CREDIT AGREEMENT PROVIDING FOR A SENIOR SECURED TERM LOAN OF UP TO US$38,500,000 WATERMAN STEAMSHIP CORPORATION,

 

 

 

 

 

 

 

 

 

 

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CREDIT AGREEMENT PROVIDING FOR A

SENIOR SECURED TERM LOAN

OF UP TO US$38,500,000

 

 

▇▇▇▇▇▇▇▇ STEAMSHIP CORPORATION,

as Borrower, AND

The Banks and Financial Institutions listed on Schedule I hereto, as Lenders,

 

AND

 

DVB BANK SE,

as Mandated Lead Arranger, Facility Agent and Security Trustee, AND

INTERNATIONAL SHIPHOLDING CORPORATION,

as Guarantor

 

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August 26, 2014

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

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SENIOR SECURED TERM LOAN CREDIT AGREEMENT

 

THIS  SENIOR  SECURED  TERM  LOAN  CREDIT AGREEMENT  (this  "Agreement")  is made  as of the 26111  day of August, 2014, by and among (1) ▇▇▇▇▇▇▇▇  STEAMSHIP  CORPORATION, a corporation incorporated and existing under the laws of the State of New  York ("▇▇▇▇▇▇▇▇ Steamship"), as borrower (the "Initial Borrower"), (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing  under the laws of the State of Delaware, as guarantor (the "Guarantor"),  (3) the banks and financial institutions listed on Schedule I, as lenders (together with any bank or financial institution which becomes a  Lender pursuant to Section 12, the "Lenders" and each a "Lender"), (4) DVB BANK SE, as facility agent (in such capacity including any successor thereto, the "Facility Agent"), and as security trustee for the Lenders (in such capacity, the "Security Trustee" and, together with the Facility Agent, the "Agents") and (5) DVB BANK SE, as mandated lead arranger (in such capacity, the "Mandated Lead Arranger").

 

WITNESSETH  THAT:

WHEREAS, at the request of the Borrower, each of the Agents has agreed to serve in the capacity under the terms of this Agreement and the Lenders have agreed to provide to the Borrower a senior secured term loan facility in the amount of up to Thirty Eight Million Five Hundred Thousand Dollars ($38,500,000);

 

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt  and adequacy  of which are hereby acknowledged, the parties hereto agree as set forth below:

 

1.DEFINITIONS

 

1.1Specific  Definitions.   In this Agreement  the words  and expressions  specified below  shall, except where the context otherwise requires, have the meanings attributed to them below:

 

 

 

 

1.2Computation  of Time Periods;  Other Definitional  Provisions.   In this Agreement,  the Note, the other Security Documents and the Fee Letter, in the computation of periods of time from a specified date to a later specified date, the word "from" means  "from and including" and the words "to" and "until" each mean "to but excluding"; words importing  either gender include the other gender; references to  "writing" include printing, typing, lithography and other means of reproducing words in a tangible  visible  form; the words "including," "includes" and "include" shall be deemed to be followed by  the  words   "without limitation"; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to this Agreement, the Note or such  Security Document,  as applicable;  references  to  agreements  and  other contractual instruments (including this Agreement, the Note and the Security Documents) shall be deemed to include all subsequent amendments, amendments and restatements,  supplements, extensions, replacements and other modifications  to such instruments  (without,  however,   limiting  any  prohibition   on  any  such amendments,  extensions  and other modifications  by the terms of this Agreement, the Note or any  Security Document); references to any matter that is "approved" or requires "approval" of a party shall mean approval given in the sole and absolute discretion of such party unless otherwise  specified.

 

1.3Accounting Terms. Unless otherwise specified herein, all accounting terms used in this Agreement, the Note and in the Security Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Facility Agent or to the Lenders under this Agreement shall be prepared, in accordance with generally accepted accounting principles for the United States ("GAAP"), as amended from time to time including amendments to GAAP made as a result of the conformity of GAAP to International Financial Repo1iing Standards; provided,  however,  that  for purposes of determining the Guarantor's ratios and financial covenants set forth in Section 9.3, GAAP shall be GAAP in effect as at June 30, 2014.

 

1.4Certain  Matters  Regarding  Materiality.   To the extent that any representation,  warranty, covenant or other undertaking of any of the Security Parties in this Agreement is qualified by  reference to those which are not reasonably expected to result in a "Material Adverse Effect" or  language of similar import, no inference shall be drawn therefrom that any Agent or Lender has knowledge  or approves of any noncompliance by such Security Party with any governmental rule.

 

2.REPRESENTATIONS AND WARRANTIES

 

2.1Representations    and   Warranties.      In   order   to   induce  the   Creditors   to   enter   into   this Agreement and to make the Facility available, each  Security Party  hereby  represents  and warrants  to  the Creditors  (which representations  and warranties  shall survive the execution and delivery of this Agreement and the Note and the drawdown of the Facility) that:

 

(a)Due Organization and Power. Each Security Party is validly existing in good standing under the laws of its jurisdiction of incorporation, has full power to carry on its business as now being conducted and to enter into and perform its obligations under this Agreement, the Note and the Security Documents to which it is a party, and is in compliance with all statutory, regulatory and other requirements relative to such business and such

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agreements;

 

(b)Authorization and Consents. All necessary corporate action has been taken to authorize, and all necessary consents and authorities have been obtained and remain in full force and effect to permit, each Security Party to enter into and perform its obligations under this Agreement, the Note and the Security Documents and, in the case of the Borrower to borrow, service and repay the Facility and, as of the date of this Agreement, no further consents or authorities are necessary for the service and repayment of the Facility or any part thereof;

 

(c)Binding Obligations. This Agreement, the Note, the Security Documents and the Fee Letter constitute or will, when executed  and delivered, constitute the legal, valid and binding obligations of each Security Party that is a party thereto enforceable against such Security Party in accordance  with  their respective terms, except to the extent that such enforcement may be limited by equitable  principles, principles of public  policy or applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting generally the enforcement of creditors' rights;

 

(d)No Violation. The execution and delivery of, and the performance of the provisions of, this Agreement, the Note, the Fee Letter and those of the Security Documents to which it is to be a party by each Security Party do not contravene any applicable law or regulation existing at the date hereof or any contractual restriction (including, after giving effect to the consent agreement referred to in Section 4.l(dd), the Regions Credit Agreement) binding on such Security Party or the certificate of incorporation or by-laws (or equivalent instruments) thereof and that the proceeds of the Facility shall be used by the Borrower exclusively for its own account and for the purpose set forth in Section 3. l(a);

 

(e)Filings; Stamp Taxes. Other than the recording of the Mortgage with (x) prior to the Vessel Transfer, the appropriate authorities for the United States and (y) upon the Vessel Transfer the appropriate authorities for the Republic of the ▇▇▇▇▇▇▇▇ Islands, and the filing of Uniform Commercial Code Financing Statements with (x) prior to the Vessel Transfer, the Department of State of the State of New York and (y) upon the Vessel Transfer, the Recorder of Deeds of the District of Columbia in respect of the Assignments, and the payment of filing or recording fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement, the Note, the Security Documents or the Fee Letter that any of them or any document relating thereto be registered, filed, recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar Taxes be paid on or in relation to this Agreement, the Note, any of the Security Documents or the Fee Letter;

 

(f)Litigation. No action, suit or proceeding is pending or threatened against any Security Party before any court, board of arbitration or administrative agency which could or might have a Material Adverse Effect;

 

(g)No Default. No Security Party is in default under any agreement by which it is bound, or is in default in respect of any financial commitment or obligation, in each case, exceeding $5,000,000 individually or $20,000,000 in the aggregate;

 

(h)Vessel. The Vessel is:

 

(i)in the sole and  absolute ownership  of the Borrower  and duly registered  in the Borrower's name (x) prior to the Vessel Transfer, under the United States flag and

(y) upon the Vessel Transfer, under the ▇▇▇▇▇▇▇▇ Islands flag, unencumbered, save and except for the Mortgage and as permitted thereby;

 

(ii)classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations;

 

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(iii)operationally seaworthy and in every way fit for its intended service; and

 

(iv)insured  in  accordance  with  the  provisions  of  the  Mortgage  and  the  requirements thereof in respect of such insurances will have been complied with;

 

(i)Insurance. Each of the Security Parties has insured its properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses;

 

(j)Financial Information.  Except as otherwise disclosed in writing to the Facility Agent on or prior to the date hereof, all financial statements, information and other data furnished by any Security Party to the Facility Agent are complete and correct, such financial statements have been prepared in accordance with GAAP and accurately and fairly present the financial condition of the parties covered thereby as of the respective dates thereof and the results of the operations thereof for the period or respective periods covered by such financial statements, and since the date of the Guarantor's financial statements  most recently delivered to the Facility Agent, there has been no Material Adverse Effect as to any of such parties and none thereof has any contingent obligations, liabilities for taxes or other outstanding financial obligations except as disclosed in such statements, information and data;

 

(k)Tax Returns. Each Security Party has filed all material tax returns required to be filed thereby and has paid all taxes payable thereby which have become due, other than those not yet delinquent or the nonpayment of which would not have a Material Adverse Effect and except for those taxes being contested in good faith and by appropriate proceedings or other acts and for which adequate reserves shall have been set aside on its books;

 

(1)BRISA. The execution and delivery of this Agreement and the consummation  of the transactions hereunder will not involve any "prohibited transaction" for purposes of BRISA or Section 4975 of the Code and no condition exists or event or transaction has occurred in connection with any Plan or Multiemployer Plan maintained or contributed to, or required to be maintained or contributed to, by any Security Party, any of their respective subsidiaries or any BRISA Affiliate resulting from the failure of any thereof to comply with BRISA which is reasonably likely to result in any Security Party, any of their respective subsidiaries or any BRISA Affiliate incurring any liability, fine or penalty which individually or in the aggregate could have a Material Adverse Effect. No BRISA Funding Event, BRISA Termination Event, Foreign Termination Event or Foreign Underfunding exists or has occurred, or is reasonably expected to exist or occur, that, when taken together with all other BRISA Funding Events, BRISA Termination Events, Foreign Termination Events and Foreign Underfundings that exist or  have occurred, or which could reasonably be expected to exist or occur, could reasonably be expected to result in liability to the Security Parties, their respective subsidiaries and BRISA Affiliates in the aggregate in excess of $1,000,000;

 

(m)Chief  Executive  Office.   The chief executive officer and chief place of business  of  each Security Party and the office in which the records relating to the earnings and other receivables of  each Security Party are kept is, and will continue to be, located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇;

 

(n)Foreign  Trade  Control  Regulations.    (i) None  of the  Security  Parties  nor  any  of  their respective Subsidiaries, nor any director, officer, employee, agent, Affiliate or representative of a  Security Party, is an individual or entity ("Person") that is, or is owned or controlled by a Person that is a Blocked Person or otherwise the subject of any Sanctions.

 

(ii)The Borrower will not, directly or indirectly, use the proceeds of the Facility, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:

 

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(A)to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

 

(B)in any other manner that will result in a violation of Sanctions by any Person.

 

(iii)For the past 5 years, the Borrower has not knowingly engaged in, is not now knowingly engaged in, and will not knowingly  engage  in,  any  dealings  or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(iv)None of the transactions contemplated herein will violate Sanctions.

 

(o)Money Laundering. (i) The operations of the Borrower are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by the PATRIOT Act, and the applicable anti-money laundering statutes of jurisdictions where the Borrower conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Anti-Money Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Borrower, threatened.

 

(ii) The Borrower requires the Facility for use in connection with its lawful organizational purpose and for no other purposes and the Borrower has not contravened any Anti-Money Laundering Laws. The Borrower represents that it is the ultimate beneficiary of the Facility to be made to it as contemplated in this Agreement and will promptly notify the Lenders (by written notice to the Facility Agent) if it ceases to be the ultimate beneficiary. Such written notice shall disclose the name and the address of the new ultimate beneficiary.

 

(p)Equity Ownership. The Borrower is owned directly one hundred percent (100%) by the Guarantor;

 

(q)Environmental Matters and Claims. (a) Except as heretofore disclosed in writing to the Facility Agent (i) each of the Borrower and its Affiliates (which for purposes of this Section 2.l (q) shall be deemed to include the Guarantor and its Affiliates) will, when required to operate their business as then being conducted, be in compliance with all applicable United States federal and state, local, foreign and international laws, regulations, conventions and agreements relating to pollution prevention or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, navigable waters, waters of the contiguous zone, ocean waters and international waters), including, without limitation, laws, regulations, conventions and agreements relating to (1) emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous materials, oil, hazardous substances, petroleum and petroleum products and by-products ("Materials of Environmental Concern"), or (2) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern ("Environmental Laws"); (ii) each of the Borrower and its Affiliates  will,  when  required,  have  all  permits,  licenses,  approvals,  rulings,  variances,  exemptions,

clearances, consents or other authorizations required under applicable Environmental Laws ("Environmental Approvals") and will, when required, be in compliance with all Environmental Approvals required to operate their business as then being conducted; (iii) the Borrower has not nor has any Affiliate thereof received any notice of any claim, action, cause of action, investigation or demand by any person, entity, enterprise or government, or any political subdivision, intergovernmental body or agency, department or instrumentality thereof, alleging potential liability for, or a requirement to incur, material investigator  costs, cleanup costs, response and/or remedial costs (whether incurred by a governmental entity or otherwise), natural resources damages, prope1iy damages, personal

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injuries, attorneys' fees and expenses, or fines or penalties, in each case arising out of, based on or resulting from (1) the presence, or release or threat of release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such person, or (2) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or Environmental Approval ("Environmental Claim") (other than Environmental Claims that have been fully and finally adjudicated or otherwise determined and all fines, penalties and other costs, if any, payable by the Security Parties in respect thereof have been paid in full or which are fully  covered by insurance (including permitted deductibles)); and (iv) there are no  circumstances  that  may  prevent  or interfere  with such full compliance in the future; and (b) except as heretofore disclosed in writing to the Facility Agent there is no Environmental Claim pending or threatened against the Borrower or any Affiliate thereof  and there are no past or  present actions, activities, circumstances, conditions, events or incidents,  including, without limitation, the release, emission, discharge or disposal of any Materials of Environmental  Concern, that could form the basis of any Environmental Claim against such persons the adverse disposition of which may result in a Material Adverse Effect;

 

(r)Compliance with ISM Code, ISPS Code and MTSA.  The Vessel and the Operator  comply with the requirements of the ISM Code, the ISPS Code and the MTSA including, but not limited  to, the maintenance and renewal of valid certificates pursuant thereto;

 

(s)Threatened Withdrawal of DOC or SMC. There is no threatened or actual withdrawal of the Operator's DOC or SMC in respect of the Vessel;

 

(t)Liens. Other than as disclosed in Schedule III, there are no liens of any kind on any property owned by any Security Party other than those liens created pursuant to this Agreement or the Security Documents or permitted thereby;

 

(u)Indebtedness. Other than as disclosed in Schedule IV, none of the Security Parties has any Indebtedness;

 

(v)Payment Free of Taxes. All payments made or to be made by the Security Parties under or pursuant to this Agreement, the Note, the Security Documents and the Fee Letter shall be made free and clear of, and without deduction or withholding for an account of, any Taxes;

 

(w)No Proceedings to Dissolve. There are no proceedings or actions pending or contemplated by any Security Party or, to the best knowledge of any Security Party, contemplated by any third party, to dissolve or terminate any Security Party;

 

(x)Solvency. In the case of each of the Security Parties, (a) the sum of its assets, at a fair valuation, does and will exceed its liabilities, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities, (b) the present fair market salable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities, as they mature, (c) it does not and will not have  unreasonably small working capital with  which to continue its business and (d) it has not incurred, does not intend to incur and does not believe it will incur debts beyond its ability to pay such debts as they mature;

 

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(y)Compliance  with  Laws.  Each of the Security Parties is in compliance with all  applicable laws, except where any failure to comply with any such applicable laws would not, alone or in the aggregate, have a Material Adverse Effect; and

 

(z)Survival. All representations, covenants and warranties made herein and in any certificate or other document delivered pursuant hereto or in connection herewith shall survive the making of the Facility and the issuance of the Note.

