate Guarantee made between the Original Borrowers, the Managers, the Corporate Guarantor and the Creditors;

 

"Security Agent" means Citibank International plc of 33 Canada Square, Canary Wharf, London E14 5LB, England, acting for the purposes of this Agreement through its offices at 8 Othonos Street, 105 57 Athens, Greece (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.1.3) or such other person as may be

 

  

15

  

appointed as security agent and trustee by the Banks and the Agent pursuant to clause 16.14 and includes its successors in title;

 

"Security Documents" means this Agreement, the Supplemental Agreements, the Fees Letter, the Mortgages, the Deeds of Covenant, the Share Pledges, the Manager's Undertakings, the Corporate Guarantee, the Account Pledges, the Trust Deed, and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrowers, the Corporate Guarantor or any of them pursuant to this Agreement or any other Security Documents (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

 

"Security Party" means each Borrower, the Corporate Guarantor or any other person who may at any time be a party to any of the Security Documents (other than the Creditors and the Managers);

 

"Security Period" means the period commencing on the date hereof and terminating upon the discharge of the security created by the Security Documents by payment of all monies payable thereunder;

 

"Security Requirement" means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers and the Banks) which is:

 

	
  

	
(a)

	
at any relevant time from the first Drawdown Date up to and including 30 June 2009, one hundred and twenty five per cent (125%) of the Loan as at such time; and

 

	
  

	
(b)

	
at any relevant time from 1 July 2009 up to and including 30 June 2010, one hundred per cent (100%) of the Loan as at such time;

 

	
  

	
(c)

	
at any relevant time from 1 July 2010 up to and including 23 December 2011, one hundred and twenty five per cent (125%) of the Loan as at such time;

 

	
  

	
(d)

	
at any relevant time from 24 December 2011 up to and including 1 January 2013, one hundred per cent (100%) of the Loan as at such time; and

 

	
  

	
(e)

	
at any relevant time after 1 January 2013, one hundred and twenty five per cent (125%) of the Loan as at such time;

 

"Security Value" means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers and the Banks) which is, at any relevant time, the aggregate of (a) the market value of the Mortgaged Ships as most recently determined in accordance with clause 8.2.2 and (b) the value of any additional security for the time being actually provided to the Creditors or any of them pursuant to clause 8.2.1 (taking into account any amounts standing to the credit of the BET Account at any relevant time, but not to the extent that such amounts exceed the amount of the minimum balance required under clause 8.1.17 applicable at the time);

 

"Seller" means:

 

	
  

	
(a)

	
in relation to Fighter, the Fighter Seller;

 

	
  

	
(b)

	
in relation to Commander, the Commander Seller;

 

	
  

	
(c)

	
in relation to Intruder, the Intruder Seller;

 

	
  

	
(d)

	
in relation to Performer, the Performer Seller;

 

	
  

	
(e)

	
in relation to Prince, the Prince Seller; or

 

  

16

  

	
  

	
(f)

	
in relation to Scouter, the Scouter Seller,

 

and "Sellers" means any or all of them;

 

"Shareholder" means Seanergy Maritime Holding Corp. a company incorporated in the Republic of the Marshall Islands and includes its successors in title;

 

"Share Pledge" means, in relation to a Borrower, the charge of all the issued shares of such Borrower dated 30 September 2009 executed by the Corporate Guarantor in favour of the Security Agent and "Share Pledges" means any or all of them;

 

"Ships" means, together, Fighter, Commander, Intruder, Prince and Scouter and:

 

	
  

	
(a)

	
in relation to the Fighter Advance and/or the Fighter Borrower, it means Fighter;

 

	
  

	
(b)

	
in relation to the Commander Advance and/or the Commander Borrower, it means Commander;

 

	
  

	
(c)

	
in relation to the Intruder Advance and/or the Intruder Borrower, it means Intruder;

 

	
  

	
(d)

	
in relation to the Prince Advance and/or the Prince Borrower, it means Prince; or

 

	
  

	
(e)

	
in relation to the Scouter Advance and/or the Scouter Borrower, it means Scouter,

 

and "Ship" means any of them;

 

"Ship Security Documents":

 

	
  

	
(a)

	
in relation to Fighter, means the Fighter Mortgage, the Fighter Deed of Covenant and each Manager's Undertaking in respect of Fighter;

 

	
  

	
(b)

	
in relation to Commander, means the Commander Mortgage, the Commander Deed of Covenant and each Manager's Undertaking in respect of Commander;

 

	
  

	
(c)

	
in relation to Intruder, means the Intruder Mortgage, the Intruder Deed of Covenant and each Manager's Undertaking in respect of Intruder;

 

	
  

	
(d)

	
in relation to Prince, means the Prince Mortgage, the Prince Deed of Covenant and each Manager's Undertaking in respect of Prince; or

 

	
  

	
(e)

	
in relation to Scouter, means the Scouter Mortgage, the Scouter Deed of Covenant and each Manager's Undertaking in respect of Scouter;

 

"SMC" means, in relation to each Ship, the safety management certificate issued in respect of such Ship in accordance with rule 13 of the Code;

 

"Spill" means any actual emission, spill, release or discharge of a Pollutant into the environment;

 

"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;

 

"Supplemental Agreements" means, together, the First Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement, the Fourth Supplemental Agreement, the Fifth Supplemental Agreement and the Supplemental Letters;

 

  

17

  

"Supplemental Letters" means each of the letters dated 10 July 2008 and 4 August 2010, each executed by (inter alios) the Borrowers and the Agent and any other letters supplemental to this Agreement that may have been executed prior to the date of the Fifth Supplemental Agreement;

 

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

 

"Termination Date" means 30 November 2007 or such later date as the Agent (acting on the instructions of the Majority Banks) may in its sole discretion agree in writing;

 

"Third Supplemental Agreement" means the agreement dated 23 December 2010 made between (inter alios) the Borrowers, the Corporate Guarantor and the Creditors;

 

"Total Commitment" means, at any relevant time, the aggregate of the Commitments of all the Banks at such time;

 

"Total Loss" means, in relation to a Ship:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the Compulsory Acquisition of such Ship (excluding, for the avoidance of doubt, requisition for hire); or

 

	
  

	
(c)

	
the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to the Compulsory Acquisition of such Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless such Ship be released and restored to the relevant Borrower from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within forty five (45) days after the occurrence thereof;

 

"Transferee Bank" has the meaning ascribed thereto in clause 15.3;

 

"Transferor Bank" has the meaning ascribed thereto in clause 15.3;

 

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

 

"Trust Deed" means the trust deed dated 26 June 2007 executed by the Security Agent;

 

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

 

"Ultimate Shareholder" means each of the persons notified in writing by the Borrowers to the Creditors prior to the date of the Third Supplemental Agreement, and accepted in writing by the Creditors in their sole discretion, to be, on the date of the Third Supplemental Agreement and the Effective Date (as defined therein), the ultimate beneficial owners of at least 50.1% of the total issued voting share capital of the Shareholder, and "Ultimate Shareholders" means any or all of them; and

 

  

18

  

"Underlying Documents" means, together, the Contracts and the Management Agreements and "Underlying Document" means any of them.

 

	
1.3

	
Headings

 

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

 

	
1.4

	
Construction of certain terms

 

In this Agreement, unless the context otherwise requires:

 

	
1.4.1

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

 

	
1.4.2

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

 

	
1.4.3

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

 

	
1.4.4

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

 

	
1.4.5

	
references to a time of day are to London time;

 

	
1.4.6

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

 

	
1.4.7

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

 

	
1.4.8

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

 

	
1.5

	
Majority Banks

 

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

 

	
1.6

	
Banks' Commitment

 

For the purposes of the definition of "Majority Banks" in clause 1.2 and the relevant provisions of clause 16, references to the Commitment of a Bank shall, if the Total Commitment has, at any relevant time, been reduced to zero, be deemed to be a reference to the Commitment of that Bank immediately prior to such reduction to zero.

 

  

19

  

2              The Total Commitment and the Advances

 

	
2.1

	
Agreement to lend

 

The Banks, relying upon each of the representations and warranties in clause 7, agree to lend to the Borrowers and the Outgoing Borrower, jointly and severally, upon and subject to the terms of this Agreement, in six (6) Advances, the principal sum of up to the lower of (a) Two hundred and twenty two million Dollars ($222,000,000) and (b) the amount in Dollars not exceeding seventy per cent (70%) of the aggregate of the Contract Prices.  The obligation of each Bank under this Agreement shall be to contribute that proportion of each Advance which, as at the Drawdown Date of such Advance, its Commitment bears to the Total Commitment.

 

	
2.2

	
Obligations several

 

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

 

	
2.3

	
Interests several

 

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

 

	
2.4

	
Drawdown

 

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

 

	
2.5

	
Amounts, timing and limitation of Advances

 

	
2.5.1

	
The aggregate amount of the Loan shall not exceed the lower of (a) Two hundred and twenty two million Dollars ($222,000,000) and (b) the amount in Dollars which is seventy per cent (70%) of the aggregate of the Contract Prices.

 

	
2.5.2

	
Each Advance shall be made solely for the purpose of financing in part the payment of the Contract Price for the Ship relevant to such Advance and shall only be made available on or after the Delivery Date for such Ship.

 

	
2.5.3

	
The amount of the Fighter Advance shall not exceed the lower of (a) $30,100,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Fighter Contract Price.

 

	
2.5.4

	
The amount of the Commander Advance shall not exceed the lower of (a) $35,000,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Commander Contract Price.

 

	
2.5.5

	
The amount of the Intruder Advance shall not exceed the lower of (a) $24,500,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Intruder Contract Price.

 

  

20

  

	
2.5.6

	
The amount of the Performer Advance shall not exceed the lower of (a) $50,500,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Performer Contract Price.

 

	
2.5.7

	
The amount of the Prince Advance shall not exceed the lower of (a) $49,000,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Prince Contract Price.

 

	
2.5.8

	
The amount of the Scouter Advance shall not exceed the lower of (a) $32,900,000 and (b) the amount in Dollars which is equal to seventy per cent (70%) of the Scouter Contract Price.

 

	
2.6

	
Availability

 

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

 

	
2.7

	
Termination of Total Commitment

 

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

 

	
2.8

	
Application of proceeds

 

Without prejudice to the Borrowers' obligations under clause 8.1.3, no Creditor shall have any responsibility for the application of the proceeds of the Loan or any part thereof by the Borrowers.

 

	
3

	
Interest and Interest Periods

 

	
3.1

	
Normal interest rate

 

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

 

	
3.2

	
Selection of Interest Periods

 

Subject to clause 3.3, the Borrowers may by notice received by the Agent not later than 10:00 a.m. on the third Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1) month, two (2) months, three (3) months or six (6) months or, subject to availability to be determined by the Agent), such other period (shorter than twelve (12) months) as the Borrowers may select and the Agent (acting on the instructions of the Banks) may agree.

 

	
3.3

	
Determination of Interest Periods

 

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

 

	
3.3.1

	
the initial Interest Period in respect of each Advance shall commence on the date such Advance is made and each subsequent Interest Period for such Advance shall commence on the last day of the previous Interest Period for such Advance;

 

  

21

  

	
3.3.2

	
the initial Interest Period in respect of each Advance for a Ship drawn down after the first Advance to be drawn down shall end on the same day as the then current Interest Period for the Loan and on such day, all Advances then outstanding shall be consolidated into, and shall thereafter constitute, the Loan;

 

	
3.3.3

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

 

	
3.3.4

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

 

	
3.4

	
Default interest

 

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

 

	
3.5

	
Notification of Interest Periods and interest rate

 

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

 

	
3.6

	
Market disruption; non-availability

 

	
3.6.1

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

 

	
  

	
(a)

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

 

  

22

  

	
  

	
(b)

	
where applicable (and provided that the Agent has appointed any other bank or financial institution (other than, and in addition to, Citibank International plc) as Reference Bank) only one or none of the Reference Banks supplies the Agent with a quotation for the purposes of calculating LIBOR (being unable on reasonable grounds and not just unwilling to do so); or

 

	
  

	
(c)

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

 

the Agent shall forthwith give notice (a "Determination Notice") thereof to the Borrowers and to each of the Banks.  A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue.  After the giving of any Determination Notice the undrawn amount of the Total Commitment shall not be borrowed until notice to the contrary is given to the Borrowers by the Agent.

 

	
3.6.2

	
During the period of ten (10) days after any Determination Notice has been given by the Agent under clause 3.6.1, each Bank shall negotiate in good faith with the Borrowers (but without incurring any legal obligations) with a view to arriving at an alternative basis (the "Substitute Basis") for maintaining the Loan, failing which the Borrowers shall promptly, on first demand or within the time limit determined by the Agent, prepay the Loan together with accrued interest thereon to the date of prepayment (calculated at the rate or rates most lately applicable to the Loan) and all other sums payable by the Borrowers or any of them under the Security Documents.  In such a case the Borrowers shall pay to each Bank such amount as may be determined by each Bank to be necessary to compensate that Bank for the increased cost (if any) of maintaining its Contribution during the period of negotiation referred to in this clause 3.6 until such prepayment.

 

	
3.6.3

	
Each Substitute Basis may include (without limitation) alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to the relevant Bank equivalent to the Margin.  Each Substitute Basis so certified shall be binding upon the Borrowers and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Agent notifies the Borrowers that none of the circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.

 

	
3.7

	
Reference Bank quotations

 

If any Reference Bank is unable on reasonable grounds to furnish a quotation for the purposes of calculating LIBOR the interest rate shall be determined, subject to clause 3.6, on the basis of quotations furnished by the other Reference Banks.

 

	
4

	
Repayment and prepayment

 

	
4.1

	
Repayment

 

The Borrowers shall repay the Loan by sixteen (16) consecutive semi-annual instalments, one such instalment to be repaid on each of the Repayment Dates.  Subject to the provisions of this Agreement, the amount of each of the first to fifteenth such instalments (inclusive) shall be Ten million four hundred and thirty seven thousand five hundred Dollars ($10,437,500) and the amount of the sixteenth and final instalment shall be Sixty five million four hundred and thirty seven thousand five hundred Dollars ($65,437,500) (comprising a repayment instalment of Ten million four hundred and thirty seven thousand five hundred Dollars ($10,437,500)) and a balloon payment of Fifty five million Dollars ($55,000,000) (such balloon payment the "Balloon Instalment").

 

  

23

  

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

 

	
4.2

	
Voluntary prepayment

 

The Borrowers may prepay the Loan in whole or part (such part being in an amount of Five million Dollars ($5,000,000) or any larger sum which is an integral multiple of Five million Dollars ($5,000,000)), on any Interest Payment Date relating to the part of the Loan to be prepaid without premium or penalty subject always to their obligations under clause 4.4.

 

	
4.3

	
Prepayment on Total Loss or sale

 

	
4.3.1

	
Before drawdown

 

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

 

	
4.3.2

	
After drawdown

 

On the Disposal Reduction Date for a Mortgaged Ship, the Borrowers shall prepay such part of the Loan as is equal to the higher of (a) the Relevant Amount for such Mortgaged Ship and (b) such amount in Dollars as shall ensure that, immediately following the relevant prepayment, the Security Value shall be not less than the Security Requirement (except in the case of the last Mortgaged Ship, in which case the prepayment amount required under this clause 4.3.2 shall be equal to the full amount of the Loan outstanding at such time, together with all other amounts outstanding under the Security Documents at such time). If the sale or insurance proceeds payable to the relevant Borrower are higher than the amount required to be prepaid under the preceding paragraph, then on the Disposal Reduction Date for such Mortgaged Ship, any such surplus shall be paid by the relevant Borrower to the BET Account.

 

	
4.3.3

	
        Consent to sale

 

Each Borrower may sell or enter into any agreement to sell or otherwise dispose of its Mortgaged Ship without the prior written consent of the Agent or the other Creditors, if such Borrower delivers to the Agent evidence satisfactory to the Agent (acting on the instructions of the Majority Banks) that such sale is or will be for the full value of such Mortgaged Ship to an arm's length purchaser and is for payment in cash and provided further that no Event of Default has occurred and is continuing or will, on completion of such sale, have occurred and be continuing, and the Agent (acting on the instructions of the Majority Banks) is satisfied that on or immediately after the delivery of such Mortgaged Ship to the relevant purchaser, the net sale proceeds of such Mortgaged Ship will be not less than the full amount payable to the Creditors upon completion of such sale pursuant to this clause 4.3 and any other amounts payable under clause 4.4.

 

	
4.3.4

	
Defined terms

 

	
  

	
For the purposes of this clause 4.3:

 

	
  

	
(a)

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

 

  

24

  

	
  

	
(b)

	
"Disposal Reduction Date" means:

 

	
  

	
(i)

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

 

	
  

	
(ii)

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

 

	
  

	
(c)

	
"Total Loss Reduction Date" means, in relation to a Mortgaged Ship which has become a Total Loss, the date which is the earlier of:

 

	
  

	
(i)

	
the date falling one hundred and eighty (180) days after that on which such Mortgaged Ship becomes a Total Loss; and

 

	
  

	
(ii)

	
the date upon which insurance proceeds are, or Requisition Compensation (as defined in the relevant Ship Security Documents) is, received in respect of such Total Loss by the relevant Borrower (or the Security Agent pursuant to the relevant Ship Security Documents; and

 

	
  

	
(d)

	
"Relevant Amount" means, in relation to a Mortgaged Ship which has become a Total Loss or is sold, the amount in Dollars which is equal to the amount of the Applicable Fraction multiplied by the amount of the Loan outstanding as of the Disposal Reduction Date for such Mortgaged Ship.

 

	
4.3.5

	
Interpretation

 

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

 

	
  

	
(a)

	
in the case of a constructive total loss of a Ship, upon the date (the "NOA Date") and at the time notice of abandonment of such Ship is given to the insurers of such Ship for the time being (provided a claim for total loss is admitted by such insurers) or, if such insurers do not forthwith admit the relevant claim, on the earlier of (a) the date when either a total loss is subsequently admitted by the insurers or a total loss is subsequently adjured by a competent court of law or arbitration tribunal to have occurred and (b) the date falling one hundred and forty (140) days after the NOA Date;

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Ship (other than where the same amounts to Compulsory Acquisition of such Ship) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the relevant Borrower of the use of such Ship for more than forty five (45) days, upon the expiry of the period of forty five (45) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred.

 

	
4.4

	
Amounts payable on prepayment

 

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

 

	
4.4.1

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

 

	
4.4.2

	
and additional amount payable under clauses 6.6 or 12.2; and

 

  

25

  

	
4.4.3

	
all other sums payable by the Borrowers to the Creditors under this Agreement or any of the other Security Documents including, without limitation, any amounts payable under clause 11.

 

	
4.5

	
Notice of prepayment; reduction of repayment instalments

 

	
4.5.1

	
No prepayment may be effected under clause 4.2 unless the Borrowers shall have given the Agent at least ten (10) Banking Days' prior written notice of their intention to make such prepayment.

 

	
4.5.2

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

 

	
4.5.3

	
Any amount prepaid pursuant to clauses 4.2, 4.3 or 8.2.1(a) shall be applied in reducing the repayment instalments under clause 4.1 (including the Balloon Instalment) proportionately.

 

	
4.5.4

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

 

	
4.5.5

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

 

	
5

	
Fees and expenses

 

	
5.1

	
Fees

 

The Borrowers shall pay to the Agent:

 

	
5.1.1

	
for the account of the Arranger, on the date of this Agreement, an underwriting fee of the amount specified in the Fees Letter (for sharing between the Arranger and the Banks in such manner as the Arranger may determine in its absolute discretion and as it has separately agreed with each Bank); and

 

	
5.1.2

	
for the account of the Agent, on the date of this Agreement and at twelve (12) monthly intervals thereafter until all moneys owing under the Security Documents have been repaid in full or, if no Advance has been drawn down by the last day of the Drawdown Period, until such day, an annual agency fee in such amount per annum as is specified in the Fees Letter.

 

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

 

	
5.2

	
Expenses

 

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

 

	
5.2.1

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

 

	
5.2.2

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

 

together with interest at the rate referred to in clause 3.4 from the date on which such expenses were incurred to the date of payment (as well after as before judgment) (and amounts payable on demand under this clause 5.2 shall be deemed as having been paid at the stipulated time if paid within three (3) Banking Days of demand).

 

  

26

  

 

	
5.3

	
Value added tax

 

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

 

	
5.4

	
Stamp and other duties

 

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

 

	
6

	
Payments and taxes; accounts and calculations

 

	
6.1

	
No set-off or counterclaim

 

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

 

	
6.2

	
Payment by the Banks

 

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

 

	
6.3

	
Non-Banking Days

 

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

 

	
6.4

	
Calculations

 

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

 

  

27

  

 

	
6.5

	
Certificates conclusive

 

Any certificate or determination of the Agent as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall, in the absence of manifest error, be conclusive and binding on the Borrowers and on the Banks.

 

	
6.6

	
Grossing-up for Taxes

 

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

 

	
6.7

	
Loan account

 

Each Bank shall maintain, in accordance with its usual practice, an account evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents.  Each of the Agent and the Security Agent shall maintain a control account (being the "Account Current" referred to in each Mortgage) 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 conclusive as to the amount from time to time owing by the Borrowers under the Security Documents.

 

	
6.8

	
Agent may assume receipt

 

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

 

	
6.9

	
Partial payments

 

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

 

	
6.9.1

	
first, in or towards payment, on a pro rata basis, of any unpaid costs and expenses of the Agent and the Security Agent under any of the Security Documents;

 

  

28

  

	
6.9.2

	
secondly, in or towards payment, on a pro rata basis, of any fees payable to the Arranger, the Agent or any of the other Creditors under, or in relation to, the Security Documents which remain unpaid;

 

	
6.9.3

	
thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued interest in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

 

	
6.9.4

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

 

	
6.9.5

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

 

	
6.9.6

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

 

Following the occurrence of an Event of Default which is continuing, the order of application set out in clauses 6.9.3 to 6.9.6 may be varied by the Agent if the Majority Banks so direct, without any reference to, or consent or approval from, the Borrowers.

 

	
7

	
Representations and warranties

 

	
7.1

	
Continuing representations and warranties

 

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

 

	
7.1.1

	
Due incorporation

 

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

 

	
7.1.2

	
Corporate power

 

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

 

	
7.1.3

	
Binding obligations

 

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

 

  

29

  

 

7.1.4                No conflict with other obligations

 

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any of the Borrowers or any other Security Party 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 of the Borrowers or any other Security Party is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any of the Borrowers or any other Security Party or (iv) result in the creation or imposition of or oblige any of the Borrowers or any other Security Party to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Borrowers or any other Security Party;

 

	
7.1.5

	
No litigation

 

no litigation relating to sums exceeding Two million Dollars ($2,000,000), arbitration or administrative proceeding is taking place, pending or, to the knowledge of the officers of any of the Borrowers, threatened against any of the Borrowers or any other Security Party which could have a material adverse effect on the business, assets or financial condition of any of the Borrowers or any other Security Party;

 

	
7.1.6

	
No filings required

 

save for (a) the registration of the Mortgages in the relevant register under the laws of the relevant Flag State through the relevant Registry and (b) the registration of the Earnings Account Pledges against the relevant Borrower at the Register of Registered Charges in the British Virgin Islands in accordance with Section 163 of the British Virgin Islands Business Companies Act, 2004, 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 Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents, and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Relevant Jurisdiction;

 

	
7.1.7

	
Choice of law

 

the choice of (a) English law to govern the Underlying Documents and the Security Documents (other than the Mortgages and the Account Pledges), (b) the law of the relevant Flag State to govern each Mortgage and (c) Greek law to govern the Account Pledges, and the submissions by the Security Parties to the non-exclusive jurisdiction of the English courts or (as the case may be) Greek courts, are valid and binding;

 

	
7.1.8

	
No immunity

 

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

 

	
7.1.9

	
Consents obtained

 

every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Underlying Documents and each of the Security Documents to which it is or is to be a party or the performance by each

 

  

30

  

Security Party of its obligations under the Security Documents or the Underlying Documents to which it is or is to be a party has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same;

 

	
7.1.10

	
Shareholdings

 

	
  

	
(a)

	
the Ultimate Shareholders are the ultimate beneficial owners of at least 50.1% of the issued voting share capital of the Shareholder;

 

	
  

	
(b)

	
the Shareholder is, directly, the legal and beneficial owner of 100% of the issued voting share capital of the Corporate Guarantor; and

 

	
  

	
(c)

	
each of the Borrowers is a wholly-owned direct Subsidiary of the Corporate Guarantor;

 

	
7.1.11

	

No material adverse change

 

there has been no material adverse change:

 

	
  

	
(a)

	
in the business, assets, operations, performance, prospects or the financial position of any of the Borrowers or the Group as a whole from that described by or on behalf of the Borrowers or any other Security Party to the Agent and/or the Arranger in the negotiation of this Agreement; or

 

	
  

	
(b)

	
in the ability of any of the Borrowers, the Corporate Guarantor, the Managers or any other Security Party to comply with any of their respective obligations under the Security Documents or any of them; or

 

	
  

	
(c)

	
in the legality, validity or enforceability of any of the Security Documents or any of the rights or remedies of the Creditors or any of them thereunder; or

 

	
  

	
(d)

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

 

	
7.1.12

	
Borrowers' own account

 

	
  

	
in relation to the borrowing by each Borrower of the Loan or any part thereof, the performance and discharge of its obligations and liabilities under the Security Documents and the transactions and other arrangements effected or contemplated by this Agreement, each Borrower is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat "money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities (as amended)) article 305 bis of the Swiss Penal Code;

 

	
7.1.13

	
Solvency

 

	
  

	
(a)

	
none of the Borrowers nor any other member of the Group is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts; and

 

	
  

	
(b)

	
none of the Borrowers nor any other member of the Group by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness; and

 

	
7.1.14

	
Corporate Guarantor's assets

 

the Corporate Guarantor does not have, as at the date of the Fifth Supplemental Agreement and as at the Effective Date (as defined in the Fifth Supplemental Agreement) any assets or properties other than the shares of the Borrowers and deposits (if any) standing to the credit of the BET Account.

 

  

31

  

7.2          Initial representations and warranties

 

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

 

	
7.2.1

	
Pari passu

 

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

 

	
7.2.2

	
No default under other Borrowed Money

 

none of the Borrowers nor any other Security Party is (nor would with the giving of notice or lapse of time or a combination thereof be) in breach of or in default under any agreement relating to Borrowed Money to which it is a party or by which it may be bound;

 

	
7.2.3

	
Information - full disclosure

 

the information, exhibits and reports furnished by the Borrowers and any other Security Party to the Agent in connection with the negotiation and preparation of the Security Documents are true and accurate in all material respects and not misleading and all expressions of opinion contained therein genuinely reflect the opinions of the directors and the senior management of the Borrowers and the other Security Parties and are based on reasonable assumptions; do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading;

 

	
7.2.4

	
No withholding Taxes

 

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

 

	
7.2.5

	
No Default

 

no Default has occurred and is continuing;

 

	
7.2.6

	
The Ships

 

each Ship will, on the Delivery Date relevant to such Ship, be:

 

	
  

	
(a)

	
in the absolute ownership of the relevant Borrower who will, on and after its Delivery Date, be the sole, legal and beneficial owner of such Ship;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
operationally seaworthy and in every way fit for service; and

 

	
  

	
(d)

	
classed with the relevant Classification free of any overdue conditions or recommendations of the relevant Classification Society affecting class;

 

	
7.2.7

	
Ships' employment

 

save as disclosed to or accepted by, the Agent in writing prior to such date, none of the Ships is nor will, on or before the Drawdown Date of the Advance relevant to such Ship, be subject

 

  

32

  

to any charter or contract or to any agreement to enter into any charter or contract which, if entered into after the date of the relevant Ship Security Documents, would have required the consent of the Agent or, as the context may require, the Security Agent, the Banks and, on or before the Drawdown Date of the Advance relevant to such Ship, there will not be any agreement or arrangement whereby the Earnings (as defined in the relevant Ship Security Documents) of such Ship may be shared with any other person;

 

	
7.2.8

	
Freedom from Encumbrances

 

no Ship, nor its respective Earnings, Insurances or Requisition Compensation (each as defined in the relevant Ship Security Documents) nor the Accounts nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be, on the Drawdown Date of the Advance relevant to such Ship, subject to any Encumbrance except for Encumbrances created under, or permitted by, the Security Documents (including, for the avoidance of doubt, Permitted Liens);

 

	
7.2.9

	
Compliance with Environmental Laws and Approvals

 

to the best of the knowledge and belief of each Borrower and its officers:

 

	
  

	
(a)

	
all Environmental Laws applicable to each Ship have been complied with and all consents, licences and approvals required under such Environmental Laws have been obtained and complied with;

 

	
  

	
(b)

	
no Environmental Claim has been made or threatened or is pending against a Borrower or against any Environmental Affiliate or any Ship; and

 

	
  

	
(c)

	
there has been no Environmental Incident in respect of a Ship or any other vessel owned by, or chartered to, any Borrower which could give rise to an Environmental Claim;

 

	
7.2.10

	
Copies true and complete

 

the copies or originals of the Underlying Documents delivered or to be delivered to the Agent pursuant to clause 9.1 are, or will when delivered be, true and complete copies 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;

 

	
7.2.11

	
ISPS Code

 

with effect from the Delivery Date of a Ship, the relevant Borrower shall have a valid and current ISSC in respect of that Ship and that Ship shall be in compliance with the ISPS Code; and

 

	
7.2.12

	
Application for DOC and SMC

 

the Operator maintains a DOC for itself and, on the Delivery Date for a Ship, it will have applied for an SMC in respect of such Ship, and none of the Borrowers nor the Operator is, on the date of this Agreement, aware of any reason why any such application may be refused.

