Common use of OPERATIONAL UNDERTAKINGS Clause in Contracts

OPERATIONAL UNDERTAKINGS. 19.1 The Borrowers hereby undertake with the Creditor Parties that on the Delivery Date of each Vessel and throughout the Security Period thereafter, shall comply with the following provisions of this Clause 19 except as the Security Trustee may, with the authorization of the Instructing Group, otherwise permit: 19.1.1 to procure that each Vessel shall be duly registered under the laws and the flag approved by the Creditor Parties in the ownership of the Owner thereof and not do or suffer to be done anything whereby the registration may be forfeited or imperilled; 19.1.2 to appoint and/or keep the Manager appointed as manager of the Vessels and not vary or terminate this appointment; 19.1.3 not save as contemplated in the Finance Documents, to create, incur or permit to subsist any Encumbrance over the Vessels, the Earnings, the Insurances or the Requisition Compensation or all or any of the present or future assets of the Borrowers or either of them (other than any Permitted Encumbrance); 19.1.4 not at any time to represent to a third party that the Creditor Parties (or any of them) are carrying cargo in the Vessels or either of them or are in any way connected or associated with an operation or carriage being undertaken by them or have any operational interest in the Vessels or either of them; 19.1.5 not to voyage or time charter the Vessels or either of them or place them/her under contract for employment (a) for any period which when aggregated with any optional periods of extension contained in the said charter or contract, would exceed twelve (12) months or (b) at a charter rate which is below the market rate at the time of the charter fixture and in case of a Vessel being employed for more than twelve (12) months, after having obtained the Security Trustee’s consent acting on the instructions of the Instructing Group, the Security Trustee shall be furnished with (i) details and documentary evidence satisfactory to the Security Trustee In its sole discretion in respect of the new employment and (ii) upon Security Trustee’s request, a specific assignment in favour of the Security Trustee of the benefit of such charter together with a notice of any such assignment addressed to the relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer all in form and substance satisfactory to the Security Trustee; 19.1.6 not to demise charter the Vessels or either of them for any period whatsoever; 19.1.7 not without the prior written consent of the Security Trustee to put a Vessel into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed US$300,000 (or the equivalent in any other currency) unless the Borrowers shall have satisfied the Security Trustee that the cost of such work is fully recoverable under the Insurances (save for any applicable deductible) or such person shall first have given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on a Vessel or her Earnings or Insurances for the cost of such work or otherwise; 19.1.8 to give the Security Trustee reasonable prior notice of any dry-docking of either Vessel so that the Security Trustee (if it so requires) can arrange for a representative to be present; 19.1.9 to notify the Security Trustee of any intended laying-up or de-activation of either Vessel; 19.1.10 to provide the Security Trustee with such copies of the trading certificates of each Vessel as the Security Trustee may from time to time require; 19.1.11 to hold or procure that the Manager shall hold all appropriate ISM Code Documentation and ISPS Code Documentation and provide the Agent upon request from time to time with copies of the relevant ISM Code Documentation and ISPS Code Documentation duly issued to the Manager and the Vessels and the Owners pursuant to the ISM Code and the ISPS Code respectively; 19.1.12 to keep, or procure that there is kept, on board a Vessel a copy of all relevant ISM Code Documentation and ISPS Code Documentation; 19.1.13 as soon as an Owner becomes aware, to inform the Security Trustee immediately should the Document of Compliance and/or the Safety Management Certificate and/or the international Ship Security Certificate issued in connection with the relevant ISM Code Documentation or ISPS Code Documentation in respect of a Vessel be cancelled, rescinded, suspended or amended in any way; 19.1.14 to notify the Security Trustee promptly upon being made aware thereof upon the occurrence of: (a) any Environmental Claim against the Owners or either of them or the Manager or the Vessels or either of them; (b) any Environmental Incident which may give rise to an Environmental Claim which could or might materially affect the interests of the Owners, the Manager or any of them; (c) any claim for breach of the ISM Code or the ISPS Code being made against the Owners, an ISM Responsible Person, the Manager or any of them or otherwise in connection with the Vessels or either of them; and (d) any other matter, event or incident actual or threatened, the effect of which would lead to the ISM Code or the ISPS Code not being complied with; and to keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the relevant Owner’s, the ISM Responsible Person’s, the Manager’s or any other person’s proposed