Private & Confidential
LOAN AGREEMENT
FOR A LOAN OF UP TO
US$19,500,000
TO
STAR MARITIME ENTERPRISES CORPORATION
PROVIDED BY
HSH NORDBANK AG
[▇▇▇▇▇▇ ▇▇▇▇ LOGO]
CONTENTS
CLAUSE PAGE
------ ----
1 Purpose and definitions................................................ 1
2 The Commitment and the Loan............................................ 9
3 Interest and Interest Periods.......................................... 10
4 Repayment and prepayment............................................... 12
5 Commitment commission, fees and expenses............................... 13
6 Payments and taxes; accounts and calculations.......................... 14
7 Representations and warranties......................................... 15
8 Undertakings........................................................... 19
9 Conditions............................................................. 26
10 Events of Default...................................................... 27
11 Indemnities............................................................ 31
12 Unlawfulness and increased costs....................................... 32
13 Security and set-off................................................... 33
14 Accounts............................................................... 34
15 Assignment, transfer and lending office................................ 35
16 Notices and other matters.............................................. 36
17 Governing law and jurisdiction......................................... 37
Schedule 1 Form of Drawdown Notice.......................................... 39
Schedule 2 Documents and evidence required as conditions precedent to the
Loan being made.................................................. 40
Schedule 3 Form of Corporate Guarantee...................................... 44
Schedule 4 Form of Mortgage................................................. 45
Schedule 5 Form of General Assignment....................................... 46
Schedule 6 Form of Manager's Undertaking.................................... 47
THIS AGREEMENT is dated 30 November 2006 and made BETWEEN:
(1) STAR MARITIME ENTERPRISES CORPORATION as Borrower; and
(2) HSH NORDBANK AG as Bank.
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 Bank agrees to make available to the Borrower a loan of up
to Nineteen million five hundred thousand Dollars ($19,500,000) to be
used for the purpose of (a) financing part of the cost of the purchase
of the Ship and (b) providing the Borrower with working capital.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACCOUNTS" means, together, the Operating Account and the Retention
Account and "ACCOUNT" means either of them;
"ACCOUNT PLEDGES" means, together, the Operating Account Pledge and
the Retention Account Pledge and "ACCOUNT PLEDGE" means either of
them;
"ANEMOS" means Anemos Maritime Holdings Inc. of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 and
includes its successors in title;
"APPROVED BROKER" means each of Astrup Fearnley A/S of Oslo, Norway, H
Clarkson & Company Ltd. of London, England and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Ltd. of London, England and any other shipbrokers nominated by the
Bank from time to time and includes their respective successors in
title and "APPROVED BROKERS" means any or all of them;
"ASSIGNEE" has the meaning ascribed thereto in clause 15.3;
"AUDITORS" means the auditors for the time being of the Group being
PricewaterhouseCoopers or such other firm of auditors approved in
advance by the Bank (such approval not to be unreasonably withheld or
delayed).
"BALLOON INSTALMENT" has the meaning ascribed thereto in clause 4.1;
"BANK" means HSH Nordbank AG whose registered office is at
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany
(or of such other address as may last have been notified to the
Borrower pursuant to clause 15.6) and includes its successors in
title, Assignees or Transferees;
"BANKING DAY" means a day on which dealings in deposits in Dollars are
carried on in the London Interbank Market and (other than Saturday or
Sunday) on which banks are open for business in Athens, Hamburg,
London and New York City (or any other relevant place of payment under
clause 6);
"BORROWED MONEY" means Indebtedness incurred 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) leases and hire purchase contracts,
(vii) swaps, forward exchange contracts, futures and other
derivatives, (viii) any other transaction (including without
limitation forward sale or
1
purchase agreements) having the commercial effect of a borrowing or
raising of money or of any of (ii) to (vii) above and (ix) guarantees
in respect of Indebtedness of any person falling within any of (i) to
(vii) above;
"BORROWER" means Star Maritime Enterprises Corporation of Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands MH96960 and includes its successors in title;
"BORROWER'S SECURITY DOCUMENTS" means, at any relevant time, such of
the Security Documents as shall have been executed by the Borrower at
such time;
"CHARTER" means the "NYPE 1946 Form" time charter to be made between
the Borrower and the Charterer in respect of the charter of the Ship
by the Charterer, such charter to be in form and substance acceptable
to the Bank in its sole discretion;
"CHARTERER" means Deiulemar Compagnia de Navigazione Spa of Italy and
includes its successors in title;
"CHARTER ASSIGNMENT" means an assignment of any charterparty or other
employment contract in respect of the Ship executed or (as the context
may require) to be executed by the Borrower in favour of the Bank
pursuant to clause 8.1.14, in such form as the Bank may require in its
sole discretion;
"CLASSIFICATION" means "NS* (Bulk Carrier, Strengthened for Heavy
Cargies Nos. 2, 4 & 6 Holds may be empty) (ESP), MNS*" or such other
classification as the Bank shall, at the request of the Borrower, have
agreed in writing shall be treated as the Classification for the
purposes of the Security Documents;
"CLASSIFICATION SOCIETY" means Nippon Kaiji Kyokai or such other
classification society which the Bank shall, at the request of the
Borrower, have agreed in writing shall be treated as the
Classification Society for the purposes of the 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 for the Safety of Life
at Sea 1974 (as amended) and includes any amendments or extensions
thereto and any regulation issued pursuant thereto;
"COMMITMENT" means the amount which the Bank has agreed to lend to the
Borrower under clause 2.1 as reduced by any relevant term of this
Agreement;
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation,
deprivation, forfeiture or confiscation for any reason of the 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;
"CONSOLIDATION DATE" means the date falling on the earlier of (i) the
Hyperion Delivery Date and (ii) the date falling four (4) months after
the Drawdown Date;
"CONTRACT" means the memorandum of agreement dated 11 August 2006 and
addendum no. 1 thereto dated 24 October 2006 as may be further amended
and supplemented from time to time with the prior written consent of
the Bank, made between the Seller and the Borrower relating to the
sale by the Seller, and the purchase by the Borrower, of the Ship;
"CONTRACT PRICE" means the purchase price payable by the Borrower to
the Seller for the Ship in accordance with the Contract, being the sum
of Nineteen million four hundred seventy seven thousand two hundred
and sixty Dollars and twenty seven cents ($19,477,260.27) or such
other sum as is determined in accordance with the terms and conditions
of the Contract to be the purchase price for the Ship thereunder;
2
"CORPORATE GUARANTEE" means the corporate guarantee executed or (as
the context may require) to be executed by the Corporate Guarantor in
favour of the Bank in the form or substantially the form set out in
schedule 3;
"CORPORATE GUARANTOR" means Navios Maritime Holdings Inc. of Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands MH96960 and includes its successors in title;
"DEFAULT" means any Event of Default or any event or circumstance
which with the giving of notice or lapse of time or the satisfaction
of any other condition (or any combination thereof) would constitute
an Event of Default;
"DELIVERY" means the delivery of the Ship by the Seller to the
Borrower, and the acceptance of the Ship by the Borrower, pursuant to
the Contract;
"DELIVERY DATE" means the date upon which Delivery occurs;
"DOC" means a document of compliance issued to an Operator in
accordance with rule 13 of the Code;
"DOLLARS" and "$" 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 U.S.
dollar funds as may at the relevant time be customary for the
settlement of international banking transactions denominated in U.S.
dollars);
"DRAWDOWN DATE" means the date, being a Banking Day falling not later
than the Termination Date, on which the Loan is, or is to be, drawn
down;
"DRAWDOWN NOTICE" means a notice substantially in the form of schedule
1;
"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 the Borrower
or any other Relevant Party or any person having a contractual
relationship with the Borrower or any other Relevant Party in
connection with any Relevant Ship or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from any Relevant Ship;
"ENVIRONMENTAL APPROVAL" means any consent, authorisation, licence or
approval of any governmental or public body or authorities or courts
applicable to any Relevant Ship or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from any Relevant Ship required under any Environmental
Law;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal
or other governmental or regulatory actions or orders instituted or
completed pursuant to any Environmental Law or any Environmental
Approval together with claims made by any third party relating to
damage, contribution, loss or injury, resulting from any actual or
threatened emission, spill, release or discharge of a Material of
Environmental Concern from any Relevant Ship;
"ENVIRONMENTAL LAWS" means all national, international and state laws,
rules, regulations, treaties and conventions applicable to any
Relevant Ship pertaining to the pollution or protection of human
health or the environment including, without limitation, the carriage
of Materials of Environmental Concern and actual or threatened
emissions, spills, releases or discharges of Materials of
Environmental Concern;
"EVENT OF DEFAULT" means any of the events or circumstances described
in clause 10.1;
3
"EXISTING LOAN AGREEMENT" means the facilities agreement dated 21
December 2005 and made between (1) the Corporate Guarantor, as
borrower, (2) the financial institutions listed in Part II of Schedule
1 thereto, as lenders and (3) the Bank in its capacity as agent,
security agent, hedge counterparty and mandated lead arranger, in
respect of facilities of (originally) up to $649,000,000;
"FLAG STATE" means the Republic of Panama or such other state or
territory designated in writing by the Bank, at the request of the
Borrower, as being the "FLAG STATE" of the Ship for the purposes of
the Security Documents;
"GENERAL ASSIGNMENT" means the first priority general assignment
collateral to the Mortgage executed or (as the context may require) to
be executed by the Borrower in favour of the Bank in the form or
substantially the form set out in schedule 5;
"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;
"GROUP" means the Corporate Guarantor and each of its Subsidiaries
from time to time during the term of this Agreement (which for the
avoidance of doubt include the Borrower) and "MEMBER OF THE GROUP"
shall be construed accordingly;
"HYPERION" means the motor vessel Navios Hyperion, a 2004-built,
(approximately) 75,500 dwt bulk carrier, owned on the date of this
Agreement by the Hyperion Seller and registered under the laws and
flag of the Flag State with IMO Number 9260627;
"HYPERION BUYER" means any member of the Group which shall become the
registered owner of Hyperion after the date of this Agreement and
includes its successors in title;
"HYPERION CONTRACT" means the memorandum of agreement to be made
between the Hyperion Seller and the Hyperion Buyer relating to the
sale by the Hyperion Seller, and the purchase by the Hyperion Buyer,
of Hyperion;
"HYPERION DELIVERY" means the delivery of Hyperion by the Hyperion
Seller to the Hyperion Buyer, and the acceptance of Hyperion by the
Hyperion Buyer, pursuant to the Hyperion Contract;
"HYPERION DELIVERY DATE" means the date upon which the Hyperion
Delivery occurs;
"HYPERION SELLER" means the registered owner of Hyperion on the date
of this Agreement and includes its successors in title;
"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 each period for the calculation of interest in
respect of the Loan ascertained in accordance with clauses 3.2 and
3.3;
"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;
4
"ISSC" means an International Ship Security Certificate issued in
respect of the Ship pursuant to the ISPS Code;
"LIBOR" means in relation to a particular period:
(a) the rate per annum for deposits of dollars for a period
equivalent to such period at 11:00 am on the Quotation Day for
such period as displayed on Reuters BBA page LIBOR01 (and, for
the purposes of this Agreement, "REUTERS BBA PAGE LIBOR01" means
the display designated as "Reuters BBA page LIBOR01" on the
Reuters Screen or such other page as may replace "Reuters BBA
page LIBOR01" on the Reuters Screen for the purpose of displaying
rates comparable to that rate or on such other service as may be
nominated by the British Bankers' Association for the purpose of
displaying BBA Interest Settlement Rates (as defined in the
British Bankers' Association's Recommended Terms and Conditions
("BBAIRS" terms) dated August, 1996) for dollars); or
(b) for any period over twelve (12) months or if on such date no such