 

	
7.3

	
Repetition of representations and warranties

 

On and as of each Drawdown Date and (except in relation to the representations and warranties in clause 7.2) on each Interest Payment Date and on the Effective Date (as defined in the Fifth Supplemental Agreement), the Borrowers shall (a) be deemed to repeat the representations and warranties in clauses 7.1 and 7.2 as if made with reference to the facts and circumstances existing on such day and (b) be deemed to further represent and warrant to each of the Creditors that the then latest audited financial statements delivered to the Agent by the

 

  

33

  

Borrowers (if any) have been prepared in accordance with the Applicable Accounting Principles which have been consistently applied and present fairly and accurately the financial position of the Borrowers and the consolidated financial position of the Group, respectively, as at the end of the financial period to which the same relate and the results of the operations of the Borrowers and the consolidated results of the operations of the Group, respectively, for the financial period to which the same relate and, as at the end of such financial period, neither the Corporate Guarantor nor any of its Subsidiaries had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements.

 

	
8

	
Undertakings

 

	
8.1

	
General

 

The Borrowers jointly and severally undertake with each Creditor that, throughout the Security Period, they will:

 

	
8.1.1

	
Notice of Default

 

promptly inform the Agent of any occurrence of which any of them becomes aware which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents or the Underlying Documents to which it is or is to be a party and, without limiting the generality of the foregoing and clause 8.1.5(b), will inform the Agent of any Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Agent, confirm to the Agent in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing;

 

	
8.1.2

	
Consents and licences

 

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

 

	
8.1.3

	
Use of proceeds

 

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

 

	
8.1.4

	
Pari passu

 

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

 

	
8.1.5

	
Financial statements, Compliance Certificates and valuations

 

	
  

	
(a)

	
prepare or cause to be prepared financial statements of each of the Borrowers and consolidated financial statements of the Group in accordance with the Applicable Accounting Principles consistently applied in respect of each financial year (commencing with the financial year ended 31 December 2007) and, in the case of the consolidated financial statements of the Group, cause the same to be reported on by their auditors and prepare or cause to be prepared consolidated financial statements of the Group in respect of each financial half-year (commencing with the financial half-year ending 30 June 2008) on the same basis as the annual statements and deliver as many copies of

 

  

34

  

	
  

	
the same as the Agent may reasonably require as soon as practicable but not later than one hundred and eighty (180) days (in the case of audited financial statements) or ninety (90) days (in the case of unaudited financial statements) after the end of the financial period to which they relate;

 

	
  

	
(b)

	
without prejudice to clause 8.1.1, at the same time as the Borrowers and/or the Corporate Guarantor provide the Agent with audited financial statements pursuant to paragraph (a) above and clause 5.1.4 of the Corporate Guarantee and at any other time as and when the Agent (acting on the instructions of the Majority Banks in their absolute discretion) shall require, provide the Agent with a certificate signed by a member of the board or other officer of each Borrower and the Corporate Guarantor, confirming that, save as otherwise stated in such certificate, no Default has occurred and is continuing;

 

	
  

	
(c)

	
at the same time as the Borrowers and/or the Corporate Guarantor provide the Agent with financial statements pursuant to paragraph (a) above and clause 5.1.4 of the Corporate Guarantee (namely not later than 30 June and 30 September of each calendar year), and, only in relation to the calendar year commencing 1 January 2012, also on or around 31 March 2012 and 31 December 2012, provide the Agent with valuations of each Ship dated not more than 14 days previously and made (at the expense of the Borrowers) in the manner specified in clause 8.2.2;

 

	
  

	
(d)

	
throughout the calendar year commencing 1 January 2012, provide the Agent with financial projections of the Group on a consolidated basis in accordance with the Applicable Accounting Principles in respect of each financial quarter:

 

	
  

	
(i)

	
in respect of the first financial quarter, not later than 15 February 2012; and

 

	
  

	
(ii)

	
in respect of the subsequent financial quarters, within 15 days after the beginning of the financial quarter to which they relate (namely no later than 15 April 2012, 15 July 2012 and 15 October 2012, respectively); and

 

	
  

	
(e)

	
throughout the calendar year commencing 1 January 2012, within 10 days after the end of each calendar month, provide the Agent with a liquidity report for the Group on a consolidated basis for such calendar month;

 

	
8.1.6

	
Delivery of reports

 

deliver to the Agent sufficient copies for all the Banks of every report, circular, notice or like document issued by any Security Party to its creditors in general (but such obligation shall not apply in respect of notices sent by the Borrowers or any of them to a creditor thereof on an individual basis);

 

	
8.1.7

	
Provision of further information

 

provide the Agent, and procure that the Corporate Guarantor shall provide the Agent, with such financial or other information and any major financial developments concerning any Borrower, the other Security Parties, any other members of the Group and their respective commitments, affairs, activities, financial standing, Indebtedness and operations and the performance of the Ships (including, without limitation, sale and purchase of ships, new borrowings, the refinancing or restructuring of existing borrowings and the employment of any ships) as the Agent or any Bank (acting through the Agent) may from time to time reasonably require;

 

	
8.1.8

	
Obligations under Security Documents

 

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

 

  

35

  

8.1.9                Compliance with Code

 

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

 

	
8.1.10

	
Withdrawal of DOC and SMC

 

and will procure that any Operator will, immediately inform the Agent if there is any threatened or actual withdrawal of such Operator's DOC or the SMC in respect of any of the Ships;

 

	
8.1.11

	
Issuance of DOC and SMC

 

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

 

	
8.1.12

	
ISPS Code Compliance

 

    and will procure that the relevant Manager or any Operator will, with effect from the Delivery Date of a Ship and at all times thereafter:

 

	
  

	
(a)

	
maintain at all times a valid and current ISSC in respect of that Ship;

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
8.1.13

	
"KYC" requirements

 

deliver to the Agent such documents and evidence as any Bank shall from time to time require, based on applicable law and regulations and such Bank's own internal guidelines from time to time, in each case, relating to the verification of identity and knowledge of such Bank's customers;

 

	
8.1.14

	
Charters etc.

 

provided it has first obtained the relevant consent of the Security Agent in accordance with the relevant Ship Security Documents, (a) deliver to the Agent a certified copy of each charter or other contract of employment of a Ship with a tenor exceeding twelve (12) months, forthwith after its execution, (b) forthwith on the Agent's demand made following the occurrence of an Event of Default which is continuing execute (i) a specific assignment of any such charter or other contract of employment in favour of the Security Agent in a form acceptable to the Agent in its reasonable discretion and (ii) any notice of assignment required in connection therewith in a form acceptable to the Agent in its reasonable discretion and promptly procure the acknowledgement of any such notice of assignment by the relevant charterer in a form acceptable to the Agent in its sole discretion, (c) forthwith on the Agent's request, deliver to the Agent such documents of the type specified in schedule 3 in relation to any such charter, contract, assignment, notice or acknowledgement as the Agent may require and (d) pay all legal and other costs incurred by the Agent and/or the Security Agent in connection with any such specific assignments, forthwith following the Agent's demand;

 

	
8.1.15

	

Assets, books and records

 

upon the request of the Agent (acting on the instructions of the Majority Banks), permit the Agent and any of its representatives, professional advisors and contractors to have access

 

  

36

  

to, and permit inspection by them of, the assets (including the Ships), books and records of each Borrower and any other Security Party at reasonable times and upon reasonable notice;

 

	
8.1.16

	
Compliance with laws and regulations - Taxes

 

and will procure that the Corporate Guarantor will, comply with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying on of their respective businesses and will pay any and all Taxes owing by it in any jurisdiction at the time they are due; and

 

	
8.1.17

	
BET Account

 

procure that the Corporate Guarantor shall maintain in the BET Account from the Effective Date (as defined in the Fifth Supplemental Agreement) and at all times thereafter, a minimum cash balance which shall be at all times not less than the aggregate of:

 

	
  

	
(a)

	
$14,500,000; and

 

	
  

	
(b)

	
such amount as is equal to the aggregate amounts that have been previously transferred from time to time into the BET Account by way of operation of clause 8.4 or clause 4.3.2.

 

	
8.2

	
Security value maintenance

 

	
8.2.1

	
        Security shortfall

 

If at any time the Security Value shall be less than the Security Requirement (unless the sole cause of such deficiency is that a Mortgaged Ship has become a Total Loss and the Borrowers are in compliance with their obligations under clause 4.3 in respect of such Total Loss), the Agent (acting on the instructions of the Majority Banks) shall give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers shall, within a period of thirty (30) days of the date of receipt by the Borrowers of the Agent's said notice, either:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
constitute to the satisfaction of the Agent such further security for the Loan as shall be acceptable to the Banks having a value for security purposes (as determined by the Agent in its discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date.  Such additional security shall be constituted by:

 

	
  

	
(i)

	
pledged cash deposits in favour of the Banks and the Agent in an amount equal to such shortfall, in such account, and pledged in such manner as may be determined by the Agent (acting on the instructions of the Majority Banks); and/or

 

	
  

	
(ii)

	
any other security acceptable to the Banks in their absolute discretion to be provided in a manner determined by the Agent (acting on the instructions of the Majority Banks).

 

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

 

	
8.2.2

	
Valuation of Mortgaged Ships

 

Each of the Mortgaged Ships shall, for the purposes of this Agreement, be valued in Dollars as and when the Agent (acting on the instructions of the Majority Banks) shall require and in

 

  

37

  

any event not less frequently than at three (3) monthly intervals and immediately prior to the sale of a Mortgaged Ship, by any two (2) of the Approved Shipbrokers, one nominated by the Agent in its sole discretion and the other nominated by the Borrowers or, failing such nomination, by the Agent in its sole discretion.  Each such valuation shall be addressed to the Agent, shall be dated not more than 14 days previously and shall be made without, unless required by the Agent, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the relevant Mortgaged Ship. The arithmetic mean of the two valuations shall constitute the value of such Mortgaged Ship for the purposes of this clause 8.2 provided however that if the two (2) valuations obtained in relation to a Mortgaged Ship vary by more than ten per cent (10%) (by reference to the higher figure), the Agent and the Borrowers shall jointly appoint a third Approved Shipbroker to value such Mortgaged Ship on the same basis as the other two (2) valuations and, in that case, the arithmetic mean of all three (3) such valuations shall then constitute the value of such Mortgaged Ship for the purposes of this clause 8.2.

 

The value of any Mortgaged Ship determined in accordance with the provisions of this clause 8.2.2 shall be binding upon the parties hereto until such time as any further such valuations shall be obtained.

 

	
8.2.3

	
Information

 

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

 

	
8.2.4

	
Costs

 

All costs in connection with the Agent obtaining any valuation of any of the Mortgaged Ships referred to in clause 8.2.2 and clause 8.1.5, any valuation referred to in schedule 3 and any valuation either of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrowers electing to constitute additional security pursuant to clause 8.2.1(b), shall be borne by the Borrowers.

 

	
8.2.5

	
Valuation of additional security

 

For the purposes of this clause 8.2, the market value of any additional security (not being a ship) provided or to be provided to the Creditors or any of them shall be determined by the Agent in its absolute discretion without any necessity for the Agent assigning any reason therefore.  If such additional security consists of a ship, the value of such ship shall be determined in accordance with clause 8.2.2 and all costs of such valuation will be paid by the Borrowers in accordance with clause 8.2.4.  If the additional security is in the form of a Dollar cash deposit, full credit shall be given for such cash on a "Dollar for Dollar" basis.

 

	
8.2.6

	
Documents and evidence

 

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

 

	
8.2.7

	
Release of additional security

 

If the Security Value shall at any time exceed the Adjusted Security Requirement, and the Borrowers shall have previously provided further security to the Banks and the Agent pursuant to clause 8.2.1(b), the Majority Banks and the Agent 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 (or procure the release by the

 

  

38

  

Security Agent of) any such further security specified by the Borrowers provided that the Agent is satisfied that, immediately following such release (a) the Security Value will continue to exceed the Adjusted Security Requirement,  (b) no Event of Default will occur as a result of such release and (c) the Corporate Guarantor will be in compliance with clauses 5.1.7 and 5.3.1 of the Corporate Guarantee (and for the purposes of this paragraph (c) compliance with such clauses shall be tested and will be required as if such clauses were applicable and not waived at that time, even if they were actually not applicable and/or waived at that time).

 

	
8.3

	
Negative undertakings

 

The Borrowers jointly and severally undertake with each Creditor that, throughout the Security Period, they will not, without the prior written consent of the Agent (acting on the instructions of the Majority Banks):

 

	
8.3.1

	
Negative pledge

 

permit any Encumbrance (other than a Permitted Encumbrance including, for the avoidance of doubt, Permitted Liens) to subsist, arise or be created or extended over all or any part of the present or future undertakings, assets, rights or revenues of the Borrowers to secure or prefer any present or future Indebtedness or other liability or obligation of any Security Party or any other person;

 

	
8.3.2

	
No merger

 

merge or consolidate with any other person or enter into any demerger, amalgamation or corporate re-domiciliation of any kind whatsoever;

 

	
8.3.3

	
Disposals

 

sell, transfer, 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 but, in any event, not in respect of assets or rights which are subject to security created by the Security Documents) whether by one or a series of transactions related or not;

 

	
8.3.4

	
Other business

 

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

 

	
8.3.5

	
Acquisitions

 

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

 

	
8.3.6

	
Capital expenditure; other obligations

 

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

 

	
8.3.7

	
No borrowing

 

incur any Borrowed Money except for Borrowed Money pursuant to or permitted by the Security Documents Provided however that each Borrower, subject to no Event of Default having occurred and continuing, shall be entitled to obtain loans or advances or borrow money from its directors or shareholders or from its Related Companies if such borrowings are fully subordinated to the rights of the Creditors under the Security Documents;

 

  

39

  

8.3.8                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;

 

	
8.3.9

	
Guarantees

 

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

 

	
8.3.10

	
Loans

 

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

 

	
8.3.11

	
Sureties

 

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

 

	
8.3.12

	
Share capital and distribution

 

purchase or otherwise acquire for value any shares of their capital or declare or pay any dividends or distribute any of their present or future assets, undertakings, rights or revenues to any of their shareholders;

 

	
8.3.13

	
Subsidiaries

 

form or acquire any Subsidiaries;

 

	
8.3.14

	
Constitutional documents

 

change, cause or permit any change in the constitutional or other related documents of the Corporate Guarantor existing on the date of this Agreement and/or the Second Supplemental Agreement; or

 

	
8.3.15

	

Intra-Group transaction

 

enter into any transactions, agreements or arrangements with any of their Related Companies or other members of the Group other than on an arm's length basis and for full value and consideration.

 

	
8.4

	
Excess Cash recapture

 

On each Excess Cash Date the Borrowers shall transfer to the BET Account the aggregate amount of Excess Cash (assuming it is a positive figure) standing to the credit of the Earnings Accounts on such day and each Borrower, in respect of each of its own Earnings Accounts, hereby irrevocably and unconditionally authorises (a) the Agent to irrevocably and unconditionally instruct the Account Bank and (b) the Account Bank, to effect each such transfer on each such Excess Cash Date.

 

  

40

  

8.5          Sale of Ships

 

	
8.5.1

	
Without prejudice to any of the rights of the Creditors under this Agreement and the other Security Documents, the Borrowers hereby undertake that they will use their best endeavours to ensure that each of Fighter, Scouter and Commander will have been sold by 30 June 2012 and that each of Intruder and Prince will have been sold by 31 December 2012.

 

	
8.5.2

	
The prepayment provisions of clauses 4.3, 4.4 and 4.5 shall apply to any sales made under this clause 8.5.

 

	
8.6

	
Sanctions

 

	
8.6.1

	
Each of the Borrowers understands that certain of the Creditors are (be it due to applicable laws or due to internal rules and regulations) prohibited to conclude transactions or finance transactions with the government of or any person or entity owned or controlled by the government of "Restricted Countries" or "Restricted Persons".

 

The Borrowers hereby confirm and undertake that they shall not, and the Borrowers will procure that the Corporate Guarantor shall not, transfer, make use of or provide the benefits of any money, proceeds or services provided by or received from the Creditors to any Restricted Person or conduct any business activity (such as entering into any ship acquisition agreement, any ship refinancing agreement and/or any charter agreement) related to a vessel, project, asset or otherwise for which money, proceeds or services have been received from the Creditors with any Restricted Persons.

 

	
8.6.2

	
In this clause 8.6:

 

"Restricted Countries" means those countries subject to sanctions and/or trade embargoes, in particular but not limited pursuant to the U.S.'s Office of Foreign Asset Control of the U.S. Department of Treasury ("OFAC"), including at the date of this Agreement, but without limitation, Cuba, Iran, Myanmar, North Korea, Sudan and Syria and any additional countries notified by any Creditor to the Borrowers from time to time based on respective sanctions being imposed by OFAC or any of the regulative bodies referred to in the definition of Restricted Persons.

 

"Restricted Persons" means persons, entities or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, Switzerland, OFAC, HM Treasury and the Foreign and Commonwealth Office of the United Kingdom, the Monetary Authority of Singapore and the Hong Kong Monetary Authority and/or any other applicable country and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).

 

	
9

	
Conditions

 

	
9.1

	
Documents and evidence

 

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

 

	
9.1.1

	
not later than two (2) Banking Days before the day on which the Drawdown Notice for the first Advance to be drawn down is given, the documents and evidence specified in Part 1 of schedule 3 in form and substance satisfactory to the Agent; and

 

	
9.1.2

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

 

  

41

  

	
9.2

	
General conditions precedent

 

The obligation of the Banks to make any Advance available shall be subject to the further conditions that, at the time of the giving of the Drawdown Notice for such Advance, and at the time of the making of such Advance:

 

	
9.2.1

	
the representations and warranties contained in (a) clauses 7.1, 7.2 and 7.3(b) and (b) clause 4.4 of the Corporate Guarantee, are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and

 

	
9.2.2

	
no Default shall have occurred and be continuing or would result from the making of the relevant Advance.

 

	
9.3

	
Waiver of conditions precedent

 

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

 

	
9.4

	
Further conditions precedent

 

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

 

	
10

	
Events of Default

 

	
10.1

	
Events

 

There shall be an Event of Default if:

 

	
10.1.1

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

 

	
10.1.2

	
Breach of Insurance and certain other obligations: any of the Borrowers or any other person fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the relevant Ship Security Documents) for any of the Mortgaged Ships or if any insurer in respect of such Insurances cancels such Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for such Insurances or for any other failure or default on the part of any of the Borrowers or any other person or any of the Borrowers commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by them under clauses 8.1.5, 8.1.17,  8.2, 8.3, 8.4 or 8.5 or 8.6 or the Corporate Guarantor commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clauses 5.2 or 5.3 or 5.4 or 5.5 of the Corporate Guarantee; or

 

	
10.1.3

	
Breach of other obligations: any Security Party or any Manager commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) and, in respect of any such breach or omission which in the opinion of the Agent (acting on the instructions of the Majority Banks) is capable of remedy, such action as the Agent (acting on the instructions of the Majority Banks) may require shall not have been taken within fourteen (14) days of the Agent notifying the relevant Security Party or the relevant Manager of such default and of such required action; or

 

  

42

  

	
10.1.4

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

 

	
10.1.5

	
Cross-default: any Borrowed Money of any Security Party is not paid when due or any Borrowed Money of any Security Party 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 the relevant Security Party of a voluntary right of prepayment), or any creditor of any Security Party becomes entitled to declare any such Borrowed Money due and payable or any facility or commitment available to any Security Party relating to Borrowed Money is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party shall have satisfied the Agent that such withdrawal, suspension or cancellation will not affect or prejudice in any way the relevant Security Party's ability to pay its debts as they fall due and fund its commitments, or any guarantee given by any Security Party in respect of Borrowed Money is not honoured when due and called upon and, in the case of the Corporate Guarantor only, the amount, or aggregate amount at any one time, of all Borrowed Money of the Corporate Guarantor in relation to which any of the foregoing events shall have occurred and be continuing is equal to or greater than Three million Dollars ($3,000,000) or its equivalent in the currency in which the same is denominated and payable; or

 

	
10.1.6

	
Legal process: any judgment or order made against any Security Party (being, in any such case relating to the Corporate Guarantor, in an amount, or aggregate amount at any one time, of not less than Three million Dollars ($3,000,000)) is not stayed or complied with within fourteen (14) days or a creditor (acting in good faith) 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 seven (7) days; or

 

	
10.1.7

	
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; has assets the value of which is less than the value of its liabilities (taking into account contingent and prospective liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or any corporate action, legal proceedings or other procedure or step is taken in relation to any of the above; or

 

	
10.1.8

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

 

	
10.1.9

	
Winding up: any corporate action, legal proceedings or other procedure or step is taken for the purpose of winding-up any Security Party or an order is made or resolution passed for the winding up of any Security Party or a notice is issued convening a meeting for the purpose of passing any such resolution unless, in the case of an involuntary petition, the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within forty five (45) days of the presentation of the petition; or

 

	
10.1.10

	
Administration: any petition is presented, notice given or other step is taken for the purpose of the appointment of an administrator of any Security Party or an administration order is made in relation to any Security Party; or

 

	
10.1.11

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

 

	
10.1.12

	
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

 

  

43

  

	
  

	
to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors Provided however that if the Borrowers are able to provide such evidence as is satisfactory in all respects to the Agent (acting on the instructions of the Majority Banks) that such rescheduling will not relate to any payment default or anticipated default, the same shall not constitute an Event of Default; or

 

	
10.1.13

	
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 Agent, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.13 (inclusive) in respect of that Security Party 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

 

	
10.1.14

	
Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business; or

 

	
10.1.15

	
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 Provided however that there will not be an Event of Default if such events lead to the Total Loss of a Ship and the Borrowers comply with their relevant prepayment obligations under clause 4.3.2 in respect of such Total Loss; or

 

	
10.1.16

	
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 or any other person which is a party thereto, or if any such Security Party or such other person shall deny that it has any, or any further, liability thereunder; or

 

	
10.1.17

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

 

	
10.1.18

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

 

	
10.1.19

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

 

	
10.1.20

	
Material adverse change: there occurs an event or series of events which, in the opinion of the Agent (following consultation with the Banks), might have a material adverse effect on:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the ability of any Security Party to comply with or perform any of its obligations under the terms of any of the Security Documents, or

 

	
  

	
(c)

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

 

	
  

	
(d)

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

 

  

44

  

	
10.1.21

	
Arrest: any Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Borrower and the relevant Borrower shall fail to procure the release of such Ship within a period of fourteen (14) Banking Days thereafter; or

 

	
10.1.22

	
Registration: the registration of any Ship under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Banks or, if any Ship is, with the prior consent of the Agent, only provisionally registered on its Delivery Date, such Ship is not permanently registered under the laws and flag of the relevant Flag State within ninety (90) days after the Drawdown Date of the Advance relevant to such Ship; or

 

	
10.1.23

	
Unrest: the Flag State of any Ship becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means if, in any such case, such event could in the opinion of the Agent reasonably be expected to have a material adverse effect on the security constituted by any of the Security Documents and the relevant Borrower has failed within thirty (30) days from receiving notice from the Agent to this effect to (a) delete its Ship from its existing Flag State and (b) re-register its Ship under another Flag State approved by the Banks in their reasonable discretion through a relevant Registry, in each case, at the Borrowers' cost and expense; or

 

	
10.1.24

	
Environmental Incidents: there is an Environmental Incident which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Agent, be reasonably expected to have a material adverse effect (i) on the business, assets, operations, property or financial condition of any of the Borrowers or any Security Party or any of their respective Environmental Affiliates or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

 

	
10.1.25

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

 

	
10.1.26

	
Shareholdings: at any time:

 

	
  

	
(a)

	
any Borrower ceases to be a wholly-owned direct Subsidiary of the Corporate Guarantor; or

 

	
  

	
(b)

	
the Ultimate Shareholders cease to be the ultimate beneficial owners of at least 50.1% of the issued voting share capital of the Shareholder (or of any other lower percentage which is not less than 40%, but only provided that any such lower percentage and reduction has resulted solely from a rights' issue or other capital increase of the Shareholder); or

 

	
  

	
(c)

	
the Shareholder ceases to be the direct legal and beneficial owner of 100% of the issued voting share capital of the Corporate Guarantor; or

 

	
10.1.27

	
Accounts: any moneys are withdrawn from any of the Accounts other than in accordance with clause 14 and the Account Pledges; or

 

	
10.1.28

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

 

  

45

  

	
10.2

	
Acceleration

 

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

 

	
10.2.1

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

 

	
10.2.2

	
the Loan and all interest accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or at any other time specified in such notice, become due and payable.

 

	
10.3

	
Demand basis

 

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

 

	
11

	
Indemnities

 

	
11.1

	
Miscellaneous indemnities

 

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

 

	
11.1.1

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

 

	
11.1.2

	
the occurrence of any other Event of Default;

 

	
11.1.3

	
any prepayment of the Loan or part thereof being made under clauses 3.6.2, 4.2, 4.3, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or

 

	
11.1.4

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

 

including, in any such case, but not limited to, any loss or expense sustained or incurred by the relevant Creditor in maintaining or funding its Contribution or, as the case may be, Commitment (or any part thereof) or in liquidating or re-employing deposits from third parties acquired to effect or maintain its Contribution or, as the case may be, its Commitment (or any part thereof) or any other amount owing to such Creditor.

 

	
11.2

	
Currency indemnity

 

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

 

  

46

  

rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the relevant Creditor may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.  Any amount due from the Borrowers under this clause 11.2 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

 

	
11.3

	
Environmental indemnity

 

The Borrowers shall indemnify each Creditor on demand in respect of all costs, claims, losses, demands, liabilities, penalties and fines of whatever nature (including, without limitation, those arising under, Environmental Laws) which may be incurred or made against such Creditor at any time, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against such Creditor which would or could not have been brought against such Creditor if it had not entered into any of the Security Documents and/or been involved in any of the transactions contemplated by the Security Documents.

 

	
11.4

	
Waiver

 

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

 

	
11.5

	
General indemnity

 

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

 

	
12

	
Unlawfulness, increased costs and mitigation

 

	
12.1

	
Unlawfulness

 

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

 

  

47

  

If circumstances arise which would result in a notification under this clause 12.1 then, without in any way limiting, reducing or otherwise qualifying the obligations of the Borrowers under clause 6 and this clause 12.1, the affected Bank in consultation with the Agent and the other Banks shall endeavour to take such reasonable steps as may be open to it to mitigate or remove such circumstances (including the transfer of the affected Bank's rights and obligations under this Agreement to another bank or financial institution unless to do so might (in the reasonable opinion of such Bank) be prejudicial to the affected Bank (or, as the case may be, its holding company) or be in conflict with such Bank's (or, as the case may be, its holding company's) general banking policies or involve any Bank (or, as the case may be, its holding company) in expense or increased administrative burden.