 

3.THE FACILITY

 

3.1Purposes. (a) The Lenders shall, during the Availability Period, make the Facility available to the Borrower for the purpose of partially financing the acquisition costs of the Vessel.

 

(b) Making of the Facility. Each of the Lenders, relying upon each of  the representations and warranties set out in Section 2, hereby severally and not jointly agrees with the Borrower that, subject to and upon the terms of this Agreement, it will, not later than 11:00 a.m. New York City time on the Drawdown Date, make its portion of the Facility, in Federal or other funds, immediately available in New York City to the Facility Agent at its address set forth on Schedule I or to such account of the Facility Agent most recently designated by it for such purpose by notice to the Lenders. Unless the Facility Agent determines that any applicable condition specified in Sections 4.1 or 4.2 has not been satisfied, the Facility Agent will make the funds so received from the Lenders available to the Borrower at the aforesaid address, subject to the receipt of the funds by the Facility Agent as provided in the immediately preceding sentence, not later than 2:30 P.M. (New York City time) on the Drawdown Dates, and in any event as soon as practicable after receipt. The Facility will be made available in one (1) drawing.

 

3.2Receipt of Funds. Unless the Facility Agent shall have received notice from a Lender prior to the Drawdown Date that such Lender will not make available to the Facility Agent such Lender's share of the Advance, the Facility Agent may assume that such Lender has made such share available to the Facility Agent on the Drawdown Date in accordance with this Section 3.2 and the Facility Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Facility Agent, such Lender and the Borrower (but without duplication) severally agree to repay to the Facility Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Facility Agent, at (i) in the case of the Borrower, a rate per annum equal to the Applicable Rate and (ii) in the case of such Lender, the actual costs of funds incurred by the Facility Agent for such funds. If such Lender shall repay to the Facility Agent such corresponding amount, such amount so repaid shall constitute such Lender's share of the Advance for purposes of this Agreement as of the Drawdown Date. Nothing in this Section 3.2 shall be deemed to relieve any Lender of its obligation to make its share of the Advance to the extent provided in this Agreement. In the event that the Borrower is required to repay the Advance to the Facility Agent pursuant to this Section 3.2 as between the B01Tower and the defaulting Lender, the liability for any breakfunding costs as described in Section 4.3 shall be borne by the defaulting Lender. If the defaulting Lender has not paid any such breakfunding costs upon demand by the Facility Agent therefore, the Borrower shall pay such breakfunding costs upon demand by the Facility Agent and the Borrower shall be entitled to recover any such payment for breakfunding costs made by the Borrower from the defaulting Lender.

 

3.3Drawdown Notice. The Borrower shall, by 10:00 a.m. New York City time on a day which is at least three (3) Banking Days (or fewer Banking Days if agreed by the Lenders) before the Drawdown Date serve a notice (a "Drawdown Notice"), substantially in the form of Exhibit B, on the Facility Agent, which notice shall (a) be in writing addressed to the Facility Agent, (b) be effective on receipt by the Facility Agent, (c) specify the amount of the Facility to be drawn, (d) specify the Banking Day on which the Facility is to be drawn, (e) specify the disbursement instructions, and (f) be irrevocable.

 

3.4Effect   of  Drawdown   Notice.     Delivery   of  the  Drawdown  Notice   shall  be  deemed  to constitute a warranty by the Borrower (a) that the representations and warranties stated in Section 2 (updated mutatis mutandis) are true and correct on and as of the date of the Drawdown Notice and will be true and correct on and as of the Drawdown Date as if made on such date, and (b) that no Event of Default  nor any event which with the giving of notice  or lapse of time or both would  constitute  an Event  of  Default  has occurred and is continuing.

 

4.CONDITIONS  PRECEDENT

 

4.1Conditions Precedent to this Agreement. The obligation of the Lenders to make the Facility available to the Borrower under this Agreement shall be expressly subject to the following conditions precedent:

 

(a)Corporate Authority. The Facility Agent shall have received the following  documents  in form and substance satisfactory to the Facility Agent and its legal advisers:

 

(i)copies, certified as true and complete by an officer of each of the Security Parties, of the resolutions of its board of directors and, with respect to both the Initial Borrower and the Ultimate Borrower, shareholders evidencing approval of the Transaction Documents to which each is a party and authorizing an appropriate officer or officers or attorney-in-fact or attorneys-in-fact to execute the same on its behalf, including the execution of the Drawdown Notice;

 

(ii)copies, certified as true and complete by an officer of each of the Security Parties (and the Ultimate Borrower), of the certificate or articles of incorporation and by­ laws or similar constituent document thereof;

 

(iii). copies, certified as true and complete by an officer of each of the Security Patties (and the Ultimate Borrower), of the names and true signatures of the officers of such Security Parties authorized to sign each Transaction Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder;

 

(iv)certificate of the jurisdiction of each Security Party (and the Ultimate Borrower) as to the good standing thereof;

 

(v)the capital and shareholding structure of the Borrower (and the Ultimate Borrower) certified to be true and complete by an officer of the Borrower (and the Ultimate Borrower);

 

(vi)a ce1tificate signed by the Chairman, President, Executive Vice President, Treasurer, Comptroller, Controller or chief financial officer of each of the Security Parties to the effect that (A) no Default or Event of Default shall have occurred and be continuing and (B) the representations and warranties of such  Security ▇▇▇▇▇ contained in this Agreement are true and correct as of the date of such certificate.

 

(b)The Agreement. Each of the Security Parties shall have duly executed and delivered this Agreement to the Facility Agent.

 

(c)The Note.  The Borrower shall have duly executed and delivered the Note to the Facility Agent.

 

(d)The   Creditors.The Facility  Agent  shall  have  received  executed  counterparts   of  this Agreement from each of the Lenders.

 

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(e)Fees. The Creditors shall have received payment in full of all fees and expenses due to each thereof pursuant to the terms hereof on the date when due including, without limitation, all fees and expenses due under Section 15 and the Fee Letter.

 

(f) Environmental  Claims.  The Lenders  shall be satisfied that none of the Security Parties is subject to any Environmental Claim which could reasonably be expected to have a Material Adverse Effect.

 

(g)Legal Opinions. The Facility  Agent, on behalf of the Agents  and the Lenders, shall have received opinions addressed to the Facility Agent from (i) Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇, L.L.P., special counsel to the Security Parties, and (ii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Agents and the Lenders, in each case in such form as the Facility Agent may require, as well as such other legal opinions as the Lenders shall have required as to all or any matters under the laws of the State of Delaware, the State of New York and the United States of America, covering certain of the representations and warranties and conditions which are the subjects of Sections 2 and 4, respectively.

 

(h)Officer's Certificate. The Facility Agent shall have received a certificate signed by  the President or other duly authorized executive officer of the Borrower certifying that under applicable law existing on the date hereof, the Borrower shall not be compelled by law to withhold or deduct any Taxes from any amounts to become payable to the Facility Agent for the account of the Creditors hereunder.

 

(i)Initial Charter Party Agreement.  The Borrower shall have delivered to the Facility Agent  a copy, certified as true and complete by an officer of the Borrower, of the Initial Charter Party Agreement.

 

(j) Accounts. The Borrower shall have established (i) the Earnings Accounts and the Retention Accounts in the name of the Initial Borrower and (ii) the Earnings Accounts and the Retention Accounts in the name of the Ultimate Borrower, in each case, with DVB Bank SE (Frankfurt).

 

(k)UCC Filings. The Facility Agent shall have received evidence that Uniform  Commercial Code Financing Statements have been filed in the State of New York and in such other jurisdictions as the Facility Agent may reasonably require.

 

(1)Financial Statements. Each of the Security Parties shall deliver to the Facility Agent consolidated financial statements for the period ending March 31, 2014 or for any other period requested by the Facility Agent prior to the Closing Date.

 

(m)Licenses,   Consents   and   Approvals.    The  Facility  Agent  shall  have  received  satisfactory evidence that all necessary licenses, consents and approvals in connection with the transactions  contemplated by this Agreement, the Note, the Security Documents and the Fee Letter have been obtained.

 

(n)Know     Your     Customer     Requirements.        The    Facility    Agent    shall    have    received documentation, with respect to  the  Security  Parties  and  the  Ultimate  Borrower,  to  its  satisfaction  in connection with its know your customer requirements, including but not limited to:

 

(i)completed bank account opening mandates with telephone and fax indemnities to include a list of all account holders' authorized signatories and specimens of their signatures;

 

(ii)ce1tified list of directors, including titles, business  and  residential  addresses  and dates of birth;

 

(iii)certified true copy of photo identification (i.e. passport or driving license) and evidence of residential address for all authorized signatories;

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(iv)with respect to the Borrower, certificate of ultimate beneficial  ownership,  certified by the respective secretary or assistant secretary of such entity; and

 

(v)non-resident declaration forms, if applicable.

 

(o)Loan  Administration  Form.   The Facility Agent  shall have received  a duly executed  Loan Administration Form.

 

(p)Debt   Service  Letter  of  Credit.    The Facility  Agent  shall  have  received  the Debt  Service Letter of Credit.

 

(q)Maritime    Administration    Approval.The   Borrower   shall   have   obtained   Maritime Administration Approval in form and substance satisfactory to the Lenders.

 

(r)Vessel Documents.  The Facility Agent shall have received:

 

(i)the latest survey report in respect of the Vessel;

 

(ii)the classification ce1tificate of the Vessel and the trading certificate of the Vessel from the Classification Society with which such Vessel is classed at least ten (10) days prior to the Drawdown Date, unless otherwise agreed by the Facility Agent;

 

(iii)the relevant pages of the Trim & Stability booklet, including (x) a copy of the approval page displaying the name of the Vessel and the stamp of class, (y) a copy of the page giving the description of the Vessel and (z) the page stating the Vessel's LDT;

 

(iv)the chartering description (e.g. Q88 for tankers or Form C for LPG); and

 

(v)evidence satisfactory that the Vessel is:

 

a.in the sole and absolute ownership of such Borrower and duly registered in such Borrower's name under the United States flag free of all liens and encumbrances of record other than the Mortgage;

 

b.insured in accordance with the prov1s10ns of the Mo1tgage and all requirements of the Mo1tgage in respect of such insurance have been fulfilled (including, but not limited to, letters of undertaking from the insurance brokers,  including  confirmation notices of assignment, notices of cancellation and loss payable clauses acceptable to the Lenders); the main terms of such insurances (including the copies or drafts of the relevant insurance documents) to be provided to the Facility Agent at least 10 days prior to the Drawdown Date;

 

c.classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations and requirements;  and

 

d.operationally seaworthy and in every way fit for its intended service.

 

(s)Security Documents. The Borrower shall have executed and delivered to the Facility Agent:

 

(i)the Earnings and Charterparties Assignment;

 

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(ii)the Insurances Assignment;

 

(iii)the Account Pledges relating to the Earnings Account and the Retention Account;

 

(iv)the Assignment  Notice  and the acknowledgement  thereof  in respect  of (i) through

(iii) above (including the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement  from  the Initial Charterer);

 

(v)the Mo1tgage relating to its Vessel;

 

(vi)Manager's Unde1taking from each of the Commercial Manager (unless the B01Tower is the Commercial Manager) and the Technical Manager (or any subcontractor thereof), including, where applicable, an assignment of the interests of such manager in the insurances and subordination undertakings;

 

(vii)evidence that the Borrower has sent an instruction letter to the Classification Society as required under Section 9.l(z) and that the Classification Society has executed the unde1taking as required thereby; and

 

(viii)an irrevocable power of attorney granted by the Borrower to the Security Trustee which, upon the occurrence and during the continuance of an Event  of  Default, enables the Security Trustee to make all necessary decisions in relation to the Vessel and obliges the master of the Vessel to adhere to the Security Trustee's instructions.

 

(t)Registration of the Mortgage. The Facility Agent shall have received satisfactory evidence that the Mortgage has been duly registered under the laws of the United States of America and constitutes a first priority mortgage lien under the laws of the United States.

 

(u)Vessel Appraisals. The Facility Agent shall have received appraisals, in form and substance satisfactory to the Facility Agent, as to the Fair Market Value of the Vessel (to be dated not earlier than one month prior to the Drawdown Date).

 

(v)ISM DOC. The Facility Agent  shall have received a copy of the Operator's DOC and satisfactory evidence of compliance with the ISM, IPS Codes and/or IAPPC, to the extent applicable.

 

(w)Evidence  of  Current  COFR.  The Facility Agent shall have received a copy of the  current Certificate of Financial Responsibility pursuant to the Oil Pollution ▇▇▇ ▇▇▇▇ for the Vessel.

 

(x)Insurance Report. The Facility Agent shall have received a detailed report from a firm of independent marine insurance consultants appointed by the Facility Agent in respect of the insurances on the Vessel, in form and substance satisfactory to the Facility Agent; the cost of such report to be for the account of the Borrower.

 

(y)Drawdown Notice. The Facility Agent having received the Drawdown Notice in accordance with the terms of Section 3.3.

 

(z)Representations and Warranties True. The representations stated in Section 2 being true and correct as if made on that date.

 

(aa) No Default.  No Default or Event of Default having occurred and being continuing or would result from the making of the requested Advance.

 

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(bb)No Material Adverse Effect.   Since December 31, 2013, there having been

 

(i)no material  adverse  change in the consolidated  financial  strength of the Borrower and the Guarantor;

 

(ii)no material adverse global economic or political development; and

 

(iii)no material adverse development in the international money and capital markets;

 

which,  in the reasonable  opinion  of the Lenders,  might  prejudice the successful  and timely  closing of the Facility or the successful and timely performance of any of the material obligations under this Agreement.

 

(cc) Miscellaneous. The Facility Agent shall be satisfied with any other document, authorization, opinion or assurance it may require

 

(dd)   Regions  Consent.   The Facility Agent shall have received a consent agreement  executed by the administrative agent, the collateral agent, the "Required Lenders" and the loan parties under the Regions Credit Agreement together with the related UCC financing statement amendment, in each case, in form and substance satisfactory to it.

 

4.2Breakfunding Costs. In the event that, on the date specified for the making of the Advance in the Drawdown Notice, the Lenders shall not be obliged under this Agreement to make the requested Advance available, the Borrower shall indemnify and hold the Lenders fully harmless against any losses which the Lenders (or any thereof) may sustain as a result of borrowing or agreeing to borrow funds to meet the drawdown requirement of the Drawdown Notice and the certificate of the relevant Lender or Lenders shall, absent manifest error, be conclusive and binding on the Borrower as to the extent of any such losses.

 

4.3Satisfaction after Drawdown. Without prejudice to any of the other terms and conditions of this Agreement, in the event all of the Lenders elect, in their sole discretion, to make the Facility available to the B01Tower prior to the satisfaction of all or any of the conditions referred to in Sections 4.1 and 4.2, the Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such condition or conditions within seven (7) days after the Drawdown Date (or such longer period as the Majority Lenders, in their sole discretion, may agree).

 

5.REPAYMENT  AND PREPAYMENT

 

5.1Repayment. Subject to the prov1s10ns of this Section 5 regarding application of prepayments, the Borrower shall repay the principal of the Facility in twenty four (24) consecutive quarterly installments begim1ing on the Initial Payment Date and ending on the Final Payment Date, each of the twenty four (24) installments being in an amount equal to $740,384.62 (accompanied by, in the case of the last such installment, a balloon payment in the amount of $20,730,769.23 or the full amount of the Facility then outstanding and all interest, fees or other moneys payable under any Transaction Document).