or actual response to any of those events or matters; 19.1.15 to permit, or procure that the Security Trustee shall have the right at any time on reasonable notice to inspect or survey each Vessel or instruct a duly authorised independent surveyor to carry out such survey on its behalf to ascertain the condition of such Vessel and satisfy itself that such Vessel is being properly repaired and maintained, provided that such inspections shall not unreasonably interfere with such Vessel’s running or operation (and the costs of such inspection or survey shall be payable by the Borrowers); 19.1.16 to promptly provide the Security Trustee with information concerning the classification status and insurance of the Vessels from time to time as and when so required in writing by the Security Trustee; 19.1.17 to ensure that the Owners shall execute and deliver to the Security Trustee such documents of transfer as the Security Trustee may require in the event of sale of the Vessels pursuant to any power of sale contained in the Mortgage over the relevant Vessel or which the Security Trustee may have in law; 19.1.18 to provide the Security Trustee with a certificate of ownership and encumbrances relative to the Vessels issued by the relevant registry of the Vessels; and 19.1.19 upon becoming aware, to notify the Security Trustee immediately by telefax of any recommendation or requirement imposed by the Classification Society, the Insurers or by any other competent authority in respect of a Vessel that is not complied with in accordance with its terms; 19.1.20 to ensure that each Owner shall carry on each Vessel with the Vessel’s papers a properly certified copy of the Mortgage over such Vessel and exhibit the same to any person having a legal interest in, or having business with, such Vessel and to any representative of the Security Trustee, and place and keep prominently in the Chart Room and in the Master’s cabin of such Vessel a framed notice printed in plain type of such size that the paragraph of reading matter shall cover a space not less than six inches wide and nine inches high reading as follows: 19.1.21 to pay when due and payable all taxes, assessments, levies, governmental charges, fines and penalties lawfully imposed on and enforceable against the Vessels unless contested In good faith by the Owners by the appropriate proceedings; 19.1.22 if any writ or proceedings shall be issued against the Vessels or either of them shall be otherwise attached, arrested or detained by any proceeding in any court or tribunal or by any government or other authority, to Immediately notify tie Security Trustee thereof by telefax confirmed by letter and within fourteen (14) days thereafter cause that Vessel to be released; 19.1.23 not to cause or permit the Vessels or either of them to be operated in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code and not to engage in any unlawful trade or carry any cargo that will expose the Vessels or either of them to penalty, forfeiture or capture and in the event of hostilities in any part of the world (whether a war be declared or not) not employ the Vessels or either of them or voluntarily suffer their/her employment in carrying any contraband goods; 19.1.24 to promptly pay all tolls, dues and outgoings in respect of each Vessel and all wages, allotments, insurance and pension contributions of the Master and crew of each Vessel when due and make all deductions from the wages in respect of any tax liability, accounting to the relevant authority for them and if the Security Trustee at any time has reasonable cause to believe that such payments may not be being made, to produce to the Security Trustee at its request evidence confirming that all such amounts have been paid when due; 19.1.25 at all times to maintain each Vessel in a seaworthy condition and in good running order and repair in accordance with first class ship ownership and ship management practice and keep each Vessel in such condition as will entitle them/her to be classed at the highest classification status with their/her Classification Society free of all recommendations and qualifications (other than those which have been or are being complied with in accordance with their terms and which are not by their terms overdue for compliance), follow any interim operational provisos to such recommendations and qualifications and when so requested to provide the Security Trustee with a certificate issued by the relevant Classification Society confirming that such classification is maintained; 19.1.26 to submit each Vessel regularly to such periodical or other surveys as may be required for classification purposes and, if so required by the Security Trustee in writing, supply to the Security Trustee copies of all survey reports issued in respect thereof; 19.1.27 at all times to comply with all legal requirements whether imposed by enactment, regulation, common law or otherwise and have on board each Vessel as and when legally required valid certificates showing compliance therewith; 19.1.28 without prejudice to the generality of Clause 19.1.27, to obtain and maintain any and ail Environmental Approvals required in respect of each Vessel and comply or procure that the Manager or any charterer of either Vessel (including without