 

	
12.2

	
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 a Bank or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, or other banking or monetary controls or requirements which affect the manner in which such Bank allocates capital resources to its obligations hereunder or those resulting from the implementation of any amendment of the "International Convergence of Capital Measurement and Capital Standards" Basel Committee on Banking Supervision (July 1988, as amended) or any amendatory or substitute agreement in respect thereof including, but without limitation, the proposed new Basle Capital Accord ("Basle II"), is to:

 

	
12.2.1

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

 

	
12.2.2

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

 

	
12.2.3

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

 

	
12.2.4

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

 

	
12.2.5

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

 

	
12.2.6

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

 

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

 

	
  

	
(a)

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

 

	
  

	
(b)

	
such Bank shall negotiate with the Borrowers in good faith with a view to restructuring the transaction constituted by the Security Documents in a way which will prevent in a manner satisfactory to such Bank and the Borrowers the incurrence of the relevant increased costs by the Borrowers, without decreasing the amounts nor any net returns due to such Bank under the Security Documents or the amounts which, but for such increased costs would have been so due, and without otherwise adversely affecting the

 

  

48

  

	
  

	
rights, interests and security of such Bank under the transaction as constituted by the Security Documents and without increasing the cost to the Borrowers of, or otherwise adversely affecting the rights and interests of the Borrowers under, the transactions and (unless such Bank nominates a longer period, which it shall be at liberty to do) such negotiations shall continue for a period of up to thirty (30) days after such Bank has given notice under paragraph (a) above or for such lesser period as is permitted under any applicable law having regard to the increased costs concerned (such period hereinafter referred to in this clause 12.2 as the "Negotiation Period"); and

 

	
  

	
(c)

	
if at the end of the Negotiation Period, such Bank and the Borrowers have not reached an agreement on the restructuring of the transaction constituted by the Security Documents on the basis of what is described in paragraph (b) above, then the Borrowers shall, on demand made by such Bank, at any time after the expiry of the Negotiation Period, and whether or not the Loan or any part thereof has then been repaid or prepaid, pay to such Bank the amount which such Bank specifies (in a certificate (which shall be conclusive on the Borrowers in the absence of manifest error) setting forth the basis of the computation of such amount but not including any matters which such Bank or its holding company regards as confidential) is required to compensate the Bank (or its holding company) for such alternative funding, increased cost, reduction, payment or foregone return (as the case may be).

 

Such Bank will promptly notify the Borrowers of its intention to demand indemnification pursuant to this clause 12.2 and such notification and demand will be (in the absence of manifest error) conclusive and full evidence binding on the Borrowers as to the amount of any increased cost or reduction of payment or foregone return and the method of calculating the same. A claim under this clause 12.2 may be made at any time and must be satisfied by the Borrowers on the then next Interest Payment Date or, alternatively, within three days of the relevant demand made by such Bank. Any amount due from the Borrowers under this clause 12.2 shall be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of this Agreement or the other Security Documents.

 

For the purposes of this clause 12.2 "holding company" means the company or entity (if any) within the consolidated supervision of which a Bank is included.

 

	
12.3

	
Exception

 

Nothing in clause 12.2 shall entitle any Bank to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

 

	
12.4

	
Mitigation and Tax credits

 

	
12.4.1

	
Mitigation

 

If circumstances arise which would, or would upon the giving of notice,  result in an increased payment required to be made by the Borrowers to any Bank under clause 6.6 or clause 12.2 then, without in any way limiting the obligations of the Borrowers under either of these clauses, the relevant Bank shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the other Security Documents to another of its offices not affected by the circumstances which gave rise to such increased payment, but no Bank shall be under any obligation to take any such action, if in its opinion, to do so would or might:

 

	
  

	
(a)

	
be prejudicial to such Bank (or, as the case may be, its holding company); or

 

	
  

	
(b)

	
have an adverse effect on such Bank's or its holding company's business, operations, administration or financial condition; or

 

  

49

  

	
  

	
(c)

	
involve such Bank or its holding company in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent, with any regulation or such Bank's general banking policies; or

 

	
  

	
(d)

	
involve such Bank or its holding company in any expense (unless indemnified to its satisfaction) or tax disadvantage.

 

	
12.4.2

	
Tax credits

 

If a Bank receives for its own account a repayment or credit in respect of tax on account for which the Borrowers have made an increased payment under clause 6.6, it shall pay to the Borrowers a sum equal to the repayment or credit received, provided always that:

 

	
  

	
(a)

	
such Bank can do so without prejudicing the retention of the amount of such repayment or credit and without prejudice to the right of such Bank to obtain any other relief or allowance which may be available to it;

 

	
  

	
(b)

	
such Bank shall not be obliged to allocate to this transaction any part of a tax repayment or credit which is referable to a number of transactions;

 

	
  

	
(c)

	
nothing in this clause shall entitle the Borrowers to enquire about such Bank's tax affairs or oblige such Bank to arrange its tax affairs in any particular manner, to disclose any information regarding its tax affair and computations, to claim any type of relief, credit, allowance or deduction instead of, or in priority to, another or to make any such claim within any particular time;

 

	
  

	
(d)

	
nothing in this clause shall oblige such Bank to make a payment which exceeds any repayment or credit in respect of tax on account of which the Borrowers have made an increased payment under clause 6.6; and

 

	
  

	
(e)

	
any allocation or determination made by such Bank under or in connection with this clause shall be binding on the Borrowers.

 

	
13

	
Security, set-off and pro-rata payments

 

	
13.1

	
Application of moneys

 

All moneys received by the Agent and/or the Security Agent 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 Agent's or the Security Agent's discretion, shall be applied in the following manner:

 

	
13.1.1

	
first, in or towards payment, on a pro rata basis, of all unpaid costs and expenses which may be owing to the Creditors or any of them under any of the Security Documents;

 

	
13.1.2

	
secondly, in or towards payment, on a pro rata basis, of any unpaid fees payable to the Creditors or any of them;

 

	
13.1.3

	
thirdly, in or towards payment, on a pro rata basis, of any arrears of interest owing in respect of the Loan or any part thereof;

 

	
13.1.4

	
fourthly, in or towards repayment, to the Banks, on a pro rata basis, of the Loan (whether the same is due and payable or not);

 

	
13.1.5

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

 

  

50

  

	
13.1.6

	
sixthly, in or towards payment, on a pro rata basis, to the Creditors of any other sums owing to them under any of the Security Documents;

 

	
13.1.7

	
seventhly (but subject to the provisions of each Manager's Undertaking), in or towards payment of any sums, fees or expenses owing by any of the Borrowers to any of the Managers pursuant to the relevant Management Agreement; and

 

	
13.1.8

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

 

	
13.2

	
Set-off

 

	
13.2.1

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

 

	
13.2.2

	
No Creditor shall be obliged to exercise any right given to it by this clause 13.2.

 

	
13.2.3

	
Each Creditor shall notify the Borrowers through the Agent forthwith upon the exercise or purported exercise of any right of set-off under this clause 13.2, giving full details in relation thereto and the Agent shall inform the other Creditors.

 

	
13.2.4

	
This clause 13.2 gives each Creditor a contractual right of set-off only and does not create any equitable charge or other Encumbrance over any credit balance of the Borrowers or any of them.

 

	
13.3

	
Pro rata payments

 

	
13.3.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
13.3.2

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

 

  

51

  

	
  

	
the Recovering Bank such Bank's pro-rata share of the amount which has to be refunded by the Recovering Bank.

 

	
13.3.3

	
Each Bank shall on request supply to the Agent such information as the Agent may from time to time request for the purposes of this clause 13.3.

 

	
13.3.4

	
Notwithstanding the foregoing provisions of this clause 13.3, no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Agent).

 

	
13.4

	
No release

 

For the avoidance of doubt it is hereby declared that failure by any Recovering Bank to comply with the provisions of clause 13.3 shall not release any other Recovering Bank from any of its obligations or liabilities under clause 13.3.

 

	
13.5

	
No charge

 

The provisions of this clause 13 shall not, and shall not be construed so as to, constitute a charge by a Bank over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 13.3.

 

	
13.6

	
Further assurance

 

The Borrowers jointly and severally undertake with each Creditor that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents be valid and binding obligations of the respective parties thereto and rights of each Bank enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Majority Banks may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents.

 

	
13.7

	
Conflicts

 

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

 

	
14

	
Accounts

 

	
14.1

	
General

 

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

 

	
14.1.1

	
on or before the Drawdown Date of the first Advance to be drawn down, open each of the Accounts; and

 

	
14.1.2

	
procure that all moneys payable to each Borrower in respect of the Earnings (as defined in the relevant Ship Security Documents) of such Borrower's Ship shall, unless and until the Agent (acting on the instructions of the Majority Banks) directs to the contrary pursuant to the provisions of the relevant Ship Security Documents, be paid to the relevant Earnings Account Provided however that if any of the moneys paid to any of the Earnings Accounts are payable in a currency other than Dollars, the Account Bank shall (and each Borrower in respect of its own Earnings Account hereby irrevocably and unconditionally instructs the Account Bank to) convert such moneys into Dollars at the Account Bank's spot rate of exchange at the relevant time for

 

  

52

  

	
  

	
the purchase of Dollars with such currency and the term "spot rate of exchange" shall include any premium and costs of exchange payable in connection with the purchase of Dollars with such currency.

 

	
14.2

	
Earnings Accounts: withdrawals

 

Unless and until an Event of Default shall occur and the Agent (acting on the instructions of the Majority Banks) shall direct to the contrary, each Borrower shall be entitled to withdraw moneys from each of its Earnings Accounts for the following purposes:

 

	
14.2.1

	
to pay any amount to the Agent in or towards payments of any instalments of interest or any repayments, reductions, or other payments of principal, or any other amounts then payable pursuant to the Security Documents (including moneys payable to the BET Account under clause 8.4);

 

	
14.2.2

	
to pay the proper and reasonable expenses of its Ship;

 

	
14.2.3

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

 

	
14.2.4

	
to make any other payments on behalf of that Borrower which are not prohibited by this Agreement or any of the other Security Documents.

 

However, if an Event of Default occurs and is continuing, the Borrowers shall not be entitled to withdraw any moneys from the Earnings Accounts at any time during the Security Period without the prior written consent of the Agent (acting on the instructions of the Majority Banks).

 

	
14.3

	
Retention Account: credits and withdrawals

 

	
14.3.1

	
The Borrowers hereby jointly and severally undertake with each Creditor that they will, from the date of this Agreement and so long as any moneys are owing under the Security Documents, on each Retention Date pay to the Account Bank for credit to the Retention Account, the Retention Amount for such Retention Date provided however that, to the extent that there are moneys standing to the credit of the Earnings Accounts (or any of them) as at any Retention Date, such moneys shall, up to an amount equal to the Retention Amount for such Retention Date, be transferred to the Retention Account on that Retention Date (and the Borrowers hereby irrevocably authorise the Account Bank to effect each such transfer) and to that extent the Borrowers' obligations to make the payments referred to in this clause 14.3.1 shall have been fulfilled upon such transfer being effected.

 

	
14.3.2

	
Unless and until there shall occur an Event of Default, each Retention Amount credited to the Retention Account together with interest from time to time accruing or at any time accrued thereon shall be applied by the Account Bank (and the Borrowers hereby irrevocably authorise the Account Bank so to apply the same) upon each Repayment Date and/or on each day that interest is payable pursuant to clause 3.1, in or towards payment to the Agent of the relevant instalment then falling due for repayment or, as the case may be, the relevant amount of interest then due.  Each such application by the Account Bank shall constitute a payment in or towards satisfaction of the Borrowers' corresponding payment obligations under this Agreement but shall be strictly without prejudice to the obligations of each of the Borrowers to make any such payment to the extent that the aforesaid application by the Account Bank is insufficient to meet the same.

 

	
14.3.3

	
Unless the Agent (acting on the instructions of the Majority Banks) otherwise agrees in writing and subject to clause 14.3.2, none of the Borrowers shall be entitled to withdraw any moneys from the Retention Account at any time from the date of this Agreement and so long as any moneys are owing under the Security Documents.

 

	
14.4

	
Account terms

 

Amounts standing to the credit of the Earnings Accounts and the Retention Account shall (unless otherwise agreed between the Account Bank and the Borrowers) bear interest at the

 

  

53

  

rates from time to time offered by the Account Bank to its customers for Dollar deposits in comparable amounts for comparable periods.  Interest shall accrue on the Earnings Accounts and the Retention Account from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year and shall be credited to the relevant Account at such times as the Account Bank and the Borrowers shall agree.

 

	
14.5

	
Pledging of Accounts

 

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

 

	
15

	
Assignment, transfer and lending office

 

	
15.1

	
Benefit and burden

 

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

 

	
15.2

	
No assignment by Borrowers

 

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

 

	
15.3

	
Transfers by Banks

 

Any Bank (the "Transferor Bank") may at any time, following the prior written consent of the Borrowers (which consent shall not be unreasonably withheld or delayed and the request for which shall be promptly responded to) and the prior written consent of the Agent, cause all or any part of its rights, benefits and/or obligations under this Agreement and the Security Documents to be transferred to any other bank or financial institution (a "Transferee Bank") by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Bank and the Transferee Bank.  No such transfer is binding on, or effective in relation to, the Borrowers or the Agent unless (i) it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Bank, the Transferee Bank and the Agent (on behalf of itself, the Borrowers and the other Creditors) and (ii) such transfer of rights under the other Security Documents has been effected and registered in a manner satisfactory in all respects to the Agent and the relevant Transferee Bank.  The consent of the Borrowers referred to above shall not be required if (a) the relevant Transferee Bank in relation to a proposed transfer is a Related Company of the relevant Transferor Bank.  Upon signature of any such Transfer Certificate by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below.

 

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

 

	
15.3.1

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

 

	
15.3.2

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

 

	
15.3.3

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

 

	
  

	
(a)

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

 

  

54

  

	
  

	
(b)

	
the Transferor Bank's Commitment is discharged to the extent specified in the Transfer Certificate;

 

	
  

	
(c)

	
the Transferee Bank becomes a Bank with a Contribution and/or a Commitment of the amounts specified in the Transfer Certificate;

 

	
  

	
(d)

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

 

	
  

	
(e)

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

 

	
  

	
(f)

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

 

	
15.3.4

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

 

	
15.3.5

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

 

	
15.4

	
Reliance on Transfer Certificate

 

	
15.4.1

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

 

	
15.4.2

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

 

	
15.4.3

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

 

	
15.5

	
Transfer fees and expenses

 

If any Bank causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents, such Bank shall pay to the Agent on demand all costs, fees and expenses (including, but not limited to, legal fees and expenses), and all value added tax

 

  

55

  

thereon, verified by the Agent as having been incurred by the Agent or the Security Agent or any other Bank in connection with such transfer.

 

	
15.6

	
Documenting transfers

 

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

 

	
15.7

	
Sub-participation

 

A Bank may sub-participate all or any part of its rights and/or obligations under the Security Documents without the consent of, or notice to, the Borrowers but with the prior written consent of the Agent.

 

	
15.8

	
Lending office

 

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

 

	
15.9

	
Disclosure of information

 

A Bank may disclose to a prospective assignee, transferee or to any other person who may propose entering into contractual relations with such Bank in relation to this Agreement such information about the Borrowers and/or the other Security Parties as such Bank shall consider appropriate Provided that the relevant Bank has entered into a confidentiality agreement with such person in connection with any such information.

 

	
16

	
Arranger, Agent, Security Agent and Reference Bank

 

	
16.1

	
Appointment of the Agent

 

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

 

	
16.1.1

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

 

	
16.1.2

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

 

	
16.2

	
Agent's actions

 

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

 

  

56

  

16.3        Agent's duties

 

The Agent shall:

 

	
16.3.1

	
promptly notify each Bank of the contents of each notice, certificate or other document received by it from the Borrowers under or pursuant to clauses 8.1.1, 8.1.5 and 8.1.7 or any other material notice, certificate or document received from the Borrowers under the Security Documents; and

 

	
16.3.2

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

 

	
16.4

	
Agent's rights

 

The Agent may:

 

	
16.4.1

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

 

	
16.4.2

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

 

	
16.4.3

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

 

	
16.4.4

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

 

	
16.4.5

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

 

	
16.4.6

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

 

	
16.5

	
No liability of Arranger or Agent

 

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

 

	
16.5.1

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

 

  

57

  

	
16.5.2

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

 

	
16.5.3

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

 

	
16.5.4

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

 

	
16.5.5

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

 

	
16.5.6

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

 

	
16.5.7

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

 

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

 

	
16.6

	
Non-reliance on Arranger or Agent

 

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

 

	
16.7

	
No responsibility on Arranger or Agent for Borrower's performance

 

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

 

	
16.7.1

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

 

	
16.7.2

	
for the financial condition of any Security Party; or

 

	
16.7.3

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

 

  

58

  

	
16.7.4

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

 

	
16.7.5

	
to investigate or make any enquiry into the title of the Borrowers or any of them or any other Security Party to a Ship or any other security or any part thereof; or

 

	
16.7.6

	
for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere (except in the case of gross negligence or wilful misconduct); or

 

	
16.7.7

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

 

	
16.7.8

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

 

	
16.7.9

	
otherwise in connection with this Agreement (except in the case of gross negligence or wilful misconduct) or its negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Banks.

 

	
16.8

	
Reliance on documents and professional advice

 

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

 

	
16.9

	
Other dealings

 

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

 

	
16.10

	
Rights of Agent as Bank; no partnership

 

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

 

	
16.11

	
Amendments and waivers

 

	
16.11.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

Any such action so authorised and effected by the Agent shall be documented in such manner as the Agent shall (with the approval of the Majority Banks) determine, shall be 

 

 

  

59

  

 

promptly notified to the Banks by the Agent and (without prejudice to the generality of clause 16.2) shall be binding on the Banks.

 

	
16.11.2

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

 

	
  

	
(a)

	
reduce the Margin;

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
increase any Bank's Commitment;

 

	
  

	
(e)

	
extend the Termination Date;

 

	
  

	
(f)

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

 

	
  

	
(g)

	
change the order of distribution under clause 6.9 or clause 13.1;

 

	
  

	
(h)

	
change this clause 16.11;

 

	
  

	
(i)

	
change the definition of "Majority Banks" in clause 1.2; or

 

	
  

	
(j)

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

 

	
16.12

	
Reimbursement and indemnity by Banks

 

Each Bank shall reimburse the Agent (rateably, if prior to the first drawdown, in accordance with such Bank's Commitment or, if after the first drawdown, in accordance with such Bank's Contribution), to the extent that the Agent is not reimbursed by the Borrowers or any of them, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrowers or any of them under clause 5.1 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Agent (rateably, if prior to the first drawdown, in accordance with such Bank's Commitment or, if after the first drawdown, in accordance with the Bank's Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Agent's own gross negligence or wilful misconduct.

 

	
16.13

	
Retirement of Agent

 

	
16.13.1

	
The Agent may, having given to the Borrowers and each of the Banks not less than fifteen (15) days' notice of its intention to do so, retire from its appointment as Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Banks as a successor agent:

 

 

 

  

60

  

 

 

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

	
any reputable and experienced bank or financial institution nominated by the retiring Agent.

 

and, in any case, such successor agent shall have duly accepted such appointment. Any corporation into which the retiring Agent may be merged or converted or any corporation with which the Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Agent shall be a party shall, to the extent permitted by applicable law, be the successor Agent under this Agreement and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Banks.  Prior to any such successor being appointed and provided no Default has occurred and is continuing, the Agent agrees to obtain the prior consent of the Borrowers (such consent not to be unreasonably withheld or delayed.

 

	
16.13.2

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

 

	
16.14

	
Appointment and retirement of Security Agent

 

	
16.14.1

	
Appointment

 

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

 

	
16.14.2

	
Retirement

 

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

 

 

  

61

  

 

 

and, in any case, such successor security agent and trustee shall have duly accepted such appointment by delivering to the Agent (i) written confirmation (in a form acceptable to the Agent) of such acceptance agreeing to be bound by this Agreement in the capacity of Security Agent as if it had been an original party to this Agreement and (ii) a duly executed Trust Deed.

 

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

 

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

 

	
16.15

	
Powers and duties of the Security Agent

 

	
16.15.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

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

 

	
16.15.2

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

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

 

	
16.15.3

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

 

	
16.15.4

	
The Security Agent shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as security agent and trustee, as the Agent may direct.  Subject as 

 

 

  

62

  

 

 

	
 

	
provided in the foregoing provisions of this clause, unless and until the Security Agent shall have received such instructions from the Agent, the Security Agent may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.15.1 as the Security Agent shall deem advisable in the best interests of the Creditors provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Agent to take, or refrain from taking, any action of the nature referred to in clause 16.15.2 - and for which the prior consent of the Banks is expressly required under clause 16.15.3 - clauses 16.15.2 and 16.15.3 shall apply to the exclusion of this clause.

 

	
16.15.5

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

 

	
16.15.6

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

 

	
16.15.7

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

 

	
16.16

	
Trust provisions

 

	
16.16.1

	
The trusts constituted or evidenced in or by this Agreement and the Trust Deed shall remain in full force and effect until whichever is the earlier of:

 

	
  

	
(a)

	
the expiration of a period of eighty (80) years from the date of this Agreement; and

 

	
  

	
(b)

	
receipt by the Security Agent of confirmation in writing by the Agent that there is no longer outstanding any Indebtedness (actual or contingent) which is secured or guaranteed or otherwise assured by or under any of the Security Documents,

 

and the parties to this Agreement declare that the perpetuity period applicable to this Agreement and the trusts declared by the Trust Deed shall for the purposes of the Perpetuities and Accumulations Act 1964 be the period of eighty (80) years from the date of this Agreement.

 

	
16.16.2

	
In its capacity as trustee in relation to the Security Documents specified in clause 16.14, the Security Agent shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Agent by any of those Security Documents.

 

	
16.16.3

	
It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.15.1, the Security Agent shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Agent, may not be paid out promptly following receipt in the name or under the control of the Security Agent in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Agent as the Security Agent may think fit without being under any duty to diversify its investments and the Security Agent may at any time vary or transpose any such property or investments for or into

 

 

 

  

63

  

 

 

	
 

	
any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part or all of the security may, at the discretion of the Security Agent, be made or retained in the names of nominees.

 

	
16.17

	
Common Agent and Security Agent

 

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

 

	
16.18

	
Independent action by Creditors

 

Without prejudice to clause 2.3, none of the Creditors shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Security Documents without the prior written consent of the Majority Banks but, Provided such consent has been obtained, it shall not be necessary for any other Creditor to be joined as an additional party in any proceedings for this purpose.

 

	
16.19

	
Co-operation to achieve agreed priorities of application

 

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

 

	
16.20

	
Prompt distribution of proceeds

 

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

 

 

 

  

64

  

 

 

	
17

	
Notices and other matters

 

	
17.1

	
Notices

 

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

 

	
17.1.1

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

 

	
17.1.2

	
be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and

 

	
17.1.3

	
be sent:

 

	
  

	
(a)

	
if to the Borrowers or any of them at:

 

c/o Seanergy Maritime Holdings Corp.

1-3 Patriarchou Grigoriou Street

166 74 Glyfada

Greece

 

Fax no:       +30 210 963 8450

Attn:           Ms Christina Anagnostara

 

	
  

	
(b)

	
if to the Agent at:

 

Citibank International plc

European Loans Agency

Capital Markets & Banking Operations

Citigroup Centre

Canada Square, Canary Wharf

London E14 5LB

England

 

Fax No:       +44 208 636 3824 or +44 208 636 3825

Attn:           Loans Agency

 

	
  

	
(c)

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

 

c/o Citibank International plc

47-49 Akti Miaouli

185 36 Piraeus

Greece

 

Fax No:       +30 210 429 2806

Attn:           Mr. Dimitris Vassilakos

 

	
  

	
(d)

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

 

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

 

 

  

65

  

 

 

 

	
17.2

	
Notices through the Agent

 

Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) any other Security Document to be given by the Borrowers or any of them to any other party shall be given to the Agent for onward transmission as appropriate and if it is to be given to the Borrowers or any of them, it shall (except otherwise provided in the Security Documents) be given to the Agent for onward transmission to the Borrowers.

 

	
17.3

	
No implied waivers, remedies cumulative

 

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

 

	
17.4

	
English language

 

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

 

	
17.5

	
Borrowers' obligations

 

	
17.5.1

	
Joint and several

 

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

 

	
17.5.2

	
Borrowers as principal debtors

 

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

 

	
17.5.3

	
Indemnity

 

The Borrowers hereby agree jointly and severally to keep the Creditors fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of any Borrower to perform or discharge any purported obligation or liability of the other Borrowers 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 a Creditor including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of 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)).

 

 

  

66

  

 

 

	
17.5.4

	
Liability unconditional

 

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

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the Agent (acting on the instructions of the Majority Banks) 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

 

	
  

	
(c)

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

 

	
17.5.5

	
Recourse to other security

 

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

 

	
17.5.6

	
Waiver of Borrowers' rights

 

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
claim any set-off or counterclaim against the other Borrowers or any other person liable or claiming or proving in competition with any Creditor 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 other Security Document now or hereafter held by any Creditor for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Agent, it will prove for the whole or any part of its claim in the liquidation of the other 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 Banks

 

 

 

  

67

  

 

 

	
  

	
 

	
and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Agent (acting on the instructions of the Majority Banks) shall deem appropriate.

 

	
18

	
Governing law and jurisdiction

 

	
18.1

	
Law

 

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

 

	
18.2

	
Submission to jurisdiction

 

The Borrowers jointly and severally agree, for the benefit of each Creditor, that any legal action or proceedings arising out of or in connection with this Agreement (including any non-contractual obligations connected with this Agreement) against the Borrowers or any of them or any of their respective assets may be brought in the English courts.  Each of the Borrowers irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers E.J.C. Album, Solicitor at present of Exchange Tower (10th floor), 1 Harbour Exchange Square, London E14 9GE, England to receive, for them and on their behalf, service of process issued out of the English courts in any such legal action or proceedings, and each of the Borrowers further undertakes that, in the event that such individual passes away or cannot be found, each of the Borrowers hereby irrevocably and unconditionally authorises the Agent to designate, appoint and empower on their behalf, Messrs Cheeswrights or Messrs Saville & Co. at their then principal place of business in London, as substitute process agents of E.J.C. Album for the purposes of this clause. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of a Creditor to take proceedings against the Borrowers or any of them in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

 

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

 

	
18.3

	
Contracts (Rights of Third Parties) Act 1999

 

No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

 

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

 

  

68

  

 

Schedule 1

 

The Banks and their Commitments

 

	
 

Name

	
 

Lending Office

	
 

Address for Notices

	
 

Commitment

($)

 

	
 

Citibank International plc

 

	
 

Citigroup Centre

33 Canada Square

London E14 5LB

England

	
 

47 - 49 Akti Miaouli

185 36 Piraeus

Greece

 

Fax No:   30 210 429 2806

Attn:       Mr. Dimitris Vassilakos

 

	
 

42,000,000

	
 

Alpha Bank A.E.

 

	
 

Piraeus Shipping Division 

960 

89 Akti Miaouli

185 35 Piraeus

Greece

	
 

Piraeus Shipping Division 960

89 Akti Miaouli

185 35 Piraeus

Greece

 

Fax No:   +30 210 4920268

Att:         Mr C.A. Kokkinis

 

	
 

40,000,000

	
 

Credit Suisse AG (formerly known as Credit Suisse)

 

	
 

St. Alban-Graben 1-3

P.O. Box

CH4002 Basle

Switzerland

	
 

St. Alban-Graben 1-3

P.O. Box

CH4002 Basle

Switzerland

 

Fax No:   +41 61 266 7939

Att:          Tobias Angehrn

 

	
 

40,000,000

	
 

The Governor and Company of the Bank of Ireland

 

	
 

Head Office

Lower Baggot Street

Dublin 2

Ireland

 

 

	
 

Head Office

A3 Lower Baggot St

Dublin 2

Ireland

 

Fax No:   +3531 611 5411

Att:         Kim Jones

 

	
 

30,000,000

	
 

Samba Financial Group, London Branch

 

	
 

Nigthtingale House

65 Curzon Street

Mayfair

London W1J 8PF

England

 

	
 

Nigthtingale House

65 Curzon Street

Mayfair

London W1J 8PF

England

 

Fax No:   +44 207 7659 8274

Att:         Deana Cobbing

 

	
 

20,000,000

 

 

 

  

69

  

 

 

	
Name

	
 

Lending Office

	
 

Address for Notices

	
 

Commitment

($)

	
 

Agricultural Bank of Greece S.A., Piraeus Branch

 

	
 

37 Iroon Politechniou Street

185 32 Piraeus

Greece

	
 

37 Iroon Politechniou Street

185 32 Piraeus

Greece

 

Fax No:   +30 210 4175091

Att:          Ms Aggeliki Tsantaki

 

	
 

15,000,000

	
 

FBB-First Business Bank S.A.