rate is displayed, LIBOR for such period shall be the rate per
annum (rounded upward if necessary to the nearest one sixteenth
(1/16th) of one per cent) quoted by the Bank as the Bank's
offered rate for deposits in dollars in an amount comparable with
the amount in relation to which LIBOR is to be determined and for
a period equal to the relevant period to prime banks in the
London interbank market at or about 11:00 am on the Quotation Day
for such period;
"LOAN" means the principal amount borrowed by the Borrower on the
Drawdown Date or (as the context may require) the principal amount
owing to the Bank under this Agreement at any relevant time;
"MANAGEMENT AGREEMENT" means the management agreement dated _______
December 2006 made between the Borrower and the Manager in respect of
the Ship or any other agreement previously approved in writing by the
Bank between the Borrower and the Manager providing for the Manager to
manage the Ship;
"MANAGER" means Navios ShipManagement Inc. of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 or
any other person appointed by the Borrower, with the prior written
consent of the Bank, as the manager of the Ship, and includes its
successors in title;
"MANAGER'S UNDERTAKING" means the first priority manager's undertaking
and assignment executed or (as the context may require) to be executed
by the Manager in favour of the Bank in the form or substantially the
form set out in schedule 6;
"MARGIN" means one point fifty per cent (1.50%) per annum;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes pollutants,
contaminants, toxic substances, oil as defined in the United States
Oil Pollution Act of 1990 and all hazardous substances as defined in
the United States Comprehensive Environmental Response, Compensation
and Liability ▇▇▇ ▇▇▇▇;
"MONTH" means a period beginning in one calendar month and ending in
the next calendar month on the day numerically corresponding to the
day of the calendar month on which it started, provided that (i) if
the period started on the last Banking Day in a calendar month or if
there is no such numerically corresponding day, it shall end on the
last Banking Day in such next calendar month and (ii) if such
numerically corresponding day is not a Banking Day, the period shall
end on the next following Banking Day in the same calendar month but
if there is no such Banking Day it shall end on the preceding Banking
Day and "MONTHS" and "MONTHLY" shall be construed accordingly;
"MORTGAGE" means the first preferred Panamanian mortgage of the Ship
executed or (as the context may require) to be executed by the
Borrower in favour of the Bank in the form or substantially the form
set out in schedule 4;
5
"NAVIOS CORPORATION" means Navios Corporation of Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands
MH96960 and includes its successors in title;
"OPERATING ACCOUNT" means the interest bearing Dollar account of the
Borrower opened or (as the context may require to be opened) by the
Borrower with the Bank and includes any sub-accounts thereof and any
other account designated in writing by the Bank to be an Operating
Account for the purposes of this Agreement;
"OPERATING ACCOUNT PLEDGE" means a first priority pledge of the
Operating Account executed or (as the context may require) to be
executed by the Borrower in favour of the Bank in such form as the
Bank may in it sole discretion require;
"OPERATOR" means any person who is from time to time during the
Security Period concerned in the operation of the Ship and falls
within the definition of "Company" set out in rule 1.1.2 of the Code;
"PERMITTED ENCUMBRANCE" means any Encumbrance in favour of the Bank
created pursuant to the Security Documents, any Encumbrance in favour
of the Bank created pursuant to the Existing Loan Agreement and
Permitted Liens;
"PERMITTED LIENS" means any lien on the Ship for master's, officer's
or crew's wages outstanding in the ordinary course of trading, any
lien for salvage and any ship repairer's or outfitter's possessory
lien, in each case for a sum not (except with the prior written
consent of the Bank) exceeding the Casualty Amount (as defined in the
Ship Security Documents);
"QUOTATION DAY" means, in relation to any period for which an interest
rate is to be determined two (2) Banking Days before the first day of
that period, unless market practice differs in the London Interbank
Market, in which case the Quotation Day will be determined by the Bank
in accordance with market practice in the London Interbank Market (and
if quotations would normally be given by leading banks in the London
Interbank Market on more than one day, the Quotation Day will be the
last of those days);
"REGISTRY" means such registrar, commissioner or representative of the
Flag State who is duly authorised and empowered to register the Ship,
the Borrower's title to the Ship and the Mortgage under the laws and
flag of the 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;
"RELEVANT PARTY" means the Borrower, the Borrower's Related Companies,
any other Security Party or any Security Party's Related Companies;
"RELEVANT SHIP" means the Ship and any other vessel owned, operated,
managed or crewed by any member of the Group;
"REPAYMENT DATES" means, subject to clause 6.3, 31 March 2007 and each
of the dates falling at three (3) monthly intervals thereafter up to
and including the date falling on the earlier of (i) one hundred and
eight (108) months after the Drawdown Date and (ii) 31 December 2015;
"RETENTION ACCOUNT" means a Dollar account of the Borrower opened or
(as the context may require) to be opened by the Borrower with the
Bank and includes any sub-accounts thereof and any other account
designated in writing by the Bank to be a Retention Account for the
purposes of this Agreement;
6
"RETENTION ACCOUNT PLEDGE" means a first priority pledge of the
Retention Account executed or (as the context may require) to be
executed by the Borrower in favour of the Bank, in such form as the
Bank may in it sole discretion require;
"RETENTION AMOUNT" means, in relation to any Retention Date, such sum
as shall be the aggregate of:
(a) one-third (1/3rd) 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 DATE" means:
(a) in relation to the first Repayment Date, the date falling thirty
(30) days after the Drawdown Date and each of the dates falling
at monthly intervals thereafter up to the first Repayment Date;
and
(b) in relation to a Repayment Date (other than the last Repayment
Date), each of:
(i) the date falling ten (10) Banking Days after the first day
of the first month commencing immediately after such
Repayment Date;
(ii) the first day of the second month commencing immediately
after such Repayment Date; and
(iii) the first day of the third month commencing immediately
after such Repayment Date,
and "RETENTION DATES" means any or all of them. For the purposes of
this definition, clause 6.3 shall not apply to the expression
"Repayment Date";
"SECURITY DOCUMENTS" means this Agreement, the Corporate Guarantee,
the Mortgage, the General Assignment, the Manager's Undertaking, the
Charter Assignment, the Account Pledges, the Sub-manager's Undertaking
and any other documents as may have been or shall from time to time
after the date of this Agreement be executed to secure all or any part
of the Loan, interest thereon and other moneys from time to time owing
by the Borrower or any other Security Party 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 the Borrower, the Corporate Guarantor, the
Manager, the Sub-manager or any other person who may at any time be a
party to any of the Security Documents (other than the Bank);
"SECURITY PERIOD" means the period commencing on the date of this
Agreement and terminating upon discharge of the security created by
the Security Documents by payment of all moneys payable thereunder;
"SECURITY REQUIREMENT" means the amount in Dollars (as certified by
the Bank whose certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrower and the Bank) which is at any
relevant time One hundred and twenty five per cent (125%) of the Loan;
7
"SECURITY VALUE" means the amount in Dollars (as certified by the Bank
whose certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrower and the Bank) which is at any
relevant time the aggregate of (i) the market value of the Ship as
most recently determined in accordance with clause 8.3.2 and (ii) the
market value of any additional security for the time being actually
provided to the Bank pursuant to clause 8.3 as most recently
determined in accordance with clause 8.3.5;
"SELLER" means, together, Sun Lanes Shipping S.A. of Panama and Nikko
Kisen Co., Ltd. of Japan and includes its successors in title;
"SHIP" means the motor vessel Navios Star, a 2002 Imabari built,
(approximately) 76,662 dwt bulk carrier, owned on the date of this
Agreement by the Seller and registered under the laws and flag of the
Flag State, and to be registered on the Delivery Date in the ownership
of the Borrower through the Registry under the laws and flag of the
Flag State with the same name and with IMO Number 9243502;
"SHIP SECURITY DOCUMENTS" means the Mortgage, the General Assignment,
any Charter Assignment, the Sub-manager's Undertaking and the
Manager's Undertaking;
"SMC" means a safety management certificate issued in respect of the
Ship in accordance with rule 13 of the Code;
"SUB-MANAGEMENT AGREEMENT" means the agreement dated as of 2 June 2004
made between the Manager as head manager and the Sub-manager as
commercial sub-manager in respect of the Ship;
"SUB-MANAGER" means Navimax Corporation of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 or
any other person appointed by the Manager, with the prior written
consent of the Bank, as the commercial sub-manager of the Ship, and
includes its successors in title;
"SUB-MANAGER'S UNDERTAKING" means the first priority undertaking and
assignment executed or (as the context may require) to be executed by
the Sub-manager in favour of the Bank in such form as the Bank shall
require in its sole discretion;
"SUBSIDIARY" of a person means any company or entity directly or
indirectly controlled by such person, and for this purpose "CONTROL"
means either the ownership of more than fifty per cent (50%) of the
voting share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and management,
whether by contract or otherwise;
"TAXES" includes all present and future 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 December 2006 or such later date as the
Bank may in its absolute discretion agree in writing;
"TOTAL LOSS" means:
(a) the actual, constructive, compromised or arranged total loss of
the Ship; or
(b) the Compulsory Acquisition of the Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of the Ship (other than where the same
amounts to the Compulsory Acquisition of the Ship) by any
Government Entity, or by persons acting or purporting to act on
behalf of any Government Entity, unless the Ship be released and
restored to the Borrower from such hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation
within forty-five (45) days after the occurrence thereof;
"TRANSFEREE" has the meaning ascribed thereto in clause 15.4;
8
"TREASURY TRANSACTION" means any derivative entered into in connection
with protection against or benefit from fluctuation in any rate or
price (including any forward freight derivative transaction); and
"UNDERLYING DOCUMENTS" means, together, the Contract, the
Sub-management Agreement and the Management Agreement.
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 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 Central European time (CET);
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.
2 THE COMMITMENT AND THE LOAN
2.1 AGREEMENT TO LEND
The Bank, relying upon each of the representations and warranties in
clause 7, agrees to lend to the Borrower, upon and subject to the
terms of this Agreement, the principal sum of up to the lower of (i)
Nineteen million five hundred thousand Dollars ($19,500,000) and (ii)
an amount in Dollars equal to Sixty-eight percent (68%) of the market
value of the Ship as determined in accordance with paragraph 11 of
Part 1, schedule 2.
2.2 DRAWDOWN
Subject to the terms and conditions of this Agreement, the Loan shall
be advanced in full in one amount on the Drawdown Date following
receipt by the Bank from the Borrower of a Drawdown Notice not later
than 10:00 a.m. on the second Banking Day before the proposed Drawdown
9
Date. A Drawdown Notice shall be effective on actual receipt by the
Bank and, once given, shall, subject as provided in clause 3.6.1, be
irrevocable.
2.3 AMOUNT
The principal amount specified in the Drawdown Notice for borrowing on
the Drawdown Date shall, subject to the terms and conditions of this
Agreement, not exceed the lower of (i) Nineteen million five hundred
thousand Dollars ($19,500,000) and (ii) an amount in Dollars equal to
Sixty-eight percent (68%) of the market value of the Ship as
determined in accordance with paragraph 11 of Part 1, schedule 2.
2.4 AVAILABILITY
Upon receipt of a Drawdown Notice complying with the terms of this
Agreement the Bank shall, subject to the provisions of clause 9, on
the Drawdown Date make the Loan available to the Borrower in
accordance with clause 6.2. The Borrower acknowledges that payment of
the Loan or part thereof to the Seller in accordance with clause 6.2
shall satisfy the obligation of the Bank to lend the Commitment to the
Borrower under this Agreement.
2.5 TERMINATION OF COMMITMENT
Any part of the Commitment which is undrawn by the Termination Date
shall thereupon be automatically cancelled.
2.6 APPLICATION OF PROCEEDS
Without prejudice to the Borrower's obligations under clause 8.1.3,
the Bank shall have no responsibility for the application of the
proceeds of the Loan or any part thereof by the Borrower.