limitation the Time Charterer) will at all times comply with the ISM Code, the ISPS Code, the ISPS Code Documentation, all Environmental Laws, and all other laws and regulations relating to each Vessel, its ownership, operation, ▇▇▇▇▇▇▇ and management or to the business of the each Owner and/or the Manager; 19.1.29 not remove or permit the removal of any part of the Vessels or either of them or any equipment belonging thereto nor make or permit any alterations to be made in the structure, type or speed of the Vessels or either of them which materially reduce the value of the Vessels or either of them (unless such removal or alteration is required by statute or by the Classification Society); and 19.1.30 in the event of Compulsory Acquisition of a Vessel execute any assignment that the Security Trustee may request in relation to any and all amounts which the relevant Government Entity shall be liable to pay as compensation for such Vessel or for its use and if received by the Owner thereof to pay such amounts immediately to the Agent. 19.2 The Borrowers hereby irrevocably agree and undertake to ensure and procure that - 19.2.1 the Security Trustee, or its authorised representatives may, without prior notification, communicate directly with the Classification Society concerning maintenance, repair, classification and seaworthiness of the Vessels, and to the same extent with any regulatory authority having jurisdiction over the Vessels; 19.2.2 the Owners shall unconditionally authorise the Classification Society or regulatory authority, at the request of the Security Trustee, to give information to it, or its authorised representatives and to conduct inspections and surveys of the Vessels, as if requested by the Owners; provided that the Security Trustee will not, without prior consultation with the Borrowers, take any action under this Clause 19.2 unless an Event of Default or Potential Event of Default has occurred. 19.3 The Borrowers shall throughout the Security Period duly observe and perform all of the covenants, obligations and conditions which are required to be observed and performed on their part under this Agreement and each of the other Finance Documents to which they are a party and shall use their best endeavours to procure that all covenants, obligations and conditions required to be observed and performed, and undertakings made, by any of the other Security Parties under any of the Subject Documents shall be observed and complied with in their entirety.

OPERATIONAL UNDERTAKINGS. 19.1 The Borrowers hereby undertake with the Creditor Parties that on the Delivery Date of each Vessel and throughout the Security Period thereafter, shall comply with the following provisions of this Clause 19 except as the Security Trustee may, with the authorization of the Instructing Group, otherwise permit: 19.1.1 to procure that each Vessel shall be duly registered under the laws and the flag approved by the Creditor Parties in the ownership of the Owner thereof and not do or suffer to be done anything whereby the registration may be forfeited or imperilled; 19.1.2 to appoint and/or keep the Manager appointed as manager of the Vessels and not vary or terminate this appointment; 19.1.3 not save as contemplated in the Finance Documents, to create, incur or permit to subsist any Encumbrance over the Vessels, the Earnings, the Insurances or the Requisition Compensation or all or any of the present or future assets of the Borrowers or either of them (other than any Permitted Encumbrance); 19.1.4 not at any time to represent to a third party that the Creditor Parties (or any of them) are carrying cargo in the Vessels or either of them or are in any way connected or associated with an operation or carriage being undertaken by them or have any operational interest in the Vessels or either of them; 19.1.5 not to voyage or time charter the Vessels or either of them or place them/her under contract for employment (a) for any period which when aggregated with any optional periods of extension contained in the said charter or contract, would exceed twelve (12) months or (b) at a charter rate which is below the market rate at the time of the charter fixture and in case of a Vessel being employed for more than twelve (12) months, after having obtained the Security Trustee’s consent acting on the instructions of the Instructing Group, the Security Trustee shall be furnished with (i) details and documentary evidence satisfactory to the Security Trustee In in its sole discretion in respect of the new employment and (ii) upon Security Trustee’s request, a specific assignment in favour of the Security Trustee of the benefit of such charter together with a notice of any such assignment addressed to the relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer all in form and substance satisfactory to the Security Trustee; 19.1.6 not to demise charter the Vessels or either of them for any period whatsoever; 19.1.7 not without the prior written consent of the Security Trustee to put a Vessel into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed US$300,000 (or the equivalent in any other currency) unless the Borrowers shall have satisfied the Security Trustee that the cost of such work is fully recoverable under the Insurances (save for any applicable deductible) or such person shall first have given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on a Vessel or her Earnings or Insurances for the cost of such work or otherwise; 19.1.8 to give the Security Trustee reasonable prior notice of any dry-docking of either Vessel so that the Security Trustee (if it so requires) can arrange for a representative to be present; 19.1.9 to notify the Security Trustee of any intended laying-up or de-activation of either Vessel; 19.1.10 to provide the Security Trustee with such copies of the trading certificates of each Vessel as the Security Trustee may from time to time require; 19.1.11 to hold or procure that the Manager shall hold all appropriate ISM Code Documentation and ISPS Code Documentation and provide the Agent upon request from time to time with copies of the relevant ISM Code Documentation and ISPS Code Documentation duly issued to the Manager and the Vessels and the Owners pursuant to the ISM Code and the ISPS Code respectively; 19.1.12 to keep, or procure that there is kept, on board a Vessel a copy of all relevant ISM Code Documentation and ISPS Code Documentation; 19.1.13 as soon as an Owner becomes aware, to inform the Security Trustee immediately should the Document of Compliance and/or the Safety Management Certificate and/or the international International Ship Security Certificate issued in connection with the relevant ISM Code Documentation or ISPS Code Documentation in respect of a Vessel be cancelled, rescinded, suspended or amended in any way; 19.1.14 to notify the Security Trustee promptly upon being made aware thereof upon the occurrence of:of- (a) any Environmental Claim against the Owners or either of them or the Manager or the Vessels or either of them; (b) any Environmental Incident which may give rise to an Environmental Claim which could or might materially affect the interests Interests of the Owners, the Manager or any of them; (c) any claim for breach of the ISM Code or the ISPS Code being made against the Owners, an ISM Responsible Person, the Manager or any of them or otherwise in connection with the Vessels or either of them; and (d) any other matter, event or incident actual or threatened, the effect of which would lead to the ISM Code or the ISPS Code not being complied with; and to keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the relevant Owner’s, the ISM Responsible Person’s, the Manager’s or any other person’s proposed or actual response to any of those events or matters; 19.1.15 to permit, or procure that the Security Trustee shall have the right at any time on reasonable notice to inspect or survey each Vessel or instruct a duly authorised independent surveyor to carry out such survey on its behalf to ascertain the condition of such Vessel and satisfy itself that such Vessel is being properly repaired and maintained, provided that such inspections shall not unreasonably interfere with such Vessel’s running or operation (and the costs of such inspection Inspection or survey shall be payable by the Borrowers); 19.1.16 to promptly provide the Security Trustee with information concerning the classification status and insurance of the Vessels from time to time as and when so required in writing by the Security Trustee; 19.1.17 to ensure that the Owners shall execute and deliver to the Security Trustee such documents of transfer as the Security Trustee may require in the event of sale of the Vessels pursuant to any power of sale contained in the Mortgage over the relevant Vessel or which the Security Trustee may have in law; 19.1.18 to provide the Security Trustee with a certificate of ownership and encumbrances relative to the Vessels issued by the relevant registry of the Vessels; and 19.1.19 upon becoming aware, to notify the Security Trustee immediately by telefax of any recommendation or requirement imposed by the Classification Society, the Insurers or by any other competent authority in respect of a Vessel that is not complied with in accordance with its terms; 19.1.20 to ensure that each Owner shall carry on each Vessel with the Vessel’s papers a properly certified copy of the Mortgage over such Vessel and exhibit the same to any person having a legal interest in, or having business with, such Vessel and to any representative of the Security TrusteeSecurity A. [and HSH NORDBANK AG]. Under the terms of said Mortgage, neither the Owner, nor the Master nor any other person has any right, power or authority to create, incur or permit to be imposed upon this Vessel any other lien whatsoever other than for crew’s wages and place and keep prominently in the Chart Room and in the Master’s cabin of such Vessel a framed notice printed in plain type of such size that the paragraph of reading matter shall cover a space not less than six inches wide and nine inches high reading as follows:salvage” 19.1.21 to pay when due and payable all taxes, assessments, levies, governmental charges, fines and penalties lawfully imposed on and enforceable against the Vessels unless contested In in good faith by the Owners by the appropriate proceedings; 19.1.22 if any writ or proceedings shall be issued against the Vessels or either of them shall be otherwise attached, arrested or detained by any proceeding in