 

	
 

Shipping Division

62 Notara & Sotiros Dios Street

185 35 Piraeus

Greece

	
 

Shipping Division

85 Akti Miaouli & 2 Flessa Street

185 38 Piraeus

Greece

 

Fax No:    +30 210 413 2058

Att:          The Manager

 

	
 

5,000,000

	
 

Scotiabank Europe plc

	
 

Scotiabank Europe PLC

201 Bishopsgate

6th Floor

London EC2M 3NS

 

	
 

Scotiabank Europe PLC

201 Bishopsgate

6th Floor

London EC2M 3NS

 

Fax No:   +44 207 638 8444

Att:         Director, Ship Finance

 

	
30,000,000

	
 

TOTAL COMMITMENT

	
 

222,000,000

 

  

70

  

Schedule 2

Form of Drawdown Notice

 

 (referred to in clause 2.4)

 

 

To:          Citibank International plc

4 Harbour Exchange Square

2nd Floor

London E14 9GE

England

(as Agent)

 

 [·]

 

U.S.$222,000,000 Loan

Loan Agreement dated 26 June 2007 as amended and supplemented and/or restated from time to time (together, the "Loan Agreement")

 

We refer to the Loan Agreement and hereby give you notice that we wish to draw down the [Fighter] [Commander] [Intruder] [Performer] [Prince] [Scouter] Advance namely $[·] on [·] 200[·] and select [a first Interest Period in respect thereof of [·] months] [the first interest period in respect hereof to expire on [·] 200[·]]. The funds should be credited to [name and number of account] with [details of bank in New York City].

 

We confirm that:

 

	
(a)

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

 

	
(b)

	
the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) of the Loan Agreement and (ii) clause 4 of the Corporate Guarantee, 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 such Advance will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded;

 

	
(d)

	
there has been no material adverse change in our business, assets, operations, performance, prospects or financial position or those of the Group, from that described by us to the Arranger and/or to the Agent in the negotiation of the Loan Agreement; and

 

	
(e)

	
the said Advance will be used for our own benefit and under our full responsibility and exclusively for the purpose specified in clauses 1.1 and 2.5 of the Loan Agreement.

 

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

..............................................................................

For and on behalf of

LEWISHAM MARITIME INC.

..............................................................................

For and on behalf of

PULFORD OCEAN INC.

 

 

  

71

  

 

..............................................................................

For and on behalf of

RAYFORD NAVIGATION CORP.

..............................................................................

For and on behalf of

ROSSINGTON MARINE CORP.

..............................................................................

For and on behalf of

QUEX SHIPPING INC.

  

72

  

Schedule 3

 

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

 

 (referred to in clause 9.1)

 

Part 1

 

	
  

	
1

	
Constitutional documents

 

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

 

	
  

	
2

	
Corporate authorisations

 

copies of resolutions of the directors and stockholders of each Security Party and the Managers approving such of the Underlying Documents and the Security Documents to which such Security Party or such Manager is, or is to be, party and authorising the signature, delivery and performance of such Security Party's or such Manager's obligations thereunder, certified by an officer of such Security Party or such Manager as:

 

	
  

	
(a)

	
being true and correct;

 

	
  

	
(b)

	
being duly passed at meetings of the directors of such Security Party and/or such Manager and of the stockholders of such Security Party and such Manager duly convened and held;

 

	
  

	
(c)

	
not having been amended, modified or revoked; and

 

	
  

	
(d)

	
being in full force and effect,

 

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

 

	
  

	
3

	
Specimen signatures

 

copies of the signatures of the persons who have been authorised on behalf of each Security Party and each Manager to sign such of the Underlying Documents and the Security Documents to which such Security Party and such Manager is, or is to be, party and to give notices and communications, including notices of drawing, under or in connection with the Security Documents, certified by legal counsel of such Security Party and such Manager as being the true signatures of such persons;

 

	
  

	
4

	
Certificate of incumbency

 

a list of directors and officers of each Security Party and each Manager specifying the names and positions of such persons, certified by legal counsel of such Security Party and such Manager to be true, complete and up to date;

 

	
  

	
5

	
Borrowers' consents and approvals

 

a certificate from an officer of each of the Borrowers that no consents, authorisations, licences or approvals are necessary for that Borrower to authorise or are required by that Borrower in connection with the borrowing by that Borrower of the Loan pursuant to this Agreement or the execution, delivery and performance of that Borrowers' Security Documents;

 

 

  

73

  

 

 

	
  

	
6

	
Other consents and approvals

 

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

 

	
  

	
7

	
Certified Contracts

 

a copy, certified as a true and complete copy by legal counsel to the relevant Borrower of each of the Contracts (such Contracts to be on terms acceptable to the Agent);

 

	
  

	
8

	
Fees Letter and fees

 

evidence that the Fees Letter has been duly executed and that any fees due under clause 5.1 and the Fees Letter have been paid in full;

 

	
  

	
9

	
Borrowers' process agent

 

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

 

	
  

	
10

	
Security Parties' process agent

 

a letter from each Security Party's agent for receipt of service of proceedings accepting its appointment under each of the Security Documents required under this Part 1 in which it is or is to be appointed as such Security Party's agent;

 

	
  

	
11

	
Legal opinions

 

	
  

	
(a)

	
an opinion of Walkers, special legal advisers on matters of British Virgin Islands law to the Agent;

 

	
  

	
(b)

	
an opinion of Cozen O'Connor, special legal advisers on matters of Liberian and Marshall Islands law to the Agent;

 

	
  

	
(c)

	
an opinion of Dickinson, Cruickshank & Co., special legal advisers on matters of Isle of Man law to the Agent; and

 

	
  

	
(d)

	
an opinion of George Pologiorgis, special legal advisers on matters of Greek law to the Agent;

 

	
  

	
12

	
Accounts

 

evidence that the Accounts have been opened, together with duly completed mandate forms in respect thereof;

 

	
  

	
13

	
Security Documents

 

the Corporate Guarantee, the Trust Deed and the Account Pledges (together with the other documents to be delivered to the Agent pursuant thereto), each duly executed; and

 

	
  

	
14

	
Evidence of ownership

 

evidence in writing and in form and substance satisfactory to the Agent in all respects of the ultimate beneficial owner or owners of the shares in the Corporate Guarantor.

 

  

74

  

Part 2

 

	
  

	
1

	
Drawdown Notice

 

The Drawdown Notice in respect of the relevant Advance to be drawn down, duly executed;

 

	
  

	
2

	
Certified Management Agreement

 

a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the relevant Drawdown Date) as a true and complete copy by legal counsel to the relevant Borrower of the Management Agreement in respect of relevant Ship;

 

	
  

	
3

	
Ship conditions

 

evidence that the Ship relevant to the Advance which is to be made:

 

	
  

	
3.1

	
Registration and Encumbrances

 

is permanently or provisionally registered in the name of the relevant Borrower under the laws and flag of the relevant Flag State through the relevant Registry and that such Ship and its Earnings, Insurances and Requisition Compensation (as defined in the relevant Ship Security Documents) are free of Encumbrances, unless permitted under this Agreement;

 

	
  

	
3.2

	
Classification

 

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

 

	
  

	
3.3

	
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, confirmation from the protection and indemnity association or other insurer with which such Ship is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to such Ship);

 

	
  

	
4

	
Delivery documents

 

copies, certified by a person acceptable to the Agent, of the bill of sale, the commercial invoice, the protocol of delivery and acceptance and any other delivery document to be exchanged under the relevant Contract in respect of the Ship relevant to such Advance, each duly executed and delivered;

 

	
  

	
5

	
Title and no Encumbrances

 

evidence that the transfer of title to the Ship relevant to such Advance from the relevant Seller to the relevant Borrower pursuant to the relevant Contract has been duly registered with the relevant Registry;

 

	
  

	
6

	
Ship Security Documents

 

the Ship Security Documents for the Ship relevant to such Advance duly executed;

 

 

  

75

  

 

	
  

	
7

	
Mortgage registration

 

evidence that the Mortgage over the Ship relevant to such Advance has been permanently or (as the case may be) provisionally registered against such Ship under the laws and flag of the relevant Flag State through the relevant Registry;

 

	
  

	
8

	
Notices of assignment

 

copies of duly executed notices of assignment required by the terms of the relevant Ship Security Documents and in the forms prescribed by such Ship Security Documents;

 

	
  

	
9

	
Valuation

 

a valuation of the Ship to which the Advance to be drawn down relates, made (at the expense of the Borrowers) in the manner specified in clause 8.2.2 and dated not earlier than thirty (30) days prior to the proposed Drawdown Date of such Advance;

 

	
  

	
10

	
British Virgin Islands opinion

 

an opinion of Walkers, special legal advisers on matters of British Virgin Islands law to the Agent;

 

	
  

	
11

	
Marshall Islands opinion

 

an opinion of Cozen O'Connor, special legal advisers on matters of Marshall Islands law to the Agent;

 

	
  

	
12

	
Flag State opinion

 

an opinion of legal advisers to the Agent on matters of the laws of the Flag State for the Ship to which the Advance being drawdown relates;

 

	
  

	
13

	
Fees

 

evidence that any fees due under clause 5.1 have been paid in full;

 

	
  

	
14

	
Registration forms

 

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

 

	
  

	
15

	
Process agent

 

a letter from each Security Party's and each Manager's agent for receipt of service of proceedings accepting its appointment under each of the relevant Security Documents required under this Part 2 in respect of the Ship relevant to such Advance and in which it is or is to be appointed as such Security Party's or (as the case may be) such Manager's agent;

 

	
  

	
16

	
SMC/DOC

 

a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the relevant Advance which is to be made) as a true and complete copy by an officer of the relevant Borrower of the DOC issued to the Operator and either (a) the SMC for the Ship relevant to such Advance or (b) an application for the issuance of the SMC for such Ship;

 

 

  

76

  

 

	
17

	
ISPS Code compliance

 

	
  

	
(a)

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

 

	
  

	
(b)

	
a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the relevant Advance which is to be made) as a true and complete copy by an officer of the relevant Borrower of the ISSC and the continuous synopsis record (as defined in the ISPS Code) for the Ship relevant to such Advance; and

 

	
18

	
Certificate of financial responsibility

 

if the relevant Ship will trade permanently in the United States of America, a copy of a certificate of financial responsibility in respect of the Ship relevant to such Advance complying with the requirements of the United States Oil Pollution Act 1990 or the United States Comprehensive Environmental Response Compensation Liability Act 1980, together with evidence of approval thereof by the relevant regulatory authorities.

 

  

77

  

 

Schedule 4

 

Form of Transfer Certificate

 

 (referred to in clause 15.3)

TRANSFER CERTIFICATE

 

Banks are advised not to employ Transfer Certificates or otherwise to assign or transfer interests in the Loan Agreement without further ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services and Markets Act 2000 and regulations made thereunder and similar statutes which may be in force in other jurisdictions

 

	
To:

	
CITIBANK INTERNATIONAL PLC as agent on its own behalf and on behalf of the Borrowers, the Banks, the Account Bank, the Security Agent and the Arranger defined in the Loan Agreement referred to below.

 

 [Date]

 

Attention:                      [·]

 

This certificate ("Transfer Certificate") relates to a loan agreement dated 26 June 2007 as amended and supplemented and/or restated from time to time (together the "Loan Agreement") and made between (1) Lewisham Maritime Inc., Pulford Ocean Inc., Rayford Navigation Corp., Rossington Marine Corp. and Quex Shipping Inc. as joint and several borrowers (the "Borrowers"), (2) the banks and financial institutions defined therein as banks (the "Banks"), (3) Citibank International plc as Agent and Account Bank, (4) Citigroup Global Markets Limited as Arranger and (5) Citibank International plc as Security Agent, in relation to a loan of up to Two hundred and twenty two million Dollars ($222,000,000).  Terms defined in the Loan Agreement shall, unless otherwise defined herein, have the same meanings herein as therein.

 

In this Certificate:

 

the "Transferor" means [full name] of [lending office]; and

 

the "Transferee" means [full name] of [lending office].

 

	
  

	
1

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

 

	
 

Date of Advance[s]

	
 

Amount of Advance[s]

	
 

Transferor's [Contribution] [Commitment]

to Advance[s]

 

	
 

Maturity Date

	
 

 

 

	  	  	  

 

 

  

78

  

	
  

	
2

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

 

	
  

	
3

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

 

	
  

	
4

	
The Transferee:

 

	
  

	
4.1

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

 

	
  

	
4.2

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

 

	
  

	
4.3

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

 

	
  

	
4.4

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

 

	
  

	
4.5

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

 

	
  

	
5

	
The Transferor:

 

	
  

	
5.1

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

 

	
  

	
5.2

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

 

	
  

	
5.3

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

 

	
  

	
6

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

 

	
  

	
7

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

 

 

  

79

  

 

 

 

	
  

	
 

	
Transferee (including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Arranger, the Agent, the Security Agent and the Account Bank as provided by the Loan Agreement) after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

 

	
  

	
8

	
None of the Transferor, the Arranger, the Agent, the Account Bank, the Security Agent or the Banks:

 

	
  

	
8.1

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

 

	
  

	
8.2

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

 

	
  

	
9

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

 

	
  

	
10

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

 

	
  

	
11

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

 

	
Transferor

	
Transferee

	
 

By: ......................................................

	
 

By: ......................................................

	
 

 

Dated: ...................................................

	
 

 

Dated: ...................................................

 

Agent

 

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

 

CITIBANK INTERNATIONAL PLC

 

By:                      .............................................

 

Dated:                .............................................

 

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

 

  

80

  

The Schedule

 

 

Outstanding Contribution [per Advance]: $•

Commitment [per Advance]: $•

Portion Transferred: •%

Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person

(Loan Administration Department):

Telephone:

Telefax No:

Contact Person

(Credit Administration Department):

Telephone:

Telefax No:

[Account for payments:]

 

  

81ex4-1_3.htm

 

Exhibit 4.1.3

 

 

 

DATED       25 February       2011

 

 

DHT PHOENIX, INC.

(as Borrower)

 

- and -

 

DVB BANK SE, LONDON BRANCH

(as Lenders)

 

- and -

 

DVB BANK SE, LONDON BRANCH

(as Agent)

 

- and –

 

DVB BANK SE, FRANKFURT BRANCH

(as Swap Provider)

 

- and –

 

DVB BANK SE, LONDON BRANCH

(as Security Agent)

 

 

 

 

 

US$27,500,000 SECURED

LOAN AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

CONTENTS

 

Page

 

 

	
1

	
Definitions and Interpretation

	
1

	 	 	 
	
2

	
The Loan and its Purpose

	
16

	 	 	 
	
3

	
Conditions of Utilisation

	
16

	 	 	 
	
4

	
Advance

	
17

	 	 	 
	
5

	
Repayment

	
18

	 	 	 
	
6

	
Prepayment

	
18

	 	 	 
	
7

	
Interest

	
20

	 	 	 
	
8

	
Indemnities

	
22

	 	 	 
	
9

	
Fees

	
27

	 	 	 
	
10

	
Security and Application of Moneys

	
27

	 	 	 
	
11

	
Representations

	
33

	 	 	 
	
12

	
Undertakings and Covenants

	
39

	 	 	 
	
13

	
Events of Default

	
50

	 	 	 
	
14

	
Assignment and Sub-Participation

	
56

	 	 	 
	
15

	
The Agent, the Security Agent and the Lenders

	
59

	 	 	 
	
16

	
Set-Off

	
68

	 	 	 
	
17

	
Payments

	
68

	 	 	 
	
18

	
Notices

	
70

	 	 	 
	
19

	
Partial Invalidity

	
72

	 	 	 
	
20

	
Remedies and Waivers

	
72

 

	
21

	
Miscellaneous

	
72

	 	 	 
	
22

	
Law and Jurisdiction

	
74

 

 

 

 

 

 

 

 

	
SCHEDULE 1:

	
The Lenders and the Commitments

	
75

	 	 	 
	
SCHEDULE 2:

	
Conditions Precedent and Subsequent

	
76

	
 

	

Part I:  Conditions Precedent

	
76

	
 

	

Part II: Conditions Subsequent

	
82

	 	 	 
	
SCHEDULE 3:

	
Calculation of Mandatory Cost

	
83

	 	 	 
	
SCHEDULE 4:

	
Form of Drawdown Notice

	
86

	 	 	 
	
SCHEDULE 5:

	
Form of Transfer Certificate

	
87

	 	 	 
	
SCHEDULE 6:

	
Form of Compliance Certificate

	
90

	 	 	 
	
SCHEDULE 7:

	
Loan Administration Form

	
91

	 	 	 
	
Form of Loan Administration Form

	
91

 

 

 

 

 

 

 

 

 

 

LOAN AGREEMENT

 

	
Dated:         25 February 2011

	
 

 

BETWEEN:

 

	
(1)

	
DHT PHOENIX, INC., a company incorporated under the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island Majuro, Marshall Islands MH96960 (the “Borrower”); and

 

	
(2)

	
the banks listed in Schedule 1 (The Lenders and the Commitments), each acting through its office at the address indicated against its name in Schedule 1 (together the “Lenders” and each a “Lender”); and

 

	
(3)

	
DVB BANK SE, LONDON BRANCH, acting as agent through its office at Park House, 6th Floor, 16-18 Finsbury Circus, London EC2M 7EB (in that capacity the “Agent”); and

 

	
(4)

	
DVB BANK SE, FRANKFURT BRANCH, acting as swap provider through its office at Platz der Republik 6, 60325 Frankfurt, Germany (the “Swap Provider”); and

 

	
(5)

	
DVB BANK SE, LONDON BRANCH, acting as security agent through its office at Park House, 6th Floor, 16-18 Finsbury Circus, London EC2M 7EB (in that capacity the “Security Agent”).

 

WHEREAS:

 

	
(A)

	
The Borrower has agreed to purchase the Vessel from the Seller on the terms of the MOA and intends to register the Vessel under the flag of the Marshall Islands.

 

	
(B)

	
Each of the Lenders has agreed to advance to the Borrower its Commitment (aggregating, with all the other Commitments, up to twenty seven million, five hundred thousand Dollars $27,500,000) to assist the Borrower to finance part of the purchase price of the Vessel.

 

IT IS AGREED  as follows:

 

	
1

	
Definitions and Interpretation

 

1.1           In this Agreement:

 

“Account Charge” means the deed of charge referred to in Clause 10.1.4 (Security Documents).

 

 

  

  

  

 

 

“Account Holder” means Nordea Bank Norge ASA acting through its branch at Middelthunsgate 17, PO Box 1166, Sentrum, N-0107 Oslo, Norway or any other bank or financial institution which at any time, with the Agent’s prior written consent, holds the Earnings Account and/or the Retention Account.

 

“Accounts” means the Earnings Account and the Retention Account.

 

“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.

 

“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

 

“Applicable Charter” means a time charter in respect of the Vessel entered into by the Borrower which (inclusive of extension options) is capable of exceeding twelve (12) months.

 

“Approved Shipbroker” means Maritime Strategies International Ltd, RS Platou ASA, Clarksons, Fearnleys, Simpson, Spence & Young, Compass Marine Services, Arrow Shipbroking Group and any other broker agreed by the Agent from time to time.

 

“Assignment” means the deed or deeds of assignment from the Borrower referred to in Clause 10.1.2 (Security Documents).

 

“Availability Termination Date” means 15 April 2011 or such later date as the Lenders may in their discretion agree.

 

“Break Costs” means all sums payable by the Borrower from time to time under Clause 8.3 (Break Costs).

 

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, London, Frankfurt and Oslo.

 

“Cash Sweep Amount” means one third of the Excess Cash Flow that has accrued during the relevant Cash Sweep Period, the first such amount to be calculated on the second Quarter Date after the Drawdown Date and each following amount to be calculated on the subsequent Quarter Dates.

 

 

  

2

  

 

 

“Cash Sweep Period” means each period for the determination and payment of the Cash Sweep Amount, each of which of shall be of three months’ duration (except the first such period which shall commence on the Drawdown Date and end on the second Quarter Date thereafter), to continue until the Balloon (as defined in Clause 5.1) has been reduced to the Lower Balloon Amount.

 

“Charter Rights” means the rights of the Borrower pursuant to an Applicable Charter.

 

“Commercial Manager” means DHT Management AS acting as commercial manager or such other commercial manager of the Vessel nominated by the Borrower as the Agent may approve.

 

“Commitment” means, in relation to a Lender, the amount of the Loan which that Lender agrees to advance to the Borrower as its several liability as indicated against the name of that Lender in Schedule 1 (The Lenders and the Commitments) and/or, where the context permits, the amount of the Loan advanced by that Lender and remaining outstanding and “Commitments” means more than one of them.

 

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 6 (Form of Compliance Certificate).

 

“Credit Support Document” means any document described as such in the Master Agreement and, where the context permits, any other document referred to in any Credit Support Document which has the effect of creating an Encumbrance in favour of any of the Finance Parties.

 

“Credit Support Provider” means any person (other than the Borrower) described as such in the Master Agreement.

 

“Currency of Account” means, in relation to any payment to be made to a Finance Party under a Finance Document, the currency in which that payment is required to be made by the terms of that Finance Document.

 

“Default” means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

 

 

  

3

  

 

 

“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

 

“Dollars” and “$” each means available and freely transferable and convertible funds in lawful currency of the United States of America.

 

“Drawdown Date” means the date on which the Loan is advanced under Clause 4 (Advance).

 

“Drawdown Notice” means a notice substantially in the form set out in Schedule 4 (Form of Drawdown Notice).

 

“Earnings Account” means the bank account opened in the name of the Borrower with the Account Holder with account number 6027.04.91661, or such other account that the Agent may approve in writing.

 

“Earnings” means all hires, freights, pool income and other sums payable to or for the account of the Borrower in respect of the Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel PROVIDED THAT where the Vessel is entered into the Pool the “Earnings” shall be the amount due to the Borrower in respect of the Vessel pursuant to the Pool Agreement.

 

“Encumbrance” means a mortgage, charge, assignment, pledge, lien, or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

 

“Environment” means all or any of the following media: air (including air within buildings or other structures and whether below or above ground); land (including buildings and any other structures or erections in, on or under it and any soil and anything below the surface of the land); land covered with water; and water (including sea, ground and surface water and any living organism supported by such media).

 

 

  

4

  

 

 

“Environmental Approval” means any and all consents, authorisations, licenses or approvals of any Government Entity required under any Environmental Laws applicable to the Vessel or any part thereof or to the operation of, or the carriage of cargo and/or passengers on, or the provision of goods and/or services of or from the Vessel or any part thereof.

 

“Environmental Claim” means any and all enforcements, clean ups, removals or other regulatory actions or laws instituted or completed by any Government Entity under or pursuant to any Environmental Laws or any Environmental Approval together with the claims made by any third party relating to damage, contribution, loss or injury resulting from any spill from the Vessel or any part thereof.

 

“Environmental Laws” means any or all applicable law (whether civil, criminal or administrative), common law, statute, statutory instrument, treaty, convention, regulation, directive, by-law, demand, decree, ordinance, injunction, resolution, order, judgment, rule, permit, licence or restriction (in each case having the force of law) and codes of practice or conduct, circulars and guidance notes (in each case having legal or judicial import or effect), in each case of any government, quasi-government, supranational, federal, state or local government, statutory or regulatory body, court, agency or association in any applicable jurisdiction relating to or concerning:

 

	
  

	
(a)

	
pollution or contamination of the Environment, any ecological system or any living organisms which inhabit the Environment or any ecological system;

 

	
  

	
(b)

	
the generation, manufacture, processing, distribution, use (including abuse), treatment, storage, disposal, transport or handling of hazardous materials; and

 

	
  

	
(c)

	
the emission, leak, release, spill or discharge into the Environment of dust, fumes, gas, odours, smoke, steam, effluvia, heat, light, radiation (of any kind), infection, electricity or any hazardous materials and any matter or thing capable of constituting a nuisance or an actionable tort or breach of statutory duty of any kind in respect of such matters,

 

including, without limitation, the following laws of the United States of America (each as amended): the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Hazardous Materials Transportation Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery Act and the Toxic Substances Control Act together, in each case, with the regulations promulgated and the guidance issued pursuant thereto.

 

 

  

5

  

 

 

“Excess Cash Flow” means the Earnings accrued during the relevant Cash Sweep Period less the Operating Expenses paid during the relevant Cash Sweep Period and any scheduled Repayment Instalment, scheduled interest payments pursuant to Clause 7, any amounts payable to the Finance Parties pursuant to Clause 8 and 9 in each case during the relevant Cash Sweep Period, and an amount at all times not less than three hundred and fifty thousand Dollars $350,000 per Cash Sweep Period for any special survey, dry docking or intermediate survey costs in respect of the Vessel.

 

“Event of Default” means any of the events or circumstances set out in Clause 13.1 (Events of Default).

 

“Facility Period” means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents.

 

“Fair Market Value” means the charter free market value of the Vessel as calculated in accordance with Clause 10.19 (Valuation).

 

“Final Maturity Date” means the earlier of (i) the fifth (5th) anniversary of the Drawdown Date, or (ii) 15 April 2016.

 

“Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Agent and the Borrower setting out any of the fees referred to in Clause 9 (Fees).

 

“Finance Documents” means this Agreement, the Master Agreement, the Security Documents, any Fee Letter and any other document designated as such by the Agent and the Borrower and “Finance Document” means any one of them.

 

“Finance Parties” means the Agent, the Security Agent, the Swap Provider and the Lenders and “Finance Party” means any one of them.

 

 

  

6

  

 

 

“Financial Indebtedness” means any obligation for the payment or repayment of money, whether present or future, actual or contingent, in respect of:

 

	 	
(a)

	moneys borrowed;

 

	 	
(b)

	any acceptance credit;

 

	 	
(c)

	any bond, note, debenture, loan stock or similar instrument;

 

	 	
(d)

	any finance or capital lease;

 

	 	(e)	receivables sold or discounted (other than on a non-recourse basis);

 

	 	(f)	deferred payments for assets or services;

 

	
  

	
(g)

	
any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

 

	
  

	
(h)

	
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

 

	
  

	
(i)

	
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

 

	
  

	
(j)

	
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.

 

“Group” means the Guarantor and its Subsidiaries (which, for the avoidance of doubt, shall include the Borrower).

 

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

 

“Guarantee” means the guarantee and indemnity referred to in Clause 10.1.3 (Security Documents).

 

 

  

7

  

 

 

“Guarantor” means DHT Holdings, Inc. a company registered under the laws of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and/or (where the context permits) any other person who shall at any time during the Facility Period give to the Lenders or to the Security Agent on their behalf a guarantee and/or indemnity for the repayment of all or part of the Indebtedness.

 

“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued under Annex VI.

 

“IFRS” means International Financial Reporting Standards issued and/or adopted by the International Accounting Standards Board.

 

“Indebtedness” means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents.

 

“Insurances” means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with the Vessel or her increased value or the Earnings and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

 

“Intellectual Property” means:

 

	
  

	
(a)

	
any patents, trade marks, service marks, designs, business names, copyrights, design rights, moral rights, inventions, confidential information, know-how and other intellectual property rights and interests, whether registered or unregistered; and

 

	
  

	
(b)

	
the benefit of all applications and rights to use such assets of a Security Party.

 

“Interest Payment Date” means each date for the payment of interest in accordance with Clause 7.6 (Accrual and payment of interest).

 

“Interest Period” means each period for the determination and payment of interest selected by the Borrower or agreed or selected by the Agent pursuant to Clause 7 (Interest).

 

 

  

8

  

 

 

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

 

“ISM Company” means, at any given time, the company responsible for the Vessel’s compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

 

“ISPS Code” means the International Ship and Port Facility Security Code.

 

“ISPS Company” means, at any given time, the company responsible for the Vessel’s compliance with the ISPS Code.

 

“ISSC” means a valid international ship security certificate for the Vessel issued under the ISPS Code.

 

“LIBOR” means:

 

	
  

	
(a)

	the applicable Screen Rate; or

 

	
  

	
(b)

	
(if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks (or by two of them if one is unable to quote) to leading banks in the London interbank market,

 

at 11.00 a.m. two (2) Business Days before the first day of the relevant Interest Period for the offering of deposits in Dollars in an amount comparable to the Loan (or any relevant part of the Loan) and for a period comparable to the relevant Interest Period.

 

“Loan” means the aggregate amount advanced or to be advanced by the Lenders to the Borrower under Clause 4 (Advance) or, where the context permits, the amount advanced and for the time being outstanding.

 

“Loans Administration Form” means the form set out in Schedule 7.

 

“Lower Balloon Amount” means thirteen million three hundred and twelve thousand and five hundred Dollars ($13,312,500).

 

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than sixty six point six per cent (66.6%) of the aggregate of all the Commitments.

 

 

  

9

  

 

 

“Management Agreements” means the services agreement for commercial management in relation to the Vessel 22 December 2010 between the Guarantor and the Commercial Manager and the agreement for the technical management of the Vessel dated 4 January 2011 between the Borrower and the Technical Manager.

 

“Managers” means the Commercial Manager and the Technical Manager.

 

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 3 (Calculation of Mandatory Cost).

 

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

 

“Master Agreement” means any ISDA Master Agreement (or any other form of master agreement relating to interest or currency exchange transactions) entered into between the Swap Provider and the Borrower during the Facility Period, including each Schedule to any Master Agreement and each Confirmation exchanged pursuant to any Master Agreement.