3 INTEREST AND INTEREST PERIODS
3.1 NORMAL INTEREST RATE
The Borrower shall pay interest on 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 such instalment being payable 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 Bank to be the aggregate of (a) the Margin and (b)
LIBOR for such Interest Period.
3.2 SELECTION OF INTEREST PERIODS
The Borrower may by notice received by the Bank not later than 10:00
a.m. on the second Banking Day before the beginning of each Interest
Period specify whether such Interest Period shall have a duration of
one (1) month, three (3) months, six (6) months or twelve (12) months
or such other period as the Borrower may select and the Bank may, in
its absolute discretion, agree.
3.3 DETERMINATION OF INTEREST PERIODS
Every Interest Period shall be of the duration specified by the
Borrower pursuant to clause 3.2 but so that:
3.3.1 the initial Interest Period shall commence on the Drawdown Date and
each subsequent Interest Period shall commence on the last day of the
previous Interest Period;
3.3.2 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
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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 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
3.3.3 if the Borrower fails 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 Borrower fails to pay any sum (including, without limitation,
any sum payable pursuant to this clause 3.4) on its due date for
payment under any of the Security Documents, the Borrower shall pay
interest on such sum on demand from the due date up to the date of
actual payment (as well after as before judgement) at a rate
determined by the Bank 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 six (6) months as
selected by the Bank 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 Bank) 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 Bank 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 Bank under
clause 10.2.2 or a prepayment pursuant to clauses 4.3, 8.3.1(a), 8.4
or 12.1, on a date other than an Interest Payment Date relating
thereto, the first such period selected by the Bank 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 Bank is unable to determine a rate in accordance with the
foregoing provisions of this clause 3.4, interest on any sum not paid
on its due date for payment shall be calculated at a rate determined
by the Bank to be two per cent (2%) per annum above the aggregate of
the Margin and the cost of funds to the Bank.
3.5 NOTIFICATION OF INTEREST PERIODS AND INTEREST RATE
The Bank shall notify the Borrower promptly of the duration of each
Interest Period and of each rate of 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, the Bank shall have determined (which determination shall, in
the absence of manifest error, be conclusive):
(a) that adequate and fair means do not exist for ascertaining LIBOR
during such Interest Period; or
(b) that deposits in Dollars are not available to the Bank in the
London Interbank Market in the ordinary course of business in
sufficient amounts to fund the Loan for such Interest Period,
the Bank shall forthwith give notice (a "DETERMINATION NOTICE")
thereof to the Borrower. 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
Commitment shall not be borrowed until notice to the contrary is given
to the Borrower by the Bank.
3.6.2 During the period of ten (10) days after any Determination Notice has
been given by the Bank under clause 3.6.1, the Bank shall certify an
alternative basis (the "SUBSTITUTE BASIS") for
11
maintaining the Loan. The Substitute Basis may (without limitation)
include alternative interest periods, alternative currencies or
alternative rates of interest but shall include a margin above the
cost of funds to the Bank equivalent to the Margin. Each Substitute
Basis so certified shall be binding upon the Borrower and shall take
effect in accordance with its terms from the date specified in the
Determination Notice until such time as the Bank notifies the Borrower
that none of the circumstances specified in clause 3.6.1 continues to
exist whereupon the normal interest rate fixing provisions of the
Agreement shall apply.
4 REPAYMENT AND PREPAYMENT
4.1 REPAYMENT
The Borrower shall repay the Loan by thirty six (36) instalments, one
such instalment to be repaid on each of the Repayment Dates. Subject
to the provisions of this Agreement, the amount of each instalment
(other than the final instalment) shall be Three hundred twenty-five
thousand Dollars ($325,000) and the amount of the thirty-sixth and
final instalment shall be Eight million one hundred twenty-five
thousand Dollars ($8,125,000) (comprising a repayment instalment of
Three hundred and twenty-five thousand Dollars ($325,000) and a
balloon payment of Seven million eight hundred thousand Dollars
($7,800,000) (the "BALLOON INSTALMENT")). If the Commitment is not
drawn down in full, the amount of the repayment instalments (including
the Balloon Instalment) shall be reduced proportionately.
4.2 VOLUNTARY PREPAYMENT
The Borrower may prepay the Loan in whole or part (being Three hundred
twenty-five thousand Dollars ($325,000) or any larger sum which is an
integral multiple of Three hundred twenty-five thousand Dollars
($325,000)) on any Interest Payment Date relating to the part of the
Loan to be repaid without premium or penalty.
4.3 PREPAYMENT ON TOTAL LOSS
On the Ship becoming a Total Loss (or suffering damage or being
involved in an incident which, in the opinion of the Bank, may result
in the Ship subsequently being determined to be a Total Loss) or being
sold to a person other than the Borrower, before the Loan is drawn
down, the obligation of the Bank to advance the Loan shall immediately
cease and the Commitment shall be reduced to zero.
After the Drawdown Date, on the date falling one hundred and twenty
(120) days after that on which the Ship became a Total Loss or, if
earlier, on the date upon which the insurance proceeds are, or
Requisition Compensation (as defined in the Ship Security Documents)
is, received by the Borrower (or the Bank pursuant to the Security
Documents), the Borrower shall prepay the Loan in full.
For the purpose of this Agreement, a Total Loss shall be deemed to
have occurred:
4.3.1 in the case of an actual total loss of the Ship on the actual date and
at the time the Ship was lost or, if such date is not known, on the
date on which the Ship was last reported;
4.3.2 in the case of a constructive total loss of the Ship, upon the date
and at the time notice of abandonment of the Ship is given to the
insurers of the Ship for the time being;
4.3.3 in the case of a compromised or arranged total loss, on the date upon
which a binding agreement as to such compromised or arranged total
loss has been entered into by the insurers of the Ship;
4.3.4 in the case of Compulsory Acquisition, on the date upon which the
relevant requisition of title or other compulsory acquisition occurs;
and
4.3.5 in the case of hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of the Ship (other than where the
same amounts to Compulsory Acquisition of the Ship) by any Government
Entity, or by persons purporting to act on behalf of any Government
Entity, which deprives the Borrower of the use of the Ship for more
than thirty
12
(30) days, upon the expiry of the period of thirty (30) 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 (a) accrued interest on the Loan, (b) any
additional amount payable under clauses 6.6 or 12.2 and (c) all other
sums payable by the Borrower to the Bank under this Agreement or any
of the other Security Documents including, without limitation, any
accrued commitment commission payable under clause 5.1.2 and any
amounts payable under clause 11.
4.5 NOTICE OF PREPAYMENT; REDUCTION OF REPAYMENT INSTALMENTS
No prepayment may be effected under clause 4.2 unless the Borrower
shall have given the Bank at least fifteen (15) days' notice in
writing of its intention to make such prepayment. Every notice of
prepayment shall be effective only on actual receipt by the Bank,
shall be irrevocable, shall specify the amount to be prepaid and shall
oblige the Borrower to make such prepayment on the date specified. No
amount prepaid under this Agreement may be re-borrowed and any amount
prepaid pursuant to clauses 4.2 or 8.3.1(a) shall be applied in
reducing the repayment instalments under clause 4.1 (including the
Balloon Instalment) proportionately. The Borrower may not prepay the
Loan or any part thereof save as expressly provided in this Agreement.
5 COMMITMENT COMMISSION, FEES AND EXPENSES
5.1 FEES
The Borrower shall pay to the Bank on the earlier of (a) the Drawdown
Date and (b) the Termination Date:
5.1.1 an arrangement fee of One hundred seventeen thousand Dollars
($117,000), and
5.1.2 commitment commission computed from the date of this Agreement at the
rate of zero point forty-five per cent (0.45%) per annum on the daily
undrawn amount of the Commitment.
The fee referred to in this clause 5.1.1 and the commitment commission
referred to in clause 5.1.2 shall be payable by the Borrower to the
Bank whether or not any part of the Commitment is ever advanced and
shall, in either case, be non-refundable.
5.2 EXPENSES
The Borrower shall pay to the Bank on a full indemnity basis on demand
all expenses (including legal, printing and out-of-pocket
expenses(which legal expenses, for the avoidance of doubt, shall in
turn include any expenses incurred by the Bank in obtaining any legal
opinions)) incurred by the Bank (whether or not any part of the
Commitment is ever advanced):
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 or 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 judgement).
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.
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5.4 STAMP AND OTHER DUTIES
The Borrower shall pay all stamp, documentary, registration or other
like duties or taxes (including any such duties or taxes payable by
the Bank) imposed on or in connection with any of the Underlying
Documents, the Security Documents or the Loan and shall indemnify the
Bank against any liability arising by reason of any delay or omission
by the Borrower to pay such duties or taxes.
6 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 NO SET-OFF OR COUNTERCLAIM
The Borrower acknowledges that in performing its obligations under
this Agreement, the Bank will be incurring liabilities to third
parties in relation to the funding of amounts to the Borrower, such
liabilities matching the liabilities of the Borrower to the Bank and
that it is reasonable for the Bank to be entitled to receive payments
from the Borrower gross on the due date in order that the Bank is put
in a position to perform its matching obligations to the relevant
third parties. Accordingly, all payments to be made by the Borrower
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 of the Bank at such bank in such place as
the Bank may from time to time specify for this purpose.
6.2 PAYMENT BY THE BANK
All sums to be advanced by the Bank to the Borrower under this
Agreement in respect of the Loan shall be remitted in Dollars on the
Drawdown Date to the account specified in the Drawdown Notice.
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)
day year.
6.5 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Bank 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 Borrower.
6.6 GROSSING-UP FOR TAXES
If at any time the Borrower is required to make any deduction or
withholding in respect of Taxes from any payment due under any of the
Security Documents, the sum due from the Borrower in respect of such
payment shall be increased to the extent necessary to ensure that,
after the making of such deduction or withholding, the Bank 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 Borrower shall indemnify the Bank
against any losses or costs incurred by it by reason of any failure of
the Borrower to make any such deduction or withholding or by reason of
any increased payment not being made on the due date for such payment.
The Borrower shall promptly deliver to the Bank any receipts,
certificates or other proof evidencing the amounts (if any) paid or
payable in respect of any deduction or withholding as aforesaid.
14
6.7 LOAN ACCOUNT
The 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. Such account shall, in the
absence of manifest error, be conclusive as to the amount from time to
time owing by the Borrower under the Security Documents.