any court or tribunal or by any government or other authority, to Immediately immediately notify tie the Security Trustee thereof by telefax confirmed by letter and within fourteen (14) days thereafter cause that Vessel to be released; 19.1.23 not to cause or permit the Vessels or either of them to be operated in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code and not to engage in any unlawful trade or carry any cargo that will expose the Vessels or either of them to penalty, forfeiture or capture and in the event of hostilities in any part of the world (whether a war be declared or not) not employ the Vessels or either of them or voluntarily suffer their/her employment in carrying any contraband goods; 19.1.24 to promptly pay all tolls, dues and outgoings in respect of each Vessel and all wages, allotments, insurance and pension contributions of the Master and crew of each Vessel when due and make all deductions from the wages in respect of any tax liability, accounting to the relevant authority for them and if the Security Trustee at any time has reasonable cause to believe that such payments may not be being made, to produce to the Security Trustee at its request evidence confirming that all such amounts have been paid when due; 19.1.25 at all times to maintain each Vessel in a seaworthy condition and in good running order and repair in accordance with first class ship ownership and ship management practice and keep each Vessel in such condition as will entitle them/her to be classed at the highest classification status with their/her Classification Society free of all recommendations and qualifications (other than those which have been or are being complied with in accordance with their terms and which are not by their terms overdue for compliance), follow any interim operational provisos to such recommendations and qualifications and when so requested to provide the Security Trustee with a certificate issued by the relevant Classification Society confirming that such classification is maintained; 19.1.26 to submit each Vessel regularly to such periodical or other surveys as may be required for classification purposes and, if so required by the Security Trustee in writing, supply to the Security Trustee copies of all survey reports issued in respect thereof; 19.1.27 at all times to comply with all legal requirements whether imposed by enactment, regulation, common law or otherwise and have on board each Vessel as and when legally required valid certificates showing compliance therewith; 19.1.28 without prejudice to the generality of Clause 19.1.27, to obtain and maintain any and ail all Environmental Approvals required in respect of each Vessel and comply or procure that the Manager or any charterer of either Vessel (including without limitation the Time Charterer) will at all times comply with the ISM Code, the ISPS Code, the ISPS Code Documentation, all Environmental Laws, and all other laws and regulations relating to each Vessel, its ownership, operation, ▇▇▇▇▇▇▇ and management or to the business of the each Owner and/or the Manager; 19.1.29 not remove or permit the removal of any part of the Vessels or either of them or any equipment belonging thereto nor make or permit any alterations to be made in the structure, type or speed of the Vessels or either of them which materially reduce the value of the Vessels or either of them (unless such removal or alteration is required by statute or by the Classification Society); and 19.1.30 in the event of Compulsory Acquisition of a Vessel execute any assignment that the Security Trustee may request in relation to any and all amounts which the relevant Government Entity shall be liable to pay as compensation for such Vessel or for its use and if received by the Owner thereof to pay such amounts immediately to the Agent. 19.2 The Borrowers hereby irrevocably agree and undertake to ensure and procure that - 19.2.1 the Security Trustee, or its authorised representatives may, without prior notification, communicate directly with the Classification Society concerning maintenance, repair, classification and seaworthiness of the Vessels, and to the same extent with any regulatory authority having jurisdiction over the Vessels; 19.2.2 the Owners shall unconditionally authorise the Classification Society or regulatory authority, at the request of the Security Trustee, to give information to it, or its authorised representatives and to conduct inspections and surveys of the Vessels, as if requested by the Owners; provided that the Security Trustee will not, without prior consultation with the Borrowers, take any action under this Clause 19.2 unless an Event of Default or Potential Event of Default has occurred. 19.3 The Borrowers shall throughout the Security Period duly observe and perform all of the covenants, obligations and conditions which are required to be observed and performed on their part under this Agreement and each of the other Finance Documents to which they are a party and shall use their best endeavours to procure that all covenants, obligations and conditions required to be observed and performed, and undertakings made, by any of the other Security Parties under any of the Subject Documents shall be observed and complied with in their entirety.