 

5.2Voluntary   Prepayment;   No   Re-borrowing.    The  Borrower  may  prepay,  upon  five  (5) Banking Days written notice, the Facility or any portion thereof, provided that if such prepayment is made on a day other than a Payment Date, such prepayment shall be made together with the costs and  expenses provided for in Section 13.4. Each prepayment shall be in a minimum amount of Two Million  Dollars ($2,000,000) and any multiple thereof, or the full amount of the Facility then outstanding. No part  of the Facility once repaid or prepaid will be available for re-borrowing.

 

5.3Mandatory Prepayment. Upon (i) the sale of the Vessel or (ii) the earlier of (x) ninety (90) days after the Total Loss (as such term is defined in the Mortgage) of the Vessel or (y) the date on which the insurance proceeds in respect of such loss are received by the Borrower or the Security Trustee as assignee

 

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thereof, the Facility shall be repaid in full together with, in the event of a Sale under  Subsection (i) hereof only, the Prepayment Premium, as applicable, and the costs and expenses provided for in Section 13.4.

 

5.4Interest and Costs with Prepayments/Application of Prepayments.

 

(a)Any prepayment of the Facility made hereunder (including, without limitation, those made pursuant to Sections 5 and 9) shall be subject to the condition that on the  date of prepayment  all accrued interest to the date of such prepayment shall be paid in full with respect to the Facility or portions thereof being prepaid, together with the Prepayment Premium, as applicable, and any and  all  costs  or expenses incurred by any Lender in connection with any breaking of funding (as certified by such Lender, which certification shall, absent any manifest error, be conclusive and binding on the Borrower).

 

(b)All prepayments of the Facility under Section 5.2 shall be applied towards the installments of the Facility in the inverse order of their due dates for payment.

 

5.5Borrower's Obligation Absolute. The Borrower's obligation to pay each Creditor hereunder and under the Note shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof and thereof, under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the B01rower may have or may have had against the Creditors.

 

6.INTEREST AND RATE

 

6.1Payment of Interest; Interest Rate. (a) The Borrower hereby promises to pay to the Lenders interest on the unpaid principal amount of the Facility for the period commencing on the Drawdown Date until but not including the stated maturity thereof (whether by acceleration or otherwise) or the date of prepayment thereof at the Applicable Rate. The Facility Agent shall promptly notify the Borrower and the Lenders in writing of the Applicable Rate as and when determined. Each such determination, absent manifest error, shall be conclusive and binding upon the Borrower. Accrued interest on the Facility shall be payable in arrears on each Payment Date.

 

(b) Notwithstanding the foregoing, the Borrower agrees that after the occurrence and during the continuance of an Event of Default, the Facility shall bear interest at the Default Rate. In addition, the Borrower hereby promises to pay interest (to the extent that the payment of such interest shall be legally enforceable) on any overdue interest, and on any other amount payable by the Borrower hereunder which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the due date thereof until but not including the date the same is paid in full at the Default Rate.

(c) Interest payable at the Default Rate shall be payable from time to time on demand of the Facility Agent.

 

 

 

 

6.2Maximum Interest. Anything in this Agreement or the Note to the contrary notwithstanding, the interest rate on the Facility shall in no event be in excess of the maximum rate permitted by applicable law.

 

7.PAYMENTS

 

7.1Time and  Place  of  Payments,  No  Set  Off.  All payments to be made hereunder by  the Borrower shall be made to the Facility Agent, not later than 3 p.m. New York time (any payment  received after 3 p.m. New York time shall be deemed to have been paid on the next Banking Day) on the due date of such payment, to HSBC Bank USA, New York (Account No. 000.129.879, ABA No. ▇▇▇▇▇▇▇▇▇,  SWIFT ID No. ▇▇▇▇▇▇▇▇ for the credit to DVB Bank SE, Frankfurt, Reference: FP 3044858) or to  such other

 

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account of the Facility Agent as the Facility Agent may direct, without set-off or counterclaim and free from, clear of, and without deduction or withholding for, any Taxes.

 

7.2Taxes. (a) If the Borrower shall at any time be compelled by law to withhold or deduct any Taxes from any amounts payable to the Lenders hereunder, then the Borrower shall pay such additional amounts in Dollars as may be necessary in order that the net amounts received after withholding or deduction shall equal the amounts which would have been received if such withholding or deduction were not required and, in the event any withholding or deduction is made, whether for Taxes or otherwise, the Borrower shall promptly send to the Facility Agent such documentary evidence with respect to such withholding or deduction including documentary evidence satisfactory to the Facility Agent that the tax has been paid to the appropriate taxation authority as may be required from time to time by the Lenders.

 

(b)If any Lender obtains the benefit of a credit against the liability thereof for federal income taxes imposed by any taxing authority for all or part of the Taxes as to which the Borrower have paid additional amounts as aforesaid (and each Lender agrees to use commercially reasonable efforts to obtain the benefit of any such credit which may be available to it, provided that (i) it has knowledge that such credit is in fact available to it and (ii) it is able to attribute such credit to this Facility), then such Lender  shall reimburse the Borrower for the amount of the credit so obtained. The decision as to whether or not to seek such a benefit is in the sole discretion of the Lenders.

 

(c)On or prior to the date hereof (or in the case of a transferee Lender, the date that it becomes a party to this Agreement), and thereafter when reasonably requested by a Security Party, each Lender or transferee that is organized under the laws of a jurisdiction outside the United States (a "Non-U.S. Lender") shall deliver to the Borrower and the Facility Agent two properly completed and duly executed copies of (as applicable) IRS Form W-8BEN-E, W-8ECI or W-8IMY or, upon request of a Security Party or the Facility Agent, any subsequent versions thereof or successors thereto, in each case claiming a reduced rate (which may be zero) of U.S. federal withholding tax under Sections 1441 and 1442 of the Code with respect to payments of interest hereunder as such Non-U.S. Lender may properly claim. In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall, on or prior to the date hereof (or in the case of a transferee Lender, the date that it becomes a party to this Agreement), and thereafter when reasonably requested by the Borrower, provide to the Facility Agent in addition to the IRS Form W-8 required above a certificate representing that such Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code)  of such Borrower  and is not a controlled foreign corporation related to such Borrower (within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly notify the Facility  Agent in the event any representation  in such certificate is no longer accurate.

 

(d)Without limiting the generality of the foregoing, if a payment made to a Lender under this Agreement or any of the other Transaction Documents would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Facility Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Facility Agent such documentation prescribed by applicable law (including as prescribed by Section 147l(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Facility Agent as may be necessary for the Borrower and the Facility Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (k), "FATCA" shall include any amendments made to FATCA after the date of this Agreement. In addition, each Lender shall indemnify the Facility Agent and the Borrower for any withholding Tax or other penalties imposed in connection with any "withholdable payment,'' as defined in Section 1473 of the Internal Revenue Code,

 

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made to  a Lender that  is not  a U.S. Person that  has  failed to comply with the reporting  requirements  or otherwise qualify for an exemption under FATCA.

 

(e)Nothing contained in this Section 7.2 shall require the Facility Agent or Lender (or any transferee Lender) to make available any of its tax returns or any other information that it deems to be confidential or proprietary.

 

7.3Sharing  of  Setoffs.   Each Lender  agrees  that  if it  shall, through  the exercise  of  a right  of banker's  lien,  setoff  or  counterclaim  or  pursuant  to  a  secured  claim  under  Section  506  of  the  Federal Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim,  exercised or received by such Lender under any applicable bankruptcy, insolvency or other similar law or  otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of the Facility as a result of which its funded Commitment shall be proportionately less than the funded Commitment  of any  other Lender,  it shall be deemed simultaneously to have purchased  from such other Lender at face value,  and shall promptly pay to such other Lender the purchase price for, a participation in the funded  Commitment of such other Lender so that  the aggregate  funded  Commitment  of  each  Lender  shall be  in  the same proportion to the aggregate funded Commitments then  outstanding  as  its  funded  Commitment   prior  to  such  exercise  of banker's lien, setoff or counterclaim or other event was to the principal  amount  of all funded  Commitments outstanding prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that, if any such purchase  or purchases  or adjustments  shall be made  pursuant to this Section 7.3 and the payment  giving rise thereto shall thereafter be recovered, such purchase  or purchases or adjustments shall be rescinded to the extent  of such recovery  and the purchase  price  or  prices  or  adjustment  restored  without interest.   Any Lender holding  a participation  in a funded  Commitment deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or  counterclaim with respect  to any and all moneys owing to  such Lender by reason thereof  as fully as if  such Lender had made an advance in the amount of such participation. The Borrower expressly consents to the foregoing arrangement.

 

7.4Computations; Banking  Days. (a)·All computations of interest and fees shall be made by the Facility Agent or the Lenders, as the case may be, on the basis of a 360-day year, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which interest or fees are payable. Each determination by the Facility Agent or the Lenders of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(b) Whenever any payment hereunder or under the Note shall be stated to be due on a day other than a Banking Day, such payment shall be due and payable on the next succeeding Banking Day unless the next succeeding Banking Day falls in the following calendar month, in which case it shall be payable on the immediately preceding Banking Day.

 

8.EVENTS OF DEFAULT

 

8.1Events  of  Default.    In  the  event  that  any  of the  following  events  shall  occur  and  be continuing:

 

(a)Principal Payments. Any principal of the Facility is not paid on the due date therefore; or

 

(b)Interest  and  Other  Payments.   Any interest on the Facility or any other amount  becoming payable under this Agreement or any other Transaction Document is not paid within three (3) Banking Days from the date when due; or

 

(c)Representations, etc. Any representation, warranty or other statement made by any of the Security Parties in this Agreement, any of the other Transactions Documents or in any other instrument, document or other agreement delivered in connection herewith proves to have been untrue or misleading in any material respect as at the date as of which it was made or confirmed; or

 

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(d)Impossibility, Illegality. It becomes impossible or unlawful for any of the Security Parties to fulfill any of the covenants and obligations contained herein or in any Transaction Document, or for any of the Lenders to exercise any of the rights vested in any of them hereunder or under the other Transaction Documents; or

 

(e)Mortgage.  There is any default under the Mortgage; or

 

(f)Certain Covenants. Any Security Party defaults in the perfo1mance or observance of any covenant contained in Section 9.l (b), 9.l (d), 9.l (f), 9.l(m), 9. l (n), 9. l (o), 9.l (r),  9.l (v),  9.2  (other  than clauses (j), (1) and (m) thereof) and 9.3; or

 

(g)Covenants. One or more of the Security Parties default in the performance of  any term, covenant or agreement contained in this Agreement or in the other Transaction Documents, or in any other instrument, document or other agreement delivered in connection herewith or therewith, in each case other than an Event of Default referred to elsewhere in this Section 8.1, and such default continues unremedied for a period of ten (10) days after written notice thereof has been given to the relevant Security Party or Parties by the Facility Agent at the request of any Lender; or

 

(h)Indebtedness  and Other Obligations.  Any Security Party or any of its Subsidiaries  defaults in the payment when due (subject to any applicable grace period) of any Indebtedness  or of  any other indebtedness, in either case, in an outstanding principal amount equal to or exceeding Five Million Dollars ($5,000,000) individually or Twenty Million Dollars ($20,000,000) in the aggregate or such Indebtedness or other indebtedness is, or by reason of such default is subject to being, accelerated or any  party becomes entitled to enforce the security for any such Indebtedness or other indebtedness and such party shall take steps to enforce the same, unless  such default or enforcement  is being contested in  good faith and by appropriate proceedings or other acts and such Security Party has set aside on its books  adequate reserves with respect thereto; or

 

(i)Bankruptcy. Any Security Party commences any proceedings relating  to  any  substantial portion of its property under any reorganization, arrangement or readjustment  of debt, dissolution, winding up, adjustment,. composition, bankruptcy or  liquidation law or  statute of any jurisdiction, whether now or hereafter in effect (a "Proceeding"), or there is commenced against any thereof any Proceeding and such Proceeding remains undismissed or unstayed for a period of sixty (60) days; or any receiver,  trustee, liquidator or sequestrator of, or for, any thereof or any substantial portion of the property of any thereof is appointed and is not discharged within a period of sixty (60) days; or any thereof by any act indicates consent to or approval of or acquiescence in any Proceeding or to the appointment of any receiver, trustee, liquidator or sequestrator of, or for, itself or any substantial portion of its prope1ty; or

 

(j)Judgments. Any judgment or order is made the effect whereof would be to render invalid this Agreement or any other Transaction Document or any material provision thereof or any Security Party asserts that any such agreement or provision thereof is invalid; or judgments or orders for the payment of money (not paid or fully covered by insurance, subject to applicable deductibles) in excess of $2,500,000 in the aggregate for the Guarantor or its Subsidiaries (or its equivalent in any other currency) shall be rendered against the Guarantor and/or any of its Subsidiaries and such judgments or orders shall continue unsatisfied and unstayed for a period of thirty (30) days; or

 

(k)Inability to Pay Debts. Any Security Party is unable to pay or admits its inability to pay its debts as they fall due or a moratorium shall be declared in respect of any Indebtedness of any thereof; or

 

(1)Termination   of  Operations;   Sale  of  Assets.    Except  as  expressly  permitted  under   this Agreement, any Security Party ceases its operations or sells or otherwise disposes of all or substantially all of its assets or all or substantially all of the assets of any Security Party are seized or otherwise appropriated; or

 

 

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(m)Change in Financial Position. Any change in the operations or the financial position of any Security Party which, in the reasonable opinion of the Majority  Lenders, could reasonably be expected  to have a Material Adverse Effect; or

 

(n)Cross-Default. Any Security Party defaults under any material  contract  or  agreement  to which it is a party or by which it is bound including, but not limited to, the Initial Charter Party Agreements or any Approved Charter; or

 

(o)BRISA Debt. An BRISA Funding Event, BRISA Te1mination Event, Foreign Termination Event or Foreign Underfunding shall exist or occur that, in the reasonable opinion of the Majority Lenders, when taken together with all other BRISA Funding Events, BRISA Termination Events, Foreign Termination Events and Foreign Underfundings that exist or have occurred, or could reasonably be expected to exist or occur, result in liability to the Security Parties, their respective subsidiaries and BRISA Affiliates in the aggregate in excess of $1,000,000; or

 

(p)Change of Control.  A Change of Control has occurred; or

 

(q)Instability  of  a  Flag  State.   There exists instability  in the jurisdiction  where  the Vessel  is flagged, which, in the reasonable  opinion of the Majority Lenders, could reasonably be expected to have  a Material Adverse Effect; or

 

(r)Class  Certification  Withdrawal.   There occurs a withdrawal  of the Vessel's rating by  its Classification Society; or

 

(s)Arrest and/or Detention of the Vessel. There occurs any capture, seizure, arrest, detention or confiscation of the Vessel by any government or by persons acting or purporting to act on behalf of any government unless the Vessel is released and restored to the Borrower from such capture, seizure, arrest, detention or confiscation within fourteen (14) days after the occurrence thereof; or

 

(t)Vessel Transfer. The Vessel Transfer does not occur prior to October 31, 2014 pursuant to the terms and subject to the conditions of Section 12.2 and the Onmibus Assignment and Assumption Agreement, unless the amount available to be drawn under the Debt Service Letter of Credit is sufficient to cover the Debt Service due on the next Payment Date; or

 

(u)Cancellation  of Approved  Charter.  An Approved Charter with a duration of more than  12 months is terminated, unless the Borrower continues to pay the Debt Service; or

 

(v)Off Charter. The Vessel is off charter (other than for scheduled drydockings of the Vessel) for a continuous period of 14 days at any time, or 56 days in total in any 12-month period, unless  the Borrower continues to pay the Debt Service; or

 

(w)Material   Adverse   Effect.    There  occurs  any  event  or  condition  that  could  reasonably  be expected to have a Material Adverse Effect;

 

then, the Lenders' obligation to make the Facility available shall cease and the Facility Agent on behalf of the Lenders may, with the Majority Lenders' consent and shall, upon the Majority Lenders' instruction, by notice to the Borrower, declare the entire Facility, accrued interest and any other sums payable by the Borrower hereunder, under the Note and under the other Transaction Documents due and payable whereupon the same shall forthwith be due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; provided that upon the happening of an event specified in subclauses (i) or (k) of this Section 8.1, the Facility, accrued interest and any other sums payable by the Borrower hereunder, under the Note and under the other Transaction Documents shall be immediately due and payable without declaration, presentment, demand, protest or other notice to the Borrower all of which are expressly waived.