 

“Maximum Loan Amount” means the lesser of (a) twenty seven million five hundred thousand Dollars ($27,500,000) and (b) fifty five per cent 55% of the Fair Market Value of the Vessel to be determined not more than two (2) weeks prior to the Drawdown Date.

 

“MOA” means the memorandum of agreement dated 8 December 2010 as amended by an addendum no. 1 dated 8 February 2011 on the terms and subject to the conditions of which the Seller will sell the Vessel to the Borrower for a purchase price of fifty five million Dollars ($55,000,000).

 

“Mortgage” means the preferred mortgage referred to in Clause 10.1.1 (Security Documents).

 

“Operating Expenses” means expenses properly and reasonably incurred by the Borrower in connection with the operation, employment, maintenance, repair and insurance of the Vessel.

 

“Original Financial Statements” means the audited financial statements of the Guarantor for the financial year ended 31 December 2010.

 

 

  

10

  

 

 

“Permitted Encumbrance” means any Encumbrance which has the prior written approval of the Agent, or any liens for current crews’ wages and salvage and liens incurred in the ordinary course of trading the Vessel up to an aggregate amount at any time not exceeding five per cent (5%) of the charter-free sale value of the Vessel.

 

“Pledgor” means DHT Holdings, Inc., a company incorporated under the laws of the Marshall Islands with registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.

 

“Pool” means the pool of vessels that are subject to the Pool Agreement.

 

“Pool Agreement” means the accession agreement no. 33 for the pool employment of the Vessel in the Tankers International Pool dated 23 February 2011 made between the Borrower and the Pool Manager together with the Rules of the Tankers International Pool attached thereto.

 

“Pool Manager” means Tankers International LLC, a company incorporated under the laws of the Marshall Islands with its principal place of business at Libra Tower, 23 Olympion Street, Limassol 3306, Cyprus.

 

“Prepayment Fee” means a fee in the amount of:

 

	
  

	
(i) 

	
in the event that such prepayment occurs prior to the first (1st) anniversary of the Drawdown Date, three per cent (3%) of the Loan outstanding;

 

	
  

	
(ii) 

	
in the event that such prepayment occurs after the first (1st) anniversary of the Drawdown Date but prior to the second (2nd) anniversary of the Drawdown Date, two per cent (2%) of the Loan outstanding;

 

	
  

	
(iii) 

	
in the event that such prepayment occurs after the second (2nd) anniversary of the Drawdown Date but prior to the third (3rd) anniversary of the Drawdown Date, one per cent (1%) of the Loan outstanding; and

 

	
  

	
(iv)

	
in the event that such prepayment occurs after the third (3rd) anniversary of the Drawdown Date, nil.

 

“Principal Subsidiary” means any subsidiary of the Guarantor whose total assets represent not less than twenty five per cent (25%) of the consolidated total assets of the Guarantor as calculated by reference to the then latest audited annual accounts of such subsidiary and the Guarantor.

 

 

  

11

  

 

 

“Proportionate Share” means, at any time, the proportion which a Lender’s Commitment (whether or not advanced) then bears to the aggregate Commitments of all the Lenders (whether or not advanced).

 

“Quarter Date” means 31 March, 30 June, 30 September and 31 December of each year.

 

“Reference Banks” means, in relation to LIBOR, DVB Bank SE, Frankfurt Branch and the principal London offices of JP Morgan Chase and Deutsche Bank AG or such other banks as may be appointed by the Agent in consultation with the Borrower.

 

“Relevant Documents” means the Finance Documents, the MOA, the Pool Agreement, the Management Agreement, the Managers’ confirmations specified in Part I of Schedule 2 (Conditions precedent) and the Account Holder’s confirmation specified in Part I of Schedule 2 (Conditions precedent).

 

“Repayment Date” means the date for payment of any Repayment Instalment in accordance with Clause 5.1 (Repayment of Loan).

 

“Repayment Instalment” means any instalment of the Loan to be repaid by the Borrower under Clause 5.1 (Repayment of Loan).

 

“Requisition Compensation” means all compensation or other money which may from time to time be payable to the Borrower as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).

 

“Retention Account” means the bank account opened in the name of the Borrower with the Account Holder with account number 6027.04.91688, or such other account that the Agent may approve in writing.

 

“Screen Rate” means in relation to LIBOR, the British Bankers’ Association Interest Settlement Rate for the relevant currency and period displayed on the appropriate page of the Reuters screen.  If the agreed page is replaced or the service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders.

 

 

  

12

  

 

 

“Security Documents” means the Mortgage, the Assignment, the Guarantee, the Account Charge, the Share Pledge, any other Credit Support Documents or (where the context permits) any one or more of them and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and “Security Document” means any one of them.

 

“Security Parties” means the Borrower, the Guarantor, the Pledgor, any other Credit Support Provider and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and “Security Party” means any one of them.

 

“Seller” means Ascona Transportation Special Maritime Enterprise, a company incorporated in Greece with its registered office at 36, Amalias Avenue, Athens, Greece.

 

“Share Pledge” means the pledge of shares referred to in Clause 10.1.5 (Security Documents).

 

“SMC” means a valid safety management certificate issued for the Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

 

“SMS” means a safety management system for the Vessel developed and implemented in accordance with the ISM Code.

 

“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

 

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

 

“Technical Manager” means Goodwood Ship Management acting as technical manager or such other technical managers of the Vessel nominated by the Borrower as the Agent may approve.

 

“Total Loss” means:

 

	
  

	
(a)

	
an actual, constructive, arranged, agreed or compromised total loss of the Vessel; or

 

 

 

  

13

  

 

 

	
  

	
(b)

	
the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire); or

 

	
  

	
(c)

	
the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within (b) above), unless the Vessel is released and returned to the possession of the Borrower within thirty (30) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.

 

“Transaction” means a transaction entered into between the Swap Provider and the Borrower governed by the Master Agreement.

 

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

 

“Transfer Date” means, in relation to any Transfer Certificate, the later of:

 

(a)           the proposed Transfer Date specified in the Transfer Certificate; and

 

(b)           the date on which the Agent executes the Transfer Certificate.

 

“Trust Property” means:

 

	
  

	
(a)

	
all benefits derived by the Security Agent from Clause 10 (Security and Application of Moneys); and

 

	
  

	
(b)

	
all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents,

 

with the exception of any benefits arising solely for the benefit of the Security Agent.

 

“Vessel” means the vessel m.t. “ASCONA” (to be renamed “DHT PHOENIX”) (IMO no. 9180891) currently registered under the flag of Greece in the ownership of the Seller and intended to be sold by the Seller to the Borrower on the terms of the MOA, and everything now or in the future belonging to her on board and ashore.

 

“Working Capital Amount” means the sum of one million six hundred and fifty thousand Dollars ($1,650,000).

 

 

  

14

  

 

 

	
  

	
1.2

	In this Agreement:

 

	
  

	
1.2.1

	
words denoting the plural number include the singular and vice versa;

 

	
  

	
1.2.2

	
words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;

 

	
  

	
1.2.3

	
references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;

 

	
  

	
1.2.4

	
references to this Agreement include the Recitals and the Schedules;

 

	
  

	
1.2.5

	
the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;

 

	
  

	
1.2.6

	
references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;

 

	
  

	
1.2.7

	
references to “indebtedness” include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

	
  

	
1.2.8

	
references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;

 

	
  

	
1.2.9

	
references to any Finance Party include its successors, transferees and assignees;

 

	
  

	
1.2.10

	
a time of day (unless otherwise specified) is a reference to London time; and

 

	
  

	
1.2.11

	
words and expressions defined in the Master Agreement, unless the context otherwise requires, have the same meaning.

 

 

  

15

  

 

 

	
  

	
1.3

	Offer letter

        

This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between any Finance Party and the Borrower or their representatives prior to the date of this Agreement.

 

	
2

	
The Loan and its Purpose

 

	
  

	
2.1

	
Amount   Subject to the terms of this Agreement, the Lenders agree to make available to the Borrower a term loan in an aggregate amount not exceeding the Maximum Loan Amount.

 

	
  

	
2.2

	
Finance Parties’ obligations   The obligations of each Finance Party under the Finance Documents are several.  Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other party to the Finance Documents.  No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

 

	
  

	
2.3

	
Purpose   The Borrower shall apply the Loan for the purposes referred to in Recital (B).

 

	
  

	
2.4

	
Monitoring   No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.

 

	
3

	
Conditions of Utilisation

 

	
  

	
3.1

	
Conditions precedent   The Borrower is not entitled to have the Loan advanced unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions precedent) each of which shall be in a form and subsistence satisfactory to the Agent and the Agent’s legal advisors.

 

	
  

	
3.2

	
Further conditions precedent   The Lenders will only be obliged to advance the Loan if on the date of the Drawdown Notice and on the proposed Drawdown Date:

 

	
  

	
3.2.1

	
no Default is continuing or would result from the advance of the Loan; and

 

 

  

16

  

 

 

	
  

	
3.2.2

	
the representations made by the Borrower under Clause 11 (Representations) are true in all material respects.

 

	
  

	
3.3

	
Loan Limit  The Lenders will only be obliged to advance the Loan if the amount of the Loan does not exceed the Maximum Loan Amount.

 

	
  

	
3.4

	
Conditions subsequent   The Borrower undertakes to deliver or to cause to be delivered to the Agent on, or as soon as practicable after, the Drawdown Date the additional documents and other evidence listed in Part II of Schedule 2 (Conditions subsequent) each of which shall be in a form and subsistence satisfactory to the Agent and the Agent’s legal advisors.

 

	
  

	
3.5

	
No waiver   If the Lenders in their sole discretion agree to advance all or any part of the Loan to the Borrower before all of the documents and evidence required by Clause 3.1 (Conditions precedent) have been delivered to or to the order of the Agent, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Agent no later than thirty (30) days after the Drawdown Date or such other date specified by the Agent.

 

The advance of all or any part of the Loan under this Clause 3.5 shall not be taken as a waiver of the Lenders’ right to require production of all the documents and evidence required by Clause 3.1 (Conditions precedent).

 

	
  

	
3.6

	
Form and content   All documents and evidence delivered to the Agent under this Clause 3 shall:

 

	
  

	
3.6.1

	
be in form and substance acceptable to the Agent; and

 

	
  

	
3.6.2

	
if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.

 

	
4

	
Advance

 

	
  

	
4.1

	
Drawdown Request   The Borrower may request the Loan to be advanced in one (1) amount on any Business Day prior to the Availability Termination Date by delivering to the Agent a duly completed Drawdown Notice not more than ten (10) and not fewer than two (2) Business Days before the proposed Drawdown Date.  Any such Drawdown Notice shall be signed by an authorised signatory of the Borrower and, once delivered, is irrevocable.

 

 

  

17

  

 

 

	
  

	
4.2

	
Lenders’ participation   Subject to Clauses 2 (The Loan and its Purpose) and 3 (Conditions of Utilisation), the Agent shall promptly notify each Lender of the receipt of the Drawdown Notice, following which each Lender shall advance its Commitment to the Borrower through the Agent on the Drawdown Date.

 

	
5

	
Repayment

 

	
  

	
5.1

	
Repayment of Loan   The Borrower agrees to repay the Loan to the Agent for the account of the Lenders by twenty (20) consecutive quarterly instalments each in the sum of six hundred and nine thousand three hundred and seventy five Dollars ($609,375), the first instalment falling due on the date which is three (3) calendar months after the Drawdown Date and subsequent instalments falling due at consecutive intervals of three (3) calendar months thereafter.  A balloon payment of fifteen million three hundred and twelve thousand five hundred Dollars ($15,312,500) (the “Balloon”) shall be payable together with the twentieth (20th) and final instalment.  In any event the Loan and any other Indebtedness shall be paid in full by the Borrower on or prior to the Final Maturity Date.

 

	
  

	
5.2

	
Reduction of Repayment Instalments   If the amount advanced to the Borrower is less than twenty seven million five hundred thousand Dollars ($27,500,000):

 

	
  

	
5.2.1

	
first, the amount of the Balloon shall be reduced by the aggregate of twenty seven million five hundred thousand ($27,500,000) less the amount of the Loan actually advanced; and

 

	
  

	
5.2.2

	
second, the amount of Repayment Instalments other than the Balloon shall be reduced pro rata by the aggregate of twenty seven million five hundred thousand Dollars ($27,500,000) less the Balloon less the amount of the Loan actually advanced.

 

	
  

	
5.2.3

	
Reborrowing   The Borrower may not reborrow any part of the Loan which is repaid or prepaid.

 

	
6

	
Prepayment

 

	
  

	
6.1

	
Illegality   If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan:

 

	
  

	
6.1.1

	
that Lender shall promptly notify the Agent of that event;

 

 

  

18

  

 

 

	
  

	
6.1.2

	
upon the Agent notifying the Borrower, the Commitment of that Lender (to the extent not already advanced) will be immediately cancelled; and

 

	
  

	
6.1.3

	
the Borrower shall repay that Lender’s Commitment (to the extent already advanced) on the last day of the current Interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent and notified by the Agent to the Borrower (being no earlier than the last day of any applicable grace period permitted by law) and the remaining Repayment Instalments shall be reduced pro rata.

 

	
  

	
6.2

	
Voluntary prepayment of Loan   The Borrower may prepay the whole or any part of the Loan on any interest payment date (but, if in part, being an amount that reduces the Loan by a minimum amount of five hundred thousand Dollars ($500,000)) subject as follows:

 

	
  

	
6.2.1

	
it gives the Agent not less than five (5) Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice;

 

	
  

	
6.2.2

	
it pays to the Agent for the account of the Lenders, in addition to the amount prepaid, any applicable Prepayment Fee;

 

	
  

	
6.2.3

	
no prepayment may be made until after the Availability Termination Date; and

 

	
  

	
6.2.4

	
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1 (Repayment of Loan) in inverse order of maturity.

 

	
  

	
6.3

	
Mandatory prepayment on sale or Total Loss   If the Vessel is sold by the Borrower or becomes a Total Loss, the Borrower shall, simultaneously with any such sale or within ninety (90) days after any such Total Loss, prepay the whole of the Loan.

 

	
  

	
6.4

	
Restrictions   Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.

 

 

  

19

  

 

 

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and subject to Clause 6.2.2 (Voluntary prepayment of Loan), without premium or penalty.

 

If the Agent receives a notice under this Clause 6 it shall promptly forward a copy of that notice to the Borrower or the Lenders, as appropriate.

 

	
7

	
Interest

 

	
  

	
7.1

	
Interest Periods   The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three, six or nine months’ duration, as selected by the Borrower by written notice to the Agent not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Agent (acting on the instructions of all the Lenders).

 

	
  

	
7.2

	
Beginning and end of Interest Periods   Each Interest Period shall start on the Drawdown Date or (if the Loan is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

 

	
  

	
7.3

	
Non-Business Days   If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

 

	
  

	
7.4

	
Interest rate   During each Interest Period interest shall accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the Margin, (b) LIBOR and (c) the Mandatory Cost, if any.

 

	
  

	
7.5

	
Failure to select Interest Period   If the Borrower at any time fails to select or agree an Interest Period in accordance with Clause 7.1 (Interest Periods), the interest rate applicable shall be the rate determined by the Agent in accordance with Clause 7.4 (Interest rate) for an Interest Period of such duration (not exceeding six (6) months) as the Agent may select.

 

 

  

20

  

 

 

	
  

	
7.6

	
Accrual and payment of interest   Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrower to the Agent for the account of the Lenders on the last day of each Interest Period and, if the Interest Period is longer than six months, on the dates falling at three monthly intervals after the first day of that Interest Period as well as on the last day of the Interest Period.

 

	
  

	
7.7

	

Default interestIf the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent (2%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each selected by the Agent (acting reasonably). Any interest accruing under this Clause 7.7 shall be immediately payable by the Borrower on demand by the Agent. If unpaid, any such interest will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

 

	
  

	
7.8

	
Alternative interest rate   If either (a) the applicable Screen Rate is not available for any Interest Period and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for that Interest Period or (b) a Lender or Lenders inform the Agent by written notice that the cost to it or them of obtaining matching deposits for any Interest Period would be in excess of LIBOR and that notice is received by the Agent no later than close of business in London on the day LIBOR is determined for that Interest Period:

 

	
  

	
7.8.1

	
the Agent shall give notice to the Lenders and the Borrower of the occurrence of such event; and

 

	
  

	
7.8.2

	
the rate of interest on each Lender’s Commitment for that Interest Period shall be the rate per annum which is the sum of:

 

	
  

	
(a)

	
the Margin; and

 

 

  

21

  

 

 

	
  

	
(b)

	
the rate notified to the Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its Commitment from whatever source it may reasonably select; and

 

	
  

	
(c)

	
the Mandatory Cost, if any, applicable to that Lender’s Commitment,

 

PROVIDED THAT if the resulting rate of interest on any Commitment is not acceptable to the Borrower:

 

	
  

	
7.8.3

	
the Agent on behalf of the Lenders will negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest;

 

	
  

	
7.8.4

	
any substitute basis agreed pursuant to Clause 7.8.3 shall be binding on all the parties to this Agreement and shall apply to all Commitments; and

 

	
  

	
7.8.5

	
if, within thirty (30) days of the giving of the notice referred to in Clause 7.8.1, the Borrower and the Agent fail to agree in writing on a substitute basis for determining the rate of interest, the Borrower will immediately prepay the relevant Commitment, together with any Break Costs, and the remaining Repayment Instalments shall be reduced pro rata.

 

	
  

	
7.9

	
Determinations conclusive   The Agent shall promptly notify the Borrower of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.

 

	
8

	
Indemnities

 

	
  

	
8.1

	
Transaction expenses   The Borrower will, within fourteen (14) days of the Agent’s written demand, pay the Agent (for the account of the Finance Parties) the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Finance Parties or any of them in connection with:

 

	
  

	
8.1.1

	
the negotiation, preparation, printing, execution and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);

 

 

  

22

  

 

 

	
  

	
8.1.2

	
any amendment, addendum or supplement to any Finance Document (whether or not completed); and

 

	
  

	
8.1.3

	
any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessel, although subject to the provisions of Clause 10.19).

 

	
  

	
8.2

	
Funding costs   The Borrower shall indemnify each Finance Party, by payment to the Agent (for the account of that Finance Party) promptly on the Agent’s written demand, against all losses and costs incurred or sustained by that Finance Party if, for any reason, the Loan is not advanced to the Borrower after the relevant Drawdown Notice has been given to the Agent, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by a Finance Party).

 

	
  

	
8.3

	
Break Costs   The Borrower shall indemnify each Finance Party, by payment to the Agent (for the account of that Finance Party) promptly on the Agent’s written demand, against all costs, losses, premiums or penalties incurred by that Finance Party as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6 (Prepayment) or otherwise) on a day other than the last day of an Interest Period for the Loan or relevant part of the Loan, or any other payment under or in relation to the Finance Documents on a day other than the due date for payment of the sum in question, including (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain all or any part of the Loan, and any liabilities, expenses or losses incurred by that Finance Party in terminating or reversing, or otherwise in connection with, any Transaction or any other interest rate and/or currency swap, transaction or arrangement entered into by that Finance Party to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement or the Master Agreement.

 

 

  

23

  

 

 

	
  

	
8.4

	
Currency indemnity   In the event of a Finance Party receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, promptly on the Agent’s written demand, pay to the Agent for the account of the relevant Finance Party such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Agent on behalf of the relevant Finance Party as a separate debt under this Agreement.

 

	
  

	
8.5

	

Increased costs (subject to Clause 8.6 (Exceptions to increased costs)) If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement (including the implementation or application of or compliance with (i) the Basel II Accord or any other Basel II Regulation, (ii) Basel III or (iii) the UK Bank Levy (in each case, whether such implementation, application or compliance is by any central bank or any fiscal, monetary or other authority, a Finance Party or the holding company of a Finance Party)):

 

	
  

	
8.5.1

	

a Finance Party (or the holding company of a Finance Party) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or

 

	
  

	
8.5.2

	
the basis of Taxation of payments to a Finance Party in respect of all or any part of the Indebtedness shall be changed; or

 

	
  

	
8.5.3

	

any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of a Finance Party; or

 

	
  

	
8.5.4

	

the manner in which a Finance Party allocates capital resources to its obligations under this Agreement and/or the Master Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which a Finance Party is required or requested to maintain shall be affected; or

 

  

24

  

 

 

	
  

	
8.5.5

	
there is imposed on a Finance Party (or on the holding company of a Finance Party) any other condition in relation to the Indebtedness or the Finance Documents;

 

and the result of any of the above shall be to increase the cost to a Finance Party (or to the holding company of a Finance Party) of that Finance Party making or maintaining its Commitment, or its obligations under the Master Agreement, or to cause a Finance Party to suffer (in its opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement or the Master Agreement, and/or performing its obligations under this Agreement or the Master Agreement, or to cause a reduction in any amount due and payable to a Finance Party under any of the Finance Documents, then, subject to Clause 8.6 (Exceptions to increased costs), the Finance Party affected shall notify the Agent and the Borrower shall from time to time pay to the Agent on demand for the account of that Finance Party the amount which shall compensate that Finance Party (or the relevant holding company) for such additional cost or reduced return or reduced amount.  A certificate signed by an authorised signatory of that Finance Party setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law.

 

For the purposes of this Clause 8.5:

 

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

 

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

 

“Basel II Regulation” means (a) any law or regulation implementing the Basel II Accord or (b) any Basel II Approach adopted by a Finance Party;

 

 

  

25

  

 

 

“Basel III” means the “Consultative proposals to strengthen the resilience of the banking sector” published by the Basel Committee on Banking Supervision on 17 December 2009 as amended or supplemented (including by the agreements of the Governors and Heads of Supervision summarised in the Annex to their communiqué dated 29 July 2010 and further approved by them on 12 September 2010;

 

“holding company” means, in respect of a Finance Party, the company or entity (if any) within the consolidated supervision of which that Finance Party is included; and

 

“UK Bank Levy” means the tax to be imposed on certain applicable banks pursuant to the Finance Act 2011.

 

	
  

	
8.6

	

Exceptions to increased costs  Clause 8.5 (Increased costs) does not apply to the extent any additional cost or reduced return referred to in that Clause is:

 

	
  

	
8.6.1

	

compensated for by a payment made under Clause 8.10 (Taxes); or

 

	
  

	
8.6.2

	

compensated for by a payment made under Clause 17.3 (Grossing-up); or

 

	
  

	
8.6.3

	

compensated for by the payment of the Mandatory Cost; or

 

	
  

	
8.6.4

	

attributable to the wilful breach by the relevant Finance Party (or the holding company of that Finance Party) of any law or regulation.

 

	
  

	
8.7

	
Events of Default   The Borrower shall indemnify each Finance Party from time to time, by payment to the Agent (for the account of that Finance Party) promptly on the Agent’s written demand, against all losses, costs and liabilities (including legal fees) incurred or sustained by that Finance Party as a consequence of any Event of Default.

 

	
  

	
8.8

	
Enforcement costs   The Borrower shall pay to the Agent (for the account of each Finance Party) promptly on the Agent’s written demand the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document including (without limitation) any losses, costs and expenses which that Finance Party may from time to time sustain, incur or become liable for by reason of that Finance Party being mortgagee of the Vessel and/or a lender to the Borrower, or by reason of that Finance Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.

 

 

  

26

  

 

 

	
  

	
8.9

	
Other costs   The Borrower shall pay to the Agent (for the account of each Finance Party) promptly on the Agent’s written demand the amount of all sums which that Finance Party may pay or become actually or contingently liable for on account of the Borrower in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, any sums which that Finance Party may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention, and any sums for which a Finance Party may become liable as a result of an Environmental Claim.

 

	
  

	
8.10

	
Taxes   The Borrower shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on a Finance Party’s overall net income) and shall indemnify the Finance Parties, by payment to the Agent (for the account of the Finance Parties) promptly on the Agent’s written demand, against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.

 

	
9

	
Fees

 

	
  

	
9.1

	
Commitment fee   The Borrower shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a fee computed at the rate of one point one per cent (1.10%) per annum on the undrawn amount of the Loan from time to time from the date of this Agreement until the earlier of the Drawdown Date and the Availability Termination Date.  The accrued commitment fee is payable on the last day of each successive period of three months from the date of this Agreement and on the Availability Termination Date.

 

	
  

	
9.2

	
Upfront fee   The Borrower shall pay to the Agent for the account of the Agent an upfront fee in the amount and at the times agreed in a Fee Letter.

 

	
10

	
Security and Application of Moneys

 

	
  

	
10.1

	
Security Documents   As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:

 

 

 

  

27

  

 

	
  

	
10.1.1

	

a first preferred mortgage over the Vessel;

 

	
  

	

10.1.2

	

a first priority deed or deeds of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation of the Vessel;

 

	
  

	

10.1.3

	

a guarantee and indemnity from the Guarantor;

 

	
  

	

10.1.4

	

a first priority deed of charge over the Accounts and all amounts from time to time standing to the credit of the Accounts; and

 

	
  

	

10.1.5

	

a first priority pledge of all the issued shares of the Borrower.

 

	
  

	
10.2

	
Earnings and Retention Accounts   The Borrower shall maintain the Accounts with the Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.

 

	
  

	
10.3

	
Earnings   The Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.

 

	
  

	
10.4

	
Working Capital Amount   The Borrower shall maintain the Working Capital Amount in the Earnings Account PROVIDED THAT the Borrower may apply the Working Capital Amount towards the Operating Expenses if the prior written consent of the Agent is obtained which the Agent shall be entitled to withhold if any sums made or previously made available to the Borrower pursuant to Clause 10.11 have been used for purposes other than Operating Expenses.

 

	
  

	
10.5

	
Transfers to Retention Account   On the day in each calendar month during the Facility Period which numerically corresponds to the Drawdown Date (or, if there is no such day, on the last Business Day of that month), the Borrower shall procure that there is transferred from the Earnings Account to the Retention Account:

 

	
  

	
10.5.1

	
one-third of the amount of the Repayment Instalment due on the next Repayment Date (which shall be deemed to be the day for that transfer if that day is a Repayment Date); and

 

 

  

28

  

 

 

	
  

	
10.5.2

	
the amount of interest due on the next Interest Payment Date (which shall be deemed to be the day for that transfer if that day is an Interest Payment Date) divided by the number of months between the last Interest Payment Date (or, if none, the Drawdown Date) and that next Interest Payment Date, and the Borrower irrevocably authorises the Agent to instruct the Account Holder to make those transfers.

 

	
  

	
10.6

	
Additional payments to Retention Account   If for any reason the amount standing to the credit of the Earnings Account is insufficient to make any transfer to the Retention Account required by Clause 10.5 (Transfers to Retention Account), the Borrower shall, without demand, procure that there is credited to the Retention Account, on the date on which the relevant amount would have been transferred from the Earnings Account, an amount equal to the amount of the shortfall.

 

	
  

	
10.7

	
Certificate of Excess Cash Flow  The Borrower shall provide a certificate to the Agent within ten (10) days after the each Quarter Date (although the first such certificate to be provided within ten (10) days after the second Quarter Date following the Drawdown Date) showing the calculation of the Excess Cash Flow of the Vessel for the preceding three (3) month period (or, in the case of the first certificate, the period from the first Drawdown Date to the second Quarter Date following the Drawdown Date).

 

	
  

	
10.8

	
Cash Sweep to Retention Account Within ten (10) days after each Quarter Date (except the first payment which should be made ten (10) days after the second Quarter Date following the Drawdown Date), the Borrower shall procure that the relevant Cash Sweep Amount is transferred from the Earnings Account to the Retention Account and the Borrower irrevocably authorises the Agent to instruct the Account Holder to make those transfers.

 

	
  

	
10.9

	
Application of Retention Account   The Borrower shall procure that there is transferred from the Retention Account to the Agent:

 

	
  

	
10.9.1

	
on each Repayment Date, the amount of the Repayment Instalment and Cash Sweep Amount then due;

 

	
  

	
10.9.2

	on each Interest Payment Date, the amount of interest then due; and

        

 

  

29

  

 

 

	
  

	
10.9.3

	
on each Repayment Date, the Cash Sweep Amount for the preceding Cash Sweep Period,

 

and the Borrower irrevocably authorises the Agent to instruct the Account Holder to make those transfers.

 

The Cash Sweep Amount shall be applied by the Agent to reduce the Balloon (as defined in Clause 5.1) to the Lower Balloon Amount.

 

	
  

	
10.10

	
Borrower’s obligations not affected   If for any reason the amount standing to the credit of the Retention Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower’s obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.