7 REPRESENTATIONS AND WARRANTIES
7.1 CONTINUING REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
7.1.1 Due incorporation
the Borrower and each of the other Security Parties are duly
incorporated and validly existing in good standing under the laws of
their respective countries of incorporation, each as a ▇▇▇▇▇▇▇▇
Islands corporation, 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
the Borrower has power to execute, deliver and perform its obligations
under the Underlying Documents and the Borrower's Security Documents
and to borrow the Commitment and each of the other Security Parties
has power to execute and deliver and perform its obligations under the
Security Documents and the Underlying 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 the Borrower to borrow
will be exceeded as a result of borrowing the Loan;
7.1.3 Binding obligations
the Security Documents and the Underlying Documents constitute or
will, when executed, constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with their
respective terms;
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 judgement, decree or permit to which the Borrower 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 the Borrower 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 the Borrower or any other Security
Party or (iv) result in the creation or imposition of or oblige the
Borrower or any of its Related Companies or any other Security Party
to create any Encumbrance (other than a Permitted Encumbrance) on the
undertakings, assets, rights or revenues of the Borrower or any of its
Related Companies or any other Security Party;
7.1.5 No litigation
no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the Borrower,
threatened against the Borrower or any of its Related Companies or any
other Security Party which could have a material adverse effect on the
business, assets or financial condition of the Borrower or any other
Security Party;
15
7.1.6 No filings required
save for the registration of the Mortgage with the Registry, it is not
necessary to ensure the legality, validity, enforceability or
admissibility in evidence of any of the Underlying Documents or any of
the Security Documents that they or any other instrument be notarised,
filed, recorded, registered or enrolled in any court, public office or
elsewhere in any Relevant Jurisdiction or that any stamp, registration
or similar tax or charge be paid in any Relevant Jurisdiction on or in
relation to the Underlying Documents or the Security Documents and the
Underlying Documents and each of 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 English law to govern the Underlying Documents and the
Security Documents (other than the Mortgage and the Account Pledges),
the choice of (i) Panamanian law to govern the Mortgage and (ii)
German 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, the German courts, are valid and
binding;
7.1.8 No immunity
neither the Borrower 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 or the
performance by each Security Party of its obligations under the
Underlying Documents and the Security Documents to which it is 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; and
7.1.10 Shareholdings
(a) each of the Borrower and the Manager is a wholly-owned Subsidiary
of Anemos;
(b) the Sub-manager is a wholly-owned Subsidiary of Navios
Corporation;
(c) each of Anemos and Navios Corporation is a wholly-owned
Subsidiary of the Corporate Guarantor; and
(d) a minimum of twenty per cent. (20%) of the issued share capital
of the Corporate Guarantor is legally and ultimately beneficially
owned by ▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
7.2 INITIAL REPRESENTATIONS AND WARRANTIES
The Borrower further represents and warrants to the Bank that:
7.2.1 Pari passu
the obligations of the Borrower under this Agreement are direct,
general and unconditional obligations of the Borrower and rank at
least pari passu with all other present and future unsecured and
unsubordinated Indebtedness of the Borrower except for obligations
which are mandatorily preferred by law and not by contract;
16
7.2.2 No default under other Indebtedness
neither the Borrower nor any other Security Party nor any other
Relevant Party is (nor would with the giving of notice or lapse of
time or the satisfaction of any other condition or combination thereof
be) in breach of or in default under any agreement relating to
Indebtedness to which it is a party or by which it may be bound;
7.2.3 Information
the information, exhibits and reports furnished by any Security Party
to the Bank in connection with the negotiation and preparation of each
of the Security Documents are true and accurate in all material
respects and not misleading, 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 Security Party under the Underlying Documents or the
Security Documents or are imposed on or by virtue of the execution or
delivery by the Security Parties of the Underlying Documents or the
Security Documents or any other document or instrument to be executed
or delivered under any of the Security Documents;
7.2.5 No Default
no Default has occurred and is continuing;
7.2.6 The Ship
the Ship will, on the Delivery Date, be:
(a) in the absolute ownership of the Borrower who will on and after
the Delivery Date be the sole, legal and beneficial owner of the
Ship;
(b) provisionally registered in the name of the Borrower through the
offices of the Registry as a ship under the laws and flag of the
Flag State;
(c) operationally seaworthy and in every way fit for service; and
(d) classed with the Classification free of all requirements and
recommendations of the Classification Society;
7.2.7 Ship's employment
the Ship is not and will not, on or before the Delivery Date, be
subject 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
Ship Security Documents would have required the consent of the Bank
and, on or before the Delivery Date, there will not be any agreement
or arrangement whereby the Earnings (as defined in the Ship Security
Documents) may be shared with any other person;
7.2.8 Freedom from Encumbrances
neither the Ship, nor her Earnings, Insurances or Requisition
Compensation (each as defined in the 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, subject to any Encumbrance;
17
7.2.9 Compliance with Environmental Laws and Approvals
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank:
(a) the Borrower and the other Relevant Parties and, to the best of
the Borrower's knowledge and belief (having made due enquiry),
their respective Environmental Affiliates have complied with the
provisions of all Environmental Laws;
(b) the Borrower and the other Relevant Parties and, to the best of
the Borrower's knowledge and belief (having made due enquiry),
their respective Environmental Affiliates have obtained all
Environmental Approvals and are in compliance with all such
Environmental Approvals; and
(c) neither the Borrower nor any other Relevant Party nor, to the
best of the Borrower's knowledge and belief (having made due
enquiry), any of their respective Environmental Affiliates has
received notice of any Environmental Claim that the Borrower or
any other Relevant Party or any such Environmental Affiliate is
not in compliance with any Environmental Law or any Environmental
Approval;
7.2.10 No Environmental Claims
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank, there is no
Environmental Claim pending or, to the best of the Borrower's
knowledge and belief (having made due enquiry) threatened against the
Borrower or the Ship or any other Relevant Party or any other Relevant
Ship or, to the best of the Borrower's knowledge and belief (having
made due enquiry), any of their respective Environmental Affiliates;
7.2.11 No potential Environmental Claims
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank, there has been no
emission, spill, release or discharge of a Material of Environmental
Concern from the Ship or any other ship owned by, managed or crewed by
or chartered to the Borrower nor, to the best of the Borrower's
knowledge and belief (having made due enquiry), from any other
Relevant Ship owned by, managed or crewed by or chartered to any other
Relevant Party which could give rise to an Environmental Claim;
7.2.12 ISPS Code
on the Delivery Date the Borrower shall have a valid and current ISSC
in respect of the Ship and the Ship shall be in compliance with the
ISPS Code;
7.2.13 No material adverse change
there has been no material adverse change in the financial position of
the Borrower or the financial position of the Corporate Guarantor and
its Related Companies from that described by the Borrower or any other
Security Party to the Bank in the negotiation of this Agreement; and
7.2.14 Copies true and complete
the copies of the Underlying Documents delivered or to be delivered to
the Bank pursuant to clause 9.1 are, or will when delivered be, true
and complete copies of such documents; such documents constitute valid
and binding obligations of the parties thereto enforceable in
accordance with their respective terms and there will have been no
amendments or variations thereof or defaults thereunder.
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7.3 REPETITION OF REPRESENTATIONS AND WARRANTIES
On and as of the Drawdown Date and (except in relation to the
representations and warranties in clause 7.2) on each Interest Payment
Date the Borrower shall (a) be deemed to repeat the representations
and warranties in clause 7.1 as if made with reference to the facts
and circumstances existing on such day and (b) be deemed to further
represent and warrant to the Bank that the then latest audited
financial statements delivered to the Bank (if any) have been prepared
in accordance with US GAAP which have been consistently applied and
present fairly and accurately the financial position of the Borrower
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 Borrower and the consolidated
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 Borrower nor any member of the Group 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 Borrower hereby undertakes with the Bank 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 Commitment remains
outstanding, it will:
8.1.1 Notice of Default
promptly inform the Bank of any occurrence of which it becomes aware
which might adversely affect the ability of any Security Party to
perform its obligations under any of the Security Documents and,
without limiting the generality of the foregoing, will inform the Bank
of any Default forthwith upon becoming aware thereof and will from
time to time, if so requested by the Bank, confirm to the Bank 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;
8.1.3 Use of proceeds
use the Loan exclusively for the purpose specified in clause 1.1;
8.1.4 Pari passu
ensure that its obligations under this Agreement shall, without
prejudice to clause 8.3 and the security intended to be created under
the Security Documents, at all times rank at least pari passu with all
its other present and future unsecured and unsubordinated Indebtedness
with the exception of any obligations which are mandatorily preferred
by law and not by contract;
8.1.5 Financial statements
procure that the Corporate Guarantor shall provide the Bank with the
consolidated financial statements referred to in clause 5.1.4 of the
Corporate Guarantee in the form required in clause 5.1.5 of the
Corporate Guarantee;
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8.1.6 Delivery of reports
deliver to the Bank as many copies as the Bank may reasonably require
at the time of issue thereof of every report, circular, notice or like
document issued by the Borrower to its shareholders or creditors
generally;
8.1.7 Provision of further information
provide the Bank with such financial and other information concerning
the Borrower, its Related Companies, the other Security Parties, their
respective Related Companies, any other member of the Group and their
respective affairs as the Bank may from time to time reasonably
require including, without prejudice to the generality of the
foregoing, their financial standing, commitments, operations, any
vessel sales or purchases and any new borrowings;
8.1.8 Know your customer information
deliver to the Bank such documents and evidence as the Bank shall from
time to time require relating to the verification of identity and
knowledge of the Bank's customers and the compliance by the Bank with
all necessary "know your customer" or similar checks, always on the
basis of applicable laws and regulations or the Bank's own internal
guidelines in each case as such laws, regulations or internal
guidelines apply from time to time;
8.1.9 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to be
assumed by it under the Security Documents;
8.1.10 Compliance with Code
and will procure that any Operator will, comply with and ensure that
the Ship and any Operator complies with the requirements of the Code,
including (but not limited to) the maintenance and renewal of valid
certificates pursuant thereto throughout the Security Period and will
procure that each Related Company of the Corporate Guarantor and each
ship thereof complies with the requirements of the Code;
8.1.11 Withdrawal of DOC and SMC
and will procure that the Manager or any Operator will, immediately
inform the Bank if there is any threatened or actual withdrawal of its
Operator's DOC or the SMC in respect of the Ship;
8.1.12 Issuance of DOC and SMC
and will procure that the Manager or any Operator will, promptly
inform the Bank upon the issue to the Borrower, the Manager or any
Operator of a DOC and to the Ship of an SMC or the receipt by the
Borrower, the Manager or any Operator of notification that its
application for the same has been refused;
8.1.13 ISPS Code Compliance
and will procure that the Manager or any Operator will:
(a) maintain at all times a valid and current ISSC in respect of the
Ship;
(b) immediately notify the Bank in writing of any actual or
threatened withdrawal, suspension, cancellation or modification
of the ISSC in respect of the Ship; and
(c) ensure that the Ship will comply at all times with the ISPS Code;
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8.1.14 Charters
without prejudice to the rights of the Bank under clause 5.1.15 of the
Mortgage, advise the Bank promptly of any proposed charterparty in
respect of the Ship having a term of eleven (11) months or longer
(taking into account any optional extensions contained therein) and
(a) deliver a certified copy of each such charterparty to the Bank
forthwith after its execution, (b) forthwith after the Bank's request
(i) execute a specific assignment of such charterparty in favour of
the Bank (in such form as the Bank may require in its discretion),
(ii) execute a notice of assignment (in such form as the Bank may
require in its discretion) of such charterparty, (iii) procure that
such notice of assignment is served on the relevant charterer and that
the relevant charterer signs an acknowledgement of such notice (in
such form as the Bank may require in its discretion), (c) forthwith
after the Bank's request, deliver to the Bank such documents and
evidence of the type referred to in schedule 2 in relation to such
charterparty, the relevant assignment, the relevant notice of
assignment and its acknowledgment (including, but without limitation,
legal opinions regarding the valid execution and binding effect
thereof) as the Bank may require in its sole discretion and (d) pay on
the Bank's demand all legal and other costs and expenses incurred by
the Bank in connection with or in relation to any such assignment,
notice of assignment and the acknowledgement thereof;
8.1.15 Classification Society
without prejudice to the obligations of the Borrower under clause
8.1.7 and clause 5.1.6 of the Mortgage, irrevocably authorise and
instruct the Classification Society to provide the Bank from time to
time, at the Borrower's cost, with any information whatsoever which
the Bank may require relating to the classification of the Vessel with
the Classification Society; and
8.1.16 Own account
The Borrower confirms that it is the beneficiary (within the meaning
of section 8 of the German Money Laundering Act (Gesetz uber das
Aufspuren von Gewinnen aus schweren Straftaten (Geldwaschegesetz)) for
the Loan made or to be made available to it. It shall promptly inform
the Bank if it ceases to be, the beneficiary (within the meaning of
section 8 of the German Money Laundering Act (Gesetz uber das
Aufspuren von Gewinnen aus schweren Straftaten (Geldwaschegesetz)) for
the Loan made or to be made available to it and shall provide in
writing to the Bank the name and the address of the beneficiary
(within the meaning of section 8 of the German Money Laundering Act
(Gesetz uber das Aufspuren von Gewinnen aus schweren Straftaten
(Geldwaschegesetz)) in respect of the Loan.