 

In such event, the Creditors, or any thereof, may proceed to protect and enforce their respective rights by action at law, suit in equity or in admiralty or other appropriate proceeding, whether for specific performance of any covenant contained in this Agreement or in the Note or in any other Transaction Document or in aid of the exercise of any power granted herein or therein, or the Lenders or the Facility Agent may proceed to enforce the payment of the Note when due or to enforce any other legal or equitable right of the Lenders, or proceed to take any action authorized or permitted by Applicable Law for the collection of all sums due, or so declared due, including, without limitation, the right to appropriate and hold or apply (directly, by way of set-off or otherwise) to the payment of the obligations of the Borrower to any of the Creditors hereunder, under the Note and/or under the other Transaction Documents (whether or not then due) all moneys and other amounts of the Borrower then or thereafter in possession of any Creditor, the balance of any deposit account (demand or time,  matured or unmatured) of the Borrower then  or thereafter with any Creditor and every other claim of the Borrower then or thereafter against any of the Creditors.

 

8.2Application   of   Moneys.     Except  as  otherwise  provided   in  any  Security  Document,  all moneys  received  by the Creditors  under  or pursuant  to  this Agreement,  the Note  or any of the  Security Documents after the happening of any Event of Default (unless cured to the  satisfaction of the  Majority Lenders) shall be applied by the Facility Agent in the following manner:

 

(1) first, in or towards the  payment  or  reimbursement  of  any  expenses  or liabilities incurred by any of the Creditors in connection with the ascertainment, protection or enforcement of its rights and remedies hereunder, under the Note and under the other Transaction  Documents;

 

(2) second,  in  or  towards  payment  of  any  interest  owing  m  respect  of  the Facility;

 

(3)third, in or towards repayment of the principal of the Facility;

 

(4)fourth, in or towards payment of all other sums which may be owing to any of the Creditors under this Agreement, under the Note and under the other Transaction Documents;

 

(5)fifth, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be entitled thereto.

 

9.COVENANTS

 

9.1Affirmative Covenants. Each of the Security Parties hereby covenants and undertakes with the Lenders that, from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any of the Security Documents, it will:

 

(a)Perfonnance of Agreements. Duly perform and observe, and procure the observance and performance by all other parties thereto (other than the Lenders) of, the terms of this Agreement, the Note and the Security Documents;

 

(b)Notice of Default, etc. Promptly upon obtaining knowledge thereof, inform the Facility Agent of the occurrence of (a) any Event of Default or of any event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, (b) any litigation or governmental proceeding pending or threatened against any Security Party which could reasonably be expected to have a Material Adverse Effect, (c) the withdrawal of the Vessel's rating by its Classification Society or the issuance by the Classification Society of any recommendation or notation affecting class and (d) any other event or condition which is reasonably likely to have a Material Adverse Effect, in each case promptly, and in any event within three (3) Banking Days after becoming aware of the occurrence thereof;

 

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(c)Obtain Consents. Without prejudice to Section 2.1 and this  Section 9.1,  obtain  every consent and do all other acts and things which may from time to time be necessary or advisable for the continued due performance  of all its and the other Security Parties' respective obligations under this Agreement, under the Note and under the Security Documents;

 

(d)Financial Information. Deliver to the Facility Agent with sufficient copies for the Lenders to be distributed to the Lenders by the Facility Agent promptly upon the receipt thereof:

 

(i)as soon as available, but not later than one hundred fifty (150) days after the end of each fiscal year of the Guarantor, complete copies of the  consolidated  financial reports of the Guarantor and its Subsidiaries together with a separate financial report of the Borrower (together with a Compliance Certificate that includes, inter alia, a reconciliation of all of the differences between GAAP as at  June  30,  2014  and GAAP as at the time of delivery), all in reasonable detail which shall include at least the consolidated balance sheet of the Guarantor and its  Subsidiaries  and the profit and loss accounts and balance sheet of each Subsidiary, including the Borrower, as a separate column, as of the end of such year and the related statements of income for such year as well as the related statement of sources and uses of funds, cash flow and changes in the capital for such year for the Guarantor and its Subsidiaries, each as prepared in accordance with GAAP, all in reasonable detail, which shall be prepared by an Acceptable Accounting Firm and, with respect to the Guarantor, be audited reports;

 

(ii)as soon as available, but not later than ninety (90) days after the end of each of the first three fiscal quarters of the Guarantor, a  quarterly interim balance sheets and profit and loss statements of the Guarantor and its Subsidiaries and the related profit and loss statements as well as the related statement of sources and uses of funds, cash flow and changes in the capital for such year for the Guarantor and its Subsidiaries (together with a Compliance Certificate that includes, inter alia, a reconciliation of all of the differences between GAAP as at  June  30,  2014  and GAAP as at the time of delivery), all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Guarantor;

 

(iii)as soon as available, but not later than the end of each of the second and fourth fiscal quarters of the Guarantor, an Asset Maintenance Compliance Certificate in reasonable detail and certified to be true and complete by the chief financial officer of the Guarantor (it being understood that appraisals of the Fair Market Value of the Vessel for such Asset Maintenance Compliance Certificate shall be provided to the Facility Agent no later than 15 days prior thereto);

 

(iv)promptly upon the mailing thereof to the shareholders of the Guarantor, copies of all financial statements, reports, proxy  statements  and other communications  provided to the Guarantor's shareholders;

 

(v)within ten (10) days of the Guarantor's receipt thereof, copies of all audit letters or other correspondence from any external auditors including material financial information in respect of the Guarantor and its Subsidiaries; and

 

(vi)an updated business forecast, together with the financial statements required to be delivered in clause (i) above;

 

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(vii)not later than the third Friday of February of each fiscal year, a budget for operating expenditures of the Borrower relating to the Vessel for the following twelve (12) month period in form and substance satisfactory to the Facility Agent; and

 

(viii)such other statements (including, without  limitation,  monthly  consolidated statements of operating revenues and expenses), lists of assets and  accounts, budgets, forecasts, reports and other financial information with respect to  its business as the Facility Agent may from time to time reasonably request, certified to be true and complete by the chief financial officer of the Guarantor;

 

(e)Contingent Liabilities. For inclusion with each Compliance  Certificate  delivered  in connection with Sections 9.1(d)(i) and 9.1(d)(ii), and in any event upon the reasonable request of the Facility Agent, an accounting of all of the contingent liabilities of each Security Party;

 

(f)Vessel Covenants.  With respect to the Vessel:

 

(i)keep the  Vessel registered in the name of the Borrower under the flag of an Approved  Jurisdiction;

 

(ii)keep the Vessel in good and safe condition and state of repair (loss or damage by casualty or condemnation excepted);

 

(iii)keep the Vessel classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations or qualification unless otherwise agreed by the Facility Agent in writing;

 

(iv)keep the Vessel insured in accordance with the provisions of the Mortgage recorded against it and the requirements thereof in respect of such insurances have been complied with;

 

(v)be in possession of a proper trading certificate at all times;

 

(vi)notify the Facility Agent of all modifications to the Vessel and of the removal of any parts or equipment from the Vessel;

 

(vii)provide the Facility Agent with all requested Vessel related information;

 

(g)Vessel Valuations. For inclusion with each Asset Maintenance  Compliance Certificate delivered pursuant to Section 9.1(d)(iii) (for the second and fourth fiscal quarters of the Guarantor or more frequently at the Facility Agent's option upon and during the continuation of a Default or an Event of Default), and in any event upon the reasonable request of the Facility Agent, the Borrower shall obtain appraisals of the Fair Market Value of the Vessel. All valuations are to be at the Borrower's cost. In the event the Borrower fails or refuses to obtain the valuations requested pursuant to this Section 9.1(g) within ten (10) days of the Facility Agent's request therefore, the Facility Agent will be authorized to obtain such valuations, at the Borrower's cost, from one of the Approved Ship Brokers, which valuations shall be deemed the equivalent of valuations duly obtained by the Borrower pursuant to this Section 9.l(g), but the Facility Agent's actions in doing so shall not excuse any default of the Borrower under this Section 9.1(g);

 

(h)Corporate Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence in good standing and all licenses, franchises, permits and assets necessary to the conduct of its business;

 

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(i)Books  and  Records.   At all times keep proper books of record  and account  into which  full and correct entries shall be made in accordance with GAAP;

 

(j)Taxes    and    Assessments.       Pay   and    discharge   all   material    taxes,    assessments    and governmental charges or levies imposed upon it or upon its income or property prior to the date upon which penalties attach thereto; provided, however, that it shall not be required to pay and discharge, or cause to be paid  and  discharged,  any  such  tax,  assessment,  charge  or  levy  so  long  as  the  legality  thereof  shall  be contested  in good  faith  and  by  appropriate  proceedings  or  other  acts  and  it  shall  set  aside  on  its  books adequate reserves with respect thereto;

 

(k)Inspection. Allow any representative or representatives designated by the Facility Agent, subject to applicable laws and regulations, to visit and inspect any of  its properties,  and,  on request,  to examine its books of account, records, reports and other papers and to discuss its  affairs,  finances  and accounts with its officers, all at such reasonable times and as often as the Facility Agent reasonably requests and at the expense of the Borrower. In addition, the Borrower shall provide the Facility Agent with (and cause any Approved Charter, other than the Initial Charter Party Agreement, to contain a requirement for the provision with full rights of disclosure to the Facility Agent of) a copy of any jointly appointed independent inspection report accepted and signed by the Borrower, any deponent owner and the relevant charterer in respect of the Vessel issued during the term of this Agreement, promptly upon the issuance of any such inspection report and whether or not the Borrower is party to any such inspection repo1t;

 

(1)       Inspection  and  Survey Reports.  If the Lenders shall so request, the Borrower shall provide the Lenders with copies of all internally generated inspection or survey reports on the Vessel;

 

(m)Compliance with Statutes, Agreements, etc. Do or cause to be done all things (including, but not limited to, obtaining all consents) necessary to comply with all material contracts or agreements to which any of the Security Parties is a party, and all material laws, and the rules and regulations thereunder, applicable to such Security Party, including, without limitation, those laws, rules ,and regulations relating to employee benefit plans and environmental matters except where failure to do so would not be reasonably likely to have a Material Adverse Effect  and shall cause the Technical Manager and the Commercial Manager to comply with (or shall cause to be included in any Approved Charter other than the Initial Charter Party Agreement a provision requiring any charterer party there to comply with in respect of the Vessel and its operations) all national and international laws, directives, regulations, decrees, rulings and analogous rules, including but not limited to, rules relating to international sanctions;

 

(n)Environmental Matters. Promptly upon the occurrence of any of the following conditions, provide to the Facility Agent a certificate of a chief executive officer of the Guarantor, specifying in detail the nature of such condition and its proposed response or the proposed response of any Environmental Affiliate: (a) its receipt or the receipt by any Environmental Affiliate of any written communication whatsoever that alleges that such Person is not in compliance with any applicable Environmental Law or Environmental Approval, if such noncompliance could reasonably be expected to have a Material Adverse Effect, (b) knowledge  by it or any Environmental Affiliate that there exists any Environmental Claim pending or threatened against any such Person, which could reasonably be expected to have a Material Adverse Effect, or (c) any release, emission, discharge or disposal of any material that could form the basis of any Environmental Claim against it or against any Environmental Affiliate, if such Environmental Claim could reasonably be expected to have a Material Adverse Effect. Upon the written request by the Facility Agent, the Borrower will submit to the Facility Agent at reasonable intervals, a report providing an update of the status of any issue or claim identified in any notice or certificate required pursuant to this subsection;

 

(o)Insurance. Maintain with financially sound and reputable insurance companies insurance on all its properties and against all such risks and in at least such amounts and with such deductibles as are usually insured against by companies of established reputation engaged in the same or similar business from time to time;

 

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(p)Vessel Management. Cause the Vessel to be managed by the Guarantor or a wholly-owned Subsidiary thereof (it being understood that the technical management of the Vessel may be subcontracted to Wallem  Shipmanagement  Hong Kong);

 

(q)Brokerage   Commissions,   etc.    Indemnify  and  hold  each  of  the  Agents  and  the  Lenders harmless from any claim for any brokerage commission, fee or compensation from any broker or third party resulting from the transactions  contemplated hereby;

 

(r)ISM Code, ISPS Code and MTSA Matters. (i) Procure that the Operator will comply with and ensure that the Vessel will comply with the requirements of the ISM Code, ISPS Code and MTSA in accordance with the implementation schedules thereof, including (but not limited to) the maintenance and renewal of valid certificates, and when required, security plans, pursuant thereto throughout the term of the Facility; and (ii) procure that the Operator will immediately inform the Facility Agent if there is any threatened or actual withdrawal of its DOC, SMC or the ISSC in respect of the Vessel; and (iii) procure that the Operator will promptly inform the Facility Agent upon the issuance to the Borrower or Operator of a DOC and to the Vessel of an SMC or ISSC;

 

(s)BRISA. Forthwith upon learning of the existence or occurrence of any BRISA Funding Event, BRISA Termination Event, Foreign Termination Event or Foreign Underfunding Event that, when taken together with all other BRISA Funding Events, BRISA Termination Events, Foreign Termination Events and Foreign Underfundings that exist or have occurred, or which could reasonably be expected to exist or occur, could reasonably be expected to result in liability to the Security Parties, their respective subsidiaries and BRISA Affiliates in the aggregate in excess of $500,000, furnish or cause to be furnished to the Lenders written notice thereof;

 

(t)Evidence of Current COFR. If the Lenders shall so request, provide the Lenders with copies of the current Certificate of Financial Responsibility pursuant to the Oil Pollution ▇▇▇ ▇▇▇▇ for the Vessel;

 

(u)Listing on NYSE. With respect to the Guarantor, maintain its listing on the New York Stock Exchange;

 

(v)Change  of  Ownership.   Ensure no change in the ownership of the capital stock or  other equity interest of the Borrower;

 

(w)UCC Financing  Statements.  Ensure that within 1 Business Day after the Drawdown Date,

(A) an amendment to the UCC financing statement filed in favor of Regions Bank referenced in Section

4.l (dd)(ii) shall be filed with the Secretary of State in the State of New York and (B) the UCC financing Statement filed in favor of ▇▇▇▇▇ Fargo Bank Northwest, National Association, Trustee on February 24, 2012 shall be terminated, in each case, with satisfactory evidence of such filings to be provided to the Facility Agent Maintenance of Properties. Keep all material property necessary in its business in good working order and condition (loss or damage by casualty or condemnation excepted);

 

(y)Know Your  Customer  Requirements.  Provide all documentation (including  documentation requested by the Lenders or any prospective Lenders subsequent to the date hereof) to the satisfaction of the Lenders  or prospective  Lenders  (as the  ease  may  be)  in  connection  with  their  know  your customer requirements, including but not limited to:

 

(i)completed bank account opening mandates with telephone and fax indemnities to include the list of the all account holders' authorized signatories and specimens of their signatures;

 

(ii)certified list of directors, including titles, business and residential addresses and dates of birth;

 