 

	
  

	
10.11

	
Release of surplus   Any Earnings which have been included in a calculation of Excess Cash Flow remaining to the credit of the Earnings Account following the making of any transfer to the Retention Account required by Clause 10.5 (Transfers to Retention Account) and Clause 10.7 (Cash Sweep to Retention Account), shall (unless an Event of Default shall have occurred and be continuing) be released to or to the order of the Borrower.  However, any Earnings not previously included in a calculation of Excess Cash Flow must be included in the Excess Cash Flow calculation for the next Cash Sweep Period.

 

	
  

	
10.12

	
Restriction on withdrawal   During the Facility Period no sum may be withdrawn from the Accounts (except in accordance with this Clause 10) without the prior written consent of the Agent such consent not to be unreasonably withheld or delayed.

 

	
  

	
10.13

	
Access to information   The Borrower agrees that the Agent (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Accounts, and irrevocably waives any right of confidentiality which may exist in relation to those records.

 

	
  

	
10.14

	
Statements   Without prejudice to the rights of the Agent under Clause 10.13 (Access to information), the Borrower will provide to the Agent, no less frequently than within ten (10) days after each Quarter Date during the Facility Period, and at any other time expressly requested by the Agent (but no more frequently than once per month), written statements of account showing all entries made to the credit and debit of each of the Accounts during the immediately preceding calendar month.

 

 

  

30

  

 

 

	
  

	
10.15

	
Application after acceleration   From and after the giving of notice to the Borrower by the Agent under Clause 13.2 (Acceleration), the Borrower shall procure that all sums from time to time standing to the credit of either of the Accounts are immediately transferred to the Agent for application in accordance with Clause 10.16 (General application of moneys) and the Borrower irrevocably authorises the Agent to instruct the Account Holder to make those transfers.

 

	
  

	
10.16

	
General application of moneys   The Borrower, subject to Clause 10.17 (Application of moneys on sale or Total Loss), irrevocably authorises the Agent and the Security Agent to apply all sums which either of them may receive:

 

	
  

	
10.16.1

	
pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or

 

	
  

	
10.16.2

	
by way of payment of any sum in respect of the Insurances, Earnings, Charter Rights or Requisition Compensation; or

 

	
  

	
10.16.3

	
by way of transfer of any sum from either of the Accounts; or

 

	
  

	
10.16.4

	

otherwise arising under or in connection with any Security Document,

 

in or towards satisfaction, or by way of retention on account, of the Indebtedness, in such manner as the Agent may determine PROVIDED THAT any part of the Indebtedness arising out of the Master Agreement shall be satisfied, or retained for, on a pari passu basis with the remainder of the Indebtedness.

 

	
  

	
10.17

	
Application of moneys on sale or Total Loss   The Borrower irrevocably authorises the Agent and the Security Agent to apply all sums which either of them may receive pursuant to a sale by the Borrower of the Vessel or a Total Loss in or towards satisfaction of the prepayment due and payable by virtue of that sale or Total Loss under Clause 6.3 (Mandatory prepayment on sale or Total Loss), but the Borrower’s obligation to make that prepayment shall not be affected if those sums are insufficient to satisfy that obligation.

 

 

  

31

  

 

 

	
  

	
10.18

	
Additional security If at any time the aggregate of the Fair Market Value of the Vessel (such Fair Market Value to be conclusively determined in accordance with Clause 10.19 (Valuation)) and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Agent (in the case of other charged assets), and determined by the Agent in its discretion (in all other cases)) for the time being provided to the Security Agent under this Clause 10.18 is less than one hundred and thirty per cent (130%) of the aggregate of the amount of the Loan then outstanding and the amount certified by the Swap Provider to be the amount which would be payable by the Borrower to the Swap Provider under the Master Agreement if an Early Termination Date were to occur at that time, the Borrower shall, within thirty (30) days of the Agent’s request, at the Borrower’s option:

 

	
  

	
10.18.1

	
pay to the Security Agent or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or

 

	
  

	
10.18.2

	
give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or

 

	
  

	
10.18.3

	
prepay the Loan in the amount of the shortfall.

 

Clauses 5.2.3 (Reborrowing), 6.2.2 (Voluntary prepayment of Loan), 6.2.4 (Voluntary prepayment of Loan) and 6.4 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 10.18 and the value of any additional security provided shall be determined as stated above.

 

	
  

	
10.19

	
Valuation  The determination of the Fair Market Value of the Vessel shall be calculated pursuant to:

 

	
  

	
10.19.1

	
one valuation by an Approved Shipbroker chosen by the Agent (which shall be Maritime Strategies International Ltd unless the Agent advises otherwise) which shall be for the cost of the Borrower up to four times in any one calendar year, or at any time following a Default always for the Borrower’s cost; and

 

	
  

	
10.19.2

	
if provided by the Borrower to the Agent within five (5) Business Days of receiving notification of the valuation referred to in Clause 10.19.1, one valuation by an Approved Shipbroker selected by the Borrower which shall be for the cost of the Borrower at all times and which valuation shall be no more than five (5) Business Days old at the date of presentation for the Agent pursuant to this Clause 10.19.2,

 

 

  

32

  

 

 

The Fair Market Value shall be determined by the valuation determined pursuant to Clause 10.19.1 PROVIDED THAT the Fair Market Value shall be determined by the average of the two valuations obtained pursuant to Clauses 10.19.1 and 10.19.2, in the event that the Borrower does elect to obtain a second valuation pursuant to Clause 10.19.2.

 

If the Borrower does elect to obtain a second valuation pursuant to Clause 10.19.2 and there is a difference of or in excess of ten per cent (10%) between the two valuations obtained pursuant to Clauses 10.19.1 and 10.19.2, the Borrower may obtain and provide to the Agent a third valuation from a different Approved Shipbroker within five (5) Business Days of receipt of the valuation obtained pursuant to Clause 10.19.2 and which shall be no more than five (5) Business Days old on the date the Borrower presents such third valuation to the Agent and which shall be for the cost of the Borrower at all times.  The Fair Market Value in such circumstances shall then be determined by the average of the three valuations.

 

	
11

	
Representations

 

	
  

	
11.1

	
Representations   The Borrower makes the representations and warranties set out in this Clause 11.1 to each Finance Party on the date of this Agreement except as otherwise disclosed by the Borrower to the Agent in writing before the date of this Agreement with specific reference to this Agreement.

 

	
  

	
11.1.1

	
Status   Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation and has the power to own its assets and carry on its business as it is being conducted.

 

	
  

	
11.1.2

	
Binding obligations   The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations and each Relevant Document is in full force and effect and admissible into evidence before the relevant jurisdiction which purports to govern it.

 

 

  

33

  

 

 

	
  

	
11.1.3

	
Non-conflict with other obligations   The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with:

 

	
  

	
(a)

	
any law or regulation applicable to that Security Party;

 

	
  

	
(b)

	
the constitutional documents of that Security Party; or

 

	
  

	
(c)

	
any document binding on that Security Party or any of its assets,

 

and in borrowing the Loan, the Borrower is acting for its own account.

 

	
  

	
11.1.4

	
Power and authority   Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

 

	
  

	
11.1.5

	
Validity and admissibility in evidence   All consents, licences, approvals, authorisations, filings and registrations required or desirable:

 

	
  

	
(a)

	
to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Finance Documents; and

 

	
  

	
(b)

	
to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation; and

 

	
  

	
(c)

	
to own its assets and carry on its business,

 

have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part II of Schedule 2 (Conditions subsequent).

 

	
  

	
11.1.6

	
Governing law and enforcement   The choice of a particular law to govern each of the Relevant Documents (or any one of them) will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in the jurisdiction submitted to in each of the Relevant Documents will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.

 

 

  

34

  

 

 

	
  

	
11.1.7

	
Deduction of Tax   No Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

 

	
  

	
11.1.8

	
No filing or stamp taxes   Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents (other than the Mortgage) be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.

 

	
  

	
11.1.9

	
No default   No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan.

 

	
  

	
11.1.10

	

No misleading information Any factual information provided by any Security Party to any Finance Party was true and accurate in all material respects as at the date it was provided and no material fact or consideration was omitted.

 

	
  

	
11.1.11

	

Pari passu ranking The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

 

	
  

	
11.1.12

	

No proceedings pending or threatened No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrower’s knowledge threatened) which, if adversely determined, might reasonably be expected to have a materially adverse effect on the business, assets, financial condition or credit worthiness of any Security Party.

 

	
  

	
11.1.13

	

Disclosure of material facts The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.

 

 

  

35

  

 

 

	
  

	
11.1.14

	

No established place of business in the UK or US No Security Party has an established place of business in the United Kingdom or the United States of America.

 

	
  

	
11.1.15

	
Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrower to the Agent in accordance with Clause 3 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent.

 

	
  

	
11.1.16

	
Unlawfulness No property which is subject to any security interest constituted by any Finance Document has been derived from any unlawful activity.

 

	
  

	
11.1.17

	

Legal and beneficial ownership The relevant Security Parties are, with effect from the date of each Security Document, legal and beneficial owners of all their assets and property which are the subject of the Security Documents save where the terms of a Security Document specifically provide otherwise or are otherwise the ultimate beneficial owners of all their assets and property.

 

	
  

	
11.1.18

	

Insolvency proceedings No order has been made, nor any petition or other application been presented, or resolution passed or meeting convened for the winding-up, judicial management, administration or receivership of any of the Security Parties, nor are there any grounds on which any person would be entitled to have any of the Security Parties wound up or placed under judicial management, administration or receivership, nor has any person threatened to present such a petition or convened or threatened to convene a meeting of any of the Security Parties to consider a resolution to wind up any of the Security Parties or any other resolutions, nor has any such step been taken in relation to any of the Security Parties under the law relating to insolvency or the relief of debtors in any part of the world.

 

 

  

36

  

 

	
  

	
11.1.19

	

No trading The Borrower has not traded or carried on business prior to the date of this Agreement other than the acquisition, chartering and management of the Vessel.

 

	
  

	
11.1.20

	

Pensions The Borrower does not have any employees or obligations in respect of any pensions scheme, save in relation to the master, officers and crew of the Vessel.

 

	
  

	
11.1.21

	

Ownership of the Borrower The issued shares in the Borrower are legally and beneficially owned by the Pledgor.

 

	
  

	
11.1.22

	

No breach of laws None of the Security Parties is in breach of any law binding upon it or any of its assets including (without limitation) the ISM Code, the ISPS Code, any replacement thereof and any other regulation, rule, directive, requirement, request or guideline (whether or not having the force of law).

 

	
  

	
11.1.23

	

Financial statements The financial statements provided pursuant to Clause 12.1 (Information undertakings) are accurate and reveal the true financial position of the relevant Security Parties.

 

	
  

	
11.1.24

	

No material liabilities The Borrower has not undertaken any material liabilities, present or future, actual or contingent, save under the Relevant Documents.

 

	
  

	
11.1.25

	

Environmental Claims All Environmental Laws applicable to the Vessel have been complied with in all material respects and all material consents, licenses and approvals required under such Environmental Laws have been obtained and complied with in all material respects; no Environmental Claim has been made, settled or is pending against any Security Party or the Vessel, which has not been fully satisfied.

 

	
  

	
11.1.26

	

Ranking and effectiveness There are no Encumbrances (other than security interests constituted by the Security Documents) affecting any of the assets of the Security Parties and the security constituted by the Security Documents is in each case valid, effective security ranking first in priority.

 

  

37

  

 

 

	
  

	
11.1.27

	

Intellectual Property Each of the relevant Security Parties has licensed to it on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted and as contemplated and does not, in carrying on its business, infringe any Intellectual Property of any third party in any respect and has taken all formal or procedural actions (including payment of fees) required to maintain any material Intellectual Property owned by it.

 

	
  

	
11.1.28

	

No adverse consequences There are no adverse consequences for the Finance Parties (or any of them) in the jurisdiction of incorporation of any of the Security Parties in the entry into of the transactions contemplated by the Finance Documents.

 

	
  

	
11.1.29

	

Correctness of all documents All copy documents provided or to be provided by or on behalf of a Security Party under or in connection with the Finance Documents, including (without limitation) the constitutional documents of the Security Parties, are true, accurate and complete copies of the same, are in full force and effect and have not been modified or amended.

 

	
  

	
11.1.30

	

Immunity No Security Party or any of its respective assets has any right to immunity from set off, legal proceedings, attachment prior to judgment, other attachment or execution of judgment on the grounds of sovereign immunity or otherwise.

 

	
  

	
11.1.31

	

Accounting Reference Date(s) The accounting reference date of the Borrower and the Group is 31 December of each calendar year.

 

	
  

	
11.1.32

	

Condition of the Vessel The Vessel will following its acquisition by the Borrower be and remain in the condition required by the Mortgage including (without limitation) being classed with the highest class applicable to vessels of her type with a classification society (being a member of the International Association of Classification Societies) approved by the Agent, such approval not to be unreasonably withheld, free of overdue recommendations and conditions unless otherwise agreed to by the Agent.

 

  

38

  

 

 

	
  

	
11.1.33

	

Employment There has been no material breach by any party to any charter, pool agreement or other contract of employment for the Vessel.

 

	
  

	
11.1.34

	

Insurances The Vessel will be insured in the manner required by the Mortgage with effect from the Drawdown Date, and all of the insurance covenants in the Mortgage will be fully performed from the Drawdown Date onwards.

 

	
  

	
11.1.35

	

Managers The Managers are fit and proper commercial and technical managers of the Vessel with the requisite personnel, experience and ability to perform said functions in accordance with all applicable laws and regulations and first class international ship management practice.

 

	
  

	
11.2

	
Repetition   Each representation and warranty in Clause 11.1 (Representations) is deemed to be repeated by the Borrower by reference to the facts and circumstances then existing on the date of the Drawdown Notice and the first day of each Interest Period.

 

	
12

	
Undertakings and Covenants

 

The undertakings and covenants in this Clause 12 remain in force for the duration of the Facility Period.

 

	
  

	
12.1

	Information undertakings

       

	
  

	
12.1.1

	
Financial statements   The Borrower shall supply to the Agent:

 

	
  

	
(a)

	
as soon as the same become available, but in any event within one hundred and twenty (120) days after the end of each of the Guarantor’s financial years, the audited consolidated financial statements of the Guarantor for that financial year; and

 

	
  

	
(b)

	
as soon as they become available, but in any event within ninety (90) days after the end of each reported period, the quarterly management accounts of the Guarantor for that period.

 

 

  

39

  

 

 

	
  

	
12.1.2

	
Requirements as to financial statements   The set of financial statements delivered by the Borrower under Clause 12.1.1 (Financial statements):

 

	
  

	
(a)

	
shall be certified by an officer of the Guarantor (as the case may be) as fairly representing its financial condition as at the date as at which those financial statements were drawn up;

 

	
  

	
(b)

	
in the case of the audited financial statements for the Guarantor, for that financial year referred to in Clause 12.1.1(a), shall provide details of all off balance sheet and time charter hire commitments;

 

	
  

	
(c)

	
shall be prepared using the IFRS, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Borrower notifies the Agent that there has been a change in the IFRS, the accounting practices or reference periods and the Guarantor’s auditors deliver to the Agent:

 

	
  

	
(i)

	
a description of any change necessary for those financial statements to reflect the IFRS, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

 

	
  

	
(ii)

	
sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to make an accurate comparison between the financial position indicated in those financial statements and that indicated in the Original Financial Statements.

 

	
  

	
12.1.3

	
Information: miscellaneous   The Borrower shall and shall procure that each other Security Party shall supply to the Agent:

 

	
  

	
(a)

	
all documents dispatched by the relevant Security Party to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched unless (in the case of the Guarantor) such documents are publicly available on the Guarantor’s website;

 

 

  

40

  

 

 

	
  

	
(b)

	
promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party; and

 

	
  

	
(c)

	
promptly, such further information regarding any Security Party as the Agent may reasonably request including, without limitation, cash flow analyses and quarterly reports on the financial and operating performance of the Vessel, in form and substance satisfactory to the Agent.

 

	
  

	
12.1.4

	
Notification of default

 

	
  

	
(a)

	
The Borrower shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

 

	
  

	
(b)

	
Promptly upon a request by the Agent, the Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

 

	
  

	
12.1.5

	
“Know your customer” checks If:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
any change in the status of the Borrower after the date of this Agreement; or

 

	
  

	
(c)

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

 

 

  

41

  

 

 

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

 

	
  

	
12.1.6

	
Compliance Certificate   The Borrower shall supply to the Agent a Compliance Certificate signed by two officers of the Borrower setting out (in reasonable detail) computations as to compliance with Clause 10.18 (Additional Security) within five (5) Business Days following the end of each financial quarter together with a confirmation that the Earnings Account is credited with the relevant Working Capital Amount in accordance with Clause 10.4.

 

	
  

	
12.2

	
General undertakings

 

	
  

	
12.2.1

	
Authorisations   The Borrower shall promptly:

 

	
  

	
(a)

	
obtain, comply with and do all that is necessary to maintain in full force and effect; and

 

	
  

	
(b)

	
supply certified copies to the Agent of,

 

any consent, licence, approval or authorisation required under any law or regulation to enable each Security Party to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence in the jurisdiction of incorporation of each relevant Security Party of any Finance Document and to enable the Borrower to carry out its business and own its assets.

 

 

  

42

  

 

 

	
  

	
12.2.2

	
Compliance with laws   The Borrower shall and shall procure that the Managers shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

 

	
  

	
12.2.3

	
Conduct of business   The Borrower shall carry on and conduct its business in a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).

 

	
  

	
12.2.4

	
Evidence of good standing   The Borrower will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any Security Party remain in good standing.

 

	
  

	
12.2.5

	
Negative pledge and no disposals   The Borrower shall not without the prior written consent of the Agent create nor permit to subsist any Encumbrance or other third party rights (other than a Permitted Encumbrance) over any of its present or future assets or undertaking nor dispose of more than twenty five per cent (25%) of those assets, its revenue or of all or part of that undertaking.

 

	
  

	
12.2.6

	
Merger   The Borrower shall not without the prior written consent of the Agent enter into any amalgamation, demerger, merger or corporate reconstruction.

 

	
  

	
12.2.7

	
Change of business   The Borrower shall not without the prior written consent of the Agent make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

 

	
  

	
12.2.8

	
No other business   The Borrower shall not without the prior written consent of the Agent engage in any business other than the ownership, operation and chartering of the Vessel.

 

	
  

	
12.2.9

	
No place of business in UK or US   The Borrower shall not have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.

 

 

  

43

  

 

 

	
  

	

12.2.10

	

No borrowings or other transactions The Borrower shall not without the prior written consent of the Agent borrow any money (except for the Loan, unsecured Financial Indebtedness subordinated to the Loan, unsecured loans from the Guarantor fully subordinated to the Loan and unsecured trade credit incurred in the ordinary course of business limited to seventy five thousand Dollars ($75,000) at any one time) nor enter into any transaction (including a derivative transaction other than pursuant to the Master Agreement) which may result in the incurrence of any additional indebtedness or liabilities (including but not limited to any guarantees, whether financial or performance related) nor incur any obligations under leases.

 

	
  

	

12.2.11

	

No substantial liabilities Except in the ordinary course of business, the Borrower shall not without the prior written consent of the Agent incur any liability to any third party which is in the Agent’s opinion of a substantial nature nor acquire or invest in any additional assets and/or investments other than the Vessel.

 

	
  

	

12.2.12

	

No loans or other financial commitments The Borrower shall not without the prior written consent of the Agent make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person except for loans made in the ordinary course of business in connection with the chartering, operation or repair of the Vessel.

 

	
  

	

12.2.13

	

No dividends or non-arm’s length transactions The Borrower shall not without the prior written consent of the Agent:

 

	
  

	
(a)

	
make any distributions of a revenue or capital nature to shareholders or issue any new shares or make any payments of principal or interest on amounts owed to related entities or persons save that the Borrower may pay dividends from funds available to it pursuant to Clause 10.11 and provided that there is no Default continuing; or

 

	
  

	
(b)

	
enter into a transaction with an affiliate or a connected party other than on arm’s length terms.

 

 

  

44

  

 

 

	
  

	
12.2.14

	

Inspection of records The Borrower will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.

 

	
  

	
12.2.15

	

No change in Relevant Documents The Borrower shall procure that, without the prior written consent of the Agent, there shall be no termination of, alteration to, or waiver of any term of, any of the Relevant Documents which are not Finance Documents or any of the constitutional documents of the Borrower. The Borrower shall promptly notify the Agent of any change to the constitutional documents of the Guarantor.

 

	
  

	
12.2.16

	

No dealings with Master Agreement The Borrower shall not assign, novate or encumber or in any other way transfer any of its rights or obligations under the Master Agreement, nor enter into any interest rate exchange or hedging agreement with anyone other than the Swap Provider.

 

	
  

	
12.2.17

	

Vessel data, valuation data The Borrower shall promptly provide to the Agent any statistical or other information with respect to the Vessel or its operations and any valuation(s) of the Vessel as the Borrower may have in its possession and as the Agent may from time to time require.

 

	
  

	
12.2.18

	

Insurances The Borrower shall at the request of the Agent, supply to the Agent full details of all current insurances together with documentary evidence thereof satisfactory in all respect to the Agent.

 

	
  

	
12.2.19

	

Tax compliance The Borrower shall comply with all tax laws and regulations binding upon them and/or any of their assets from time to time.

 

	
  

	
12.2.20

	

No transactions The Borrower shall not enter into any transactions with any associated companies or companies associated with the Guarantor without the prior written consent of the Agent (such consent not to be unreasonably withheld) unless it is entered into in the normal course of its business.

 

	
  

	
12.2.21

	

No security interest The Borrower shall not create any form of security interest or quasi security interest over any of its assets or revenue without the prior written consent of the Agent, such consent not to be unreasonably withheld, unless it is reasonably incurred in the normal course of its business.

 

  

45

  

 

 

	
  

	
12.2.22

	

Maintenance of security The Borrower shall take all action necessary or desirable in and about the registration and perfection of the security constituted by the Security Documents and maintain the same with valid first priority throughout the Facility Period.

 

	
  

	
12.2.23

	

No Contracts, acquisitions or demise charters The Borrower shall not, without the written consent of the Agent, enter into any contract (other than in accordance with Clause 12.2.28 (Employment) or otherwise in the ordinary course of business) nor amend, grant, waive, surrender, forfeit, consent to any assignment or review of the hire of any contract, or sub-charter its Vessel, nor enter into any charterparty by way of demise in relation to its Vessel.

 

	
  

	
12.2.24

	

Environmental Laws The Borrower shall comply and shall procure that the Vessel, any charterer of the Vessel, the Pool Manager and the Managers (or any of them) comply with all Environmental Laws applicable to the same throughout the Facility Period.

 

	
  

	
12.2.25

	

Nuclear Material The Borrower undertakes that the Vessel will not under any circumstances carry any nuclear waste or material.

 

	
  

	
12.2.26

	

Separate business The Borrower undertakes to maintain itself and its respective business entirely separate from any other affiliate of the Borrower and in particular (but without prejudice to the generality of the foregoing) the Borrower:

 

	
  

	
(a)

	

will maintain completely separate books and records from any other affiliate of the Borrower;

 

	
  

	
(b)

	

will maintain separate bank accounts;

 

	
  

	
(c)

	

will not co-mingle its assets together with the assets of another company or person;

 

	
  

	
(d)

	

will conduct its business in its own name;

 

	
  

	
(e)

	

will maintain completely separate books and records from any other affiliate of the Borrower;

 

 

  

46

  

 

	
  

	
(f)

	

will prepare and maintain separate accounts and financial statements;

 

	
  

	
(g)

	

will maintain an arm’s length relationship with the Guarantor, and any affiliate of the Borrower;

 

	
  

	
(h)

	
will pay its own liabilities out of its own funds;

 

	
  

	
(i)

	

will maintain adequate capital for its needs;

 

	
  

	
(j)

	

will allocate fairly and reasonably any overhead for shared office space and/or facilities (if applicable);

 

	
  

	
(k)

	

will use separate stationery, invoices and cheque books from any other affiliate of the Borrower;

 

	
  

	
(l)

	

will hold itself out at all times as a separate entity and where appropriate correct any misapprehension of which it becomes aware in relation to its separate identity;

	
  

	
(m)

	
will retain no employees save for the master, officers and crew of the Vessel; and

 

	
  

	
(n)

	

will not be or become the member of any VAT group without the prior consent of the Agent.

 

	
  

	
12.2.27

	

Loans administration The Borrower undertakes to provide a completed Loans Administration Form which, among other things, shall provide the Agent with the list of authorised persons (the “Authorised Persons”) who, on behalf of the Borrower, may make available information requested or communicate generally with the Agent in relation to the ongoing administration of the Loan by the Agent throughout the Facility Period. The Authorised Persons shall also be the point of first contact with the Borrower for the Agent in relation to the administration of the Loan. The list of Authorised Persons may only be amended or varied by an Authorised Person or a Director of the Borrower.

 

	
  

	
12.2.28

	

Employment  The Borrower shall procure that the Veessel shall be hired for employment on an arm’s length basis through the Facility Period.

 

  

47

  

 

	
  

	
12.2.29

	

No change of ownership The Borrower shall procure that there shall be no change in the ownership (whether legal or beneficial) or management control of the Borrower from that advised to the Agent on or before the date of this Agreement without the prior written consent of the Agent such consent not to be unreasonably withheld, and that the Borrower remains wholly owned (legally and beneficially) by the Pledgor.

 

	
  

	
12.2.30

	

Subordination The Borrower shall ensure that any loans or other indebtedness permitted pursuant to the terms of this Agreement, all claims of the Group against the Borrower, and all sums owed to the Managers and all other material claims against the Borrower are fully subordinated to the Indebtedness on terms acceptable to the Agent.

 

	
  

	
12.2.31

	

Flag and class The Borrower undertakes to maintain the registration of the Vessel under the flag of the Marshall Islands for the duration of the Facility Period unless the Agent (and, if the Agent so requires, the underwriter of the Obligatory Insurances (as defined in the Mortgage)) agrees to another flag in writing and to maintain the Vessel’s class with a classification society (being a member of the International Association of Classification Societies with class notation Lloyds Register, *100A1, *100A1, Double hull oil tanker, ESP, Shipright (SDA, FDA, CM, *IWS, LI, *LMC, UMS, IGS with descriptive notations COW (LR), Part higher tensile steel, PL(LR), SBT(LR), Shipright (ES+1mm deck within 0.4L, PCWBT (0.6.2009), SCM, MPMS) free from all overdue recommendations, qualifications or requirements which are affecting the Vessel’s class and promptly perform all requirements qualifications or recommendations of the classification society which would result in withdrawal of class if not performed.

 

	
  

	
12.2.32

	

Evidence of current COFR The Borrower will and will procure that the Managers will, if and for so long as the Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain, retain and provide the Agent with a copy of, a valid Certificate of Financial Responsibility for the Vessel under that Act and will comply strictly with the requirements of that Act.

 

  

48

  

 

 

	
  

	
12.2.33

	

ISM Code compliance The Borrower will and will procure that the Managers will:

 

	
  

	
(a)

	

procure that the Vessel remains for the duration of the Facility Period subject to a SMS;

 

	
  

	
(b)

	

maintain a valid and current SMC for the Vessel throughout the Facility Period and provide a copy to the Agent;

 

	
  

	
(c)

	
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period and provide a copy to the Agent; and

 

	
  

	
(d)

	
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of the Vessel or of the DOC of the ISM Company.

 

	
  

	
12.2.34

	

ISPS Code compliance The Borrower will and will procure that the Managers will:

 

	
  

	
(a)

	

for the duration of the Facility Period comply with the ISPS Code in relation to the Vessel and procure that the Vessel and the ISPS Company comply with the ISPS Code;

 

	
  

	
(b)

	

maintain a valid and current ISSC for the Vessel throughout the Facility Period and provide a copy to the Agent; and

 

	
  

	
(c)

	

immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

 

	
  

	
12.2.35

	

Annex VI compliance The Borrower will and will procure that the Managers will:

 

	
  

	
(a)

	
for the duration of the Facility Period comply with Annex VI in relation to the Vessel and procure that the Vessel’s master and crew are familiar with, and that the Vessel complies with, Annex VI;

 

 

  

49

  

 

	
  

	
(b)

	

maintain a valid and current IAPPC for the Vessel throughout the Facility Period and provide a copy to the Agent; and

 

	
  

	
(c)

	
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC.

 

	
  

	
12.2.36

	

Vessel names The Borrower shall ensure that the name of the Vessel is not changed at any time during the Facility Period without the prior written consent of the Agent.

 

	
 

	
12.2.37

	

Ownership of assets The Borrower shall hold good, marketable, absolute title and the entire beneficial interest in the Vessel and the Vessel’s Insurances, Earnings and Charter Rights.