8.2 NEGATIVE UNDERTAKINGS
The Borrower undertakes with the Bank that, from the date of this
Agreement and so long as any moneys are owing under the Security
Documents and while all or any part of the Commitment remains
outstanding, it will not, without the prior written consent of the
Bank:
8.2.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of its
present or future undertaking, assets, rights or revenues to secure or
prefer any present or future Indebtedness of any Security Party or any
other person;
8.2.2 No merger
merge or consolidate with any other person or enter into a demerger,
amalgamation, corporate reconstruction or corporate redomicilation of
any type whatsoever;
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8.2.3 Disposals
sell, transfer, abandon, lend or otherwise dispose of or cease to
exercise direct control over any part (being either alone or, when
aggregated with all other disposals falling to be taken into account
pursuant to this clause 8.2.3, material in the opinion of the Bank in
relation to the undertaking, assets, rights and revenues of the
Borrower) of its 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 which for the
avoidance of doubt does not include the sale of the Ship or any of its
assets or rights which are subject to the Security Documents) whether
by one or a series of transactions related or not;
8.2.4 Other business
undertake any business other than the ownership and operation of the
Ship and the chartering of the Ship to any third parties and will
procure that no other Security Party undertakes, without the prior
written consent of the Bank, any business other than that conducted by
such Security Party at the date of this Agreement;
8.2.5 Acquisitions
acquire any further assets other than the Ship and rights arising
under contracts entered into by or on behalf of the Borrower in the
ordinary course of its business of owning, operating and chartering
the Ship;
8.2.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts entered
into in the ordinary course of its business of owning, operating and
chartering the Ship and then always on arm's length terms;
8.2.7 No borrowing
incur any Borrowed Money except for Borrowed Money pursuant to the
Security Documents;
8.2.8 Repayment of borrowings
repay the principal of, or pay interest on, or any other sum in
connection with, any of its Borrowed Money except for Borrowed Money
pursuant to the Security Documents;
8.2.9 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 (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 the Ship is entered, guarantees required to procure the release
of the Ship from any arrest, detention, attachment or levy or
guarantees or undertakings required for the salvage of the Ship);
8.2.10 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;
8.2.11 Sureties
permit any of its Indebtedness to be guaranteed or otherwise assured
against financial loss 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 the Ship
is entered, guarantees required to procure the release of the Ship
from any arrest, detention, attachment or levy or guarantees or
undertakings required for the salvage of the Ship);
22
8.2.12 Share capital and distribution
purchase or otherwise acquire for value any shares of its capital or
declare or pay any dividends or distribute any of its present or
future assets, undertaking, rights or revenues to any of its
shareholders;
8.2.13 Subsidiaries
form or acquire any Subsidiaries;
8.2.14 Shareholdings
change, cause, or permit any change in, the legal or ultimate
beneficial ownership of any of the shares in any of the Borrower, the
Corporate Guarantor or the Manager or the Sub-manager from that set
out in clause 7.1.10;
8.2.15 Constitutional documents
permit, cause or agree to any material amendment or variation of its
constitutional documents;
8.2.16 Auditors and financial year end
change the auditors or its financial year end from that of 31
December; or
8.2.17 Treasury Transactions
enter into any Treasury Transactions other than in accordance with
clause 8.6.
8.3 SECURITY VALUE MAINTENANCE
8.3.1 Security shortfall
If at any time the Security Value shall be less than the relevant
Security Requirement, the Bank may give notice to the Borrower
requiring that such deficiency be remedied and then the Borrower
shall, within a period of thirty (30) days of the date of acceptance
by the Borrower of the Bank's said notice, either:
(a) prepay such sum in Dollars as will result in the relevant
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
(b) constitute to the satisfaction of the Bank such further security
for the Loan as shall be acceptable to the Bank having a value
for security purposes (as determined by the Bank in its absolute
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 relevant Security Requirement as at such date.
The provision of clauses 4.4 and 4.5 shall apply to prepayments made
under clause 8.3.1(a).
8.3.2 Valuation of Ship
The Ship shall, for the purposes of this clause 8.3, be valued in
Dollars as and when the Bank shall require by two (2) Approved Brokers
appointed by the Bank. Each such valuation shall be addressed to the
Bank and shall be made without, unless required by the Bank, physical
inspection, and on the basis of a sale for prompt delivery for cash at
arms length on normal commercial terms as between a willing buyer and
a willing seller without taking into account the benefit of any
charterparty or other engagement concerning the Ship. The arithmetic
mean of such two (2) valuations shall constitute the value of the Ship
for the
23
purposes of this clause 8.3 PROVIDED HOWEVER THAT if the said two (2)
valuations differ by more than fifteen per cent (15%) the Bank, acting
in its sole discretion, shall appoint one of the remaining Approved
Brokers to value the Ship on the same basis as in the case of the
other two valuations and, in that case, the arithmetic mean of the
three (3) valuations shall constitute the value of the Ship for the
purposes of this clause 8.3.
The value of the Ship determined in accordance with the provisions of
this clause 8.3 shall be binding upon the parties hereto until such
time as any such further valuations shall be obtained.
8.3.3 Information
The Borrower undertakes to the Bank to supply to the Bank and to any
such shipbrokers such information concerning the Ship and its
condition as such shipbrokers may reasonably require for the purpose
of making any such valuations.
8.3.4 Costs
All costs in connection with the Bank obtaining any valuation of the
Ship referred to in clause 8.3.2 or in schedule 2, Part 1, paragraph
11, and any valuation either of any additional security for the
purposes of ascertaining the Security Value at any time or
necessitated by the Borrower electing to constitute additional
security pursuant to clause 8.3.1(b) shall be borne by the Borrower.
8.3.5 Valuation of additional security
For the purpose of this clause 8.3, the market value of any additional
security provided or to be provided to the Bank shall be determined by
the Bank in its absolute discretion without any necessity for the Bank
assigning any reason thereto.
8.3.6 Documents and evidence
In connection with any additional security provided in accordance with
this clause 8.3, the Bank shall be entitled to receive such evidence
and documents of the kind referred to in schedule 2 as may in the
Bank's opinion be appropriate and such favourable legal opinions as
the Bank shall in its absolute discretion require.
8.4 AMENDMENT TO EXISTING LOAN AGREEMENT AND PREPAYMENT UNDERTAKING
The Borrower undertakes with the Bank that, on the Consolidation Date,
it shall:
8.4.1 procure that the Corporate Guarantor and the other relevant members of
the Group enter into such amendment and/or supplement or restatement
to the Existing Loan Agreement and to any other documents related
thereto as may be required by the Bank in its sole discretion in order
that an additional facility equal to the amount in Dollars required to
refinance the Loan outstanding at the time and with terms identical to
those contained in this Agreement, is added in the Existing Loan
Agreement and is provided for in the other related documents;
8.4.2 procure that the Corporate Guarantor and the other relevant members of
the Group enter into such other documents as may be required by the
Bank in its sole discretion so that all facilities made or to be made
available under the Existing Loan Agreement (including the said
additional facility) be secured on a fully cross-collateral basis by
the assets of the Group already securing the Existing Loan Agreement
as well as the assets of the Group which are subject to the Security
Documents;
8.4.3 procure that the Corporate Guarantor draws down such additional
facility for the purpose of lending the proceeds of such additional
facility to the Borrower;
24
8.4.4 (i) use the moneys to be received by the Corporate Guarantor as
described in clause 8.4.3 to prepay all of the Loan and (ii) pay at
the same time as making such prepayment all other sums payable by the
Borrower to the Bank under clause 4.4;
8.4.5 fully observe the provisions of clause 23.32.1 of the Existing Loan
Agreement; and
8.4.6 procure that the Corporate Guarantor fully observes the provisions of
clause 23.32.2 of the Existing Loan Agreement,
The Borrower acknowledges that the Bank has agreed to:
(a) enter into this Agreement and make its Commitment available; and
(b) in its capacity as agent and, as of the date of this Agreement,
sole lender under the Existing Loan Agreement, waive until the
Consolidation Date the requirements of clauses 23.32.1 and
23.36.3 of the Existing Loan Agreement,
on the understanding that the Borrower shall provide the undertakings
contained in this clause 8.4 and that the Existing Loan Agreement and
all documents relevant thereto shall, on the Consolidation Date, be
amended and/or supplemented and/or restated in the manner and for the
purposes described in clauses 8.4.1 to 8.4.6 above, always in
accordance with the requirements of the Bank in its sole discretion.
8.5 CHARTER
The Borrower undertakes with the Bank that it shall:
8.5.1 and shall procure that the Charterer shall, enter into the Charter,
not later than the date falling forty-five (45) days from the Drawdown
Date;
8.5.2 provide the Bank with a duly executed original of the Charter
forthwith upon its execution by the Charterer and the Borrower; and
8.5.3 take all steps and execute and/or deliver all documents provided in
clause 8.1.14, within fifteen (15) days after the execution of the
Charter by the parties thereto, provided however that the relevant
notice of assignment shall be served on the Charterer only after the
Consolidation Date.
8.6 TREASURY TRANSACTIONS
8.6.1 The Borrower shall procure that no Security Party shall enter into any
Treasury Transaction, other than:
(a) with the Bank;
(b) for the purpose of hedging the Borrower's exposure under this
Agreement to fluctuations of LIBOR in relation to the funding of
the Loan (or any part thereof) for a period expiring no later
than the final Repayment Date for the Loan (or the relevant part
thereof);
(c) on the terms of the International Swaps & Derivatives
Association, Inc. 2002 or 1992 Master Agreement
(Multicurrency-Cross Border) under which:
(i) in the case of the 1992 Master, "Second Method" shall be
specified as the applicable payment method and "Market
Quotation" as the applicable payment measure;
(ii) the governing law is English law; and
(iii) all other terms of the relevant master agreement and its
schedule thereto, shall be acceptable to the Bank in its
sole discretion; and
25
(d) after providing to the Bank such Encumbrances on such assets of
the Borrower, as in either case the Bank shall require in its
sole discretion.
8.6.2 The Borrower undertakes to the Bank, that to the extent that the Bank
agrees for the Borrower to enter into a Treasury Transaction in
accordance with the terms of this Agreement, the Borrower shall, at
the Borrower's cost, promptly do all such acts or execute all such
documents as the Bank may specify (and in such form as the Bank may
require) and shall procure that the other Security Parties will do the
same, in either case for the purpose of amending this Agreement and
the other Security Documents to take into account that the Borrower or
any other Security Party has been permitted by the Bank to enter into
a Treasury Transaction in connection with the funding of the Loan.
9 CONDITIONS
9.1 DOCUMENTS AND EVIDENCE
The obligation of the Bank to make the Commitment available shall be
subject to the condition that:
9.1.1 the Bank, or its duly authorised representative, shall have received,
not later than two (2) Banking Days before the day on which the
Drawdown Notice for the Loan is given, the documents and evidence
specified in Part 1 of schedule 2 in form and substance satisfactory
to the Bank; and
9.1.2 the Bank, or its duly authorised representative, shall have received,
on or prior to the Drawdown Date, the documents and evidence specified
in Part 2 of schedule 2 in form and substance satisfactory to the
Bank.
9.2 GENERAL CONDITIONS PRECEDENT
The obligation of the Bank to advance the Loan shall be subject to the
further condition that, at the time of the giving of the Drawdown
Notice and at the time of the making of the Loan:
9.2.1 the representations and warranties contained in (i) clauses 7.1 and
7.2 and (ii) clauses 4.1 and 4.2 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 Loan.