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(iii)certified  true  copy  of photo  identification  (i.e. passport  or driving  license) and evidence of residential address for all authorized signatories;

 

(iv)with respect  to  the Borrower,  certificate  of ultimate  beneficial  ownership, certified by the respective secretary or assistant secretary of such entity; and

 

(v)non-resident declaration forms, if applicable;

 

(z)Classification    Society   Instructions    and   Undertaking.     The  Borrower   shall   instruct   the Classification Society through a letter sent by the Borrower to the Classification Society in the form attached hereto as Exhibit H-1 (and procure that the Classification Society undertakes  with  the  Security  Trustee through a letter in the form attached hereto as Exhibit H-2):

 

(i)to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Classification Society in relation to the Vessel;

 

(ii)to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class, related records and other information of the Borrower and the Vessel either (i) electronically (through the Classification Society directly or by way of indirect access via the Borrower's account manager and designating the Security Trustee as a user or administrator of the system under its account) or (ii) in person at the offices of the Classification Society, and to take copies of them electronically or otherwise;

 

(iii)to notify the Security Trustee immediately in writing and by Email at ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇  if the Classification Society:

 

(1)receives notification from the Borrower or any other person that the Vessel's Classification Society is to be changed; or

 

(2)becomes aware of any facts or matters which may result in or have resulted in a condition of class or a recommendation, or a change, suspension, discontinuance, withdrawal or expiry of the Vessel's class under the rules or terms and conditions of the Borrower's or the Vessel's membership of the Classification Society;

 

(iv)following receipt of a written request from the Security Trustee:

 

(1)to confirm that the Borrower is not in default  of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or

 

(2)if the Borrower is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society; or

 

(3)to provide any other information reasonably requested;

 

(aa)Further Assurances. Promptly upon the written request of the Facility Agent:

 

(i)correct any material defect or error that may be discovered in any Transaction Document or in the execution, acknowledgement, filing or recordation thereof; and

 

 

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(ii)do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re­ register any and all such further acts, deeds, conveyances, pledge agreements; mortgages, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignments, transfers, certificates, assurances and other instruments as the Facility Agent, may reasonably require from time to time in order to:

 

(1)carry out the purposes of the Transaction Documents;

 

(2)to the fullest extent permitted by applicable law, subject each of item  of Collateral to the Liens now or hereafter intended to be covered by the Transaction Documents pursuant to the terms thereof;

 

(3)perfect and maintain the validity, effectiveness and priority of the Liens intended to be created under the Transaction Documents; and

 

(4)assure, convey, grant, assign, transfer, preserve, protect and confirm to the Security Trustee, the rights granted or now or hereafter intended to be granted to the Security Trustee under any Transaction Document or under any other instruments executed in connection with any Transaction Document to which any Security Party is or is to be a party.

 

9.2Negative Covenants. Each of the Security Parties hereby covenants and unde1takes with the Lenders that, from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents, it will not, without the prior written consent of the Majority Lenders (or all of the Lenders if required pursuant to Section 17.8):

 

(a)Liens.  Create, assume or permit to exist, any mortgage, pledge,  lien, charge, encumbrance or any security interest whatsoever upon any Collateral or, in respect of the Borrower and the Guarantor, other property except:

 

(i)liens disclosed in Schedule III;

 

(ii)liens to secure Indebtedness permitted under Section 9.2(m), such liens to be limited to the vessels constructed or acquired;

 

(iii)liens for taxes not yet payable for which adequate reserves have been maintained;

 

(iv)the Mortgage, the Assignments and other liens in favor of the Security Trustee or the Lenders;

 

(v)liens, charges and encumbrances against the Vessel permitted  to  exist  under  the terms of the Mortgage;

 

(vi)pledges of certificates of deposit or other cash collateral securing reimbursement obligations in connection with letters of credit now or hereinafter issued for  its account in connection with the establishment  of its financial responsibility under 33

C.F.R.  Part  130 or 46  C.F.R.  Part  540,  as the  case may be,  as the  same may  be amended and replaced;

 

(vii)pledges or deposits to secure obligations under workmen's compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen's or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which it is the principal, as to

 

 

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all of the foregoing, only to the extent arising and continuing in the ordinary course of business; and

 

(viii)other liens, charges and encumbrances incidental to the conduct of its business, the ownership of its property and assets which are not more than thirty  (30)  days overdue and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of  its business;

 

(b)Third   Party   Guaranties.    Guarantee  the  obligations  of  any  third  party,  except  a  direct  or indirect  subsidiary  of the Guarantor, whether  or not  affiliated  with such Security Party, provided,  that  the Guarantor may guarantee the obligations of any third party in which the Guarantor owns an equity interest if such guarantee is of a percentage of the obligations of such third party being guaranteed which is no more than the percentage  of the Guarantor's equity ownership  in such third party.   By way of  illustration, if the Guarantor owns a 35% equity interest in a third party, the Guarantor may guarantee up to 35% of such third party's debt;

 

(c)Liens  on  Shares  of Borrower.  With respect to the Guarantor, create, assume or permit  to exist, any mortgage, pledge, lien, charge, encumbrance or any security interest whatsoever upon the shares of the Borrower;

 

(d)Subordination   of   Inter-Company   Indebtedness.    Upon  the  occurrence  and  during   the continuance of an Event of Default, allow any payments to be made by any of the Security Parties on any inter-company Indebtedness until such time as the Facility is paid in full;

 

(e)Transaction  with  Affiliates.   Enter into any transaction with an Affiliate, other than on  an arm's length basis;

 

(f)Change of Flag, Class, Management or Ownership. Change the flag of the Vessel other than to an Approved Jurisdiction, its Classification Society other than to another member of the International Association of Classification Societies acceptable to each of the Lenders, the management of the Vessel other than to the Guarantor or a wholly-owned Subsidiary thereof (it being understood that the technical management of the Vessel may be subcontracted to Walled Shipmanagement Hong Kong);

 

(g)Chartering. Enter into any charter party agreement with respect to the Vessel, other than an Approved Charter, or permit the Vessel to be sub-chartered, in each case, without the prior consent of the Majority Lenders, which consent shall not be unreasonably withheld;

 

(h)Change in Business. Materially change the nature of its business or commence any business materially different from its current business;

 

(i)Sale of Assets. Other than as reasonably acceptable to the Majority Lenders, sell, or otherwise dispose of, the Vessel or any other asset (including by way of spin-off, installment sale or otherwise) which is substantial in relation to its assets taken  as a whole; provided, however, that the Borrower may sell the Vessel to a third party in an arm's length transaction provided that either (i) the Facility shall be repaid in full together with the Prepayment Premium, as applicable, and the costs and expenses provided for in Section 13.4 or (ii) the Borrower places the amount refe1red to in clause (i) above on charged deposits with the Facility Agent;

 

(j)Changes  in  Offices  or Names.   Change the location of its chief executive office, its  chief place of business or the office in which its records relating to the earnings or insurances of the  Vessel are kept or change its name unless the Lenders shall have received sixty (60) days prior written  notice of such change;

 

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(k)Consolidation  and Merger.  Consolidate with, or merge into, any corporation or other entity,· or  merge  any  corporation  or  other  entity  into  it;  provided,  however,  that  the  Guarantor  and/or  either Borrower may merge with any Subsidiary thereof or any other Person if (A) at the time of such transaction and after giving effect thereto, no Default or Event of Default shall have occurred or be continuing, (B) the surviving entity of such consolidation  or merger  shall be the Guarantor or the respective Borrower  and (C) after giving effect to the transaction,  the Guarantor's  Consolidated  Tangible Net  Worth  shall be greater or equal to its Consolidated Tangible Net Worth prior to the merger;

 

(1)Change Fiscal Year.  In the case of the Guarantor, change its fiscal year;

 

(m)Indebtedness. In the case of the Security Parties, incur any new Indebtedness (which, for the sake of clarity, shall exclude any Indebtedness pursuant to this Agreement) other than (i) Indebtedness incurred to finance the acquisition and/or construction of any vessels; (ii) Indebtedness incurred by the Guarantor to finance the acquisition of any shipping related asset, or any railroad or railcar repair yard asset ancillary to the Guarantor's existing railroad business; (iii) Indebtedness incurred by the Guarantor to finance the acquisition of the equity interests of any company owning shipping related assets whose primary business activity is shipping or any company owning railroad or railcar repair yard assets ancillary to the Guarantor's existing railroad business whose primary business activity is related to such assets; (iv) any Indebtedness incurred in connection with any refinancing of any Indebtedness permitted under this Section 9.2(m)(i) through (iii), provided, however, that in each exception listed in clauses (i) through (iii) above, the principal amount of such Indebtedness shall not exceed eighty percent (80%) of such acquisition and/or construction price; and (v) Indebtedness incurred by the Guarantor in connection with any guarantees permitted under Section 9.2(b) hereof;

 

(n)Limitations on Ability to Make Distributions. Create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to pay dividends or make any other distributions on its capital stock or limited liability company interests, as the case may be, to the Borrower or the Guarantor, except that the Borrower. may declare a dividend or make other distributions to the Guarantor if and so long as both immediately before and after payment of such dividend or distribution, no Default or Event of Default shall have occurred and be continuing and the Security Parties are in compliance with Sections 9.3, 9.4 and 10.3;

 

(o)No Money Laundering. Contravene any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive (2005/60/EC) of the Council of the European Communities) and comparable United States Federal and state laws;

 

(p)Charter  Party  Agreements.   Amend  any  material prov1s10n  in the Initial Charter  Party Agreement or any Approved Charter, without the prior written consent of the Facility Agent; and

 

(q)Nuclear Waste, War Zone, Etc.

 

(i)Permit the Vessel to carry nuclear waste or material; or

 

(ii)in the event of hostilities in any part of the world (whether war is declared or not), cause or permit the Vessel to enter or trade to any zone which is declared a war zone by any government or by the Vessel's war risks insurers, unless the Borrower has (at its expense) effected the special, additional or modified insurance cover which the Security Trustee may reasonably require, prior to entering into such war zone;

 

9.3Financial Covenants. The Guarantor hereby covenants and undertakes with the Lenders that, from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any of the Security Documents, it will:

 

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(a)Maximum   Consolidated   Leverage   Ratio.     Maintain  a  Consolidated   Leverage  Ratio  not greater than 4.25:1.00, measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters for which financial information is available;

 

(b)Working Capital. Maintain on a consolidated basis a ratio of current  assets  to  current liabilities of not less than 1.00 to 1.00, measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters for which financial information is available;

 

(d)Minimum Liquidity. Maintain Liquidity of not less than $20 million at all times, measured as of the end of each fiscal quarter of the Guarantor;

 

(e)Minimum Consolidated Tangible Net Worth. Maintain a Consolidated Tangible Net Worth, as measured at the end of each fiscal quarter of the Guarantor, in an amount of not less than the sum of Two Hundred Twenty Eight Million Dollars ($299,786,000) plus fifty percent (50%) of all  Consolidated  Net Income of the Guarantor and its Subsidiaries earned after March 31, 2014 plus one hundred percent (100%) of the proceeds of all issuances of equity interests (common or preferred) of the Guarantor and its Subsidiaries (on a consolidated basis) received after March 31, 2014 (other than issuances in connection with the exercise by a present or former employee, officer or director under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement);

 

(f)Consolidated  EBITDA to Consolidated  Interest  Expense.  Maintain, on a consolidated basis, a ratio of Consolidated EBITDA to Consolidated Interest Expense of not less than 2.50 to 1.00, measured at the end of  each  fiscal quarter  of each fiscal year based  on the  four most  recent  fiscal  quarters  for which financial information is available;

 

(g)Minimum  Consolidated  Fixed  Charge  Coverage  Ratio.   Maintain  a Consolidated  Fixed Charge Coverage Ratio of at least (i) 1.20:1.00, beginning with the fiscal quarter ending September 30, 2014 through the fiscal quarter of the Guarantor ending June 30, 2015 and (ii) 1.25:1.00, thereafter,  measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters of the Guarantor for which financial information is available;

 

(h)In the event the Guarantor or any of its Subsidiaries shall  enter into, assume or otherwise become bound by or obligated under any agreement creating or evidencing Indebtedness, and any financial covenant included therein, in the sole judgment of the Facility Agent or the Majority Lenders, is more restrictive than the financial covenants set forth in this Section 9.3 at such time or is different  from the subject matter of such financial covenants (each such covenant,  a  "Specified  Covenant"), this  Agreement shall, without any further action on the part of the Facility Agent, the Lenders or the Creditors, be deemed to be amended automatically to include each such Specified Covenant.

 

9.4Asset Maintenance. If, at any time from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents, the Fair Market Value of the Vessel is less than the Required Percentage of the outstanding amount of the Facility, the Borrower shall, immediately following receipt by the Borrower  of written notice from the Facility Agent notifying the Borrower of such shortfall and specifying the amount thereof (which amount shall, in the absence of manifest error, be deemed to be conclusive and binding on the Borrower), either

(i) prepay such amount of the Facility (together with interest thereon and any other monies payable in respect of such prepayment pursuant to Section 5.4) as shall result in the Fair Market Value of the Vessel being not less than the Required Percentage of the outstanding amount of the Facility or (ii) place on charged deposits with the Facility Agent an amount in Dollars (together with interest thereon and any other monies payable in respect of such prepayment pursuant to Section 5.4) as shall result in the Fair Market Value of the Vessel together with the amount deposited being not less than the Required Percentage of the outstanding amount of the Facility.  The charged deposit shall be released to the Borrower when the Fair Market Value of the Vessel is not less than the Required Percentage of the outstanding amount of the Facility.

 

 

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10.ACCOUNTS.

 

10.1General. From the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents, each of the Borrower and the Guarantor, as the case may be, agrees to comply or cause compliance with the following provisions of this Section 10 except as the Facility Agent, with the consent of the Majority Lenders, may  approve from time to time in writing, such approval not to be unreasonably withheld.

 

10.2Payment of Earnings. The Borrower shall ensure that all Earnings of the Vessel are to be paid to the Earnings Account.

 

10.3Monthly Retentions. The Borrower shall ensure that (x) all Earnings of the Vessel paid into the Earnings Account on or prior to the 15°1  day of each calendar month shall be transferred to the Retention Account and (y) all or a portion of the Earnings of the Vessel paid into the Earnings Account on or after the 15111 day of each calendar month shall be transferred to the Retention Account, so that on the last day of each calendar month, an aggregate amount equal to one-third of the Debt Service payable on the next Payment Date is transferred to the Retention Account. The frequency and amount of such transfer(s) may be modified in the reasonable discretion of the Facility Agent if the payment intervals under the relevant Approved Charter changes.

 

10.4Debt Service Letter of Credit.

 

(a)The Borrower  shall cause to be issued by the Letter of Credit Bank an irrevocable, first demand letter of credit (the "Debt Service Letter of Credit") for the benefit of the Security Trustee and maintain such letter of credit so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents.

 

(b)Such Debt Service Letter of Credit shall:

 

(i)have the face amount of $4,500,000 on the Closing Date to be adjusted at the determination of the Facility Agent, taking into consideration (x) the final employment rate agreed between the Borrower and the Initial Charterer for an international flagged vessel and

(y) whether or not interest under this Agreement is fixed (and if it is hedged, the achievable fixed rate) and to be reduced quarterly by an amount equal to $190,000, commencing on the first Payment Date after the final face amount is determined by the Facility Agent pursuant to this clause (i) until the face amount becomes $2,000,000;

 

(ii)contain an evergreen provision that automatically renews the expiry date; and

 

(iii)be on terms and conditions that are otherwise acceptable to the Facility Agent.

 

(c)The Borrower shall cause the Letter of Credit Bank to inform the Facility Agent at least 60 days prior to the stated expiry date whether or not the Debt Service Letter of Credit will be renewed.