 

	
  

	
12.2.38

	

Inspection of Vessel The Borrower shall permit the physical inspection of the Vessel by the Agent or its nominee at any time during the Facility Period, upon the request of the Agent. The Borrower will be liable for the cost of up to one physical inspection of the Vessel per calendar year and three times during the Facility Period, unless there is an Event of Default which is continuing in which case the Borrower shall be liable for the costs of all such physical inspections. The Agent will use reasonable endeavours to ensure that the operation of the Vessel is not adversely affected as a result of such inspection. Upon the Agent’s request, the Borrower shall also procure from the Managers the latest complete technical reports for the Vessel. The Borrower shall comply with all reasonable requests to repair the Vessel from the Agent following an inspection.

 

	
13

	
Events of Default

 

	
  

	
13.1

	
Events of Default   Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.

 

	
  

	
13.1.1

	
Non-payment   The Borrower does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

 

 

 

  

50

  

 

 

	
  

	
(a)

	
their failure to pay is caused by administrative or technical error; and

 

	
  

	
(b)

	
payment is made within two (2) Business Days of its due date.

 

	
  

	
13.1.2

	
Other obligations   A Security Party or any other person (except a Finance Party) does not comply with any provision of any of the Relevant Documents to which that Security Party or person is a party (other than as referred to in Clause 13.1.1 (Non-payment)).

 

No Event of Default under this Clause 13.1.2 will occur if the failure to comply is capable of remedy and does not relate either to the Insurances or to compliance with Clause 10.18 (Additional security) and is remedied within ten (10) Business Days of the Agent giving notice to the Borrower or the Borrower becoming aware of the failure to comply.

 

	
  

	
13.1.3

	
Misrepresentation   Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.

 

	
  

	
13.1.4

	
Cross default   Any Financial Indebtedness of a Security Party or any member of the Group or any Principal Subsidiary:

 

	
  

	
(a)

	
is not paid when due or within any originally applicable grace period; or

 

	
  

	
(b)

	
is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described) or is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.

 

which is in excess of ten million Dollars ($10,000,000).

 

No Event of Default under this Clause 13.1.4 will occur if failure to comply is remedied within three (3) Business Days of the Agent giving notice to the Borrower of the same or the Borrower becoming aware of the failure to comply.

 

 

  

51

  

 

 

	
  

	
13.1.5

	
Insolvency

 

	
  

	
(a)

	
A Security Party is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

 

	
  

	
(b)

	
The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).

 

	
  

	
(c)

	
A moratorium is declared in respect of any indebtedness of a Security Party.

 

	
  

	
13.1.6

	
Insolvency proceedings   Any corporate action, legal proceedings or other procedure or step is taken for:

 

	
  

	
(a)

	
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party;

 

	
  

	
(b)

	
a composition, compromise, assignment or arrangement with any creditor of a Security Party;

 

	
  

	
(c)

	
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or any of its assets; or

 

	
  

	
(d)

	
enforcement of any Encumbrance over any assets of a Security Party,

 

	
  

	
 

	
or any analogous procedure or step is taken in any jurisdiction.

 

	
  

	
13.1.7

	
Creditors’ process and material litigation  Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party and is not discharged within fourteen (14) days or a Security Party becomes involved in litigation which might adversely affect its ability to perform any obligation under any Security Document to which it is a party.

 

 

  

52

  

 

 

	
  

	
13.1.8

	
Change in ownership or control of any Security Party (other than the Guarantor) There is any change in the beneficial ownership or control of any Security Party (other than the Guarantor) from that advised to the Agent by the Borrower at the date of this Agreement.

 

	
  

	
13.1.9

	
Repudiation   A Security Party or any other person (except a Finance Party) repudiates any of the Relevant Documents to which that Security Party or person is a party or evidences an intention to do so or any event which in the reasonable opinion of the Agent may result in a repudiation of the contract.

 

	
  

	

13.1.10

	

Impossibility or illegality Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by a Finance Party or a Security Party or jeopardise the security afforded by any Finance Document.

 

	
  

	

13.1.11

	

Conditions subsequent Any of the conditions referred to in Clause 3.4 (Conditions subsequent) is not satisfied within the time reasonably required by the Agent.

 

	
  

	
12.2.12

	

Revocation or modification of authorisation Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except a Finance Party) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to the interests of a Finance Party, or ceases to remain in full force and effect.

 

  

53

  

 

 

No Event of Default under this Clause 13.1.12 will occur if failure to comply is remedied within three (3) Business Days of the Agent giving notice to the Borrower of the same or the Borrower becoming aware of the failure to comply.

 

	
  

	

13.1.13

	

Curtailment of business A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.

 

	
  

	

13.1.14

	

Reduction of capital A Security Party reduces (other than the Guarantor) its authorised or issued or subscribed capital without the Agent’s approval, such approval not to be unreasonably withheld.

 

	
  

	

13.1.15

	

Loss of Vessel The Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Security Agent as security for the payment of all or any part of the Indebtedness, except that a Total Loss, or event similar to a Total Loss in relation to any other vessel, shall not be an Event of Default if:

 

	
  

	
(a)

	
the Vessel or other vessel is insured in accordance with the Security Documents; and

 

	
  

	
(b)

	
no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Agent in its discretion that any such refusal or dispute is likely to occur; and

 

	
  

	
(c)

	
payment of all insurance proceeds in respect of the Total Loss is made in full to the Security Agent within ninety (90) days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Agent may in its discretion agree.

 

	
  

	

13.1.16

	

Challenge to registration The registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of the Mortgage is contested.

 

 

  

54

  

 

 

	
  

	

13.1.17

	

War or instability The country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power or otherwise becomes unstable and the Agent in its discretion considers that, as a result, the security conferred by the Security Documents is materially prejudiced.

 

	
  

	

13.1.18

	

Master Agreement termination A notice is given by the Swap Provider under section 6(a) of the Master Agreement, or by any person under section 6(b)(iv) of the Master Agreement, in either case designating an Early Termination Date for the purpose of the Master Agreement, or the Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect.

 

	
  

	

13.1.19

	

Notice of termination The Guarantor gives notice to the Security Agent to determine its obligations under the Guarantee.

 

	
  

	

13.1.20

	

Material adverse change Any event or series of events including but not limited to changes in the financial strength of the Borrower or any member of the Group, global economic and political developments and developments in the international money and capital markets occurs which, in the reasonable opinion of the Agent, is reasonably likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of the Borrower or any member of the Group or a Security Party’s ability to perform its obligations under the relevant Security Document to which it is a party.

 

	
  

	

13.1.21

	

Major damage Damage to the Vessel which may reasonably be expected to cost more than five hundred thousand Dollars ($500,000) to repair occurs and is not covered by the Insurances for any reason including but without limitation breach of warranty by any named assured.

 

	
  

	

13.1.22

	

Arrest The Vessel is arrested or detained by any person other than any government or persons acting on behalf of any government and not released and returned to the possession of the relevant Borrower within fourteen (14) days after the arrest or detention in question.

 

	
  

	

13.1.23

	

Environmental incident Any incident occurs affecting either of the Borrower or the Vessel or any charterer of the Vessel or the Managers (or any of them) which may give rise to an Environmental Claim which may have a materially adverse effect on the ability of any Security Party to perform any obligations under any Security Document to which it is a party.

 

 

  

55

  

 

 

	
  

	

13.1.24

	

Classification The classification society of the Vessel withdraws its classification of the Vessel for any reason.

 

	
  

	
13.2

	
Acceleration   If an Event of Default is continuing the Agent may by notice to the Borrower:

 

	
  

	

13.2.1

	

declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or

 

	
  

	

13.2.2

	

declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Agent.

 

	
14

	
Assignment and Sub-Participation

 

	
  

	
14.1

	
Lenders’ rights   A Lender may assign any of its rights under this Agreement or transfer by novation any of its rights and obligations under this Agreement to any other branch of that Lender or to any other bank or financial institution or (for the purpose of a securitisation of that Lender’s rights or obligations under the Finance Documents or a similar transaction of broadly equivalent economic effect) to any special purpose vehicle, and may grant sub-participations in all or any part of its Commitment in each case subject to the prior written consent of the Borrower or the Guarantor such consent not to be unreasonably withheld PROVIDED that no such consent will be required in relation to securitisation transactions or similar transactions of broadly equivalent economic effect (always subject to causing no material adverse effect for the Borrower or the Guarantor).

 

	
  

	
14.2

	
Borrower’s co-operation   The Borrower will, and will procure that the Guarantor any charterer or employer of the Vessel will, co-operate fully with a Lender in connection with any assignment, transfer or sub-participation or securitisation by that Lender; will execute and procure the execution of such documents as that Lender may require in that connection; and irrevocably authorises any Finance Party to disclose to any proposed assignee, transferee or sub-participant or to any third party (whether before or after any assignment, transfer, sub-participation or securitisation and whether or not any assignment, transfer, sub-participation or securitisation shall take place) all information relating to the Security Parties, the Loan, the Relevant Documents and the Vessel which any Finance Party may in its discretion consider necessary or desirable but subject to causing no material adverse effect for the Borrower or the Guarantor and any third party costs being for the account of the relevant Lender.

 

 

  

56

  

 

 

	
  

	
14.3

	
Rights of assignee   Any assignee of a Lender shall (unless limited by the express terms of the assignment) take the full benefit of every provision of the Finance Documents benefitting that Lender  PROVIDED THAT:

 

	
  

	
14.3.1

	
if, as a result of circumstances existing at the date of the assignment, the Borrower would be obliged to make a payment to the assignee under Clause 8.5 (Increased costs) or Clause 17.3 (Grossing-up), then the assignee shall only be entitled to receive payment under that Clause to the same extent as that Lender would have been if the assignment had not taken place; and

 

	
  

	
14.3.2

	
an assignment will only be effective on notification by the Agent to that Lender and the assignee that the Agent is satisfied it has complied with all necessary “Know your customer” or other similar checks under all applicable laws and regulations in relation to the assignment to the assignee.

 

	
  

	
14.4

	
Transfer Certificates   If a Lender wishes to transfer any of its rights and obligations under or pursuant to this Agreement, it may do so by delivering to the Agent a duly completed Transfer Certificate, in which event on the Transfer Date:

 

	
  

	
14.4.1

	
to the extent that that Lender seeks to transfer its rights and obligations, the Borrower (on the one hand) and that Lender (on the other) shall be released from all further obligations towards the other;

 

	
  

	
14.4.2

	
the Borrower (on the one hand) and the transferee (on the other) shall assume obligations towards the other identical to those released pursuant to Clause 14.4.1 PROVIDED THAT if, as a result of circumstances existing at the date of the Transfer Certificate, the Borrower would be obliged to make a payment to the transferee under Clause 8.5 (Increased costs) or Clause 17.3 (Grossing-up), then the transferee shall only be entitled to receive payment under that Clause to the same extent as that Lender would have been if the transfer had not taken place; and

 

 

  

57

  

 

 

	
  

	
14.4.3

	
the Agent, each of the Lenders and the transferee shall have the same rights and obligations between themselves as they would have had if the transferee had been an original party to this Agreement as a Lender

 

PROVIDED THAT the Agent shall only be obliged to execute a Transfer Certificate once:

 

	
  

	
(a)

	
it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to the transferee; and

 

	
  

	
(b)

	
the transferee has paid to the Agent for its own account a transfer fee of five thousand Dollars ($5,000).

 

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Borrower a copy of that Transfer Certificate.

 

	
  

	
14.5

	
Finance Documents   Unless otherwise expressly provided in any Finance Document or otherwise expressly agreed between a Lender and any proposed transferee and notified by that Lender to the Agent on or before the relevant Transfer Date, there shall automatically be assigned to the transferee with any transfer of a Lender’s rights and obligations under or pursuant to this Agreement the rights of that Lender under or pursuant to the Finance Documents (other than this Agreement) which relate to the portion of that Lender’s rights and obligations transferred by the relevant Transfer Certificate.

 

	
  

	
14.6

	
No assignment or transfer by the Borrower   The Borrower may not assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

 

	
  

	
14.7

	
Securitisation   Any Lender may include all or part of its rights or obligations under the Finance Documents in a securitisation (or similar transaction of broadly equivalent economic effect).  The Borrower will, at the cost of the relevant Lender, co-operate fully with that Lender in connection with any such securitisation (or similar transaction) by that Lender and will execute and procure the execution of such documents as that Lender may require in that connection.  The relevant Lender may disclose all information relating to the Security Parties, the Loan and the Relevant Documents and the Vessel to any investor or potential investor in such securitisation (or similar transaction).

 

 

  

58

  

 

 

	
  

	
14.8

	
Disclosure   Without prejudice to Clause 14.2 (Borrower’s co operation) and Clause 14.7 (Securitisation) and subject to causing no material adverse effect to the Borrower or the Guarantor, the Borrower irrevocably authorises and shall procure that the Guarantor irrevocably authorises the Agent and each of the Lenders (as required) to disclose from time to time information relating to the Security Parties, the Loan, the Relevant Documents, the Vessel and any information provided by the Security Parties pursuant to the Finance Documents to:

 

	
  

	
14.8.1

	
any private, public or internationally recognised authority;

 

	
  

	
14.8.2

	
the Agent’s and the Lenders’ head office, branch, affiliate or professional advisers;

 

	
  

	
14.8.3

	
any other party to the Finance Documents or its professional advisers;

 

	
  

	
14.8.4

	
any rating agency or its professional advisers;

 

	
  

	
14.8.5

	
any other person in relation to:

 

	
  

	
(a)

	
the financing, refinancing or transfer of the Loan or any operational arrangement or other transaction in relation thereto; or

 

	
  

	
(b)

	
any enforcement or preservation of the Agent’s and/or the Lenders’ (or any of them) rights and obligations under the Finance Documents.

 

	
15

	
The Agent, the Security Agent and the Lenders

 

	
  

	
15.1

	
Appointment

 

	
  

	
15.1.1

	
Each Lender appoints the Agent to act as its agent under and in connection with the Finance Documents and each Lender and the Agent appoints the Security Agent to act as its security agent for the purpose of the Security Documents.

 

	
  

	
15.1.2

	
Each Lender authorises the Agent and each Lender and the Agent authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent or the Security Agent (as the case may be) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

 

 

  

59

  

 

 

	
  

	
15.1.3

	
The Swap Provider appoints the Security Agent to act as its security agent for the purpose of the Security Documents and authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Security Documents together with any other incidental rights, powers, authorities and discretions.

 

	
  

	
15.1.4

	
Except where the context otherwise requires, references in this Clause 15 to the “Agent” shall mean the Agent and the Security Agent individually and collectively.

 

	
  

	
15.2

	
Authority   Each Lender irrevocably authorises the Agent (subject to Clauses 15.4 (Limitations on authority) and 15.18 (Instructions)):

 

	
  

	
15.2.1

	
to execute any Finance Document (other than this Agreement) on its behalf;

 

	
  

	
15.2.2

	
to collect, receive, release or pay any money on its behalf;

 

	
  

	
15.2.3

	
acting on the instructions from time to time of the Majority Lenders to give or withhold any waivers, consents or approvals under or pursuant to any Finance Document; and

 

	
  

	
15.2.4

	
acting on the unanimous instructions from time to time of the Lenders to exercise, or refrain from exercising, any rights, powers, authorities or discretions under or pursuant to any Finance Document.

 

The Agent shall have no duties or responsibilities as agent or as security agent other than those expressly conferred on it by the Finance Documents and shall not be obliged to act on any instructions from the Lenders or the Majority Lenders if to do so would, in the opinion of the Agent, be contrary to any provision of the Finance Documents or to any law, or would expose the Agent to any actual or potential liability to any third party.

 

	
  

	
15.3

	
Trust   The Security Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3, the Security Agent holds the Trust Property on trust for the Finance Parties absolutely.  Each of the other Finance Parties agrees that the obligations, rights and benefits vested in the Security Agent shall be performed and exercised in accordance with this Clause 15.3.  The Security Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as security agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement).  In addition:

 

 

  

60

  

 

 

	
  

	
15.3.1

	
the Security Agent and any attorney, agent or delegate of the Security Agent may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by it or him in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Security Agent or any other such person by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents;

 

	
  

	
15.3.2

	
the other Finance Parties acknowledge that the Security Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance; and

 

	
  

	
15.3.3

	
the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of 125 years from the date of this Agreement.

 

The provisions of Part I of the Trustee Act 2000 shall not apply to the Security Agent or the Trust Property.

 

	
  

	
15.4

	
Limitations on authority   Except with the prior written consent of all the Lenders, the Agent shall not be entitled to:

 

	
  

	
15.4.1

	
release or vary any security given for the Borrower’s obligations under this Agreement; nor

 

	
  

	
15.4.2

	
waive the payment of any sum of money payable by any Security Party under the Finance Documents; nor

 

 

  

61

  

 

 

	
  

	
15.4.3

	
reduce the Margin; nor

 

	
  

	
15.4.4

	
change the meaning of the expression “Majority Lenders”; nor

 

	
  

	
15.4.5

	
exercise, or refrain from exercising, any right, power, authority or discretion, or give or withhold any consent, the exercise or giving of which is, by the terms of this Agreement, expressly reserved to the Lenders; nor

 

	
  

	
15.4.6

	
extend the due date for the payment of any sum of money payable by any Security Party under any Finance Document; nor

 

	
  

	
15.4.7

	
take or refrain from taking any step if the effect of such action or inaction may lead to the increase of the obligations of a Lender under any Finance Document; nor

 

	
  

	
15.4.8

	
agree to change the currency in which any sum is payable under any Finance Document (other than in accordance with the terms of the relevant Finance Document); nor

 

	
  

	
15.4.9

	
agree to amend this Clause 15.4.

 

	
  

	
15.5

	
Liability   Neither the Agent nor any of its directors, officers, employees or agents shall be liable to the Lenders for anything done or omitted to be done by the Agent under or in connection with any of the Relevant Documents unless as a result of the Agent’s gross negligence or wilful misconduct.

 

	
  

	
15.6

	
Acknowledgement   Each Lender acknowledges that:

 

	
  

	
15.6.1

	
it has not relied on any representation made by the Agent or any of the Agent’s directors, officers, employees or agents or by any other person acting or purporting to act on behalf of the Agent to induce it to enter into any Finance Document;

 

	
  

	
15.6.2

	
it has made and will continue to make without reliance on the Agent, and based on such documents and other evidence as it considers appropriate, its own independent investigation of the financial condition and affairs of the Security Parties in connection with the making and continuation of the Loan;

 

 

  

62

  

 

 

	
  

	
15.6.3

	
it has made its own appraisal of the creditworthiness of the Security Parties; and

 

	
  

	
15.6.4

	
the Agent shall not have any duty or responsibility at any time to provide it with any credit or other information relating to any Security Party unless that information is received by the Agent pursuant to the express terms of a Finance Document.

 

Each Lender agrees that it will not assert nor seek to assert against any director, officer, employee or agent of the Agent or against any other person acting or purporting to act on behalf of the Agent any claim which it might have against them in respect of any of the matters referred to in this Clause 15.6.

 

	
  

	
15.7

	
Limitations on responsibility   The Agent shall have no responsibility to any Security Party or to any Lender on account of:

 

	
  

	
15.7.1

	
the failure of a Lender or of any Security Party to perform any of its obligations under a Finance Document; nor

 

	
  

	
15.7.2

	
the financial condition of any Security Party; nor

 

	
  

	
15.7.3

	
the completeness or accuracy of any statements, representations or warranties made in or pursuant to any Finance Document, or in or pursuant to any document delivered pursuant to or in connection with any Finance Document; nor

 

	
  

	
15.7.4

	
the negotiation, execution, effectiveness, genuineness, validity, enforceability, admissibility in evidence or sufficiency of any Finance Document or of any document executed or delivered pursuant to or in connection with any Finance Document.

 

	
  

	
15.8

	
The Agent’s rights The Agent may:

 

	
  

	
15.8.1

	
assume that all representations or warranties made or deemed repeated by any Security Party in or pursuant to any Finance Document are true and complete, unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;

 

 

  

63

  

 

 

	
  

	
15.8.2

	
assume that no Default has occurred unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;

 

	
  

	
15.8.3

	
rely on any document or notice believed by it to be genuine;

 

	
  

	
15.8.4

	
rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it;

 

	
  

	
15.8.5

	
rely as to any factual matters which might reasonably be expected to be within the knowledge of any Security Party on a certificate signed by or on behalf of that Security Party; and

 

	
  

	
15.8.6

	
refrain from exercising any right, power, discretion or remedy unless and until instructed to exercise that right, power, discretion or remedy and as to the manner of its exercise by the Lenders (or, where applicable, by the Majority Lenders) and unless and until the Agent has received from the Lenders any payment which the Agent may require on account of, or any security which the Agent may require for, any costs, claims, expenses (including legal and other professional fees) and liabilities which it considers it may incur or sustain in complying with those instructions.

 

	
  

	
15.9

	
The Agent’s duties The Agent shall:

 

	
  

	

15.9.1

	

if requested in writing to do so by a Lender, make enquiry and advise the Lenders as to the performance or observance of any of the provisions of any Finance Document by any Security Party or as to the existence of an Event of Default; and

 

	
  

	

15.9.2

	

inform the Lenders promptly of any Event of Default of which the Agent has actual knowledge.

 

	
  

	
15.10

	
No deemed knowledge   The Agent shall not be deemed to have actual knowledge of the falsehood or incompleteness of any representation or warranty made or deemed repeated by any Security Party or actual knowledge of the occurrence of any Default unless a Lender or a Security Party shall have given written notice thereof to the Agent in its capacity as the Agent.  Any information acquired by the Agent other than specifically in its capacity as the Agent shall not be deemed to be information acquired by the Agent in its capacity as the Agent.

 

 

  

64

  

 

 

	
  

	
15.11

	
Other business   The Agent may, without any liability to account to the Lenders, generally engage in any kind of banking or trust business with a Security Party or with a Security Party’s subsidiaries or associated companies or with a Lender as if it were not the Agent.

 

	
  

	
15.12

	
Indemnity   The Lenders shall, promptly on the Agent’s request, reimburse the Agent in their respective Proportionate Shares, for, and keep the Agent fully indemnified in respect of all liabilities, damages, costs and claims sustained or incurred by the Agent in connection with the Finance Documents (other than the Master Agreement), or the performance of its duties and obligations, or the exercise of its rights, powers, discretions or remedies under or pursuant to any Finance Document (other than the Master Agreement), to the extent not paid by the Security Parties and not arising solely from the Agent’s gross negligence or wilful misconduct.

 

	
  

	
15.13

	
Employment of agents   In performing its duties and exercising its rights, powers, discretions and remedies under or pursuant to the Finance Documents, the Agent shall be entitled to employ and pay agents to do anything which the Agent is empowered to do under or pursuant to the Finance Documents (including the receipt of money and documents and the payment of money) and to act or refrain from taking action in reliance on the opinion of, or advice or information obtained from, any lawyer, banker, broker, accountant, valuer or any other person believed by the Agent in good faith to be competent to give such opinion, advice or information.

 

	
  

	
15.14

	
Distribution of payments   The Agent shall pay promptly to the order of each Lender that Lender’s Proportionate Share of every sum of money received by the Agent pursuant to the Finance Documents (with the exception of any amounts payable pursuant to Clause 9 (Fees) and/or any Fee Letter and any amounts which, by the terms of the Finance Documents, are paid to the Agent for the account of the Agent alone or specifically for the account of one or more Lenders) and until so paid such amount shall be held by the Agent on trust absolutely for that Lender.

 

	
  

	
15.15

	
Reimbursement   The Agent shall have no liability to pay any sum to a Lender until it has itself received payment of that sum.  If, however, the Agent does pay any sum to a Lender on account of any amount prospectively due to that Lender pursuant to Clause 15.14 (Distribution of payments) before it has itself received payment of that amount, that Lender will, on demand by the Agent, refund to the Agent an amount equal to the sum so paid, together with an amount sufficient to reimburse the Agent for any interest which the Agent may certify that it has been required to pay on money borrowed to fund the sum in question during the period beginning on the date of payment and ending on the date on which the Agent receives reimbursement.

 

 

  

65

  

 

 

	
  

	
15.16

	
Redistribution of payments   Unless otherwise agreed between the Lenders and the Agent, if at any time a Lender receives or recovers by way of set-off, the exercise of any lien or otherwise from any Security Party, an amount greater than that Lender’s Proportionate Share of any sum due from that Security Party to the Lenders under the Finance Documents (the amount of the excess being referred to in this Clause 15.16 and in Clause 15.17 (Rescission of Excess Amount) as the “Excess Amount”) then:

 

	
  

	

15.16.1

	

that Lender shall promptly notify the Agent (which shall promptly notify each other Lender);

 

	
  

	

15.16.2

	

that Lender shall pay to the Agent an amount equal to the Excess Amount within ten (10) days of its receipt or recovery of the Excess Amount; and

 

	
  

	

15.16.3

	

the Agent shall treat that payment as if it were a payment by the Security Party in question on account of the sum due from that Security Party to the Lenders and shall account to the Lenders in respect of the Excess Amount in accordance with the provisions of this Clause 15.16.

 

However, if a Lender has commenced any legal proceedings to recover sums owing to it under the Finance Documents and, as a result of, or in connection with, those proceedings has received an Excess Amount, the Agent shall not distribute any of that Excess Amount to any other Lender which had been notified of the proceedings and had the legal right to, but did not, join those proceedings or commence and diligently prosecute separate proceedings to enforce its rights in the same or another court.

 

	
  

	
15.17

	
Rescission of Excess Amount   If all or any part of any Excess Amount is rescinded or must otherwise be restored to any Security Party or to any other third party, the Lenders which have received any part of that Excess Amount by way of distribution from the Agent pursuant to Clause 15.16 (Redistribution of payments) shall repay to the Agent for the account of the Lender which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Lenders share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, together with interest on that amount at a rate equivalent to that (if any) paid by the Lender receiving or recovering the Excess Amount to the person to whom that Lender is liable to make payment in respect of such amount, and Clause 15.16.3 (Redistribution of payments) shall apply only to the retained amount.

 

 

  

66

  

 

 

	
  

	
15.18

	
Instructions   Where the Agent is authorised or directed to act or refrain from acting in accordance with the instructions of the Lenders or of the Majority Lenders each of the Lenders shall provide the Agent with instructions within three (3) Business Days of the Agent’s request (which request may be made orally or in writing).  If a Lender does not provide the Agent with instructions within that period, that Lender shall be bound by the decision of the Agent.  Nothing in this Clause 15.18 shall limit the right of the Agent to take, or refrain from taking, any action without obtaining the instructions of the Lenders or the Majority Lenders if the Agent in its discretion considers it necessary or appropriate to take, or refrain from taking, such action in order to preserve the rights of the Lenders under or in connection with the Finance Documents.  In that event, the Agent will notify the Lenders of the action taken by it as soon as reasonably practicable, and the Lenders agree to ratify any action taken by the Agent pursuant to this Clause 15.18.

 

	
  

	
15.19

	
Payments   All amounts payable to a Lender under this Clause 15 shall be paid to such account at such bank as that Lender may from time to time direct in writing to the Agent.

 

	
  

	
15.20

	
“Know your customer” checks   Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

	
  

	
15.21

	
Resignation   Subject to a successor being appointed in accordance with this Clause 15.21, the Agent may resign as agent and/or security agent at any time without assigning any reason by giving to the Borrower and the Lenders notice of its intention to do so, in which event the following shall apply:

 

	
  

	

15.21.1

	

the Lenders may within thirty (30) days after the date of the Agent’s notice appoint a successor to act as agent and/or security agent or, if they fail to do so, the Agent may appoint any other bank or financial institution as its successor;

 

 

  

67

  

 

 

	
  

	

15.21.2

	

the resignation of the Agent shall take effect simultaneously with the appointment of its successor on written notice of that appointment being given to the Borrower and the Lenders;

 

	
  

	

15.21.3

	

the Agent shall thereupon be discharged from all further obligations as agent and/or security agent but shall remain entitled to the benefit of the provisions of this Clause 15; and

 

	
  

	

15.21.4

	

the Agent’s successor and each of the other parties to this Agreement shall have the same rights and obligations amongst themselves as they would have had if that successor had been a party to this Agreement.

 

	
  

	
15.22

	
No fiduciary relationship   Except as provided in Clauses 15.3 (Trust) and 15.14 (Distribution of payments), the Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or for any other person and nothing contained in any Finance Document shall constitute a partnership between any two or more Lenders or between the Agent and any other person.

 

	
16

	
Set-Off

 

	
  

	
16.1

	
Set-off   A Finance Party may set off any matured obligation due from the Borrower under any Finance Document (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower, regardless of the place of payment, booking branch or currency of either obligation.  If the obligations are in different currencies, that Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

	
  

	
16.2

	
Master Agreement rights   The rights conferred on the Swap Provider by this Clause 16 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Provider by the Master Agreement.