9.3 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 9 are inserted solely for the
benefit of the Bank and may be waived by the Bank in whole or in part
and with or without conditions.
9.4 FURTHER CONDITIONS PRECEDENT
Not later than five (5) Banking Days prior to the Drawdown Date and
not later than five (5) Banking Days prior to each Interest Payment
Date, the Bank may request and the Borrower shall, not later than two
(2) Banking Days prior to such date, deliver to the Bank on such
request further favourable certificates and/or opinions as to any or
all of the matters which are the subject of clauses 7, 8, 9 and 10 of
this Agreement.
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10 EVENTS OF DEFAULT
10.1 EVENTS
There shall be an Event of Default if:
10.1.1 NON-PAYMENT: the Borrower or any other Security Party fails to pay any
sum payable by it under any of the Security Documents at the time, in
the currency and in the manner stipulated in the Security 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 OBLIGATIONS AND CERTAIN OTHER OBLIGATIONS: the
Borrower or the Manager or any other person fails to obtain and/or
maintain the Insurances (as defined in, and in accordance with the
requirements of, the Ship Security Documents) for the Ship or if any
insurer in respect of such Insurances cancels the Insurances or
disclaims liability by reason, in either case, of mis-statement in any
proposal for the Insurances or for any other failure or default on the
part of the Borrower or any other person or the Borrower commits any
breach of or omits to observe any of the obligations or undertakings
expressed to be assumed by it under clauses 8.1.14, 8.2, 8.3, 8.4, 8.5
or 8.6; or
10.1.3 BREACH OF OTHER OBLIGATIONS: the Borrower or any other Security Party
commits any breach of or omits to observe any of its obligations or
undertakings expressed to be assumed by it under any of the Security
Documents (other than those referred to in clauses 10.1.1 and 10.1.2
above) and, in respect of any such breach or omission which in the
opinion of the Bank is capable of remedy, such action as the Bank may
require shall not have been taken within fourteen (14) days of the
Bank notifying the relevant Security Party of such default and of such
required action; or
10.1.4 MISREPRESENTATION: any representation or warranty made or deemed to be
made or repeated by or in respect of the Borrower or any other
Security Party in or pursuant to any of the Security Documents or in
any notice, certificate or statement referred to in or delivered under
any of the Security Documents is or proves to have been incorrect or
misleading in any material respect; or
10.1.5 CROSS-DEFAULT: any Borrowed Money of any Security Party or any other
member of the Group is not paid when due or any Borrowed Money of any
Security Party or any other member of the Group 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 or, as the case may be, member
of the Group of a voluntary right of prepayment), or any creditor of
any Security Party or any other member of the Group becomes entitled
to declare any such Borrowed Money due and payable being, in any such
case in respect of any Borrowed Money of a member of the Group (other
than the Borrower), an amount, or aggregate amount at any one time, of
not less than $2,000,000, or any facility or commitment available to
any Security Party or any other member of the Group relating to
Borrowed Money being, in any such case in respect of a member of the
Group (other than the Borrower), an amount, or aggregate amount at any
one time, of not less than $2,000,000, is withdrawn, suspended or
cancelled by reason of any default (however described) of the person
concerned unless the relevant Security Party or, as the case may be,
member of the Group shall have satisfied the Bank that such
withdrawal, suspension or cancellation will not affect or prejudice in
any way the relevant Security Party's or member's of the Group ability
to pay its debts as they fall due and fund its commitments, or any
guarantee given by any Security Party or any other member of the Group
in respect of Borrowed Money is not honoured when due and called upon;
or
10.1.6 CONSENTS AND AUTHORISATIONS: any consent, authorisation, licence or
approval of, or registration with or declaration to, governmental or
public bodies or authorities or courts required by the Borrower or any
other Security Party to authorise, or required by the Borrower or any
other Security Party in connection with, the execution, delivery,
validity, enforceability
27
or admissibility in evidence of any of the Security Documents or the
performance by the Borrower or any such Security Party of its
obligations under any of the Security Documents is modified in a
manner unacceptable to the Bank or is not granted or is revoked or
terminated or expires and is not renewed or otherwise ceases to be in
full force and effect; or
10.1.7 LEGAL PROCESS: any judgement or order made against the Borrower or any
judgement or order for an amount in excess of $2,000,000 in aggregate
made against any other Security Party is not stayed or complied with
within ten (10) days or a creditor attaches or takes possession of, or
a distress, execution, sequestration or other process is levied or
enforced upon or sued out against, any of the undertakings, assets,
rights or revenues of the Borrower or any of the undertakings, assets,
rights or revenues having an aggregate value of $2,000,000 or more of
any other Security Party and is not discharged within ten (10) days;
or
10.1.8 INSOLVENCY: any Security Party or other member of the Group 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, but not including any liabilities under the
Intra-Group Loan Agreement (as such term is defined in the Existing
Loan Agreement)); or suffers the declaration of a moratorium in
respect of any of its Indebtedness (if a moratorium occurs, the ending
of the moratorium will not remedy the Event of Default caused by that
moratorium); or
10.1.9 REDUCTION OR LOSS OF CAPITAL: a meeting is convened by any Security
Party or any other member of the Group for the purpose of passing any
resolution to purchase, reduce or redeem any of its share capital; or
10.1.10 WINDING UP: an order is made or resolution passed for the winding up
of any Security Party or any other member of the Group or a notice is
issued convening a meeting for the purpose of passing any such
resolution or any corporate action, legal proceedings or other
procedure or step is taken for the purpose of winding-up any Security
Party or any other member of the Group except any winding-up petition
which the Borrower can demonstrate, by providing opinion of leading
Counsel to that effect, to the reasonable satisfaction of the Bank, is
frivolous or vexatious and such winding-up petition is discharged,
stayed or dismissed within ten (10) days of commencement or, if
earlier, the date on which it is advertised; or
10.1.11 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 any other member of the Group or the Bank believes
that any such petition or other step is imminent or an administration
order is made in relation to any Security Party or any other member of
the Group; or
10.1.12 APPOINTMENT OF RECEIVERS AND MANAGERS: any administrative or other
receiver is appointed of any other Security Party or any other member
of the Group 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 any other member of the Group; or
10.1.13 COMPOSITIONS: any corporate action, legal proceedings or other
procedures or steps are taken, or negotiations commenced, by the
Borrower or any other Security Party or any other member of the Group
or by any of its creditors with a view 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; or
10.1.14 ANALOGOUS PROCEEDINGS: there occurs, in relation to any Security Party
or any other member of the Group, 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 opinion
of the Bank, appears in that country or territory to correspond with,
or have an effect equivalent or similar to, any of those mentioned in
clauses 10.1.7 to 10.1.13 (inclusive) or any Security Party or any
other Relevant Party otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency,
bankruptcy or liquidation; or
28
10.1.15 CESSATION OF BUSINESS: any Security Party or any other member of the
Group suspends or ceases or threatens to suspend or cease to carry on
its business except as a result of a disposal which is allowed under
the Existing Loan Agreement for any member of the Group other than the
Borrower, the Manager and the Corporate Guarantor; 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 the Borrower or any other Security Party which is a
party thereto, or if the Borrower or any such Security Party shall
deny that it has any, or any further, liability thereunder; or
10.1.17 SEIZURE: all or a material part of the undertakings, assets, rights or
revenues of, or shares or other ownership interests in, any Security
Party or any other member of the Group are seized, nationalised,
expropriated or compulsorily acquired by or under the authority of any
Government Entity; or
10.1.18 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
the Bank to exercise the rights or any of them vested in it under any
of the Security Documents or otherwise; or
10.1.19 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
10.1.20 ENCUMBRANCES ENFORCEABLE: any Encumbrance in respect of any of the
property (or part thereof) which is the subject of any of the Security
Documents becomes enforceable; or
10.1.21 MATERIAL ADVERSE CHANGE: there occurs, in the reasonable opinion of
the Bank, a material adverse change in the financial condition of any
Security Party or any other member of the Group or the consolidated
financial condition of the Group, in each case by reference to their
financial condition as described by the Borrower or any other Security
Party to the Bank in the negotiation of this Agreement or, in the case
of the Corporate Guarantor, from that set out in the financial
statements delivered to the Bank pursuant to clause 4.1 of the
Corporate Guarantee; or
10.1.22 FLAG STATE: the Flag State becomes involved in hostilities or civil
war or there is a seizure of civil power in the Flag State by
unconstitutional means if, in any such case such event could in the
opinion of the Bank reasonably be expected to have a material adverse
effect on the security constituted by any of the Security Documents
and the Borrower fails to (a) procure the registration of the Ship
under the flag of another state which is acceptable to the Bank in its
sole discretion, (b) procure the execution in favour of the Bank and,
where necessary, the registration, of a new mortgage over the Ship, a
new general assignment in respect of the Earnings, the Ship Insurances
and the Requisition Compensation (each such terms as defined in the
Ship Security Documents) of the Ship and a manager's undertaking from
the Manager and the Sub-manager of the Ship, in each case in such form
as the Bank shall in its absolute discretion require and always of the
same priority as the previous such Encumbrance and (c) provide the
Bank or its duly authorised representative with such documents and
evidence as the Bank may in its sole discretion require, in each case
within ten (10) Banking Days following the written request of the Bank
to the Borrower to do so; or
10.1.23 ENVIRONMENTAL CLAIM: the Borrower and/or any other member of the Group
and/or any of their respective Environmental Affiliates fails to
comply with any Environmental Law or any Environmental Approval or the
Ship or any other Relevant Ship is involved in any incident which
gives rise or which may give rise to an Environmental Claim, if in any
such case, such non compliance or incident or the consequences thereof
could (in the opinion of the Bank) reasonably be expected to have a
material adverse effect on the business, assets, operations, property
or financial condition of the Borrower or any other Security Party or
on the security created by any of the Security Documents; or
29
10.1.24 P&I AND THIRD PARTY LIABILITY INSURANCES: the Borrower or any other
person fails or omits to comply with any requirements of the
protection and indemnity association or other insurer with which the
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, liability for Environmental
Claims arising in jurisdictions where the Ship operates or trades) is
or may be liable to cancellation, qualification or exclusion at any
time; or
10.1.25 ARREST: the Ship is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in the exercise or purported exercise
of any possessory lien or other claim or otherwise taken from the
possession of the Borrower and the Borrower shall fail to procure the
release of the Ship within a period of ten (10) Banking Days
thereafter; or
10.1.26 REGISTRATION: the registration of the Ship under the laws and flag of
the Flag State is cancelled or terminated; or
10.1.27 SHAREHOLDINGS: there is any change in the legal or ultimate beneficial
ownership of any of the shares in the Borrower and/or the Corporate
Guarantor and/or the Manager and/or the Sub-manager from that
specified in clause 7.1.10; or
10.1.28 ACCOUNTS: any moneys are withdrawn from the Accounts other than in
accordance with clause 14; or
10.1.29 EXISTING LOAN AGREEMENT: any of the events or circumstances set out in
clauses 24.1 to 24.8 of the Existing Loan Agreement occurs and is
continuing; or
10.1.30 TERMINATION OF CHARTER: the Charter is cancelled or terminated or
becomes frustrated for any reason whatsoever other than expiry by
effluxion of time or the Ship becoming a Total Loss; or
10.1.31 MATERIAL EVENTS: any other event occurs or circumstance arises which,
in the opinion of the Bank, is likely materially and adversely to
affect either (i) the ability of the Borrower or any other Security
Party to perform all or any of their respective obligations under or
otherwise to comply with the terms of any of the Security Documents or
(ii) the security created by any of the Security Documents.
