Common use of Replacement Option Clause in Contracts

Replacement Option. (a) Upon the sale of the Ship (or a Total Loss of a Ship) the Borrower may, subject to no Event of Default having occurred and being continuing and subject to the Intercreditor Agreement, elect to retain the proceeds of such sale (or Total Loss) for the purpose of re-investing such amount in another vessel approved by the Security Trustee on behalf of the Lenders being a vessel with a market value at least equal to the re-invested amount. (b) In such case, and prior to completion of the relevant sale of a Ship (or receipt of Total Loss proceeds) the Borrower shall constitute in favour of the Security Trustee a Security over such sale (or Total Loss) proceeds in agreed form and provide the Security Trustee with such ancillary evidence, Authorisation and other documents as the Security Trustee may require. (c) The funds so deposited will stand as security for the Loan and the Discount Premium Amount and other moneys under this Agreement but may be released from such Security upon the purchase by the Borrower of a ship approved by the Security Trustee (on behalf of the Lenders) in its absolute discretion, and on the basis that forthwith upon the completion of such purchase the new ship will be subject to a Mortgage and Insurance Assignment as security for the Loan and the Discount Premium Amount, and the Borrower will have provided to the Security Trustee such documents, Authorisation and evidence similar to the requirements set forth in Schedule 2 as the Security Trustee may (in its absolute discretion) require. Upon completion of such purchase the Borrower and the Guarantors will enter into such supplementary documentation as the Agent may require to incorporate the new vessel into the term of this Agreement. (d) If the Borrower does not use the relevant sale (or Total Loss) proceeds within 6 months of receipt or, if earlier, prior to the Termination Date then the relevant proceeds shall be applied in prepayment of the Loan and the Discount Premium Amount by the Lenders at any time thereafter and in accordance with the Intercreditor Agreement.

Replacement Option. (a) Upon the sale of the Ship (or a Total Loss of a Ship) the Borrower may, subject to no Event of Default having occurred and being continuing and subject to the Intercreditor Agreementcontinuing, elect to retain the proceeds of such sale (or Total Loss) for the purpose of re-investing such amount in another vessel approved by the Security Trustee on behalf of the Lenders being a vessel with a market value at least equal to the re-invested amount. (b) In such case, and prior to completion of the relevant sale of a Ship (or receipt of Total Loss proceeds) the Borrower shall constitute in favour of the Security Trustee a Security over such sale (or Total Loss) proceeds in agreed form and provide the Security Trustee with such ancillary evidence, Authorisation and other documents as the Security Trustee may require. (c) The funds so deposited will stand as security for the Loan and the Discount Premium Amount and other moneys under this Agreement but may be released from such Security upon the purchase by the Borrower of a ship approved by the Security Trustee (on behalf of the Lenders) in its absolute discretion, and on the basis that forthwith upon the completion of such purchase the new ship will be subject to a Mortgage and Insurance Assignment as security for the Loan and the Discount Premium Amount, and the Borrower will have provided to the Security Trustee such documents, Authorisation and evidence similar to the requirements set forth in Schedule 2 as the Security Trustee may (in its absolute discretion) require. Upon completion of such purchase the Borrower and the Guarantors will enter into such supplementary documentation as the Agent may require to incorporate the new vessel into the term of this Agreement. (d) If the Borrower does not use the relevant sale (or Total Loss) proceeds within 6 months of receipt or, if earlier, prior to the Termination Date then the relevant proceeds shall be applied in prepayment of the Loan and the Discount Premium Amount by the Lenders at any time thereafter and in accordance with the Intercreditor Agreementthereafter.