 

(d)If (i) there occurs an Event of Default that is continuing or (ii) the Debt Service Letter of Credit is not renewed 60 days prior to the stated expiry date, the Security Trustee at its option may draw upon the Debt Service Letter of Credit and apply the proceeds  from  such  drawing  to  prepay  the Facility, and Section 5 shall apply in relation to any such prepayment.

 

10.5Shortfall  in  Earnings.    If the  aggregate  Earnings  received  in the  Earnings  Account  are insufficient in any month for the required amount to be transferred to the Retention Account under  Section 10.3, the Borrower shall immediately deposit an amount equal to such deficiency into the Retention Account.

 

10.6Transfers from Retention Account; Application of Retentions.

 

(a)The Borrower shall ensure that on each Payment Date, the amount  of  the  Debt Service payable on such Payment Date is transferred (and the Borrower hereby authorizes the Facility Agent to transfer such amount) from the Retention Account to the Facility Agent's account specified in Section 7.1.

 

(b)Upon the occurrence and during the continuation of an Event of Default, without prejudice to any other right the Security Trustee may have under the Transaction Documents, the Facility Agent may withdraw from the Earnings Accounts any Excess Cash Flow and, at the Facility Agent's option:

 

(i)transfer any portion of such Excess Cash Flow to the Retention Account; or

 

(ii)apply any portion  of such Excess  Cash Flow to prepayment  of the Facility  on the next Payment Date, and Section 5 shall apply in relation to any such prepayment.

 

(c)Any amount deposited in the Retention Account shall be retained  as security and no funds may be withdrawn by the Borrower from the Retention Account at any time, so long as any principal, interest or other moneys are owing in respect of this Agreement or the other Transaction Documents.

 

10.7Location of Accounts. Each of the Borrower and the Guarantor, as the case may be, shall promptly:

 

(a)comply with any requirement of the Facility Agent as to the location or re-location of the Earnings Account and the Retention Account (or either of them), and without limiting the foregoing, each of the Borrower and the Guarantor agrees to segregate the Earnings Account and the Retention Account (or any of them) from the banking platform on which their other accounts are located or designated; and

 

(b)execute any documents which the Facility Agent specifies to create or maintain in favor of the Security Trustee a security interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account and the Retention Account.

 

10.8Debits for Expenses. The Facility Agent, upon providing the Borrower and the Guarantor with one (1) Banking Day's prior notice, shall be entitled (but not obliged) from time to time to debit the Earnings Account or the Retention Account in order to discharge any amount due and payable under Section

15.2 or 19.8 to a Creditor or payment  of which any Creditor has become entitled to demand under  Section 15.2 or  19.8.

 

10.9Borrower's Obligations Unaffected.  The provisions of this Section 10 do not affect:

 

(a)the liability of the Borrower to make payments of principal and interest on the due dates; or

 

(b)any other liability or obligation of the Borrower or any other Security Party under any Transaction Document

 

11.GUARANTEE

 

11.1The Guarantee. The Guarantor hereby irrevocably and unconditionally guarantees to each of the Creditors and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Facility made by the Lenders to the Borrower and evidenced by the Note and all other amounts from time to time owing to the Creditors by the Borrower under this Agreement, under the Note and under any of the Transaction Documents,   in  each  case  strictly  in  accordance  with  the  terms  thereof  (such  obligations  being  herein

 

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collectively called the "Guaranteed Obligations"). The Guarantor hereby further agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay the same, without any demand or  notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

 

11.2Obligations Unconditional. The obligations of the Guarantor  under  Section  11.1  are absolute, unconditional and irrevocable, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Borrower under this Agreement, the Note or any other agreement or instrument referenced to herein or therein, or any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this  Section 11.2 that the obligations of the Guarantor hereunder shall be absolute, unconditional and irrevocable, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder, which shall remain absolute, unconditional  and in-evocable as described above:

 

a.at any time or from time to time, without notice to the Guarantor, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

 

b.any of the acts mentioned in any of the provisions of this Agreement or the Note or any other agreement or instrument referred to herein or therein shall be done or omitted;

 

c.the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended  in  any respect, or any right under this Agreement or the Note or any other agreement or instrument referenced to herein or therein shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefore shall be released or exchanged, in whole or in part,  or otherwise dealt with; or

 

d.any lien or security interest granted to, or in favor of, the Security Trustee or any Lender or Lenders as security for any of the Guaranteed Obligations shall fail to be perfected.

 

The Guarantor hereby expressly waives diligence, presentment, demand of payment, protest  and all notices whatsoever, and any requirement that any  Agent or any Lender exhaust any right, power or  remedy  or proceed against the Borrower under this Agreement or the Note or  any  other  agreement  or  instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed  Obligations.

 

11.3Reinstatement. The obligations of the Guarantor under this Section 11 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the B01rower in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any Proceedings and the Guarantor agrees that it will indemnify each Creditor on demand for all reasonable costs and expenses (including, without limitation, fees of counsel) incurred by such Creditor in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

 

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11.4Subrogation. The Guarantor hereby irrevocably waives, but only until all amounts payable hereunder by the Guarantor to the Creditors  (or any of them) have been paid  in full, any and all rights to which any of them may be entitled by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or to  be reimbursed, indemnified or exonerated by or to seek contribution from the Borrower in respect thereof.

 

11.5Remedies. The Guarantor agrees that, as between the Guarantor and the Lenders, the obligations of the Borrower under this Agreement and the Note may be declared to be forthwith due and payable as provided in Section 8 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 8) for purposes  of Section 11.1 notwithstanding  any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall fo1ihwith become due and payable by the Guarantor for purposes of Section 11.1.

 

11.6Joint,   Several  and   Solitary  Liability.   The Guarantor's  obligations  and liability under  this Agreement shall be on a "solitary" or "joint and several" basis along with Borrower to the same degree and extent as if the Guarantor had been and/or will be a co-borrower, co-principal obligor and/or co-maker of the Guaranteed Obligations. In the event that there is more than one Guarantor under this Agreement,  or in the event  that  there  are  other  guarantors,  endorsers  or  sureties  of  all  or  any  portion  of  the  Guaranteed Obligations,  the Guarantor's  obligations  and liability hereunder  shall further be on a "solitary" or "joint and several" basis along with such other guarantors, endorsers and/or sureties.

 

11.7Continuing Guarantee. The guarantee in this Section 11 is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.

 

12.ASSIGNMENT

 

12.1Generally. This Agreement shall be binding upon, and inure to the benefit of, each of the Security Parties and each of the Creditors and their respective successors and assigns.

 

12.2Assignment by Security Parties.

 

(a)The Security Parties may not assign any of their respective rights or obligations hereunder without the written consent of the Lenders.

 

(b)Notwithstanding the foregoing clause (a), the Initial Borrower may assign its rights and obligations under the Transaction Documents to the Ultimate Borrower in connection with the Vessel Transfer; provided, (x) before and after giving effect to the Vessel Transfer, no Event of Default nor any event which with the giving of notice or lapse of time or both would constitute an Event of Default shall have occurred and be continuing; and (y) the following conditions precedent shall have been satisfied:

 

(i)Corporate Authority. The Facility Agent shall have received from the Ultimate Borrower the documents described in Section 4.l (a)  in  form  and  substance satisfactory to the Facility Agent and its legal advisers, or a certification that such documents have not changed since the Closing Date and remain in full force and effect;

 

(ii)▇▇▇▇ of Sale. The Initial Borrower and the Ultimate Borrower shall have duly executed and delivered a ▇▇▇▇ of sale relating to the transfer of the Vessel in form and substance acceptable to the Facility Agent;

 

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(iii)Omnibus  Assignment   and  Assumption   Agreement.    The Initial  B01Tower  and  the Ultimate Borrower shall have duly executed and delivered the Omnibus Assignment and Assumption Agreement to the Facility Agent;

 

(iv)Note.  The Ultimate Borrower  shall have duly executed and delivered the Note to the Facility Agent;

 

(v)Environmental Claims. The Lenders shall be satisfied that the Ultimate Borrower is not subject to any Environmental Claim which could reasonably be expected to have a Material Adverse Effect.

 

(vi)Legal Opinions. The Facility Agent, on behalf of the Agents and the Lenders, shall have received opinions addressed to the Facility Agent from (i) Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇, L.L.P., special counsel to the Ultimate Borrower, (ii) the Ultimate Borrower's ▇▇▇▇▇▇▇▇ Islands counsel, and (iii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Agents and the Lenders, in each case in such form as the Facility Agent may require, as well as such other legal  opinions  as  the Lenders shall have required as to all or any matters under the laws of New York and the Republic of the ▇▇▇▇▇▇▇▇ Islands;

 

(vii)Officer's Certificate. The Facility Agent shall have received a certificate signed by the President or other duly authorized executive officer of the Ultimate Borrower certifying that under applicable law existing on the date hereof, the Ultimate Borrower shall not be compelled by law to withhold or deduct any Taxes from any amounts to become payable to the Facility Agent for the account of the Creditors hereunder;

 

(viii)Approved Charter. The Borrower shall have delivered to the Facility Agent copies, certified as true and complete by an  officer of the Borrower, of the relevant Approved Charter (or the appropriate notation agreement thereof from the Initial Borrower to the Ultimate Borrower);

 

(ix)Accounts. The Facility Agent shall have received evidence that (i) all amounts on deposit in the Earnings Account and the Retention Account that are established in the name of the Initial Borrower, shall have been transferred to the corresponding accounts established  in the name of the Ultimate Borrower and (ii) the Earnings Account and the Retention Account in the name of the Initial Borrower shall henceforth have been closed;

 

(x)UCC Filings. The Facility Agent shall have received evidence that Uniform Commercial Code Financing Statements have been filed in the District of Columbia and in such other jurisdictions as the Facility Agent may reasonably require;

 

(xi)Financial Statements. The Ultimate Borrower shall deliver to the Facility Agent the financial statements of the Ultimate Borrower satisfying the requirements set forth in Section 9. l (d)(i) and (ii) for the fiscal year ending December  31,  2013  and  such other fiscal periods as the Facility Agent may reasonably specify;

 

(xii)Licenses,   Consents   and   Approvals.     The  Facility  Agent  shall  have   received satisfactory evidence that all  necessary  licenses,  consents  and   approvals in connection with the transactions  contemplated by this Agreement,  the Note, the Security Documents and the Fee Letter have been obtained in respect of the Ultimate Borrower.

SK O I029 0083 6033829   v!O

 

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(xiii)Know Your Customer Requirements. The Facility Agent shall have received, to the extent any update is required, documentation to its satisfaction in connection with its know your customer requirements.

 

(xiv)Loan Administration Form. The Facility Agent shall have received a duly executed Loan Administration  Form from the Ultimate Borrower.

 

(xv)Vessel Documents.   The Facility Agent shall have received  evidence satisfactory to it and its counsel that the Vessel is (or will be upon the consummation of the Vessel Transfer):

 

(1)in the sole and absolute ownership of the Ultimate Borrower and duly registered in such Ultimate Borrower's name in the Republic of the ▇▇▇▇▇▇▇▇ Islands, free of all liens and encumbrances of record other than the Mortgage;

 

(2)insured in accordance with the provisions of the Mortgage and  all requirements of the Mortgage in respect of such insurance have been fulfilled (including, but not limited to, letters of undertaking from the insurance brokers,  including  confirmation notices of assignment, notices of cancellation and loss payable clauses acceptable to the Lenders);

 

(3)classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations; and

 

(4)operationally seaworthy and in every way fit for its intended service.

 

(xvi)Security Documents. The Ultimate Borrower shall have executed and delivered to the f:'acility Agent:

 

(1)the Earnings and Charterparties Assignment;

 

(2)the Insurances Assignment;

 

(3)the Account Pledges relating to the Earnings Account and the Retention Account;

 

(4)the Assignment Notice and the acknowledgement thereof in respect of (i) through (iii) above (including the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement from the Initial Charterer);

 

(5)the MI Continuation Mortgage; and

 

(6)an irrevocable power of attorney granted by the Borrower to the Security Trustee which, upon the occurrence of an Event of Default, enables the Security Trustee to make all necessary decisions in relation to the Vessel and obliges the master of the Vessel to adhere to the Security Trustee's  instructions.

 

(xvii)Registration   of   the   MI   Continuation   M01tgage.     The  Facility  Agent  shall  have received satisfactory evidence that the MI  Continuation  Mortgage  has  been  duly registered under the laws of the Republic of ▇▇▇▇▇▇▇▇ Islands and constitutes a first priority mortgage lien under such jurisdiction.

 

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(xviii)Continuation of Security Interest. The Facility Agent and the Security Trustee shall have received reasonable evidence that the Security Trustee's security  interest granted pursuant to the Security Agreements on the Closing Date shall be continued after the Vessel Transfer.

 

(xix)Reaffirmation. The Guarantor shall have executed and  delivered  to  the  Facility Agent a reaffirmation agreement in form and  substance reasonably  satisfactory to the Facility Agent.

 

12.3Assignment by Lender.

 

(a)Each Lender shall be entitled to assign its rights and obligations under this Agreement or grant participation(s) in the Facility to any subsidiary, holding company or other affiliate or office of such Lender, to any subsidiary, office or other affiliate company, special purpose entity or funding vehicle of any thereof or, with the consent of the Borrower (such consent not to be unreasonably withheld or delayed and to be deemed granted within ten (10) Business Days from the day it has been sought unless it has been expressly refused within that period, provided, however, that such consent from the Borrower is not required if an Event of Default has occurred and is continuing) and with the consent of the Facility Agent, to any other bank or financial institution (in a minimum amount of not less than $1,000,000), and such Lender shall forthwith give notice of any such assignment or participation to the Borrower and pay the other Lender an assignment fee of $3,000 for each such assignment or participation; provided, however, that any such assignment must be made pursuant to an Assignment and Assumption Agreement. The B01Tower will take all reasonable actions requested by the Agents or any Lender to effect such assignment. In addition, any Lender may disclose to any prospective assignee any information about the Security Parties and the Transaction Documents as the Lender shall consider appropriate if the person to whom the information is given agrees in writing to keep such information confidential.

 

(b)The Facility Agent, acting for this purpose- as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders and principal amount of the Facility owing to each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Facility Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(c)Upon its receipt  of a duly completed Assignment  and Assumption Agreement executed by an assigning Lender and an assignee, the assignment fee referred to above  and  any written consent to such assignment required, the Facility Agent shall accept such Assignment and Assumption Agreement and record the information contained therein in the Register; provided, that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to this Agreement, the Facility Agent shall have no obligation to accept such Assignment and  Assumption Agreement and record the information therein in the Register unless and until such payment  shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(d)In addition, any Lender may at  any time, without the consent of, or notice to, the Borrower or any Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advance owing to it); provided, that (i) such Lender's obligations under this Agreement shall  remain  unchanged,  (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and

(iii) the Borrower, the Guarantor, the Facility Agent and the other Lenders shall continue to deal solely and

 

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directly with such Lender in connection with  such Lender's  rights  and  obligations  under  this  Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement  or instrument  may provide  that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that requires the consent of each Lender directly affected thereby pursuant to the terms of this Agreement and that directly affects such Participant.

 

13.ILLEGALITY,  INCREASED COST, NON-AVAILABILITY,  ETC.

 

13.1Illegality. In the event that by reason of any change in any applicable law, regulation or regulatory requirement or in the interpretation thereof, a Lender has a reasonable basis to conclude that it has become unlawful for any Lender to maintain or give effect to its obligations as contemplated by this Agreement, such Lender shall inform the Facility Agent and the Borrower to  that effect,  whereafter  the liability of such Lender to make its Commitment available shall forthwith cease and the Borrower shall be required  either to repay to such Lender that portion of the Facility advanced by such Lender immediately or, if such Lender so agrees, to repay such portion of the Facility to the Lender on the last day of the calendar month in accordance with and subject to the provisions of Section 13.4. In any such event, but without prejudice to the aforesaid obligations of the Borrower to repay such portion of the Facility, the Borrower and the relevant Lender shall negotiate in good faith with a view to agreeing on terms for making such portion of the Facility available from another jurisdiction or otherwise restructuring such portion of the Facility on a basis which is not unlawful.