10.2 ACCELERATION
The Bank may, without prejudice to any other rights of the Bank, at
any time after the happening of an Event of Default by notice to the
Borrower declare that:
10.2.1 the obligation of the Bank to make the Commitment available shall be
terminated, whereupon the Commitment shall be reduced to zero
forthwith; and/or
10.2.2 the Loan and all interest and commitment commission accrued and all
other sums payable under the Security Documents have become due and
payable, whereupon the same shall, immediately or in accordance with
the terms of such notice, become due and payable.
10.3 DEMAND BASIS
If, pursuant to clause 10.2.2, the Bank declares the Loan to be due
and payable on demand, the Bank may by written notice to the Borrower
(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 and commitment commission accrued
and all other sums payable under this Agreement or (b) withdraw such
declaration with effect from the date specified in such notice.
30
11 INDEMNITIES
11.1 MISCELLANEOUS INDEMNITIES
The Borrower shall on demand indemnify the Bank, without prejudice to
any of the Bank's other rights under any of the Security Documents
against any loss (including loss of Margin) or expense which the Bank
shall certify as sustained or incurred by it as a consequence of:
11.1.1 any default in payment by the Borrower of any sum under any of the
Security Documents when due; or
11.1.2 the occurrence of any other Event of Default; or
11.1.3 any prepayment of the Loan or part thereof being made under clauses
4.3, 8.3.1(a), 8.4 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 the Loan not being made for any reason (excluding any default by the
Bank) after the Drawdown Notice for the Loan has been given,
including, in any such case, but not limited to, any loss or expense
sustained or incurred in maintaining or funding the Loan or any part
thereof or in liquidating or re-employing deposits from third parties
acquired to effect or maintain the Loan or any part thereof.
11.2 CURRENCY INDEMNITY
If any sum due from the Borrower under any of the Security Documents
or any order or judgement 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
judgement into another currency (the "SECOND CURRENCY") for the
purpose of (a) making or filing a claim or proof against the Borrower,
(b) obtaining an order or judgement in any court or other tribunal or
(c) enforcing any order or judgement given or made in relation to any
of the Security Documents, the Borrower shall indemnify and hold
harmless the Bank from and against any loss suffered as a result of
any difference between (i) the 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 Bank 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, judgement, claim or proof. Any
amount due from the Borrower under this clause 11.2 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 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 Borrower shall indemnify the Bank on demand and hold the Bank
harmless from and against all costs, expenses, payments, charges,
losses, demands, liabilities, actions, proceedings (whether civil or
criminal), penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be suffered, incurred or
paid by, or made or asserted against the Bank at any time, whether
before or after the repayment in full of principal and interest under
this Agreement, 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 the Bank if such Environmental Claim
would not have been, or been capable of being, made or asserted
against the Bank if it had not entered into any of the Security
Documents and/or exercised any of its rights, powers and discretions
thereby conferred and/or performed any of its obligations thereunder
and/or been involved in any of the transactions contemplated by the
Security Documents.
31
11.4 CENTRAL BANK OR EUROPEAN CENTRAL BANK RESERVE REQUIREMENTS INDEMNITY
The Borrower shall on demand promptly indemnify the Bank against any
cost incurred or loss suffered by it as a result of its complying with
the minimum reserve requirements of the European Central Bank and/or
with respect to maintaining required reserves with the relevant
national Central Bank to the extent that such compliance relates to
the Commitment or the Loan or deposits obtained by it to fund or
maintain the whole or part of the Loan and such cost or loss is not
recoverable by the Bank under clause 12.2.
12 UNLAWFULNESS AND INCREASED COSTS
12.1 UNLAWFULNESS
If it is or becomes contrary to any law or regulation for the Bank to
advance the Loan or to maintain the Commitment or fund the Loan, the
Bank shall promptly give notice to the Borrower whereupon (a) the
Commitment shall be reduced to zero and (b) the Borrower shall be
obliged to prepay the Loan 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 Borrower under this
Agreement.
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 the 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, is to:
12.2.1 subject the Bank to Taxes or change the basis of Taxation of the 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
the 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, the Bank or its
holding company in making or keeping the Commitment available or
maintaining or funding all or part of the Loan; and/or
12.2.3 reduce the amount payable or the effective return to the Bank under
any of the Security Documents; and/or
12.2.4 reduce the 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 the Bank's obligations under
any of the Security Documents; and/or
12.2.5 require the 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 the 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 the Loan from its
capital for regulatory purposes;
then and in each such case:
(a) the Bank shall notify the Borrower in writing of such event
promptly upon its becoming aware of the same; and
(b) the Borrower shall on demand pay to the Bank the amount which the
Bank specifies (in a certificate setting forth the basis of the
computation of such amount but not including any matters which
the Bank or its holding company regards as confidential) is
required
32
to compensate the Bank and/or (as the case may be) its holding
company for such liability to Taxes, cost, reduction, payment,
foregone return or loss.
For the purposes of this clause 12.2 (a) the Bank may in good faith
allocate or spread costs and/or losses among its assets and
liabilities (or any class thereof) on such basis as it considers
appropriate and (b) "HOLDING COMPANY" means the company or entity (if
any) which the consolidated supervision of which a Bank is included.
12.3 EXCEPTION
Nothing in clause 12.2 shall entitle the 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.
13 SECURITY AND SET-OFF
13.1 APPLICATION OF MONEYS
All moneys received by the Bank under or pursuant to any of the
Security Documents and expressed to be applicable in accordance with
the provisions of this clause 13.1 shall be applied by the Bank in the
following manner:
13.1.1 first in or toward payment of all unpaid fees, commissions and
expenses which may be owing to the Bank under any of the Security
Documents;
13.1.2 secondly in or towards payment of any arrears of interest owing in
respect of the Loan or any part thereof;
13.1.3 thirdly in or towards repayment of the Loan (whether the same is due
and payable or not);
13.1.4 fourthly in or towards payment to the 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 repaid;
13.1.5 fifthly in or towards payment to the Bank of any other sums owing to
it under any of the Security Documents; and
13.1.6 sixthly the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled to receive such surplus.
13.2 SET-OFF
13.2.1 The Borrower authorises the Bank (without prejudice to any of the
Bank's rights at law, in equity or otherwise), at any time and without
notice to the Borrower, to apply any credit balance to which the
Borrower is then entitled standing upon any account of the Borrower
with any branch of the Bank in or towards satisfaction of any sum due
and payable from the Borrower to the Bank under any of the Security
Documents. For this purpose, the Bank 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 The Bank shall not be obliged to exercise any right given to it by
this clause 13.2. The Bank shall notify the Borrower forthwith upon
the exercise or purported exercise of any right of set-off giving full
details in relation thereto.
13.2.3 Nothing in this clause 13.2 shall be effective to create a charge or
other security interest.
13.3 FURTHER ASSURANCE
The Borrower undertakes 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
33
valid and binding obligations of the respective parties thereto and
rights of the Bank enforceable in accordance with their respective
terms and that it will, at its expense, execute, sign, perfect and do,
and will procure the execution, signing, perfecting and doing by each
of the other Security Parties of, any and every such further
assurance, document, act or thing as in the reasonable opinion of the
Bank may be necessary or desirable for perfecting the security
contemplated or constituted by the Security Documents.
13.4 CONFLICTS
In the event of any conflict between this Agreement and any of the
other Borrower's Security Documents, the provisions of this Agreement
shall prevail.
14 ACCOUNTS
14.1 GENERAL
The Borrower undertakes with the Bank that it will:
14.1.1 on or before the Drawdown Date, open each of the Accounts; and
14.1.2 procure that all moneys payable to the Borrower in respect of the
Earnings (as defined in the General Assignment) of the Ship shall,
unless and until the Bank directs to the contrary pursuant to clause
2.1.1 of the General Assignment, be paid to the Operating Account
Provided however that if any of the moneys paid to the Operating
Account are payable in a currency other than Dollars, the Bank shall
convert such moneys into Dollars at the Bank's spot rate of exchange
at the relevant time for 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 OPERATING ACCOUNT: WITHDRAWALS
Unless the Bank otherwise agrees in writing, the Borrower shall not be
entitled to withdraw any moneys from the Operating Account at any time
from the date of this Agreement and so long as any moneys are owing
under the Security Documents save that, unless and until a Default
shall occur and the Bank shall direct to the contrary, the Borrower
may withdraw moneys from the Operating Account for the following
purposes:
14.2.1 to transfer to the Retention Account on each Retention Date all or
part of the Retention Amount for such Retention Date;
14.2.2 to pay any amount to the Bank in or towards payments of any
instalments of interest or principal or any other amounts then payable
pursuant to the Security Documents;
14.2.3 to pay the proper and reasonable operating expenses of the Ship; and
14.2.4 to pay the proper and reasonable expenses of administering its
affairs.
14.3 RETENTION ACCOUNT: CREDITS AND WITHDRAWALS
14.3.1 The Borrower hereby undertakes with the Bank that it 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 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 Operating Account such moneys shall, up to an amount
equal to the Retention Amount be transferred to the Retention Account
on that Retention Date (and the Borrower hereby irrevocably authorises
the Bank to effect each such transfer) and to that extent the
Borrower's 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 (whereupon the
provisions of clause 14.4 shall apply), all Retention Amounts credited
to the Retention Account together with
34
interest from time to time accruing or at any time accrued thereon
shall be applied by the Bank (and the Borrower hereby irrevocably
authorises the Bank so to apply the same) upon each Repayment Date,
and on each day that interest is payable pursuant to clause 3.1, in or
towards payment to the Bank of the instalment then falling due for
repayment or (as the case may be) the amount of interest then due.
Each such application by the Bank shall constitute a payment in or
towards satisfaction of the Borrower's corresponding payment
obligations under this Agreement but shall be strictly without
prejudice to the obligations of the Borrower to make any such payment
to the extent that the aforesaid application by the Bank is
insufficient to meet the same.
14.3.3 Unless the Bank otherwise agrees in writing, the Borrower shall not 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 APPLICATION OF ACCOUNTS
At any time after the occurrence of an Event of Default, the Bank may,
without notice to the Borrower, apply all moneys then standing to the
credit of the Accounts (together with interest from time to time
accruing or accrued thereon) in or towards satisfaction of any sums
due to the Bank under the Security Documents in the manner specified
in clause 13.1.
14.5 ACCOUNT TERMS
The Accounts are to be managed under, and pursuant to, the Bank's
electronic banking system. Amounts standing to the credit of the
Accounts shall (unless otherwise agreed between the Bank and the
Borrower) bear interest at the rates from time to time offered by the
Bank to its customers for Dollar deposits in comparable amounts for
comparable periods. Interest shall accrue on the Accounts 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 Accounts
at such times as the Bank and the Borrower shall agree.
14.6 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 Bank and the Borrower and their respective successors in
title.
15.2 NO ASSIGNMENT BY BORROWER
The Borrower may not assign or transfer any of its rights or
obligations under this Agreement.
15.3 ASSIGNMENT BY BANK
The Bank may assign all or any part of its rights under this Agreement
or under any of the other Security Documents to any other bank or
financial institution (an "ASSIGNEE") without the prior consent of the
Borrower.
15.4 TRANSFER
The Bank may transfer all or any part of its rights, benefits and/or
obligations under this Agreement and/or any of the other Security
Documents to any one or more banks or other financial institutions (a
"TRANSFEREE"), without the prior consent of the Borrower; provided the
Transferee, by delivery of such undertaking as the Bank may approve,
becomes bound by the terms of this Agreement and agrees to perform all
or, as the case may be, part of the Bank's obligations under this
Agreement.