 

	
17

	
Payments

 

	
  

	
17.1

	
Payments   Each amount payable by the Borrower under a Finance Document (other than the Master Agreement) shall be paid to such account at such bank as the Agent may from time to time direct to the Borrower in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment.  Payment shall be deemed to have been received by the Agent on the date on which the Agent receives authenticated advice of receipt, unless that advice is received by the Agent on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Agent in its discretion considers that it is impossible or impracticable for the Agent to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Agent on the Business Day next following the date of receipt of advice by the Agent.

 

 

  

68

  

 

 

	
  

	
17.2

	
No deductions or withholdings   Each payment (whether of principal or interest or otherwise) to be made by the Borrower under a Finance Document (other than the Master Agreement) shall, subject only to Clause 17.3 (Grossing-up), be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.

 

	
  

	
17.3

	
Grossing-up   If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, under a Finance Document (other than the Master Agreement), the Borrower will promptly notify the Agent and, simultaneously with making that payment, will pay to the Agent whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after making the deduction or withholding, the relevant Finance Parties receive a net sum equal to the sum which they would have received had no deduction or withholding been made.

 

	
  

	
17.4

	
Evidence of deductions   If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document (other than the Master Agreement), the Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty (30) days after making that payment, deliver to the Agent an original receipt issued by the relevant authority, or other evidence acceptable to the Agent, evidencing the payment to that authority of all amounts required to be deducted or withheld.

 

 

  

69

  

 

 

	
  

	
17.5

	
Adjustment of due dates   If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan or a payment under the Master Agreement, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day).  Any such variation of time shall be taken into account in computing any interest in respect of that payment.

 

	
  

	
17.6

	
Control account   The Agent shall open and maintain on its books a control account in the name of the Borrower showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement.  The Borrower’s obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 17.6 and those entries will, in the absence of manifest error, be conclusive and binding.

 

	
  

	
17.7

	
Clawback   The Agent shall have no liability to pay any sum to the Borrower until it has itself received payment of that sum.  If, however, the Agent does pay any sum to the Borrower on account of any amount prospectively due to the Borrower pursuant to Clause 4 (Advance) before it has itself received payment of that amount, the Borrower will, on demand by the Agent, refund to the Agent an amount equal to the sum so paid, together with an amount sufficient to reimburse the Agent for any interest which the Agent may certify that it has been required to pay on money borrowed to fund the sum in question during the period beginning on the date of payment and ending on the date on which the Agent receives reimbursement.

 

	
18

	
Notices

 

	
  

	
18.1

	
Communications in writing   Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter.

 

	
  

	
18.2

	
Addresses   The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:

 

 

  

70

  

 

 

	
  

	
18.2.1

	
in the case of the Borrower, Haakon VII gate 1, 6th floor POB 2039, 0125, Oslo, Norway (fax no: +47 2311 5081) marked for the attention of Eirik Uboe/Treasurer of DHT Phoenix, Inc.;

 

	
  

	
18.2.2

	
in the case of each Lender, those appearing opposite its name in Schedule 1 (The Lenders and the Commitments);

 

	
  

	
18.2.3

	
in the case of the Agent, Park House, 6th Floor, 16-18 Finsbury Circus, London EC2M 7EB (fax no: +44 207 256 4352) marked for the attention of Loans Administration;

 

	
  

	
18.2.4

	
in the case of the Swap Provider, Platz der Republik 6, 60325 Frankfurt, Germany (fax no: +49 69 97 504 581) marked for the attention of Head of GC-GTS / Global Treasury Services; and

 

	
  

	
18.2.5

	
in the case of the Security Agent, Park House, 6th Floor, 16-18 Finsbury Circus, London EC2M 7EB (fax no: +44 207 256 4352) marked for the attention of Loans Administration;

 

or any substitute address, fax number, department or officer as any party may notify to the Agent (or the Agent may notify to the other parties, if a change is made by the Agent) by not less than five (5) Business Days’ notice.

 

	
  

	
18.3

	
Delivery   Any communication or document made or delivered by one party to this Agreement to another under or in connection with this Agreement will only be effective:

 

	
  

	18.3.1	if by way of fax, when received in legible form; or

 

	
  

	
18.3.2

	
if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

 

and, if a particular department or officer is specified as part of its address details provided under Clause 18.2 (Addresses), if addressed to that department or officer.

 

Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent.

 

 

  

71

  

 

 

All notices from or to the Borrower shall be sent through the Agent.

 

	
  

	
18.4

	
Notification of address and fax number   Promptly upon receipt of notification of an address, fax number or change of address, pursuant to Clause 18.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other parties to this Agreement.

 

	
  

	
18.5

	
English language   Any notice given under or in connection with this Agreement must be in English.  All other documents provided under or in connection with this Agreement must be:

 

	
  

	
18.5.1

	
in English; or

 

	
  

	
18.5.2

	
if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

 

	
19

	
Partial Invalidity

 

If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

	
20

	
Remedies and Waivers

 

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under a Finance Document shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

	
21

	
Miscellaneous

 

	
  

	
21.1

	
No oral variations   No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of all the Finance Parties.

 

 

  

72

  

 

 

	
  

	
21.2

	
Further assurance   If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Finance Parties or any of them are considered by the Lenders for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Agent, execute or procure the execution of such further documents as in the opinion of the Lenders are necessary to provide adequate security for the repayment of the Indebtedness.

 

	
  

	
21.3

	
Rescission of payments etc.   Any discharge, release or reassignment by a Finance Party of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.

 

	
  

	
21.4

	
Certificates   Any certificate or statement signed by an authorised signatory of the Agent purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount.

 

	
  

	
21.5

	
Counterparts   This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

 

	
  

	
21.6

	
Contracts (Rights of Third Parties) Act 1999   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.

 

	
  

	
21.7

	
Changes to IFRS   For the avoidance of doubt, it is expressly agreed that in the event of future changes to IFRS in relation to the International Account Standards relating to leases, and specifically under the standards set out in IAS 17, all references in this Agreement to balance sheet items shall be calculated according to the standards set out in IAS 17 in effect at the date of this Loan Agreement.

 

 

  

73

  

 

 

	
22

	
Law and Jurisdiction

 

	
  

	
22.1

	
Governing law   This Agreement and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law.

 

	
  

	
22.2

	
Jurisdiction   For the exclusive benefit of the Finance Parties, the parties to this Agreement irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.

 

	
  

	
22.3

	
Alternative jurisdictions   Nothing contained in this Clause 22 shall limit the right of the Finance Parties to commence any proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrower in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.

 

	
  

	
22.4

	
Waiver of objections   The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 22, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.

 

	
  

	
22.5

	
Service of process   Without prejudice to any other mode of service allowed under any relevant law, the Borrower:

 

	
  

	
22.5.1

	
irrevocably appoints Wikborg Rein (UK) Ltd of Cheapside House, 138 Cheapside, EC2V 6HS, London as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement; and

 

	
  

	
22.5.2

	
agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

 

 

  

74

  

 

 

SCHEDULE 1: The Lenders and the Commitments

 

 

	The Lenders	The Commitments
	DVB Bank SE, London Branch	$27,500,000
	Park House	 
	6th Floor	 
	16-18 Finsbury Circus	 
	London EC2M 7EB	 

 

 

Fax: +44 207 256 4352

Attention: Loans Administration

 

 

  

75

  

 

 

SCHEDULE 2: Conditions Precedent and Subsequent

 

Part I: Conditions Precedent

 

	
1

	
Security Parties

 

	
  

	
(a)

	
Constitutional Documents   Copies of the constitutional documents of each Security Party together with such other evidence as the Agent may reasonably require that each Security Party is duly incorporated in its country of  incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.

 

	
  

	
(b)

	
Certificates of good standing   A certified true copy of a certificate of good standing in respect of each Security Party (if such a certificate can be obtained).

 

	
  

	
(c)

	
Board resolutions   A copy of a resolution of the board of directors of each Security Party:

 

	
  

	
(i)

	
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and

 

	
  

	
(ii)

	
authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or despatched under those documents) on its behalf.

 

	
  

	
(d)

	
Shareholder resolutions   A copy of a resolution signed by all the holders of the issued shares in the Borrower, approving the terms of, and the transactions contemplated by, the Relevant Documents to which the Borrower is a party.

 

	
  

	
(e)

	
Officer’s certificates   A certificate of a duly authorised officer of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect and setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder.

 

	
  

	
(f)

	
Powers of attorney   The notarially attested and legalised power of attorney of each Security Party under which any documents are to be executed or transactions undertaken by that Security Party.

 

 

  

76

  

 

 

	
2

	
Security and related documents

 

	
  

	
(a)

	
Vessel documents   Photocopies, certified as true, accurate and complete by a director or the secretary or the legal advisers of the Borrower, of:

 

	
  

	
(i)

	
the MOA;

 

	
  

	
(ii)

	
the bill of sale transferring title in the Vessel to the Borrower free of all encumbrances, maritime liens or other debts;

 

	
  

	
(iii)

	
the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Vessel by the Seller to the Borrower pursuant to the MOA;

 

	
  

	
(iv)

	
any charterparty or other contract of employment of the Vessel which will be in force on the Drawdown Date including, without limitation, the Pool Agreement and evidence of delivery of the Vessel thereunder;

 

	
  

	
(v)

	
the Management Agreement;

 

	
  

	
(vi)

	
the Vessel’s current Safety Construction, Safety Equipment, Safety Radio and Load Line Certificates;

 

	
  

	
(vii)

	
evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

 

	
  

	
(viii)

	
the Vessel’s current SMC;

 

	
  

	
(ix)

	
the ISM Company’s current DOC;

 

	
  

	
(x)

	
the Vessel’s current ISSC;

 

	
  

	
(xi)

	
the Vessel’s current IAPPC;

 

	
  

	
(xii)

	
the Vessel’s current Tonnage Certificate;

 

	
  

	
in each case together with all addenda, amendments or supplements.

 

	
  

	
(b)

	
Evidence of Seller’s title   Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the Vessel’s current flag confirming that the Vessel is owned by the Seller and free of registered Encumbrances and an undertaking by the Seller to delete the Vessel from its current flag.

 

 

  

77

  

 

 

	
  

	
(c)

	
Evidence of Borrower’s title   Evidence that on the Drawdown Date (i) the Vessel will be at least provisionally registered under the flag stated in Recital (A) in the ownership of the Borrower and (ii) the Mortgage will be capable of being registered against the Vessel with first priority.

 

	
  

	
(d)

	
Evidence of insurance   Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Agent) the written approval of the Insurances by an insurance adviser appointed by the Agent and evidence that the Agent is named as co-assured or loss payee.  The Borrower shall notify the identity of the insurers and the main terms of the Insurance that will be affected to the Agent at least fifteen (15) days prior to the Drawdown Date.

 

	
  

	
(e)

	
Confirmation of class   A Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is classed in accordance with Clause 12.2.31.  The Borrower shall notify the Agent of the identity of the class and the classification society as soon as possible prior to the Drawdown Date.

 

	
  

	
(f)

	
Survey report   A report by a surveyor instructed by the Agent to inspect the Vessel confirming that the condition of the Vessel is in all respects acceptable to the Agent.

 

	
  

	
(g)

	
Valuation   Not more than two (2) weeks prior to the Drawdown Date, valuations evidencing the Fair Market Value of the Vessel addressed to the Agent, calculated in accordance with Clause 10.19 (Valuations).

 

	
  

	
(h)

	
Security Documents   The Security Documents, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.

 

	
  

	
(i)

	
Mandates   Such duly signed forms of mandate, and/or other evidence of the opening of the Accounts, as the Agent may require.

 

	
  

	
(j)

	
Managers’ confirmation   The written confirmation of the Technical Manager that, throughout the Facility Period unless otherwise agreed by the Agent, it will remain the technical manager of the Vessel and that it will not, without the prior written consent of the Agent, sub-contract or delegate the technical management of the Vessel to any third party and confirming in terms acceptable to the Agent that, following the occurrence of an Event of Default, all claims of the Manager against the Borrower shall be subordinated to the claims of the Finance Parties under the Finance Documents.

 

 

  

78

  

 

 

	
  

	
(k)

	
No disputes   The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.

 

	
  

	
(l)

	
The Account Holder’s confirmation   The written confirmation of the Account Holder that (i) the Accounts have been opened with the Account Holder, (ii) to its actual knowledge the Accounts are free from Encumbrances and rights of set off other than as created by or pursuant to the Security Documents and (iii) the Earnings Account has been credited with an amount not less than the Working Capital Amount.

 

	
  

	
(m)

	
Other Relevant Documents   Copies certified as true accurate and complete by a director, the secretary or the legal advisors to the Borrower of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 2.

 

	
  

	
(n)

	
Stability Booklet   A copy of the approval page and a copy of the page where the Vessel’s LDT is described in the stability booklet.

 

	
  

	
(o)

	
Dry Dock   A copy of the work list from the last dry dock completed in respect of the Vessel, subject to the Borrower’s receipt of the same from the Sellers.

 

	
  

	
(p)

	
Instruction to Classification Society  A letter of instruction from the Owner to the Vessel’s classification society.

 

	
3

	
Legal opinions

 

	
  

	
(a)

	
If a Security Party is incorporated in a jurisdiction other than England and Wales or if any Finance Document is governed by the laws of a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Lenders in each relevant jurisdiction, substantially in the form or forms provided to the Agent prior to signing this Agreement or confirmation satisfactory to the Agent that such an opinion will be given.

 

 

  

79

  

 

 

	
4

	
Other documents and evidence

 

	
  

	
(a)

	
Drawdown Notice   A duly completed Drawdown Notice.

 

	
  

	
(b)

	
Process agent   Evidence that any process agent referred to in Clause 22.5 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

 

	
  

	
(c)

	
Other authorisations   A copy of any other consent, licence, approval, authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any of the Relevant Documents or for the validity and enforceability of any of the Relevant Documents.

 

	
  

	
(d)

	
Financial statements   Copies of the Original Financial Statements.

 

	
  

	
(e)

	
Fees   Evidence that the fees, costs and expenses then due from the Borrower under Clause 8 (Indemnities) and Clause 9 (Fees) have been paid or will be paid by the Drawdown Date.

 

	
  

	
(f)

	
“Know your customer” documents   Such documentation and other evidence as is reasonably requested by the Agent in order for the Lenders to comply with all necessary “know your customer” or similar identification procedures in relation to the transactions contemplated in the Finance Documents.

 

	
  

	
(g)

	
No Event of Default   Evidence that no Default exists under the Finance Documents.

 

	
  

	
(h)

	
Capital Structure   Evidence of the capital structure (equity and subordinated debt) and shareholding structure of each of the Borrower and the Guarantor.

 

	
  

	
(i)

	
Loan Administration Form   A duly completed Loan Administration Form.

 

	
  

	
(j)

	
Working Capital Amount   Evidence that the Working Capital Amount has been deposited into the Earnings Account.

 

 

  

80

  

 

 

	
  

	
(k)

	
Borrower’s equity   Evidence satisfactory to the Agent that the Borrower has or will simultaneously with the drawdown of the Loan pay or will have paid all sums due to the Seller pursuant to the MOA.

 

 

  

81

  

 

 

Part II: Conditions Subsequent

 

	
1

	
Evidence of Borrower’s title   Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the flag stated in Recital (A) confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.

 

	
2

	
Deletion by Seller   Evidence that the Vessel has been deleted from its current flag.

 

	
3

	
Letters of undertaking   Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Finance Parties.

 

	
4

	
Acknowledgements of notices   Acknowledgements of all notices of assignment and/or charge given pursuant to the Security Documents.

 

	
5

	
Legal opinions   Such of the legal opinions specified in Part I of this Schedule 2 as have not already been provided to the Agent.

 

	
6

	
Survey Report   A report by a surveyor instructed by the Agent (at the expense of the Borrower) to inspect the Vessel confirming that the condition of the Vessel is in all respects acceptable to the Agent, to be provided within 12 months from the Drawdown Date.

 

	
7

	
Technical information   Delivery of technical information in respect of the Vessel in a form acceptable to the Agent including but not limited to (i) full history of class; (ii) details of statutory certificates; (iii) summaries of inspections (including flag and port state control); and (iv) any records of planned maintenance, each subject to the Borrower receiving such information from the Seller, although reasonable efforts will be made by the Borrower to obtain such information.

 

 

  

82

  

 

 

SCHEDULE 3: Calculation of Mandatory Cost

 

	
1

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

 

	
2

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

 

	
3

	
The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the percentage notified by that Lender to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in the Loan) of complying with the minimum reserve requirements of the European Central Bank as a result of participating in the Loan from that office.

 

	
4

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

 

(a)          where the Loan is denominated in sterling:

 

	
  

	
 

	

BY + S(Y - Z) + F x 0.01 per cent per annum

         100 - (B + S)

            

(b)          where the Loan is denominated in any currency other than sterling:

 

	
  

	
 

	

F x 0.01 per cent per annum

300

 

	
  

	
where:

 

	
  

	
B

	
is the percentage of eligible liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements;

 

 

  

83

  

 

 

	
  

	
Y

	
is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an overdue amount, the additional rate of interest specified in Clause 7.7 (Default interest)) payable for the relevant Interest Period on the Loan;

 

	
  

	
S

	
is the percentage (if any) of eligible liabilities which that Lender is required from time to time to maintain as interest bearing special deposits with the Bank of England;

 

	
  

	
Z

	
is the interest rate per annum payable by the Bank of England to that Lender on special deposits; and

 

	
  

	
F

	
is the charge payable by that Lender to the Financial Services Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions in any replacement regulations (with, for this purpose, the figure for the minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per £1 million of the fee base of that Lender.

 

5           For the purpose of this Schedule:

 

	
  

	
(a)

	
“eligible liabilities” and “special deposits” have the meanings given to them at the time of application of the formula by the Bank of England;

 

	
  

	
(b)

	
“fee base” has the meaning given to it in the Fees Regulations;

 

	
  

	
(c)

	
“Fees Regulations” means the regulations governing periodic fees contained in the Financial Services Authority Fees Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits.

 

	
6

	
In the application of the formula B, Y, S and Z are included in the formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as 0.5. x 15.  Each rate calculated in accordance with the formula is, if necessary, rounded upward to four decimal places.

 

	
7

	
If a Lender does not supply the information required by the Agent to determine its Additional Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the basis of the information supplied by the remaining Lenders.

 

 

 

  

84

  

 

 

 

	
8

	
If a change in circumstances has rendered, or will render, the formula inappropriate, the Agent shall notify the Borrower of the manner in which the Mandatory Cost will subsequently be calculated.  The manner of calculation so notified by the Agent shall, in the absence of manifest error, be binding on the Borrower.

 

 

  

85

  

 

 

SCHEDULE 4: Form of Drawdown Notice

 

	
To:

	
DVB BANK SE, LONDON BRANCH

 

 

 

	
From:

	
DHT PHOENIX, INC.

   

 

2011

 

Dear Sirs

 

Drawdown Notice

 

We refer to the Loan Agreement dated                      2011 made between, amongst others, ourselves and yourselves (the “Agreement”).

 

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice.

 

Pursuant to Clause 4.1 of the Agreement, we irrevocably request that you advance the sum of $[                                    ] to us on                                         2011, which is a Business Day, by paying the amount of the advance in accordance with the MOA to the following account: [                              ].

 

We warrant that the representations and warranties contained in Clause 11.1 of the Agreement are true and correct at the date of this Drawdown Notice and will be true and correct on               2011, that no Default has occurred and is continuing, and that no Default will result from the advance of the sum requested in this Drawdown Notice.

 

We select the period of [       ] months as the first Interest Period.

 

Yours faithfully

 

 

...................................

For and on behalf of

DHT PHOENIX, INC.

 

 

 

  

86

  

 

 

SCHEDULE 5: Form of Transfer Certificate

 

To:           DVB BANK SE, LONDON BRANCH

TRANSFER CERTIFICATE

 

This transfer certificate relates to a secured loan facility agreement (as from time to time amended, varied, supplemented or novated  the “Loan Agreement”) dated                      2011, on the terms and subject to the conditions of which a secured loan facility of up to $27,500,000 was made available to DHT Phoenix, Inc., by a syndicate of banks on whose behalf you act as agent and security agent.

 

	
1

	
Terms defined in the Loan Agreement shall, unless otherwise expressly indicated, have the same meaning when used in this certificate.  The terms “Transferor” and “Transferee” are defined in the schedule to this certificate.

 

	
2

	
The Transferor:

 

	
  

	
2.1

	
confirms that the details in the Schedule under the heading “Transferor’s Commitment” accurately summarise its Commitment; and

 

	
  

	
2.2

	
requests the Transferee to accept by way of novation the transfer to the Transferee of the amount of the Transferor’s Commitment specified in the Schedule by counter-signing and delivering this certificate to the Agent at its address for communications specified in the Loan Agreement.

 

	
3

	
The Transferee requests the Agent to accept this certificate as being delivered to the Agent pursuant to and for the purposes of clause 14.4 of the Loan Agreement so as to take effect in accordance with the terms of that clause on the Transfer Date specified in the Schedule.

 

	
4

	
The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the Loan Agreement.

 

	
5

	
The Transferee confirms that:

 

	
  

	
5.1

	
it has received a copy of the Loan Agreement together with all other information which it has required in connection with this transaction;

 

 

 

  

87

  

 

 

	
  

	
5.2

	
it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information; and

 

	
  

	
5.3

	
it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any Security Party.

 

	
6

	
Execution of this certificate by the Transferee constitutes its representation and warranty to the Transferor and to all other parties to the Loan Agreement that it has the power to become a party to the Loan Agreement as a Lender on the terms of the Loan Agreement and has taken all steps to authorise execution and delivery of this certificate.

 

	
7

	
The Transferee undertakes with the Transferor and each of the other parties to the Loan Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Loan Agreement will be assumed by it after delivery of this certificate to the Agent and the satisfaction of any conditions subject to which this certificate is expressed to take effect.

 

	
8

	
The Transferor makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any document relating to any Finance Document, and assumes no responsibility for the financial condition of any Finance Party or for the performance and observance by any Security Party of any of its obligations under any Finance Document or any document relating to any Finance Document and any conditions and warranties implied by law are expressly excluded.

 

	
9

	
The Transferee acknowledges that nothing in this certificate or in the Loan Agreement shall oblige the Transferor to:

 

	
  

	
9.1

	
accept a re-transfer from the Transferee of the whole or any part of the rights, benefits and/or obligations transferred pursuant to this certificate; or

 

	
  

	
9.2

	
support any losses directly or indirectly sustained or incurred by the Transferee for any reason including, without limitation, the non-performance by any party to any Finance Document of any obligations under any Finance Document.

 

 

 

  

88

  

 

 

	
10

	
The address and fax number of the Transferee for the purposes of clause 18 of the Loan Agreement are set out in the Schedule.

 

	
11

	
This certificate may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

 

	
12

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

 

THE SCHEDULE

 

	
1

	
Transferor:

 

	
2

	
Transferee:

 

	
3

	
Transfer Date (not earlier that the fifth Business Day after the date of delivery of the Transfer Certificate to the Agent):

 

	
4

	
Transferor’s Commitment:

 

	
5

	
Amount transferred:

 

	
6

	
Transferee’s address and fax number for the purposes of clause 18 of the Loan Agreement:

 

 

	
[name of Transferor]

 

 

	
[name of Transferee]

	
By:

 

 

	
By:

	
Date:

 

 

	
Date:

 

 

	
DVB BANK SE, LONDON BRANCH as Agent

 

	  
	  	  
	
By:

 

	  
	  	  
	
Date:

 

 

	  

 

 

 

  

89

  

 

 

SCHEDULE 6: Form of Compliance Certificate

 

	
To:

	
DVB BANK SE, LONDON BRANCH

 

	
From:

	
DHT PHOENIX, INC.

 

	
Dated:

	
 

 

 

Dear Sirs

DHT Phoenix, Inc. - $27,500,000 Loan Agreement dated [                   ] 2011 (the “Agreement”)

 

We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

 

We confirm that the Fair Market Value of the Vessel is $[●] and as such we are in compliance with Clause 10.18 of the Agreement.

 

Copies of the relevant valuations are attached.

 

We also confirm that the Earnings Account is credited with a Working Capital Amount of [                             ] Dollars ($[                        ]) and as such we are in compliance with Clause 16.4 of the Agreement.

 

We confirm that no Default is continuing.

 

 

 

 

	
Signed:

	 	
 

	 	 	
 

	  	
Director

	 	
Officer

	  	
of

	 	
of

	  	
DHT PHOENIX, INC.

	 	
DHT PHOENIX, INC.

 

 

 

  

90

  

 

 

SCHEDULE 7: Loan Administration Form

 

Form of Loan Administration Form

 

To:           DVB BANK SE

 

We hereby appoint the following persons to act as our point of contact with regards to any issue arising in connection with the administration to the agreement dated                        2011 made between (inter alia) yourselves and ourselves (the “Loan Agreement”) or any other documents related to the Loan:

 

	
1.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

	
2.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

	
3.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

 

No other persons other than the Directors of the Borrower or the persons listed above (the “Authorised Persons”) are hereby authorised to request any information from you regarding the Loan Agreement or any other matter related to the Loan or the Borrower or communicate with you in any way regarding the foregoing in and under any circumstances.

For the avoidance of doubt, the following are the Directors of the Borrower:

 

	
1.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

	
2.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

	
3.

	
[                                                    ], of [                                                               ], Tel: [                                      ], Mobile [                                       ], e-mail: [                      ].

 

This list of authorised persons may only be amended, modified or varied in writing by an Authorised Person with copy to the other Authorised Persons.

 

We agree to indemnify you and hold you harmless in relation to any information you provide to any Authorised Person.

 

 

  

91

  

 

 

 

Word and expressions defined in the Loan Agreement shall bear the same meanings when used herein.

This letter and any non-contractual obligations arising from it shall be governed and construed in accordance with English law.

 

Yours sincerely

 

 

For and on behalf of

DHT PHOENIX, INC.

 

 

 

  

92

  

 

 

 

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written.

 

	
SIGNED by   ANJA KALLESTAD

	
)

	
as duly authorised   ATTORNEY-IN-FACT

	
)    /s/ Anja Kallestad

	
for and on behalf of

	
)

	
DHT PHOENIX, INC.

	
)

	in the presence of:	
RODERICK McGEACHY

	
)

	 	TRAINEE SOLICITOR	 
	    /s/ Roderick McGeachy	ONE ST. PAUL’S CHURCHYARD	 
	 	LONDON EC4M 85H	 

 

 

 

 

	
SIGNED by   HANNAH BARRY

	
)

	
as duly authorised   ATTORNEY-IN-FACT

	
)

	
for and on behalf of

	
)    /s/ Hannah Barry

	
DVB BANK SE, LONDON BRANCH

	
)

	(as a Lender)	)
	in the presence of:	
RODERICK McGEACHY

	
)

	 	TRAINEE SOLICITOR	 
	    /s/ Roderick McGeachy	ONE ST. PAUL’S CHURCHYARD	 
	 	LONDON EC4M 85H	 

 

 

 

 

	
SIGNED by   HANNAH BARRY

	
)

	
as duly authorised   ATTORNEY-IN-FACT

	
)

	
for and on behalf of

	
)    /s/ Hannah Barry

	
DVB BANK SE, LONDON BRANCH

	
)

	(as the Agent)	)
	in the presence of:	
RODERICK McGEACHY

	
)

	 	TRAINEE SOLICITOR	 
	    /s/ Roderick McGeachy	ONE ST. PAUL’S CHURCHYARD	 
	 	LONDON EC4M 85H	 

 

 

 

 

	
SIGNED by   HANNAH BARRY

	
)

	
as duly authorised   ATTORNEY-IN-FACT

	
)

	
for and on behalf of

	
)    /s/ Hannah Barry

	

DVB BANK SE, FRANKFURT BRANCH

	
)

	(as a Swap Provider)	)
	in the presence of:	
RODERICK McGEACHY

	
)

	 	TRAINEE SOLICITOR	 
	    /s/ Roderick McGeachy	ONE ST. PAUL’S CHURCHYARD	 
	 	LONDON EC4M 85H	 

 

 

 

  

93

  

 

 

	
SIGNED by   HANNAH BARRY

	
)

	
as duly authorised   ATTORNEY-IN-FACT

	
)

	
for and on behalf of

	
)     /s/ Hannah Barry

	

DVB BANK SE, LONDON BRANCH

	
)

	(as a Security Agent)	)
	in the presence of:	
RODERICK McGEACHY

	
)

	 	TRAINEE SOLICITOR	 
	/s/ Roderick McGeachy	ONE ST. PAUL’S CHURCHYARD	 
	 	LONDON EC4M 85H	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 94

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