 

13.2Increased Costs. If any change in applicable law, regulation or regulatory requirement, or in the interpretation or application thereof by any governmental or other authority, shall:

 

(i)subject any Lender to any Taxes with respect to its income from the Facility, or any part thereof, or

 

(ii)change the basis of taxation to any Lender of payments of principal or interest or any other payment due or to become due pursuant to this Agreement (other than a change in the basis effected by the jurisdiction of organization of such Lender, the jurisdiction of the principal place of business of such Lender, the United States of America, the State or City of New York or any governmental subdivision or other taxing authority having jurisdiction over such Lender (unless such jurisdiction is asserted by reason of the activities of any Security Party) or such other jurisdiction where the Facility may be payable), or

 

(iii)impose, modify or deem applicable any reserve requirements or require the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or loans by, a Lender, or

(iv)impose on any Lender any other condition affecting the Facility or any part thereof, and the result  of the foregoing is either to increase the cost to such Lender of making

available or maintaining  its Commitment  or any part thereof or to reduce the amount of any payment

received by such Lender, then and in any such case if such increase or reduction in the opinion of such Lender materially affects the interests of such Lender under or in connection with this Agreement:

 

(1)such  Lender  shall  notify  the  Facility  Agent  and  the  Borrower  of  the happening of such event, and

 

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(2)the Borrower agrees forthwith upon demand to pay to such Lender  such amount as such Lender certifies to be necessary to compensate such Lender for such additional cost or such reduction; provided, however, that the foregoing provisions shall not be applicable in the event that increased costs to the Lender result from the exercise by the Lender of its right to assign its rights or obligations under Section 12.3.

 

For the avoidance of doubt, this Section 13.2 shall apply to all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued by  any United  States regulatory  authority  (i) under or in connection with the implementation of the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇ Street Reform and Consumer Protection Act and (ii) in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), regardless of the date adopted, issued, promulgated or implemented.

 

13.3Lender's  Certificate  Conclusive.   A certificate or determination  notice of the Facility  Agent or any Lender, as the case may be, as to any of the  matters referred  to  in this  Section 13 shall,  absent manifest error, be conclusive and binding on the Borrower.

 

13.4Compensation for Losses. Where any portion of the Facility is to be repaid by the Borrower pursuant to Section 5 or this Section 13, the Borrower agrees simultaneously with such repayment to pay to the relevant Lender all accrued interest to the date of actual payment on the amount repaid and all other sums then payable by the Borrower to the relevant Lender pursuant to this Agreement, together with such amounts as may be certified by the relevant Lender to be necessary to compensate such Lender for any actual loss, premium or penalties incurred or to be incurred thereby on account of funds borrowed to make, fund or maintain its Commitment or such portion thereof for the remainder (if  any) of the then current  calendar month, but otherwise without penalty or premium.

 

14.CURRENCY  INDEMNITY

 

14.1Currency Conversion. If for the purpose of obtaining or enforcing a judgment in any court in any country it becomes necessary to convert into any other currency (the "judgment currency") an amount due in Dollars under this Agreement or the other Transaction Documents then the conversion shall be made, in the discretion of the Facility Agent, at the rate of exchange prevailing either on the date of default or on the day before the day on which the judgment is given or the order for enforcement is made, as the case may be (the "conversion date"), provided that the Facility Agent shall not be entitled to recover under this Section any amount in the judgment currency which exceeds at the conversion date the amount in Dollars, as applicable, due under this Agreement, the Note and/or the other Transaction Documents.

 

14.2Change in Exchange Rate. If there is a change in the rate of exchange prevailing between the conversion date and the date of actual payment of the amount due, the Borrower shall pay such additional amounts (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the judgment currency when converted at the rate of exchange prevailing on  the  date  of  payment  will produce the amount then due under this Agreement, the Note and/or the other Transaction Documents  in Dollars; any excess over the amount due received or collected by the Lenders shall be remitted  to  the Borrower.

 

14.3Additional Debt Due. Any amount due from the Borrower under this Section 14 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement, the Note and/or any of the other Transaction Documents.

 

14.4Rate of Exchange. The term "rate of exchange" in this Section 14 means the rate at which the Facility Agent in accordance with its normal practices is able on the relevant date to purchase Dollars with the judgment currency and includes any premium and costs of exchange payable in connection with such purchase.

 

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15.FEES AND EXPENSES

 

15.1Fees. The Borrower shall pay all fees in the Fee Letter.

 

15.2Expenses. The Borrower agrees, whether or not the transactions hereby contemplated are consummated, on demand to pay, or reimburse the Agents for their payment of, the reasonable expenses of the Agents and (after the occurrence and during the continuance of an Event of Default) the Lenders incident to said transactions (and in connection with any supplements, amendments, waivers or consents relating thereto or incurred in connection with the enforcement or defense of any of the Agents' and the Lenders' rights or remedies with respect thereto or in the preservation of the Agents' and the Lenders' priorities under the documentation executed and delivered in connection therewith) including, without limitation, all reasonable costs and expenses of preparation, negotiation, execution and administration of this Agreement and the documents referred to herein, the reasonable fees and disbursements of the Agents' counsel in connection therewith, as well as the reasonable fees and expenses of any independent appraisers, surveyors, engineers and other consultants retained by the Agents in connection with this transaction, all costs and expenses, if any, in connection with the enforcement of this Agreement and the other Transaction Documents (and the security granted pursuant thereto) and stamp and other similar taxes, if any, incident to the execution and delivery of the documents (including, without limitation, the other Transaction Documents) herein contemplated and to hold the Agents and the Lenders free and harmless in connection with any liability arising from the nonpayment of any such stamp or other similar taxes. Such taxes and, if any, interest and penalties related thereto as may become payable after the date hereof shall be paid immediately by the Borrower to the Agents or the Lenders, as the case may be, when liability therefore is no longer contested by such party or parties or reimbursed immediately by the Borrower to such party or parties after payment thereof (if the Agents or the Lenders, at their sole discretion, chooses to make such payment).

 

16.APPLICABLE LAW, WRISDICTION AND WAIYER

 

16.1Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

16.2Jurisdiction. Each of the Security Parties hereby irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York in any action or proceeding brought against it by  any of the Lenders or the Agents under this Agreement or under any document delivered hereunder and hereby irrevocably agrees that valid service of summons or other legal process on it may be effected by serving a copy of the summons and other legal process in any such action or proceeding on the Security Parties by mailing or delivering the same by hand to the Security Parties at the address indicated for notices in Section 18.1. The service, as herein provided, of such summons or other legal process in any such action or proceeding shall be deemed personal service and accepted by the Security Parties as such, and shall be legal and binding upon the Security Parties for all the purposes of any such action or proceeding. Final judgment (a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness of the Security Parties to the Lenders or the Agent) against the Security Parties in any such legal action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment. The Security Parties will advise the Facility Agent promptly of any change of address for the purpose of service of process. Notwithstanding anything herein to the contrary, the Lenders may bring any legal action or proceeding in any other appropriate jurisdiction.

 

16.3WAIVER   OF   IMMUNITY.     TO  THE  EXTENT  THAT  ANY  OF  THE   SECURITY PARTIES HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH   ATTACHMENT  PRIOR  TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION  OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO  ITSELF OR ITS PROPERTY, EACH OF THE SECURITY PARTIES HEREBY IRREVOCABLY   WAIVES SUCH IMMUNITY IN

 

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RESPECT  OF  ITS  OBLIGATIONS  UNDER  THIS  AGREEMENT  OR  ANY  OTHER  TRANSACTION DOCUMENT.

 

16.4WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG EACH OF THE SECURITY PARTIES AND EACH OF THE CREDITORS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY  ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY  HERETO  ON  ANY  MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE OTHER TRANSACTION  DOCUMENTS.

 

17.THE AGENTS

 

17.1Appointment of Facility Agent. Each of the Lenders irrevocably appoints and authorizes the Facility Agent to take such action as facility agent on its behalf and to exercise such powers under this Agreement, the Note and the other Transaction Documents as are delegated to the Facility Agent by the terms hereof and thereof. Neither the Facility Agent nor any of its directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them under this Agreement, the Note or the other Transaction Documents or in connection therewith, except for its or their own  gross negligence  or willful misconduct.

 

17.2Appointment of Security Trustee. Each of the Lenders irrevocably appoints, designates and authorizes the Security Trustee to act as security trustee on its behalf with regard to (i) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Lenders or any of them or for the benefit thereof under or pursuant to this Agreement or any of the other Transaction Documents (including, without limitation, the benefit of all covenants, undertakings,  representations, warranties and obligations given, made or undertaken to any Lender in the Agreement or the other Transaction Documents), (ii) all moneys, property and other assets paid or transferred to or vested in any Lender or .any agent thereof or received or recovered by any Lender or any agent thereof pursuant  to, or in connection with, this Agreement or the other Transaction Documents whether from any Security Party or any other person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Lender or any agent thereof in respect of the same (or any part thereof). The Security Trustee hereby accepts such appointment but shall have no obligations under this Agreement, under the Note or under any of the other Transaction Documents except those expressly set forth herein and therein. Neither the Security Trustee nor any of its directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them under this Agreement, the Note or the other Transaction  Documents  or  m connection therewith, except for its or their own gross negligence or willful misconduct.

 

17.3Distribution of Payments. Whenever any payment is received by the Facility Agent or the Security Trustee from the Borrower or the Guarantor for the account of the Lenders, or any of them, whether of principal or interest on the Note, commissions, fees under Section 15 or otherwise, it will thereafter cause to be distributed on the day of receipt if received before 10:00 a.m. New York time, or on the day after receipt if received thereafter, like funds relating to such payment ratably to the Lenders according to their respective Commitments, in each case to be applied according to the terms of this Agreement. Unless the Facility Agent or the Security Trustee, as the case may be, shall have received  notice  from the Borrower prior to the date when any payment is due hereunder that the Borrower will not make any payment on such date, the Facility Agent or the Security Trustee may assume that the Borrower have made such payment to the Facility Agent or the Security Trustee, as the case may be, on the relevant date and the Facility Agent or the Security Trustee may, in reliance upon such assumption, make available to the Lenders on such date a corresponding amount relating to such payment ratably to the Lenders according to their respective Commitments. If and to the extent that the Borrower shall not have so made such payment available to the Facility Agent or the Security Trustee, as the case may be, the Lenders and the Borrower (but without duplication)  severally  agree to  repay  to  the Facility  Agent  or  the  Security  Trustee,  as the  case  may  be,

 

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forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Lenders until the date such amount is repaid to the Facility Agent or the Security Trustee, as the case may be, as calculated by the Facility Agent or Security Trustee to reflect its cost of funds.

 

17.4Holder  of  Interest  in Note.   The Agents  may treat  each Lender  as the holder  of all of  the interest of such Lender in the Note.

 

17.5No Duty to Examine, Etc. The Agents shall not be under a duty to examine or pass upon the validity, effectiveness or genuineness of any of this Agreement, the other Transaction Documents or any instrument, document or communication furnished pursuant to this Agreement or in com1ection therewith or in connection with any other Transaction Document, and the Agents shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be.

 

17.6Agents as Lenders. With respect to that portion of the Facility made available by it, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not an Agent, and the term "Lender" or "Lenders" shall include any Agent in its capacity as a Lender. Each Agent and its affiliates may accept deposits from, lend money to and generally engage in any kind of business with, the Borrower and the Guarantor as if it were not an Agent.

 

17.7Acts of the Agents.  Each Agent shall have duties and discretion, and shall act as follows:

 

(a)Obligations of the Agents. The obligations of each Agent under this Agreement, the Note and the other Transaction Documents are only those expressly set forth herein and therein;

 

(b)No Duty to Investigate. No Agent shall at any time, unless requested to do so by a Lender or Lenders, be under any duty to enquire whether an Event of Default,  or an event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred or to investigate the performance of this Agreement, the Note or any Security Document by any Security Party; and

 

(c)Discretion   of  the  Agents.    Each  Agent  shall be  entitled  to use  its  discretion  with respect to exercising or refraining from exercising any rights which may be vested in it by, and with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement and the other Transaction Documents, unless the Facility Agent shall have been instructed by the Majority Lenders to exercise such rights or to take or refrain from taking such action; provided, however, that no Agent shall be required to take any action which exposes it to personal liability or which is contrary to this Agreement or applicable law;

 

(d)Instructions  of Ma jority  Lenders.  Each Agent shall in all cases be fully protected in acting  or refraining  from  acting under  this  Agreement  or under  any  other  Transaction  Document   in accordance with the instructions of the Majority Lenders, and any action taken or failure to act pursuant  to such instructions shall be binding on all of the Lenders.

 

17.8Certain Amendments. Neither this Agreement, the Note nor any of the Security Documents nor any terms hereof or thereof may be amended unless such amendment is approved by the Borrower and the Majority Lenders, provided that no such amendment shall, without the consent of each Lender affected thereby, (i) reduce the interest rate or extend the time of payment of scheduled principal payments or interest or fees on the Facility, or reduce the principal amount of the Facility or any fees hereunder, (ii) increase or decrease the Commitment of any Lender or subject any Lender to any additional obligation (it being understood that a waiver of any Event of Default or any mandatory repayment of the Facility shall not constitute a change in the terms of any Commitment  of any Lender), (iii) amend, modify or waive any provision of this Section 17.8, (iv) amend the definition of Majority Lenders or any other definition referred

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to in this Section 17.8, (v) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, (vi) release any Security Party from any of its  obligations  under  any Security Document except as expressly provided herein or in such Security Document, or (vii) amend any provision relating to the maintenance of collateral under Section 9.4. All amendments  approved  by  the Majority Lenders under this Section 17.8 must be in writing and signed by the Borrower and each of the Lenders. In the event that any Lender is unable to or refuses to sign an amendment approved by the Majority Lenders hereunder, such Lender hereby appoints the Facility Agent as its Attorney-in-Fact  for the purposes of signing such amendment. No provision of this Section 17 or any other provisions relating to the Facility Agent may be modified without the consent of the Facility Agent.

 

17.9Assumption  regarding  Event of Default.   Except as otherwise provided  in Section 17.15, the Facility Agent and the Security Trustee shall be entitled to assume that no Event of Default, or event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and is continuing, unless it has been notified by any Security Party of such fact, or has been notified by a Lender that such Lender considers that an Event of Default or such an event (specifying in detail the nature thereof) has occurred and is continuing.  In the event that either thereof shall have been notified by any Security Party or any Lender in the manner set forth in the preceding sentence of any Event of Default or of an event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, the Facility Agent shall notify the Lenders and shall take action and assert such rights under this Agreement, under the Note and under Security Documents as the Majority Lenders shall request in writing.

 

17.10Limitations  of  Liability.   No  Agent  or Lender  shall be under  any liability or responsibility whatsoever:

 

(1)to any Security Party or any other person or entity as a consequence of any failure or delay in performance by, or any breach by, any other Lenders or any other person of any of its or their obligations under this Agreement or under any Security Document;·

 

(2)to any Lender or Lenders as a consequence of any failure or delay in performance by, or any breach by, any Security Party of any of its respective obligations under this Agreement or under the other Transaction Documents; or

 

(3)to any Lender or Lenders for any statements, representations or warranties contained in this Agreement, in any Security Document or in any document or instrument delivered in connection with the transaction hereby contemplated; or for the validity, effectiveness, enforceability or sufficiency of this Agreement, any other Transaction Document or any document or instrument delivered in connection with the transactions hereby contemplated.