35
15.5 DOCUMENTING ASSIGNMENTS AND TRANSFERS
If the 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 or clause 15.4, the Borrower undertakes, immediately on
being requested to do so by the Bank and at the cost of the Borrower,
to enter into, and procure that the other Security Parties shall enter
into, such documents as may be necessary or desirable to transfer to
the Assignee or Transferee all or the relevant part of the Bank's
interest in the Security Documents and all relevant references in this
Agreement to the Bank shall thereafter be construed as a reference to
the Bank and/or its Assignee or Transferee (as the case may be) to the
extent of their respective interests PROVIDED HOWEVER that if either
the Bank or a Transferee, prior to any transfer or assignment under
this clause 15 taking place, requires that this Agreement and the
Security Documents are amended in order to be in a syndicated form
(namely with an agent, security agent, majority banks and other
clauses relevant to a loan agreement where a syndicate of banks acts
as lender), then the Borrower hereby undertakes, at the Borrower's
cost, to promptly do all such acts or execute all such documents
(including assignments, transfers, mortgages, charges, notices and
instructions) as the Bank may specify (and in such form as the Bank
may require) and to procure that the Corporate Guarantor and the
Manager shall promptly do all such acts or execute all such documents
(including assignments, transfers, mortgages, charges, notices and
instructions) as the Bank may specify (and in such form as the Bank
may require), in either case for the purpose of amending this
Agreement and the other Security Documents accordingly.
15.6 LENDING OFFICE
The Bank shall lend through its office at the address specified in the
definition of "Bank" in clause 1.2 or through any other office of the
Bank selected from time to time by it through which the Bank wishes to
lend for the purposes of this Agreement. If the office through which
the Bank is lending is changed pursuant to this clause 15.6, the Bank
shall notify the Borrower promptly of such change.
15.7 SYNDICATION
Without prejudice to any of the provisions of this clause 15, the
Borrower shall provide assistance to the Bank in the primary
syndication of the Loan (including, without limitation, by making
appropriate personnel available for the purpose of making
presentations to, or meeting, potential lending institutions) and
shall comply with all reasonable requests for information from
potential syndicate members prior to completion of syndication.
15.8 DISCLOSURE OF INFORMATION
The Bank may disclose to a prospective assignee, transferee or to any
other person who may propose entering into contractual relations with
the Bank in relation to this Agreement such information about the
Borrower and any other Security Party as the Bank shall consider
appropriate.
16 NOTICES AND OTHER MATTERS
16.1 NOTICES
Every notice, request, demand or other communication under this
Agreement or (unless otherwise provided therein) under any of the
other Security Documents shall:
16.1.1 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;
16.1.2 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 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
36
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
16.1.3 be sent:
(a) if to the Borrower at:
c/o Navios ShipManagement Inc.
85 Akti Miaouli
185 38 Piraeus
Hellenic Republic
Fax No: ▇▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
(b) if to the Bank at:
HSH Nordbank ▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany
Fax No: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇
Attention: Shipping; Greek Clients
or to such other address and/or numbers as is notified by one party to
the other party under this Agreement.
16.2 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Bank to exercise any power,
right or remedy under any of the Security Documents shall operate as a
waiver thereof, nor shall any single or partial exercise by the Bank
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.
16.3 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 Bank shall be entitled to
rely.
17 GOVERNING LAW AND JURISDICTION
17.1 LAW
This Agreement is governed by, and shall be construed in accordance
with, English law.
17.2 SUBMISSION TO JURISDICTION
The Borrower agrees, for the benefit of the Bank, that any legal
action or proceedings arising out of or in connection with this
Agreement against the Borrower or any of its assets may be brought in
the English courts. The Borrower irrevocably and unconditionally
submits to the jurisdiction of such courts and irrevocably designates,
appoints and empowers ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ at present of ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇'▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ to receive for it and
on its behalf, service of process issued out of the English courts in
any such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of the Bank to take proceedings against the Borrower 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
37
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 Borrower may have against the Bank arising out of or in connection
with this Agreement.
17.3 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No term of this Agreement is enforceable under the Contracts (Rights
of Third Parties) ▇▇▇ ▇▇▇▇ 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.
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SCHEDULE 1
FORM OF DRAWDOWN NOTICE
(referred to in clause 2.2)
To: HSH NORDBANK ▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany
[o] 2006
U.S.$19,500,000 LOAN
LOAN AGREEMENT DATED [o] 2006 (THE "LOAN AGREEMENT")
We refer to the Loan Agreement and hereby give you notice that we wish to draw
down the Loan, namely $[19,500,000] on [o] 2006 and select a first Interest
Period in respect thereof of [o] months. The funds should be credited as
follows: [INSERT DETAILS]
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 and 7.2 of
the Loan Agreement and (ii) clauses 4.1 and 4.2 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 the Loan will be within our
corporate powers, has been validly authorised by appropriate corporate
action and will not cause any limit on our borrowings (whether imposed by
statute, regulation, agreement or otherwise) to be exceeded; and
(d) there has been no material adverse change in our financial position nor in
the consolidated financial position of the Corporate Guarantor from that
described by us or any other Security Party to the Bank in the negotiation
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
STAR MARITIME ENTERPRISES CORPORATION
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SCHEDULE 2
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 an officer of each Security Party as true, complete
and up to date copies of all documents which contain or establish or relate
to the constitution of that Security Party;
2 CORPORATE AUTHORISATIONS
copies of resolutions of the directors and certificates of resolutions of
the shareholders of each Security Party approving such of the Underlying
Documents and the Security Documents to which such Security Party is, or is
to be, a party and authorising the signature, delivery and performance of
such Security Party's obligations thereunder, certified (in a certificate
dated no earlier than five (5) Banking Days prior to the date of this
Agreement) by an officer of such Security Party as:
2.1 being true and correct;
2.2 being duly passed at meetings of the directors of such Security Party and
of the shareholders of such Security Party each duly convened and held;
2.3 not having been amended, modified or revoked; and
2.4 being in full force and effect,
together with originals or certified copies of any powers of attorney
issued by any Security Party pursuant to such resolutions;
3 SPECIMEN SIGNATURES
copies of the signatures of the persons who have been authorised on behalf
of each Security Party to sign such of the Underlying Documents and the
Security Documents to which such Security Party 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 (in a certificate
dated no earlier than five (5) Banking Days prior to the date of this
Agreement) by an officer of such Security Party as being the true
signatures of such persons;
4 CERTIFICATE OF INCUMBENCY
a list of directors and officers of each Security Party specifying the
names and positions of such persons, certified (in a certificate dated no
earlier than five (5) Banking Days prior to the date of this Agreement) by
an officer of such Security Party to be true, complete and up to date;
5 BORROWER'S CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to the
date of this Agreement) from an officer of the Borrower that no consents,
authorisations, licences or approvals are necessary for the Borrower to
authorise or are required by the Borrower in connection with the borrowing
by the Borrower of the Loan pursuant to this Agreement or the other
Borrower's Security Documents;
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6 OTHER CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to the
date of this Agreement) from an officer of each Security Party (other than
the Borrower) that no consents, authorisations, licences or approvals are
necessary for such Security Party to guarantee and/or grant security for
the borrowing by the Borrower of the Commitment pursuant to this Agreement
and execute, deliver and perform the Security Documents insofar as such
Security Party is a party thereto;
7 SECURITY DOCUMENTS
the Account Pledges and the Corporate Guarantee each duly executed;
8 CERTIFIED UNDERLYING DOCUMENTS
a copy, certified (in a certificate dated no earlier than five (5) Banking
Days prior to the date of this Agreement) as a true and complete copy by an
officer of the Borrower of the Contract, the Sub-manager's Undertaking and
the Management Agreement;
9 BORROWER'S PROCESS AGENT
a letter from the Borrower's agent for receipt of service of proceedings
referred to in clause 17.2 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 the 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
in which it is or is to be appointed as such Security Party's agent;
11 VALUATION
two valuations of the Ship made in accordance with clause 8.3.2 and dated
not more than five (5) Banking Days prior to the date of the Drawdown
Notice, showing a market value of the Ship in all respects acceptable to
the Bank;
12 ACCOUNTS
evidence that each of the Accounts has been opened, together with duly
completed mandate forms in respect thereof; and
13 FURTHER MATTERS OR OPINIONS
any such other matter or further opinion as may be required by the Bank.
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PART 2
1 DRAWDOWN NOTICE
The Drawdown Notice duly executed;
2 SHIP CONDITIONS
Evidence that the Ship:
2.1 REGISTRATION AND ENCUMBRANCES
is registered in the name of the Borrower through the Registry under the
laws and flag of the Flag State and that the Ship and its Earnings,
Insurances and Requisition Compensation (each such term as defined in the
General Assignment) are free of Encumbrances;
2.2 CLASSIFICATION
maintains the Classification free of all requirements and recommendations
of the Classification Society; and
2.3 INSURANCE
is insured in accordance with the provisions of the Ship Security Documents
and all requirements of the 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 the 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 the Ship);
3 SHIP SECURITY DOCUMENTS
the Ship Security Documents duly executed;
4 TITLE AND DELETION
evidence that the transfer of title to the Ship from the Seller to the
Borrower has been duly recorded at the Registry free of Encumbrances and
that the prior registration of the Ship (if any) in the name of the Seller
has been cancelled or will be cancelled within thirty (30) days from the
Delivery Date;
5 MORTGAGE REGISTRATION
evidence that the Mortgage over the Ship has been registered against the
Ship through the Registry under the laws and flag of the Flag State;
6 NOTICES OF ASSIGNMENT
copies of duly executed notices of assignment required by the terms of the
Ship Security Documents and in the forms prescribed by the Ship Security
Documents;
7 FEES AND COMMISSIONS
evidence that the arrangement fee due under clause 5.1 and the commitment
commission due under clause 5.1.2 have both been paid in full;
42
8 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
in which it is or is to be appointed as such Security Party's agent;
9 PANAMANIAN OPINION
an opinion of Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Asvat, special legal advisers on
matters of Panamanian law, to the Bank;
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
an opinion of Messrs. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., special legal advisers on
matters of ▇▇▇▇▇▇▇▇ Islands law, to the Bank;
11 ▇▇▇▇ OF SALE AND DELIVERY DOCUMENTS
a copy, certified as a true and complete copy by an officer of the
Borrower, of a duly executed and notarised/legalised ▇▇▇▇ of sale in
respect of the Ship evidencing the Contract Price and the other delivery
documents duly executed and exchanged pursuant to the Contract;
12 READINESS AND PAYMENT OF CONTRACT PRICE
evidence that the Ship is in all respects ready for Delivery and that the
Contract Price has been paid in full;
13 SMC/DOC
a copy, certified (in a certificate dated no earlier than five (5) Banking
Days prior to the date of this Agreement) as a true and complete copy by an
officer of the Borrower of the DOC issued to the Operator and the SMC for
the Ship;
14 SURVEY REPORT
to deliver to the Bank a report prepared by surveyors or inspectors
acceptable to the Bank in relation to the seaworthiness and safe operation
of the Ship, such report to be acceptable to the Bank in its sole
discretion;
15 ISPS CODE COMPLIANCE
15.1 evidence satisfactory to the Bank that the Ship is subject to a ship
security plan which complies with the ISPS Code; and
15.2 a copy certified (in a certificate dated no earlier than five (5) Banking
Days prior to the Drawdown Date) as a true and complete copy by an officer
of the Borrower of the ISSC for the Ship and the continuous synopsis record
required by the ISPS Code in respect of the Ship; and
16 FURTHER MATTERS OR OPINIONS
any such other matter or further opinion as may be required by the Bank.
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SCHEDULE 3
FORM OF CORPORATE GUARANTEE
44
SCHEDULE 4
FORM OF MORTGAGE
45
SCHEDULE 5
FORM OF GENERAL ASSIGNMENT
46
SCHEDULE 6
FORM OF MANAGER'S UNDERTAKING
47
SIGNED by Georgia Babanara )
for and on behalf of ) ------------------------
STAR MARITIME ENTERPRISES CORPORATION ) Attorney-in-Fact
)
SIGNED by )
for and on behalf of ) ------------------------
HSH NORDBANK AG ) Attorney-in-Facty
48