 

17.11Indemnification of the Facility Agent and  Security Trustee.  The Lenders agree to indemnify each Agent (to the extent not reimbursed by the Security Parties or any thereof), pro rata  according to the respective  amounts of their Commitments, from and against any and all liabilities,  obligations, losses, damages, penalties, actions, judgments,  suits, costs,  expenses  or disbursements  of  any kind or nature whatsoever (including legal fees and expenses incurred in investigating claims and  defending itself against such liabilities) which may be imposed on, incurred by or asserted against, such Agent in any way relating to or arising out of this Agreement or any other Transaction Document, any  action taken or omitted by such Agent thereunder or the preparation, administration, amendment or  enforcement of,  or waiver  of  any provision of, this Agreement or any other Transaction Document,  except that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages,  penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of either such Agent.

 

 

 

17.12Consultation with Counsel. Each of the Facility Agent and the Security Trustee may consult with legal counsel selected by such Agent and shall not be liable for any action taken, permitted or omitted by it in good faith in accordance with the advice or opinion of such counsel.

 

17.13Resignation. Any Agent may resign at any time by giving sixty (60) days' written notice thereof to the other Agents, the Lenders and the Borrower. Upon any such resignation, the Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within sixty (60) days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank or trust company of recognized standing. The appointment of any successor Agent shall be subject to the prior written consent of the Borrower, such consent not to be unreasonably withheld. After any retiring Agent's resignation as Agent hereunder, the provisions of this Section 17 shall continue in effect for its benefit with respect to any actions taken or omitted by it while acting as an Agent.

 

17.14Representations of Lenders. Each Lender represents and warrants to each other Lender and the Agents that:

 

(1)in making its decision to enter into this Agreement and to make its Commitment available hereunder, it has independently taken whatever steps it considers necessary to evaluate the financial condition and affairs of the Security Parties, that it has made · an independent credit judgment and that it has not relied upon any statement, representation  or warranty by any other Lender or any Agent; and

 

(2)so long as any portion of its Commitment remains outstanding, it will continue to make its own independent evaluation of the financial condition and affairs of the Security Parties.

 

17.15Notification of Event of Default. The Facility Agent hereby undertakes  to promptly  notify the Lenders, and the Lenders hereby promptly undertake to notify the Facility Agent and the other Lenders, of the existence of any Event of Default which shall have occurred and be continuing of which such party has actual knowledge.

 

17.16Reversal of Redistribution. Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Security Documents, or otherwise), which is applicable to the payment  of the principal of, or interest on, the Facility, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such obligation then owed and due to such Lender bears to the total of such obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the  other Lenders an interest in the obligations of the respective Security Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

 

17.17Parallel Debt.

 

(a)The Borrower hereby irrevocably and unconditionally  undertakes,  as  far  as necessary in advance, to pay to the Security Trustee, as creditor in its own right and not as representative of any of the other Creditor, an amount equal to the aggregate of all its Principal Obligations to all the Creditor Parties from time to time due in accordance with the terms and conditions of such Principal  Obligations (such payment undertaking

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and the obligations and liabilities which are the result  thereof,  its  "Parallel Debt").  Each of the parties hereto hereby acknowledges that (i) the Parallel Debt of the Borrower constitutes unde1takings, obligations and liabilities of the Borrower to the Security Trustee which are separate and independent from, and without prejudice to, the Principal Obligations which the Borrower has to any other Creditor and (ii) that the Parallel Debt represents the Security Trustee's own claim to receive payment of such Parallel Debt by the Borrower, provided that the total amount which may become due under the Parallel Debt of the Borrower under this Section 17.17 shall never exceed the total amount which may become due under all the Principal Obligations of the Borrower to all the Creditor Parties.

 

(i)The total amount due by the Borrower as the Parallel Debt under Section 17.17(a) shall be decreased to the extent that the Borrower shall have paid any amounts to the Creditor Parties or any of them to reduce the Borrower's outstanding Principal Obligations or any Creditor otherwise receive any amount of such Principal Obligations (other than by virtue of Section l 7.17(b)(ii)); and

 

(ii)To the extent that the Borrower shall have paid any amounts to the Security Trustee under the Parallel Debt or the Security Trustee shall have otherwise received monies in payment of such Parallel Debt, the total amount due under the Principal Obligations shall be decreased by the same amount.

 

(b)In the event the Security Trustee should resign, the Security Trustee shall assign the Parallel Debt owed to it to its successor security trustee together with all of its other rights and obligations under this Section 17.17 and shall take all such further actions as the Facility Agent in its sole discretion may deem necessary or desirable in order to assign and transfer to the successor security trustee the Parallel Debt and the other rights and obligations under this Section 17.17.

 

18.NOTICES  AND DEMANDS

 

18.1Notices. All notices, requests, demands and other communications to any party hereunder, shall be in writing (including prepaid overnight courier, facsimile transmission, electronic transmission or similar writing) and  shall be given to the Borrower or the Guarantor at the address, facsimile number or email address set forth below and to the Lenders and the Agents at their address, facsimile number or email address set forth in Schedule I or at such other address, facsimile number or email address as such party may hereafter specify for the purpose by notice to each other party hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, on the date of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent, it shall be deemed to have been received on the next following Banking Day in such locality), (ii) if by email or other electronic communication, upon the sender's receipt of an acknowledgment from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgment) or (iii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.

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19.MISCELLANEOUS

 

19.1Right of Set-off.  Upon the occurrence and during the continuance of any Event of Default, each Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply  any and all deposits (general or special, time or demand, provisional or final) at any time held (including, but not limited to, the Earnings Accounts) and other indebtedness at any time owing by the Facility Agent, such Lender or such Affiliate to or for the credit or the account of the Borrower or any other Security Party against any and all of the Obligations of the Borrower or other Security Party now or hereafter existing under the Transaction Documents, irrespective of whether the Facility Agent or such Lender  shall have made any demand under this Agreement and although such Obligations may  be unmatured.  The Facility Agent  and  each Lender agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give  such notice shall not affect the validity of such set-off and application. The rights of the Facility Agent and each Lender and their respective Affiliates under this Section 19.1 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Facility Agent, such Lender and their respective Affiliates may have. Notwithstanding anything to the contrary  set  forth  in Section 17 or elsewhere herein, the Facility Agent may not discriminate against the Lenders  generally  in favor of its own interests when exercising setoff rights against amounts received from any Security Party hereunder, including any amount in any Earnings Account or Retention Account.

 

19.2Time of Essence. Time is of the essence of this Agreement but no failure or delay on the part of any Creditor to exercise any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power or right hereunder preclude any other or further exercise thereof or the exercise of any other power or right. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.

 

19.3Unenforceable, etc., Provisions - Effect. In case any one or more of the provisions contained in this Agreement or in the other Transaction Documents would, if given effect, be invalid, illegal or unenforceable in any respect under any law applicable in any relevant jurisdiction,  said provision shall not be

 

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enforceable against the relevant Security Party, but the validity, legality and enforceability of the remaining provisions herein or therein contained shall not in any way be affected or impaired thereby.

 

19.4References. References herein to Articles, Sections, Exhibits and Schedules are to be construed as references to articles, sections of, exhibits to, and schedules to, this Agreement or the other Transaction Documents as applicable, unless the context otherwise requires.

 

19.5Further Assurances. Each of the Security Parties hereby agrees that if this Agreement or any of the other Transaction Documents shall, in the reasonable opinion of the Lenders, at any time be deemed by the Lenders for any reason insufficient in whole or in part to carry out the true intent and spirit hereof or thereof, it will execute or cause to be executed such other and further assurances and documents as in the opinion of the Lenders may be required in order to more effectively accomplish the purposes of  this Agreement  and/or the other Transaction Documents.

 

19.6Prior Agreements, Merger. Any and all prior understandings and agreements  heretofore entered into between the Security Parties on the one part, and the Creditors, on the other part, relating to the transactions contemplated hereby, whether written or oral, are superseded by and merged  into  this Agreement and the other agreements (the forms of which are exhibited hereto) to be executed and delivered in connection herewith to which the Security Parties, the Agent, the Security Trustee and/or the Lenders are parties, which alone fully and completely express the agreements between the Security Parties, the Agents, and the Lenders.

 

19.7Entire  Agreement;   Amendments.    This  Agreement  constitutes  the  entire  agreement  of  the parties  hereto  including  all patties  added  hereto  pursuant  to  an Assignment  and Assumption  Agreement. Subject  to  Section  17.8,  any  provision  of  this  Agreement  or  any  other  Transaction  Document  may  be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower, the Agents, and the Majority Lenders. This Agreement may be executed in any number of counterparts, each of which  shall be  deemed  an  original,  but  all  such  counterparts  together  shall  constitute  one  and  the  same instrument.

 

19.8Indemnification. Neither any Creditor nor any of its directors, officers, agents or employees shall be liable to any of the Security Parties for any action taken or not taken thereby in connection herewith in the absence of its own gross negligence or willful misconduct. Each of the Borrower and the Guarantor hereby jointly and severally  agree to indemnify the Creditors, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities (including without limitation all such liabilities arising out of(x) Environmental Claims, (y) business conducted by any of the Security Parties in a Sanctioned Country or with a Blocked Person in violation of Sanctions, at all times subject to applicable  law  and the  Security Parties' continued cooperation with OFAC or any other governmental entity, to the extent necessary and (z) any electronic communication purporting to have originated from any of the Security Parties to any Lender without proper authorization), losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement, any actual or proposed use of proceeds  of the Facility hereunder, or any related transaction or claim; provided  that (i) no Indemnitee shall have the right to be indemnified  hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by final judgment by a court of competent jurisdiction and (ii) to the extent permitted by law, the Indemnitee shall provide the Security Parties with prompt notice of any such investigative, administrative or judicial proceeding after the Indemnitee becomes aware of such proceeding; provided, however, that the Indemnitee's failure to provide such notice in a timely manner shall not relieve the Security Parties of their obligations hereunder. Each of the Borrower and the Guarantor agrees to, and shall, indemnify and hold each of the Creditors harmless against any loss, as well as against any reasonable costs  or  expenses  (including  reasonable  legal  fees  and  expenses),  which  any of the  Creditors  sustains  or

 

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incurs as a consequence of any default in payment of the principal amount of the Facility, interest accrued thereon or any other amount payable hereunder, under the Note or under the other Transaction Documents including, but not limited to, all actual losses incurred in liquidating or re-employing fixed deposits made by third parties or funds acquired to effect or maintain the Facility or any portion thereof. Any Creditor's certification of such costs and expenses  shall, absent any manifest error, be conclusive  and binding on the Borrower.

 

19.9USA PATRIOT  Act  Notice;  OFAC  and  Bank  Secrecy  Act.  The Facility Agent  hereby notifies each of the Security Parties that pursuant to the requirements of the USA PATRIOT Act  (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the "PATRIOT Act"), and the policies and practices of the Facility Agent, each of the Creditors is required to obtain, verify and record certain  information and documentation that identifies each of the Security Parties, which information includes the name and address of each of the Security Parties and such other information that will allow the Creditors to identify each of the Security Parties in accordance with the Patriot Act. In addition, each of the Security Parties shall: (a) ensure that no Person who owns a controlling interest in or otherwise controls any of the  Security Parties or any subsidiary of any thereof is or shall be listed on the Specially Designated Nationals  and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control  ("OFAC"), the Department of the Treasury or included in any Executive Orders; (b) not use or permit the use of the proceeds of the Facility to violate any of the foreign asset control regulations of OFAC or any  enabling statute or Executive Order relating thereto;  and (c) comply, and cause any of its subsidiaries  to comply, with all applicable Bank Secrecy Act laws and regulations, as amended.

 

19.10Remedies Cumulative and Not Exclusive; No Waiver. Each and every right, power and remedy herein given to the Facility Agent shall be cumulative and shall be in addition to every other right, power and remedy of the Facility Agent now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy, whether herein given or otherwise existing, may be exercised from time to time, in whole or in part, and as often and in such order as may be deemed expedient by the Facility Agent, a11d the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No failure, delay or omission by the Facility Agent or any of the Creditors in the exercise of any right or power or in the pursuance of any remedy accruing upon any breach or default by the Borrower or any Security Party shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy or to be an acquiescence therein; nor shall the acceptance by the Facility Agent or any of the Creditors of any security or of any payment of or on account of any of the amounts due from the Borrower or any Security Party to the Facility Agent and maturing after any breach or default or of any payment on account of any past breach or default be construed to be a waiver of any right with respect to any future breach or default or of any past breach or default not completely cured thereby. In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Security Parties' obligations, the Facility Agent shall have rights and remedies of a secured party under the Uniform Commercial Code.

 

19.11Counterparts;  Electronic  Delivery.   This Agreement  may be executed  in any number  of counterparts, each of which shall be deemed an original, but all such counterparts together shall  constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by  facsimile or electronic transmission shall be deemed as effective as delivery of an originally executed counterpart. In the event that any of the Security Parties deliver an executed counterpart of this  Agreement by facsimile or electronic transmission, such Security Parties shall also deliver an originally executed counterpart as soon as practicable, but the failure of such Security Parties to deliver an  originally executed counterpart of this Agreement shall not affect the validity or effectiveness of this Agreement.

 

19.12Headings. In this Agreement, Section headings are inserted for convenience of reference only and shall not be taken into account in the interpretation of this Agreement.

19.13Disclosure. Each of the Security Parties irrevocably  authorizes  the  Creditors  to  give, divulge and reveal from time to time information and details relating to  its  Accounts,  any Vessel,  the Facility, this Agreement, the Note, the Security Documents,  the Commitments, any agreement  entered into by any of the

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Security Parties in connection with this Agreement, the Note or the Security Documents and any other information provided by any of the Security Parties to any of the Creditors in connection with this Agreement, the Note or the  Security Documents (unless such information and details have been expressly communicated to the Creditors to be material non-public information (except in the case where such disclosure is compelled by applicable law)) to (i) any regulatory or self-regulatory authorities (including any stock exchanges) or public or internationally recognized authorities, (ii) the head offices, branches, affiliates and professional advisers of any of the Creditors, (iii) any other parties to this Agreement, the Note or the Security Documents and any parties to any agreement entered into by any of the Security Parties  in connection therewith, (iv) any rating agencies and their professional advisers, (v) any Person with whom any of the Security Parties propose to enter (or contemplate entering) into contractual relations in relation to the Facility or the Commitments; and (vi) any other Person (including any transferee or potential transferee of the Facility) in connection with the funding, refinancing, transfer, assignment, sale, sub-participation or operational arrangement or other transaction in relation thereto, including, but not limited to,  any enforcement, preservation, assignment, transfer, sale or sub-participation of any of the rights and/or obligations of any of the Creditors.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives as of the day and year first above written.

 

▇▇▇▇▇▇▇▇  STEAMSHIP  CORPORATION,

as

By:/s/ ▇. ▇▇▇▇▇▇▇

Name: ▇. ▇▇▇▇▇▇▇

          Title:CFO

 

INTERNATIONAL SHIPHOLDING CORPORATION,

as Guarantor

 

By:   /s/ ▇. ▇▇▇▇▇▇▇

        Name: ▇. ▇▇▇▇▇▇▇

Title: CFO

 

 

 

DVB BANK SE

as Mandated Lead Arranger, Facility Agent, Security Trustee and Lender

 

By:_ Name:

Title:

 

 

By:_ Name:

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page -Credit Agreement]

 

 

 

 

 

 

 

 

 

IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed by

their duly authorized representatives as of the day and year first above written.

 

▇▇▇▇▇▇▇▇ STEAMSHIP CORPORATION,

as Borrower

 

By:_  

Name:

Title:

 

 

INTERNATIONAL SHIPHOLDING CORPORATION,

as Guarantor

 

 

By:  Name:

Title:

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